May 30, 2024 Third-Party Platform Regulations

May Legislative Update

California SB 1490 Passed the Senate! 

A Major Victory! On May 21, 2024, Senate Bill 1490, introduced by Senator Durazo, successfully passed through the Senate Floor and is now moving on to the CA State Assembly. This bill received substantial support from both California restaurants and state legislators, marking a significant step forward in challenging the unfair business practices of large delivery apps. This victory highlights the power of collective action by restaurants in demanding meaningful change.

The legislation will bring protections to consumers and restaurants that promote transparency and equity to online food delivery including: 

  • Requires disclosure of fees to the restaurant charged by a food delivery platform including specific rates for marketing, order processing, and delivery;
  • Stops food delivery platforms from penalizing restaurants that refuse certain services – food delivery platforms must inform restaurants of any fee or product changes especially if a restaurant declines a product or service; 
  • Allows restaurants to opt-in to the 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 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. 

Florida Bill Enacted into Law

The Florida Senate Bill 676, which we actively advocated for, has officially been enacted into law. Governor Ron DeSantis signed the bill last month, aiming to regulate the operations of food delivery platforms and help restaurants curb unauthorized third-party delivery practices.

Why it Matters:

This crucial legislation establishes clear boundaries for food delivery platforms, ensuring they cannot process or facilitate orders from restaurants without the explicit consent of the establishments. Moreover, it mandates that these platforms transparently disclose all applicable fees, commissions, and charges imposed on customers, along with their policies regarding marketing, menu listings, pricing, and other key operational aspects. A significant feature of the bill is its future requirement for delivery services to enable direct communication between restaurants and their customers, ensuring a transparent and seamless interaction throughout the food preparation and delivery process.

Jersey City Ordinance 

On May 22nd, Jersey City adopted a new ordinance which passed 7-1. The ordinance includes the following provisions:

  • Agreement Between Restaurant and Delivery Platform: The ordinance requires a formal agreement between restaurants and delivery platforms, allowing restaurants to use all platform services without delivery required. The agreement must outline the fee or commission charge to the restaurants for this option, the allocation of delivery fees charged to the customers between the delivery platform and restaurant and how delivery responsibilities are allocated
  • Fee Cap: The delivery platform cannot charge more than 5% of the purchase price of an order, though this cap does not apply to advertising, SEO, consulting, or credit card processing fees and does not apply when using the delivery service.
  • Tiered Service Levels: The ordinance mandates that delivery platforms must offer at least one tier for core delivery at or below 15%. Core delivery includes listing, making restaurants discoverable on website, app and internet service and facilitating and performing delivery.  Core services do not include advertising, SEO, business consulting and credit card processing
  • Search Results Transparency: Delivery platform cannot omit or hide a restaurant from relevant search results based on core delivery service selection (Tier 1 selection)
  • Uniform Dispatch Times: No tier may offer differing dispatch times or priority
  • Delivery Radius: All tiers must have delivery radius of at least 1 mile from restaurant in city limits

Why it Matters:

Councilman Solomon, who authored the bill said “this is the foundation to address concerns and create as level a playing field as we can when the three big companies control the market”. After hearing from several restaurant operators at the public hearing, he said “you guys are so important to our community, you create jobs, you bring vitality, and we need to see you thrive and this is sort of a basic step we can take to help you keep more of your hard earned profits.”