In a letter today sent to the Minneapolis City Council, the Center for Individual Freedom (CFIF) expressed opposition to Ordinance 2021-00906, legislation that would permanently impose a pricing cap on commissions and other fees charged by third-party food delivery services such as Uber Eats and DoorDash.

The proposed price-control scheme could undermine an important lifeline for Minneapolis restaurants and their workers – especially independent, family-owned establishments – which have relied on third-party delivery services to remain open during the pandemic.

As stated in the letter:

Extending that price control would not only further violate the bargained-for terms of voluntary contracts that businesses enter with those third-party platforms, it would make food delivery less accessible to customers, and it would reduce earning opportunities for Minneapolis delivery drivers who have relied on these platforms for additional income during the pandemic… Additionally, extending commission caps on freely negotiated contracts will make it even harder to cover costs absent consumer price increases. That in turn could lead to fewer orders and less revenue for restaurants, higher prices for consumers, reduced service areas and fewer earning opportunities for struggling delivery couriers.

Read the full letter below.

November 8, 2021

Minneapolis City Hall
350 S. Fifth St.
Minneapolis, MN 55415

RE: Third Party Delivery Services Ordinance (2021-00906)

Dear Councilmember:

On behalf of the Center for Individual Freedom (CFIF) and over 300,000 supporters and activists across Minneapolis and the rest of the nation, I write regarding an issue of great importance: ordinance 2021-00906, which would permanently extend price controls on vital food delivery businesses far beyond their original scope. 

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. That becomes even more critical amid difficult economic times such as these. 

The proposed ordinance at issue would contravene that duty by extending into perpetuity a price control scheme over contracts between private third-party delivery platforms and restaurants. Extending that price control would not only further violate the bargained-for terms of voluntary contracts that businesses enter with those third-party platforms, it would make food delivery less accessible to customers, and it would reduce earning opportunities for Minneapolis delivery drivers who have relied on those 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 companies have served as invaluable aids to many struggling businesses as 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 those platforms provide to local businesses should not be disregarded. 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 caps 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, extending commission caps on freely negotiated contracts will make it even harder to cover costs absent consumer price increases. That in turn could 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, extending price controls upon third-party delivery services would only harm restaurants further by limiting the options available to them. The trickle-down effect of the price controls harms not just the small businesses and restaurants that use those 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 further disruption. Many delivery workers deliver food as part-time opportunities to earn supplemental 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. Extending existing price controls will 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,

Jeffrey Mazzella
President