Bill Wants to Force Food Delivery Apps to Get Restaurants’ Approval First

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Tanu Henry | California Black Media 

Jonathan Burgess co-owns Burgess Brothers with his twin brother Matthew. It is a popular American bistro-slash-barbecue restaurant and food supply company based in Sacramento. Locals treasure them for their delicious waffles; handcrafted gourmet barbecue sauce; sweet and spicy smoked sausages; among other specialties. 

The African American entrepreneur says small family-owned businesses like his are tempted by what digital food delivery services might offer them: A broader customer base and online advertising on highly trafficked apps.  

But that exposure comes with a crippling cost. 

“There’s only like a very thin 5% profit margin for most small restaurants. It’s simple math. If you give Uber, Doordash or one of the others a nice chunk of that, it just doesn’t work out for you.” 

Burgess says food delivery services should offer special rates for mom and pop shops that are lower than what they charge chain restaurants. Those corporation-owned eateries typically buy their ingredients wholesale at much lower costs and they can make up for losses on delivery fees by what they make in volume. 

Assemblymember Lorena Gonzalez (D-San Diego) has written a bill to address the challenges food delivery apps have posed for small restaurants like Burgess’s across California. When the chair of the Assembly Appropriations Committee and Latino Caucus introduced Assembly Bill 2149, the Fair Food Delivery Act in February, she did not know the COVID-19 pandemic would shutter restaurants across California, and around the world, about a month later. 

Now, more than five months since the World Health Organization declared the international health crisis a global pandemic, more Americans than ever, faced with limited dining-out options, are relying on food delivery apps to purchase meals from restaurants. Grubhub, one app-based food delivery service, reports that it has more than 27 million active users and its orders have increased by over 32% over the last year.

But Gonzales says those large tech companies like Grubhub and its competitors Uber Eats, DoorDash, Postmates and others — all of them earn billions of dollars each year — take advantage of small struggling restaurants when they deliver those eateries’ food without their consent or an agreement. 

“When food delivery companies take advantage of small mom and pop restaurants by delivering their food without permission, it can damage the customer’s experience and the restaurant’s reputation,” Gonzalez said, adding that food delivery companies have created “significant disruption” in the food service business. 

If passed, AB 2149 would require all food delivery companies in California to get the “express written consent of a food facility before delivering the business’ food,” according to a statement Gonzalez’s office released. 

 “This bill will put the power back in the hands of small restaurant owners by ensuring they have agreed to the delivery arrangement beforehand,” Gonzalez continued. 

She says food delivery services sometimes post outdated menus and provide poor service. Both things can harm a restaurants reputation, she argues. She also points out that the app-based companies may out-compete restaurants that have their own delivery service.

In California, there are an estimated 76,201 food and drinking establishments, according to the California Restaurant Association (CRA). The CRA supports AB 2149. Hundreds of those California restaurants are Black-owned. In the Los Angeles area alone, for instance, there are nearly 200 African American-owned restaurants, according to Infatuation, an L.A-based website. 

But Courtney Jensen, who serves as the California executive director of  TechNet, a trade group that represents a number of  leading tech companies says there are several problems with Gonzalez’s bill. Among them are the potential “flagrant” violation of the California Consumer Privacy Act (CCPA) and the possibility that putting restrictions on delivery services could reduce the revenue of the same restaurants that the legislation intends to help. 

Under AB 2149, food delivery services would have to turn over lists of the restaurants’ customers to them. 

“Some restaurants or other food facilities that may not be required to comply with CCPA would be provided consumer’s personal information,” Jensen told LA Magazine. “By providing personal information to these food facilities, which are not required to comply with CCPA, the privacy rights of California consumers are undercut, as they would have no rights to access, delete, or opt out of sales of their personal information from these restaurants that either are not required or lack the resources to extend CCPA rights to consumers.”

The Electronic Frontier Foundation, a San Francisco based non-profit that defends civil liberties in the digital space, also opposes the bill. That organization argues that the right of food delivery service companies to operate without formal agreements with restaurants is protected by the Copyright Act, a federal law passed in 1976. 

“AB 2149 is a poorly conceived attempt to hamstring food delivery platforms,” Jensen says.

But Burgess maintains that promoting a third-party restaurant online without that business’s permission or buy-in is wrong. 

“It’s an intrusion. For the sake of decency and full transparency, these companies should get authorization before they advertise someone’s business,” he said. “This is not in the best interest of the restaurant.”

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