California bill would force DoorDash and UberEats to disclose ‘hidden’ restaurant fees

Online delivery services like DoorDash and UberEats charge restaurants fees that are hidden from customers and can drive up the cost of those deliveries. A California lawmaker has introduced a bill to make it easier for consumers to see exactly what delivery services are charging.

However, the initiator of the bill has ties to scandal-plagued former Uber CEO Travis Kalanick, and critics of the bill warn that it could give large restaurant chains access to information about their competitors.

Senate Bill 1490 would require platforms like GrubHub, DoorDash and UberEats to disclose to their customers what fees are charged to both them and the restaurants.

Currently, California law only requires such platforms to inform their customers that restaurants will be charged certain fees, but not the amount of those fees.

The bill’s author, Senator María Elena Durazo (D-Los Angeles), said in a supporting statement that “customers and restaurants pay high and often hidden fees when they order through major third-party delivery platforms.”

She added that this transparency will allow customers to “make informed decisions when ordering food at their favorite restaurants.”

Since the COVID-19 pandemic began, restaurants have seen a dramatic shift in their revenue streams as fewer people eat in and more order in. Online orders now account for 30 to 40 percent of restaurant sales, according to Durazo’s office.

The largest online food delivery platforms “abuse their influence to charge high and hidden fees and actively cut restaurants off from their own customers,” her office said.

The bill is supported by the Digital Restaurant Association, which advocates for the restaurant industry.

“Restaurants and customers have a right to transparency and to know exactly what fees are being charged and who is receiving them,” the DRA said in a statement supporting the bill.

The DRA has ties to former Uber executive Travis Kalanick, who resigned from his position at the ride-sharing company in 2017. Under his leadership, the company faced a number of complaints, including allegations of sexual harassment, according to the New York Times.

According to the Financial Times, Kalanick has business ties to Tusk Holdings, the company behind the Digital Restaurant Association.

A representative for Kalanick did not respond to The Bee’s media inquiry.

“We believe SB 1490 could ultimately prove to be a backdoor for major restaurant chains and Travis Kalanick’s startups to access competitors’ business information,” said Ruth Whittaker, policy director for the Chamber of Progress, in a statement.

The Chamber of Progress, a center-left group funded by the technology industry, opposes the bill.

Whittaker said that while SB 1490 contains “many well-intentioned proposals,” he added that “there are some provisions that don’t quite fit with the overall consumer focus of the bill and reveal the intentions of the bill’s corporate sponsors.”

Whittaker said the provision requiring platforms to disclose the fees paid by restaurants was unnecessary.

“Consumers don’t need this information, and they don’t care. When was the last time you asked yourself what fees your local pizzeria pays to a third-party delivery service?” she said.

However, large restaurant chains that have the financial power to negotiate exclusive contracts with the platforms “would like to see what fees their competitors are paying,” Whittaker said.

The bill is expected to be considered by the Senate Judiciary Committee and the Senate Business, Professions and Economic Development Committee later this spring.