The Ontario government is 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. ORHMA has been challenging the high delivery fees set by third-party delivery companies in behalf of the restaurant industry in Ontario. We welcome this legislation as we continue to advocate for tailored industry relief especially through these challenging times.
Currently, fees placed on restaurants by food delivery companies can reach as high as 30% in Ontario. With this legislation, restaurants should expect a cap of 15% for delivery fees 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 by Prabmeet Sarkaria, Associate Minister 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.
Tony Elenis, President and CEO of the Ontario Restaurant, Hotel & Motel Association (ORHMA) says, “The vast majority of restaurants generate a profit of 2 to 3 per cent from delivery services, with many operating at a loss. The issue is disproportionately more punitive to smaller businesses. A permanent solution is required through a regulation that caps commission fees. We thank the Ontario government for their effort to regulate fees and provide some relief to restaurants.”