On The Money Virus Outbreak Gig Work

FILE - In this Feb. 27, 2020, file photo, the DoorDash app is shown on a smartphone in New York. Some app-based delivery companies have announced hiring sprees to cope with a surge in orders from millions of people stuck at home. DoorDash has launched a "priority access program" to help laid off restaurant employees sign up for delivery work. (AP Photo, File)

Gedion Fanta stands inside his Ethiopian restaurant on East Colfax Avenue in front of empty tables arranged for diners that will likely never appear.

“Nowadays, no one comes to eat,” said Fanta, owner of Abyssinia Ethiopian Restaurant and Bar. “There is nobody. People are still scared.”

Instead, he relies on third-party delivery services, like UberEats, GrubHub, Postmates and DoorDash, as a lifeline to stay open, but even those are hurting his business, he said, taking 20 to 30% of each order as commission.

A proposal, that aims to lighten the load for restaurant owners like Fanta across Denver, would pose a cap on commission fees collected by those delivery services, which can sometimes soar as high as 35% an order. 

Some restaurants, particularly chains and national chains, are able to negotiate a better deal, said Councilwoman Kendra Black, “so it’s really the little guys who are paying the highest rate, and it does really hurt them.”

At Fanta's restaurant, GrubHub and DoorDash each make, on average, $300 per week from delivering food from his restaurant, Fanta said. Before the pandemic, commission from the companies totaled about $100 a month.

If the proposal passes, commission fees would be capped at 15%.

“That would be unbelievable,” Fanta said of the proposal, noting that he could use the money to help pay his staff.

The current commission rates forced Phoenician Kabob, at 1502 Ivanhoe St., to start its own delivery service, said Elle Kline, manager of the Mediterranean restaurant.

“We tried to avoid them,” Kline said of the third-party delivery services, holding a flyer she hands out to customers that encourages them to order directly from the restaurant’s website. Though the restaurant still uses GrubHub, DoorDash and Postmates, their in-house delivery service helps offset the loss in revenue.

During lunch hour on Thursday, the restaurant’s 14 tables were empty.

Fifteen percent commission cap would help, Kline said. “Anything less than now."

The proposal is on par with legislation passed in other large cities, including Chicago, New York City, Seattle, Washington, D.C. It would also ensure that 100% of the tips go to the driver, and that delivery companies be barred from tacking on extra processing or service fees.

The initiative is backed by the Colorado Restaurant Association, the city’s coronavirus-era Economic Relief and Recovery Council, Eat Denver and others.

In a statement, DoorDash said it is “committed to supporting delivery workers and restaurants during this critical time” and has given more than $120 million in commission relief and cut commission in half for more than 150,000 restaurants across the country.

“Commission caps are a form of price fixing that can have many unintended consequences, and we’re eager to continue working with Denver City Council to find a solution that ensures affordable delivery for residents, flexible work opportunities for Dashers, and more revenue for restaurants,” the statement read.

A spokeswoman for GrubHub said the company appreciated Denver city council’s “collaborative approach” to finding a solution to the cap and that proposal would not negatively impact drivers’ tips.

“However, we believe fee caps are the wrong way to support restaurants, as it will negatively impact restaurants’ order volume and increase their costs. As a result, delivery workers would have fewer work opportunities and lower earnings,” she said in a statement.

Black’s proposal, if passed, would only last four months, through February, at which point the City Council could decide whether to extend it.

For restaurants like El Noa Noa Mexican Restaurant on Santa Fe Drive, the cap would help, though Manager Leticia Banuelos wishes it would drop even lower.

The patio at El Noa Noa was nearly full Thursday afternoon, but Banuelos fears a drop in diners as winter weather rolls in. The restaurant has been relying on UberEats, DoorDash and Postmates since the pandemic began, but with commission rates set at 25% for each service, the burden is heavy.

“When we were closed, we were just paying employees to keep them on payroll. We weren’t making any profit,” she said. “God, I wish it could go down to 10%, but I understand. That can probably help a little.”

Black's proposal was advanced out of committee on Wednesday and heads for a first reading on the floor of City Council on Sept. 28. A final vote is scheduled for Oct. 5.