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| CFIF Urges Opposition to Food Delivery Price Controls in Kansas City |
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By CFIF Staff
Monday, January 25 2021 |
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January 25, 2021 Councilwoman Katheryn Shields
Chair
Finance, Governance & Public Safety Committee
City Council, City of Kansas City
414 E. 12th Street
Kansas City, MO 64106
Re: Opposition to Ordinance No. 210054 Price Controls Over Food Delivery Businesses
Dear Councilwoman Shields:
On behalf of the Center for Individual Freedom (CFIF) and over 300,000 supporters and activists across the state of Missouri and the rest of the nation, I write regarding an issue of great importance: Ordinance No. 210054, which would enact a price control of 15% on vital food delivery businesses.
Even during stable and growing economic times, among government’s most important responsibilities is ensuring a public policy climate that enables new and small businesses to succeed, particularly by keeping regulatory barriers low. That becomes even more critical amid difficult economic times such as these.
The proposed ordinance at issue would contravene that duty by creating a patchwork price control scheme over contracts between private third-party delivery platforms and restaurants. That would not only violate the bargained-for terms of voluntary contracts that businesses enter with third-party platforms, it would make food delivery less accessible to customers, and it would reduce earning opportunities for Missouri delivery drivers who have relied on these platforms for additional income during the pandemic.
While the restaurant industry has been affected to a devastating degree during the public health emergency, third-party delivery platforms have served as an invaluable aid to many struggling businesses while cities have limited or shut down dining options for consumers. While some restaurants may choose to offer these services themselves, many have relied on third party platforms to offer solutions and resources that would normally require enormous capital. Those platforms, such as DoorDash, UberEats, GrubHub and others, have used commission fees from their contracts to cover costs such as insurance, background checks, marketing and advertising that restaurants would otherwise have to pay themselves.
What these platforms provide local business should not be disregarded or penalized with heavy-handed price controls. They offer critical access points and opportunities for millions of customers, online ordering technology workers, credit card processing businesses, marketing personnel and delivery couriers. Unfortunately, some restaurants now want those third-party delivery services to continue for their own benefit, but without paying the adequate costs for the services provided.
Exacerbating matters, these types of commission cap ordinances disproportionately affect smaller restaurants. That’s because third-party delivery services often must prioritize larger restaurants that bring in more business and have higher subtotals. Additionally, a proposed cap of 15% on freely negotiated contracts would provide little to no ability to cover costs absent consumer price increases. That could in turn lead to fewer orders and less revenue for restaurants, higher prices for consumers, reduced service areas and fewer earning opportunities for struggling delivery couriers.
While it’s certainly true the restaurant sector continues to suffer due to the pandemic and public health orders, suddenly imposing price controls upon delivery services would only harm them further by limiting the options available to them. The trickle-down effect of these price controls would harm not just the small businesses and restaurants that use these platforms, but also the delivery workers, and ultimately, the consumers who rely on the services as well.
What restaurants and delivery drivers alike need during this stressful economic period is stability, not sudden further disruption. Many delivery workers deliver food as part-time opportunities to earn supplement income, and overwhelmingly rely upon flexible schedules that meet their economic, personal and family needs.
City leaders should accordingly seek opportunities that support the entire economic chain driving communities each and every day, not artificially favor one type of enterprise over another. Price controls such as the proposed ordinance would have more unintended consequences that cannot be mitigated during an already tumultuous economic time.
Thank you for your consideration, and we welcome further productive discussion on this important issue.
Sincerely,
/s/
Jeffrey Mazzella
President
cc: All Members, Finance, Governance & Public Safety Committee
Councilman Eric Bunch
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