Santa Clara caps third-party delivery fees at 15 % to help local restaurants

Bay Area

SANTA CLARA, Calif. (KRON) — The city of Santa Clara has now passed a temporary ordinance that caps fees at 15 percent that a third-party delivery service can charge restaurants during the coronavirus pandemic.

Santa Clara joins several other Bay Area cities in adopting a temporary ordinance as small businesses have struggled to keep up amid the pandemic.  

At Tuesday’s City Council meeting the board approved the temporary ordinance in response to local restaurants experiencing a sharp decline in revenue during the pandemic as they were forced to close indoor dining and rely on limited outdoor dining, pickup, and third-party delivery services. 

“We had been looking at other cities that had enacted similar type ordinances and we listened to our small business community and some of them had made comments that they were struggling because the fees were high,” said Ruth Shikada, Santa Clara Assistant City Manager. 

“They were high relatively speaking from the context of they really do rely on that business now, it’s not like it was; it was a smaller portion of their business pre-COVID, now it’s an overwhelming portion of the business with delivery takeout.” 

Amid the coronavirus pandemic, local restaurants reported being charged 20 to 30 percent by third-party delivery services. 

The temporary ordinance goes into effect immediately and also prevents delivery companies from changing costs by retaining any portion of a driver’s gratuities. 

Third-party delivery services will now be required to disclose the fees charged to applications users, gratuities paid and any discounts offered by the restaurants. 

The city says the ordinance will remain in effect until the end of the COVID-19 local emergency. 

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