Ontario Government proposes food delivery company fee caps

The Ontario government aims to help local restaurants and bakery-cafés by introducing new legislation that would protect them from high delivery fees. The Supporting Local Restaurants Act, 2020, would cap fees charged by food delivery companies in areas where indoor dining is prohibited to help more small and independent restaurants stay in business.

If passed, the legislation the government intends to introduce today by Prabmeet Sarkaria, Associate Minister of Small Business and Red Tape Reduction, and the regulation under it would:

• Cap the rates charged by food delivery service companies and apps in areas where indoor dining is prohibited.
• Permit fines of up to $10 million to food delivery service companies that do not comply with the law.
• Provide food delivery service company employees or contractors who perform delivery services with protection that their compensation will not be affected by these changes.

“Ontario’s small and independent restaurants have shouldered an outsized share of COVID-19’s economic burdens,” said Minister Sarkaria in a press release. “But through it all, they’ve continued to serve our communities, our families and have lifted our spirits. With this legislation, our government is helping local businesses stay in business, and providing a solution that will help our local restaurants when every little bit helps.”

Under this proposal, food delivery company employees or contractors who perform delivery services would be able to file complaints if their compensation or payments were reduced once the act comes into effect.

To provide additional relief to local restaurants and other businesses required to close or significantly restrict services in areas categorized as “control” or “lockdown,” Ontario has announced $600 million to help with them fixed costs, including property taxes, hydro and natural gas bills. The government is also supporting small businesses and restaurants through its Main Street Recovery Plan by:

• Committing to permanently allow licensed restaurants and bars to include alcohol with food as part of a takeout or delivery order before the existing regulation expires;
• Offering the $60-million Main Street Relief Grant that provides up to $1,000 to help eligible small businesses with the cost of PPE;
• Permanently allowing delivery companies to provide deliveries 24/7, providing needed flexibility;
• Helping nearly 23,000 small businesses grow online with $2,500 grants through Digital Main Street; and
• Offering free financial advice and online training to help small businesses make informed decisions and navigate the unprecedented economic circumstances brought on by the pandemic.

Currently, fees placed on restaurants by food delivery companies can reach as high as 30 per cent in Ontario. After working with the sector, Minister Sarkaria said restaurants should expect a cap of 15 per cent for delivery fees. This approach aims to ensure that delivery drivers’ pay would be protected and delivery apps would not reduce service areas or restaurant selection.