Title
Introduction of Ordinance Re-Adopting Alameda Municipal Code Section 6-62 (Third-Party Food Delivery Services) of Article XVIII (Fair Housing and Tenant Protections) of Chapter VI (Businesses, Occupations and Industries) to Continue Placing Limits on Charges Imposed by Third-Party Delivery Services; Define Core Product Offering to Mean a Service; and Other Amendments. (Base Reuse and Economic Development 10061810)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
The City of Alameda’s (City) Third-Party Food Delivery Services Ordinance (the “Ordinance”, Exhibit 1, AMC Section 6-62) was adopted on September 15, 2020, during the COVID-19 pandemic. The Ordinance placed a 15% cap on the fees and surcharges levied on Alameda restaurants using third-party food delivery services such as Uber Eats, DoorDash, and Grubhub. This ordinance sought to alleviate the high fees levied at Alameda restaurants during a time when nearly all food sales were delivery-based. The Ordinance was extended March 7, 2023 and sunset on May 1, 2025.
Given the importance of maintaining a vibrant restaurant industry in Alameda, the continued challenges it faces post-pandemic, and the current economic uncertainties, staff is requesting the Ordinance to be re-adopted as it was previously approved, to extend it for one year. This will allow staff time to engage with the local restaurant community to better understand the current context of the third-party food delivery services and its impacts on retail food establishments. After its review, staff may recommend amending the Ordinance next year.
BACKGROUND
Due to the mandatory, statewide shelter-in-place order during the COVID-19 pandemic, many Alameda restaurants, and their consumers, came to rely on third-party food delivery services, online platforms that facilitate food delivery and pick-up. These companies provide a variety of services, including food delivery, website integration, marketing assistance, credit card processing and insurance coverage. Typical fees these companies charged restaurants for these services ranged from 15% to 31% of the purchase price, on top of the 12% to 30% fees charged to customers. While services offered by these companies were valuable and important, the services offered by brick-and-mortar restaurants were essential during the COVID-19 pandemic. However, these high fees represented a significant financial hardship to restaurants that were already experiencing great difficulty due to restrictions imposed in response to the COVID-19 pandemic.
On September 15, 2020, City Council unanimously approved an ordinance establishing a 15% of purchase price limit on charges imposed by third-party delivery services. That ordinance was effective for the duration of the local COVID-19 pandemic state of emergency, until February 28, 2023, when the state terminated its COVID-19 emergency declaration.
At that time, research indicated that restaurants were among the most hard-hit businesses during the height of the pandemic, and continued to experience challenges including, but not limited to, chronic understaffing, inflationary pressures, supply chain issues, and apprehension of customers to return to in-person dining. Staff also conducted outreach to retail food establishments, including discussions with representatives from the Alameda Restaurant and Bar Coalition, the Chamber of Commerce & Economic Alliance, and the Business Improvement Districts. On March 7, 2023, City Council approved amending the Ordinance to continue the 15% cap on delivery fees until May 1, 2025.
DISCUSSION
Given the importance of maintaining a vibrant restaurant industry in Alameda, the continued challenges it faces post-pandemic, and the current uncertainties with the economy, staff is requesting the Ordinance to be re-adopted, as it was previously approved, for an additional period of one year. This will allow staff time to conduct additional research and outreach to the local food service establishments to better understand the current context of the third-party food delivery services and its impacts on retail food establishments. After its review, staff may recommend amending the Ordinance next year.
ALTERNATIVES
• Approve the recommendation to re-adopt the Third-Party Food Delivery Services Ordinance (AMC Section 6-62).
• Do not approve the recommendation to re-adopt the Third-Party Food Delivery Services Ordinance (AMC Section 6-62).
FINANCIAL IMPACT
There is no financial impact to the City from introducing an ordinance to limit fees charged to restaurants by third-party delivery service companies. However, the goal of this ordinance is to ensure the long term vitality of Alameda’s restaurant industry. If beneficial, this ordinance may result in higher sales tax due to increased restaurant sales of delivery food.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This Ordinance is consistent with the City’s Economic Development Strategic Plan which states, “Alameda shall continue to evolve into a thriving and resilient economy with a range of quality jobs by supporting innovative businesses, entrepreneurs, and artists; providing a wide range of housing; enhancing the vibrancy of retail, restaurants, tourism, and cultural destinations; leveraging its unique waterfront assets; improving multimodal local and regional transportation options; and pursuing clean energy solutions, while maintaining a commitment to environmental sustainability, climate action, social equity, and fiscal health.”
ENVIRONMENTAL REVIEW
This action does not constitute a “project” as defined in California Environmental Quality Act (CEQA) Guidelines Section 15378 and therefore no further CEQA analysis is required.
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Introduce Ordinance re-adopting Alameda Municipal Code Section 6-62 (Third-Party Food Delivery Services) of Article XVIII (Fair Housing and Tenant Protections) of Chapter VI (Businesses, Occupations and Industries) to continue placing limits on charges imposed by third-party delivery services; define core product offering to mean a service; and other amendments.
Respectfully Submitted,
Abigail Thorne-Lyman, Base Reuse and Economic Development Director
By,
Jackie Keliiaa, Development Manager
Financial Impact section reviewed,
Ross McCarthy, Acting, Finance Director
Exhibit:
1. Third-Party Food Delivery Services Ordinance (AMC Section 6-62)