Denver’s restaurant scene, vibrant until devastated by the pandemic, has been struggling to get back on its feet ever since last spring’s lockdown. Sadly, many eateries have been shuttered for good. Many others are barely staying afloat as they try to comply with complex, confusing and inconsistent state and local mask orders, distance requirements and the like. They also have to deal with public apprehension about eating in public places.
It’s understandable the Denver City Council would want to help. It stepped in last week in an effort to relieve at least one pressure point on restaurants — the sometimes-hefty commissions they pay popular delivery services like DoorDash and GrubHub. The council imposed a temporary cap on the commissions that can range up to 30% of a food order.
The services have been a lifeline to restaurants and restaurant goers alike amid COVID. They were for a time the principal means of letting you savor the fare from your favorite local bistro. Even after restaurants were allowed to reopen with restrictions last summer, the delivery services continued to play a big role for a public reluctant to dine out.
At the same time, the commissions have cut into the ever-thinner margin of restaurants. Restaurateurs, backed by the Colorado Restaurant Association, approached the council for relief. The resulting measure by District 4 Councilwoman Kendra Black caps the commissions at 15% and requires that 100% of tips go to the delivery driver. The cap will remain in place until at least Feb. 9.
The new policy, unanimously approved by the council, poses risks. As with so many well-intended interventions into the marketplace — whether meant to level the playing field or prevent exploitation of workers or others — it could backfire. If it turns out the 15% cap isn’t right for the Denver market, or if the council chooses to extend the limit when it expires in February, it could reduce incentive to the delivery services.
That could result in fewer jobs for the services’ drivers and reduce orders placed at the very restaurants the council wants to help. After all, a central feature of the next-gen delivery services is their easy-to-use apps, which don’t just place orders for deliveries but also use algorithms to drive more consumers to those restaurants in the first place.
It all comes courtesy of the forward-looking, if oft-maligned, “gig economy.” It’s a latter-day version of self-employment that has become a go-to source of temporary work for some and supplemental income for others — all the more so amid COVID.
Their jobs matter, too, as do the jobs lost or jeopardized in the restaurant industry. Indeed, let’s hope the council’s commission cap doesn’t result in lost income for drivers who, ironically, were laid off at restaurants earlier this year.
We urge the council to tread lightly as the new policy’s expiration date approaches.