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New Bill Would Mandate Agreements Between Delivery Services And Restaurants In California

A sign outside a North Park restaurant reading "We deliver with Postmates," Aug. 19, 2020.
Roland Lizarondo
A sign outside a North Park restaurant reading "We deliver with Postmates," Aug. 19, 2020.

During the coronavirus pandemic, food delivery platforms such as Uber Eats, DoorDash and Postmates have exploded in popularity.

The app-based services usually have contracts with individual eateries to deliver their food, but not always.

New Bill Would Mandate Agreements Between Delivery Services And Restaurants In California
Listen to this story by Matt Hoffman.

"The person that picked it up said, 'Oh yeah, we work with Postmates,' so I did some investigation and found we’re not on Postmates. How are they selling our food?" said Jeff Rossman, owner of Terra American Bistro. Rossman also serves as the head of the local chapter of the California Restaurant Association.

More than 1½ years ago, Postmates listed Rossman's restaurant without his permission.

"It’s not on my behalf — I’m not putting my best foot forward," he said. "So as an industry we were like, 'That’s not cool.'"

The California Restaurant Association said this has been an ongoing issue statewide and is particularly hitting small businesses hard.

"Right now all the power really is in the hands of these delivery companies," said Assemblymember Lorena Gonzalez (D-San Diego), who authored AB 2149 which would mandate food delivery services to have agreements with restaurants in order to work with them.

Gonzalez points out some food does not travel well and customers will blame the restaurant — not the delivery service — when food arrives cold or soggy.

"They think the restaurant itself is not adhering to the normal level of service when they never agreed to be in this relationship," she said.

Customers on apps such as Postmates can order from "non-partner" merchants — that is, from restaurants that do not have agreements with the delivery app. If a restaurant wants to be removed from the app, the process could take up to 72 hours, but some have said it takes months.

"This bill is really allowing us to recapture the customer and say, 'Hey, we’re behind our food. It’s our menu. It’s not just you picking something that we don’t think is going to travel well,'" Rossman said.

For these "non-partner" merchant orders, delivery services like Postmates do not collect a commission from eateries which can be as high as 30%. Instead, the business gets the full amount of cost of the meal.

One restaurant owner, who did not want to be identified, said as long as they are getting the full price for orders, they do not mind delivery services.

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Rossman, however, is more worried about Assembly Bill 5, which may make these third-party food delivery companies go away entirely.

"Forcing them to be employees is changing their whole models," he said of AB 5, also authored by Gonzalez, that went into effect Jan. 1.

That legislation requires independent contractors, like those used by third-party delivery services, to become actual employees. Delivery companies and ridesharing services have resisted the change.

"If those drivers, those third party delivery drivers, get turned into employees, I don't know what that’s going to do for all of our virtual restaurants, delivery restaurants," Rossman said. "I think it’s going to change the game."

The Fair Food Delivery Act has passed the State Assembly and a Senate committee. It now heads for a full Senate floor vote.