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| CFIF Urges Massachusetts Governor to Veto Price Controls on Vital Food Delivery Businesses |
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By CFIF Staff
Friday, January 08 2021 |
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January 8, 2021
The Honorable Charles D. Baker, Jr., Governor
Commonwealth of Massachusetts
Room 280, Office of the Governor
24 Beacon Street
Boston, Massachusetts 02133
Re: H.B. 5250 Section 98(a) – Price Controls on Food Delivery
Dear Governor Baker:
On behalf of the Center for Individual Freedom (CFIF) and over 300,000 supporters and activists across Massachusetts and the rest of the nation, I write regarding an issue of utmost and immediate importance: House Bill 5250 Section 98(a), which would amount to price controls on increasingly vital food delivery businesses.
Even during stable and growing economic times, one of the most important things that government can do is ensure new and small businesses succeed by keeping regulatory barriers low. That becomes even more critical amid difficult economic times such as these. In that vein, while we appreciate your leadership in supporting Massachusetts restaurants throughout COVID-19, we encourage you to exercise your line-item veto authority with respect to a provision in HB 5250.
That proposed provision in question would suddenly impose a haphazard price control scheme over contracts between private third-party delivery platforms and restaurants. These are voluntary contracts that businesses enter with third-party platforms, and the cumbersome proposed regulation would instantly make food delivery more expensive and less accessible for customers, while reducing earning opportunities for Massachusetts delivery drivers who rely upon income from these platforms.
As you know, the restaurant industry has struggled immensely during the pandemic and remains a crucial component of the U.S. economy. It’s also worth highlighting, however, that third-party delivery platforms use commission fees from their contracts to cover costs that restaurants would otherwise have to pay directly, such as insurance, background checks and advertising.
While some restaurants choose to offer these services themselves, others choose contract delivery services via platforms such as DoorDash, UberEats, and GrubHub. Those services in turn provide access and opportunities for millions of customers, online ordering technology workers, credit card processing businesses, marketing personnel and delivery couriers. Now, restaurants want the service to continue, but without paying the adequate costs for the services provided.
Ominously, price controls of the type included in H.B. 5250 would immediately become among the most restrictive in the country, and would lead to unintended consequences that would harm the economy and restaurants during a time of great uncertainty.
Commission caps contemplated by H.B. 5250 would disproportionately affect smaller restaurants because third-party delivery services may favor larger restaurants that bring in more business and have higher subtotals. Additionally, a 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 true that the restaurant sector also continues to suffer, suddenly imposing price controls upon delivery services would only harm them further while inflicting potentially catastrophic damage upon deliverers upon whom restaurants and isolated consumers increasingly rely.
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. The measures proposed by H.B. 5250, Section 98(a) would obstruct their flexibility and ability to support their families.
We welcome the opportunity to discuss alternative and more helpful language during the next legislative session, with the hope of helping maintain restaurant choice for supplemental services that ultimately benefit them while also minimizing harm to local couriers and consumers.
The state maintains a compelling interest in supporting the restaurant industry through such alternative ideas as tax deferments or forgiveness, public and private partnerships to provide direct relief to restaurants, and streamlined and lenient permitting to expand outdoor dining, to name a few. Accordingly, we strongly urge you to veto the price control provision of H.B. 5250, Section 98(a) on third-party food delivery.
Thank you for your consideration, and we welcome further productive discussion of this important issue.
Sincerely,
/s/
Jeffrey Mazzella
President
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