While bars and restaurants are struggling in the wake of the coronavirus lockdowns, some woke liberal city council members in Portland think they have the answer.
The council, by unanimous vote, decided to cap the fees that Uber Eats, Grub Hub, and other food delivery services can charge restaurants, putting pressure on yet another industry in spite of warnings that the move would backfire.
Granted, food delivery apps and restaurants have clashed over the years over the price of delivery services. Some apps charge as much as 30% of the cost of the order, which means that restaurants make little to no profit from certain orders. Many eateries were willing to take the loss in the hope that people who ordered food to go would eventually come to the restaurant to eat. However, COVID-19 restrictions have dashed those hopes to pieces.
In many cases, restaurants have to give customers up to 35 square feet of personal space, a restriction that makes it difficult if not impossible for restaurants to turn a profit on their services. However, a fact that Portland City Council members overlook is that many food delivery services aren’t making money from their business either.
There is really no viable business model for any food delivery service, and many of them lose tens of millions of dollars each quarter.
Even so, it won’t be the delivery services that take a hit. These services have already informed the city council that, if a fee cap is instituted, delivery services will charge customers placing the food order higher prices to have the food dropped off to one’s doorstep. This could likely result in a decrease in orders to restaurants as customers, many of whom are out of work, are unable or unwilling to pay the extra fees.
The Portland City Council vote to cap food delivery app fees at a time when restaurants are relying on these apps to do business won’t bring about the results that the council is hoping for. Instead of saving restaurants, it could spell their doom as the higher costs are passed on to customers.
What’s more, the cap hampers food delivery services, which may see a decline in business. If food delivery apps don’t have enough work for all their drivers, the number of underemployed and unemployed adults in Portland will grow.
Once again, progressives are showing the world how much they really know about business.
Featured Image by shopblocks
