Florida’s proposed ‘pro-restaurant’ regulations will hurt small, independent restaurants

More people than ever are ordering food online. But in the age of coronavirus, is it still safe? Image via AP.

The pandemic created a dramatic increase in usage of online food ordering platforms. Today, roughly 40% of restaurant sales come from online orders.

The big online ordering and delivery platforms like DoorDash, UberEats and GrubHub make up over 99% of the online food order and delivery market. Restaurants’ dependence on these apps for a substantial amount of their business means they have significant power, particularly over smaller businesses. Small, independent restaurants pay high fees and bear the brunt of delivery costs because they don’t have the resources to negotiate the deals with platforms that big chains can.

When customers order online, they are choosing that option because they trust restaurants will prepare them delicious food just the way they want it at a fair price. This trust has been shaken by the current model since the big delivery apps disconnect restaurants from customers, making it difficult to communicate order changes, dietary restrictions or food allergies.

In addition, the big delivery platforms deceive customers with hidden fees charged to restaurants, hiding the true cost of delivery. Customers can’t see many of the fees restaurants pay to delivery platforms, and the prices that restaurants have to charge to cover the fees they pay to delivery companies are eroding customers’ trust.

Late last year, the Digital Restaurant Association engaged over 700 industry members in Miami-Dade County, including owners, operators and managers, who sent letters and placed phone calls urging County Commissioners to advance a pro-restaurant ordinance that would have eliminated hidden fees and enabled direct communication between restaurants and customers. However, this ordinance was deferred to try for statewide regulations that would protect restaurants.

The new statewide legislation (HB 1099, SB 676) that was supposed to help restaurants unfortunately fails to address these issues. While these bills claim to establish much-needed regulations of third-party delivery platforms, both the House and Senate bills are missing critical protections.

This could end up hurting restaurants and consumers.

HB 1099 goes so far as to explicitly allow third-party companies to list restaurants on their platforms without consent. This is a blatant disregard to the restaurants who value any autonomy over their customers’ dining experience and who stand to weaken the relationship they’ve developed with their patrons.

Worst of all, the bill contains something called “state preemption,” meaning that no local governments can introduce any laws that amend or override these harmful regulations.

Restaurants and their customers need lines of communication to ensure order accuracy, solve issues and avoid bad experiences and negative reviews. This is a commonsense protection that actually addresses an issue local restaurants and their customers face, but it’s missing from HB 1099.

The delivery platforms have managed to convince state legislators these bills are “pro-restaurant,” but they will hurt Florida’s restaurant community and give third-party delivery platforms unlimited power to extract profits from restaurants.

When reaching out to restaurant owners and operators to speak out against this bill, I received the same message from most of the folks we reached out to. Here is just one of many: “Hey Joe, I appreciate you for reaching out and agree that these bills are bad for business. Unfortunately, I’m in the middle of renegotiating fees with some of the third-party platforms and don’t want to piss them off. I will tell you that they make up 40% of my business, so I hope you understand the hesitation.”

I appreciate the efforts of the bill sponsors in both chambers, but these bills, as written, can’t pass if we want to preserve the economic vitality and culinary diversity of the restaurant industry in Florida. These bills, if signed into law without significant amendments, would enable third-party delivery to continue taking advantage of local restaurants.

It shows a bleak reality when restaurants are afraid to speak out against the third-party platforms out of fear of retaliation, and it should serve as prime evidence of the power they hold. If lawmakers truly want to be “pro-restaurant,” they should kill bills like HB 1099 and SB 676 and introduce legislation that reins in the seemingly unlimited power of third-party delivery platforms.

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Joe Reinstein is the Executive Director, CEO and Acting Chair of the Board of Directors of the Digital Restaurant Association.