Province Proposes Cap on Delivery Fees to Support Local Restaurants

Published on November 26, 2020

Mandatory lower fees for restaurants where indoor dining is prohibited due to COVID-19

The government is helping local restaurants by introducing new legislation that would protect them from high delivery fees. The Supporting Local Restaurants Act, 2020, would cap fees charged by food delivery companies in areas where indoor dining is prohibited to help more small and independent restaurants stay in business.
Currently, fees placed on restaurants by food delivery companies can reach as high as 30% in Ontario. After working with the sector, Minister Sarkaria said restaurants should expect a cap of 15% for delivery fees, similar to what has been put in place in New York City, with an overall cap of 20% inclusive of all fees. This approach aims to ensure that delivery drivers' pay would be protected and delivery apps would not reduce service areas or restaurant selection.

If passed, the legislation the government intends to introduce today by Associate Minister Sarkaria of Small Business and Red Tape Reduction, and the regulation under it would:

Cap the rates charged by food delivery service companies and apps in areas where indoor dining is prohibited.

Permit fines of up to $10 million to food delivery service companies that do not comply with the law.

Provide food delivery service company employees or contractors who perform delivery services with protection that their compensation will not be affected by these changes.

"Ontario's small and independent restaurants have shouldered an outsized share of COVID-19's economic burdens," the Associate Minister said during the announcement. "But through it all, they've continued to serve our communities, our families and have lifted our spirits. With this legislation, our government is helping local businesses stay in business, and providing a solution that will help our local restaurants when every little bit helps." To provide additional relief to local restaurants and other businesses required to close or significantly restrict services in areas categorized as Control or Lockdown, Ontario has announced $600 million to help with them fixed costs, including property taxes, hydro and natural gas bills. The government is also supporting small businesses and restaurants through its Main Street Recovery Plan by:

Committing to permanently allow licensed restaurants and bars to include alcohol with food as part of a takeout or delivery order before the existing regulation expires;
Offering the $60-million Main Street Relief Grant that provides up to $1,000 to help eligible small businesses with the cost of PPE;
Permanently allowing delivery companies to provide deliveries 24/7, providing needed flexibility;
Helping nearly 23,000 small businesses grow online with $2,500 grants through Digital Main Street; and
Offering free financial advice and online training to help small businesses make informed decisions and navigate the unprecedented economic circumstances brought on by the pandemic.

Quick Facts
-Restaurants would be able to file complaints online if a food delivery service has overcharged fees in excess of the cap.

 

-Food delivery company employees or contractors who perform delivery services would be able to file complaints if their compensation or payments were reduced once the act comes into effect.