What is the law?
The Denver City Council passed Council Bill No. CB20-9035 on October 5th, 2020 to address fees third-party delivery services can charge restaurants during the COVID-19 crisis. The bill temporarily applies a maximum fee amount charged to restaurants by third-party delivery services in the city due to the fact that emergency orders continue to restrict all food service establishments from operating freely within the city, thereby increasing the need for take-out meal services.
Denver’s City Council is reacting to news of third-party delivery platforms and services, without the local restaurant’s knowledge or consent, will purport to sell meals from the local restaurant to consumers, and sometimes charge exorbitant fees to the already struggling local restaurants during the time of and following the declared emergency that restricts on-premises dining.
The bill restricts a third-party delivery service to only perform services for a restaurant when the restaurant has provided their consent and caps the fee charged by the third-party to 15% of the purchase price
The bill also requires the third-party delivery services to disclose on the customer’s receipt, in plain and simple language and in a conspicuous manner the following information:
- The menu price of the food;
- Sales tax applied to the transaction;
- The delivery charge/service fee charged and collected from the customer by the third-party food delivery service and by the restaurant;
- Any tip that will be paid to the person delivering the food, and not to the third-party food delivery platform, that was added into the transaction when it occurred; and
- Any commission associated with the transaction.
The changes encompassed in the bill, while temporary, will increase a restaurants’ profit margin on third-party deliver services while illustrating to each customer exactly how much each portion of the delivery costs and hopefully drive some customers towards ordering directly from their favorite restaurant.
What is the rollout timing?
The mayor is expected to sign the bill into law which will take effect immediately when the City Clerk publishes the bill. The bill temporarily amends Article X of Chapter 53, of the Denver Revised Municipal Code and shall be repealed effective February 9, 2021.
What Are The Penalties If Not Followed?
A restaurant that feels its third-party delivery service is not following the new regulations put forth by CB20-9035 can file a written complaint with the manager of finance and provide enough evidence to demonstrate that a violation has occurred. The manager of finance will investigate the complaint and determine if there is any violation by the third-party delivery service. The third-party food delivery service can be fined up to nine hundred ninety-nine dollars ($999.00) per violation, each day the violation occurs.