Blog

March 25, 2024 • Third-Party Platform Regulations

California Introduces Senate Bill 1490

On March 18, 2024, California State Senator Maria Elena Durazo (D; Los Angeles) introduced Senate Bill 1490 – a bill that brings transparency and equity to online food delivery. The legislation provides important protections for consumers and restaurants including:

  • Requires disclosure to consumers of the itemized breakdown of the transaction
    including purchase price, fees/commissions charged to the restaurant, any fees charged to the customer and tips;
  • Requires disclosure of fees charged by a food delivery platform including specific rates for marketing, delivery and order processing;
  • Bans delivery platforms from limiting the value or number of transactions disputed by a restaurant;
  • Food delivery platforms cannot penalize a restaurant for not using a service offered by the platform;
  • Requires disclosure of order status to the restaurant and customer including delivery
    method, anticipated date and time of delivery and confirmation of successful or
    unsuccessful delivery;
  • A mechanism for removing a restaurant from a food delivery platform.

The Digital Restaurant Association (DRA) would like to thank Senator Durazo for her leadership with SB 1490 as an important step forward in protecting California’s restaurant industry. Restaurants and customers alike deserve transparency to know exactly what fees are charged and who is receiving them. Currently, online food orders average 40% (Zippia.com) of a restaurant’s revenue, giving third-party delivery platforms substantial power. This critical California legislation is taking a step toward protecting consumers and restaurants from unfair and harmful business practices of the big tech food delivery apps to establish a transparent and equitable digital marketplace.

The Digital Restaurant Association (DRA), a non-profit focused on helping local restaurants thrive in a digital world, will continue to support measures like SB 1490 to protect local restaurants from the big delivery platforms, including best practices of fee transparency, improving restaurants’ control over the customer experience, and enhancing information sharing to better serve customers.