Newark Establishes a Temporary Cap on Food Service Delivery Fees

Newark, CA – In an effort to support Newark restaurants during the COVID-19 pandemic, the Newark City Council adopted an urgency ordinance establishing a temporary 15% limit on fees charged to restaurants by third-party food delivery companies.

Take-out and delivery orders have been the primary sources of revenue for restaurants during the pandemic and continue to be vital to restaurant survival. Revenue from takeout and delivery is especially important this winter season when COVID-19 transmissions are rapidly rising and outdoor dining is prohibited.

“Restaurants provide an important service in Newark. The majority are family run, representing years of investment and hard work. When their revenue is upended by a pandemic, our City and community can and will take action to help,” said Mayor Alan L. Nagy.

Currently, third-party delivery companies charge participating Newark restaurants fees as high as 30% - 33% of the purchase price for each order.

Although the COVID-19 pandemic and shelter-in-place orders have resulted in a surge of take-out ordering, third-party delivery services are cutting deep into restaurant earnings. Temporarily capping the per-order fees will ease the financial burden on struggling restaurants, allowing them to provide an essential service to residents in Newark during this pandemic.

Under the ordinance, fees charged to local restaurants by companies such as Door Dash, GrubHub, and Uber Eats will be limited to 15% of the order starting December 10, 2020. The cap is scheduled to expire when the City of Newark Declaration of Local Emergency ends.

The urgency ordinance is supported by many local restaurant owners. Delivery service fees reduce revenue needed for business expenses. Prior to the pandemic, individuals dining-in constituted a majority of revenue for businesses while individuals utilizing third party delivery platforms were generally a smaller percentage of orders.

The Newark urgency ordinance is similar to ordinances adopted by other cities such as Fremont, Hayward, and Dublin. Adopting the ordinance in Newark creates a level of uniformity for Newark restaurants and restaurants in nearby cities.

In addition to the urgency ordinance capping third party delivery charges, the Newark City Council previously allocated $200,000 towards individual, $5,000 small business grants to assist a wide range of struggling businesses. All of the grants have been distributed. The Council also directed another $140,000 towards a similar County matching program that will also distribute $5,000 grants to small businesses in Newark. The $280,000 in grants is expected to be distributed within this month.

Finally, the City recently launched www.GiftNewark.com that allows residents to purchase e-Gift Cards to Newark businesses. Pending available funds, the City will contribute an additional $5 for every $20 gift card purchased and $15 for every $40 gift card purchased. Please visit the website to see participating businesses.

Contact Economic Development Manager Anne Stedler with any questions. You can reach her by email at anne.stedler@newark.org or by calling her at 510-468-7368.