Efforts to limit the fees that third-party delivery companies can charge local restaurants have encountered some pitfalls.
More than a month after Clark County passed an emergency order capping fees at 15%, measures to adopt similar measures in Las Vegas, North Las Vegas and Henderson have stalled. Additionally, according to Clark County Commissioner Tick Segerblom, one of the big delivery apps does not honor the spirit of the ordinance in place.
“Grubhub seems to have just jumped off the rails,” Segerblom said of how the $ 6 billion food delivery company responded to the order. “They have their own legal interpretation (under) that they seem to think they can charge for marketing on top of the 15 percent.”
While other delivery companies, such as Postmates, Uber Eats, and DoorDash, responded to the order by adjusting charges to keep basic delivery and other charges at or below this limit (excluding processing fees for credit cards, sales tax, and a handful of other exceptions), many local businesses still pay the tech giant 30% or more for orders placed through its platforms.
Tacotarian owner Kristen Corral, who has led the campaign to cap fees, was among the first to notice that her Grubhub bill was not going down. Throughout August, the company continued to take 10 percent of every order from its Clark County location to cover delivery, and an additional 20 percent to cover “marketing.” Corral had never subscribed to any marketing service beyond the most basic listing on the Grubhub site and app.
When asked about the fees, Grubhub told the Review-Journal that the marketing costs are not covered by the order. Its representative pointed to the wording of the law, which specifically excludes “the cost of listing or advertising the food retail establishment on the third party food delivery service platform.”
“The ordinance is very clear that the cap does not apply to marketing or advertising services that local restaurants choose to pay to generate more orders,” a Grubhub spokesperson wrote.
Segerblom, Corral, and the Nevada Restaurant Association do not dispute that businesses are allowed to charge fees above the 15% delivery cap for special placement on their websites or apps. They argue, however, that the company uses the “marketing” label to hide higher fees for its most basic services.
“It’s not marketing. They sign you up on a platform, along with thousands of other people, ”says Corral.
When asked to withdraw or lower the fees, Grubhub agreed to lower them from 20% to 17.5% (in addition to the 10% delivery charge), meaning that the total of 27.5% was the best rate available.
Alexandria Dazlich of the Nevada Restaurant Association said, “They’re basically playing a shell game.”
Although it has repeatedly stated that restaurants “choose” to pay its higher marketing fees, Grubhub would provide no example of a Clark County restaurant paying 15% or less in combined delivery and marketing fees. . Additionally, when asked if Grubhub’s customers were able to opt out of marketing fees altogether, the company declined to respond.
Segerblom says that Grubhub’s interpretation violates the intent of the ordinance.
“And if they don’t want to back down and live under our 15 percent rule,” he said, “then we’ll just have to clarify it.”
He plans to raise the issue at a committee meeting on Tuesday and vote on new wording to clarify the ordinance for October 6.
Meanwhile, efforts to secure similar limits in Las Vegas, Henderson, and North Las Vegas experienced a different setback. According to Corral, these cities are empowered to regulate only companies that hold business licenses in their jurisdictions.
“The barrier is that commercial licenses for third-party delivery applications, in the city (of Las Vegas), North Las Vegas and Henderson, are optional,” says Corral. “I don’t see how in these jurisdictions we would be able to make an emergency order without having a business license.”
” should be.” Until they are, however, he confirms that the city does not have the authority to regulate them “under the current code”.