Update 07/03: The Department of Consumer and Regulatory Affairs provided new information about Postmates’ compliance with the 15 percent delivery fee cap: “When DCRA received complaints from restaurants about Postmates charging above the maximum 15 percent fee for third party delivery services, DCRA’s Consumer Protection Unit team investigated the claims and took swift action resulting in two separate fines. Postmates has since come into compliance with Mayor Bowser’s Order and is reimbursing the restaurants for the overcharges. Postmates said it’s also refunding 100% of commission fees paid by Black-owned restaurants for the month of June as a show of support and solidarity.”
When Mayor Muriel Bowser signed COVID-19 emergency relief legislation on May 13, a 15 percent commission fee cap on third-party delivery services took effect in the city. The cap, which forces large companies like UberEats, Grubhub, DoorDash/Caviar, and Postmates to reduce the share of money they take from restaurants’ orders—a fee that typically hovers around 30 percent—was an attempt to give D.C.’s small, mostly independent restaurants some breathing room during the pandemic.
Nearly one month later, D.C. restaurant operators report that Postmates continues to charge restaurants between 20 and 33 percent of each order.
When RASA co-founder Rahul Vinod complained to the company, he received this response on June 3rd:
“Thank you for reaching out regarding the recent news about a Washington DC fee cap. We are working with the Washington DC municipality to understand the details of this new policy and the specifics of its implementation. Once we have clarity, we will be able to follow up and answer your questions. Please stay tuned for additional updates.”
Vinod says the other delivery platforms his restaurant works with complied shortly after Bowser signed off on the Council’s legislation, with the exception of DoorDash and Caviar. According to Vinod, DoorDash and Caviar preemptively slashed their rates in half, to 12.5 percent, at the start of the pandemic, and as of June 1 started charging 15 percent. “The other companies knew what was happening,” Vinod says. With delivery now accounting for 60 to 70 percent of RASA’s business, every dollar counts.
Mount Desert Island Ice Cream co-owner Brian Lowit has emailed Postmates “at least a dozen times” about their non-compliance with the cap. Initially, he says, company representatives said they were looking into the matter. Then they stopped responding altogether. “UberEats and Grubhub reduced their rates within a day,” Lowit says. He’s stopped accepting orders from Postmates and encourages others to do the same. “They’re breaking the law and the mayor’s attempt to help restaurants. I wish everyone would turn Postmates off. Then they’d have to do the right thing.”
The city, on the other hand, has been responsive to restaurant owners’ concerns, according to Lowit and Vinod. The Department of Consumer and Regulatory Affairs—the agency responsible for enforcing the fee cap—tells City Paper they’ve investigated three valid complaints that Postmates is in violation of the law by continuing to charge restaurants on its platform 33 percent commission fees. DCRA also says it will start issuing fines of up to $1,000. (Those who want to file a complaint can complete this business complaint form or calling 202-442-4400.)
Postmates may have to get with the program, permanently. “The app services are bleeding our local restaurants dry—and we all know restaurants operate on very slim profit margins,” says Ward 3 Councilmember Mary Cheh. “That’s why I put a cap on what the app services can charge, but now I’m hearing of the devious ways these services are trying to get around the cap or not abiding by it at all. So, like other jurisdictions, I’ll be looking for more nuanced ways to permanently rein them in.”
Like most brands, Postmates sent an email to subscribers as protestors filled city streets across the nation fighting against police brutality and systemic racism. “We stand with black-owned businesses,” the subject line of their June 4 email reads. The company, founded by three white men in 2011, says it serves as a member of the NAACP’s criminal justice efforts; “joined the ACLU in calling for an independent review of the facts;” donated to the Minnesota Freedom fund; and signed on as an ally of Black Tech for Black Lives.
The email continues to describe Postmates’ new “black-owned restaurants collection.” When you open the app, there’s a way to sort by black-owned restaurants placed prominently at the top of the screen. When City Paper tested it out using a U Street NW address, only five options populated. “Each and every order from this collection will be delivered free,” Postmates says.
While eliminating delivery fees for customers may help drive more traffic to D.C.’s black-owned businesses, complying with the delivery fee cap would put more money in black business owners’ hands. Zenebech Restaurant was one of the establishments included in Postmates’ black-owned restaurant collection. Owner Michael Demissie says Postmates is charging him 20 percent commission on delivery orders.
Postmates has not responded to repeated requests for comment over the past month.
Photo by “Postmates Pan” by Garen M. is licensed under CC BY-NC 2.0