Minneapolis mayor imposes 15% cap on fees charged by 3rd party food delivery apps

MINNEAPOLIS (FOX 9) - Minneapolis Mayor Jacob Frey signed an emergency regulation Monday capping the fees third-party food delivery platforms can charge restaurants for using their services.

According to a news release, many restaurants are relying more on third-party food delivery platforms like DoorDash and Uber Eats as they pivot to takeout amid the COVID-19 pandemic. According to Frey’s office, some restaurants have been incurring delivery fees as high as 40% of the price of the customer order from these third-party platforms.

Minneapolis mayor imposes 15 percent cap on fees charged by third party food delivery apps

Minneapolis Mayor Jacob Frey imposed a 15 percent cap on fees charged by third party food delivery apps.

The new measure is designed to help restaurants and bars keep more of their delivery profits by prohibiting third-party platforms from charging them a commission fee exceeding 15% of the price of the customer’s online order.

Restaurants like Pimento Jamaican Kitchen said they're grateful for the relief. Before the pandemic, 30% of sales at Pimento Jamaican Kitchen came from apps like Door Dash and Bite Squad. Now, third party food delivery services make up 70% of the restaurant's revenues, but they take a big bite out of Pimento's bottom line.

"That's huge. For us, that's a game changer," said Yoni Rienharz, co-founder of Pimento. "For a lot of my contemporaries, it could be the difference between them staying open and closing their doors."

Several other cities in the United States have already imposed similar regulations, but Minneapolis is believed to be the first city in Minnesota to do so.

A spokeswoman with DoorDash released the following statement in regards to the new cap:

"DoorDash has always supported restaurants. Pricing regulations could cause us to increase costs for customers, which could lead to fewer orders for local restaurants and fewer earning opportunities for Dashers. Pricing regulations can also remove options available to restaurants by limiting their ability to opt-in to additional services to help their business. We remain focused on solutions that better support restaurants, customers, and Dashers."