Chicago will impose a temporary cap on restaurant delivery fees and dole out $10 million grants to bars and restaurants forced to stop serving customers indoors for the second time during the pandemic, Mayor Lori Lightfoot said Thursday.
Since the stay-at-home shutdown triggered by the coronavirus, Finance Committee Chairman Scott Waguespack (32nd) has sought a 5% cap on restaurant delivery service fees to give restaurants a break at a time when the only alternative to cooking at home is takeout or delivery.
Until now, the mayor’s approach to the problem has been more nuanced.
She imposed an executive order requiring Chicago food delivery services to come clean about third-party delivery costs, giving consumers the information they need to vote with their wallets.
But now that Gov. J.B. Pritzker has forced bars and restaurants to close to indoor patrons again, Lightfoot is vowing to cap third party fees “temporarily.”
At a City Hall news conference, the mayor said negotiations with aldermen will determine the size and duration of the cap. But Lightfoot said there is a “sense of urgency” to get the ordinance passed this month because restaurants desperately need the help.
“There’s got to be some relief. Businesses are really suffering. Indoor dining is now closed. There is gonna be even more reliance upon delivery. We’ve got to make sure that as much of that revenue from delivery goes back into the hands of the restaurants themselves,” the mayor said.
Ald. Tom Tunney (44th), owner of Ann Sather’s Restaurants, knows first-hand the dire straits facing restaurants that are the lifeblood of Chicago neighborhoods.
“It’s just very difficult to try to meet payroll when the revenues are coming in at maybe 50% — if we’re lucky. Whether it’s delivery programs or customers coming in and picking up — it’s still a very small fraction of what it needs to stay in business,” Tunney said.
“Most of our small businesses run on very small margins. And most of them employ lots of people. So it’s really incumbent that we do everything we can to keep our small businesses in business and keep our neighborhoods alive.”
Tunney noted “about 50% of total sales” come through third-party delivery services that have fees so “confounding, they just don’t make sense.”
Tunney said he’s had a “good working relationship” with companies like Grubhub, Postmates and DoorDash, but he added: “This second pandemic is so business-threatening forever that they’ve got to help us … reduce the fees, at least in the short term. We have got to get through this Phase Two. … If we don’t get through November and December, it’s gonna be very difficult in January and February — and that’s normal times.”
DoorDash argued the proposed cap would diminish customer service and reduce wages for delivery employees, now paid $22 an hour.
“More than ever, restaurants need flexibility to decide how they operate and market their business,” DoorDash spokesperson Campbell Matthews was quoted as saying in a statement.
Uber Eats spokesperson Alix Anfang said restaurants can “choose to pay a lower commission and pay for full-time delivery people themselves,” but many “don’t have the resources to do that.”
“This law would simply shift the costs back onto small, local restaurants who can afford it the least while also capping the earnings of many hard-working Chicagoans who work as delivery drivers,” Anfang was quoted as saying.
The $10 million for the grants was reallocated from the city’s Small Business Resiliency Fund, created with the windfall Chicago received from the federal CARES Act.
It will provide $10,000 apiece to 1,000 struggling restaurants and bars chosen in a lottery administered by World Business Chicago.
To qualify, restaurants and bars must prove that since March 1, due to the pandemic, they have lost at least 25% of annual net revenues “under $3 million.” Regional or national chains with more than two establishments are not eligible.
Grants must be used to cover payroll, replenish inventory and pay rent and utility bills, and 60% of the grants are reserved for businesses in low- and moderate-income community areas.
As yet another lifeline, the mayor is launching a “Take Out Chicago” contest to support local restaurants. Those who order out from at least 10 restaurants will qualify to receive VIP tours of Chicago’s cultural institutions.
City Hall is also has created a ChiServes.com portal to help hospitality workers who have either been laid off or had their hours and paychecks cut access workforce development and other supports.
Lightfoot acknowledged her latest measures are “by no means fixes” for a devastated hospitality industry — and no substitute for new stimulus funds.
“Please, Congress. Stand up and do your job. … We need this done,” she said.
“There is no reason for further excuses. … We must stand together to help our neighbors desperately in need.”