
Chicago will now require food delivery apps to disclose itemized cost breakdown - akersten
https://www.nbcchicago.com/news/local/chicago-will-now-require-food-delivery-apps-to-disclose-itemized-cost-breakdown/2270630/
======
bit_logic
What frustrates me with restaurants (especially the small business mom and pop
ones) is that they are not adapting to this situation. When I go to their
websites (sometimes they don't even have one), I want to see two things:

* A way to order and pay online.

* Details on their contactless pickup procedure if I drive there. I want them to bring it to my car, then I can unlock my trunk, and they can place it inside and close it.

If they did this, my use of these food delivery apps would drop to almost
zero. I don't mind driving to pickup my food, it's even good for my car which
has been sitting idle for weeks. But I want it to be contactless pickup. If
bringing it to my car is too hard, I might even be ok with waiting outside
their restaurant, text them, and they bring it out and place it on a table.

But these restaurants have no plan, put no effort into adapting, then complain
about high fees for food delivery apps. I don't like these expensive apps
either, please provide an alternative!

~~~
impendia
Is there some reason you can't (or don't want to) call them?

~~~
chrisseaton
Many people these days just flat out don't like having to make or receive a
phone call.

------
Spivak
This seems like such a weird law. Cool for supply chain transparency and all
but it feels super political to target delivery apps when literally everyone
does commissions for sales.

Customers should also be confused that…

* Paying $1.99 for an app doesn’t mean the developer receives $1.99.

* Buying a product on Amazon when your browser has a referral cookie means the full cost doesn’t go to the seller.

* Buying a pack of Oreos at Walmart doesn’t mean that Nabisco gets $3.

* Paying $17 to see a movie doesn’t mean the theater gets all of it.

* Buying a game on Steam…

* Buying a flight on a Travelocity…

* Getting a hotel through hotels.com

* Renting an AirBnB…

Like this list could almost literally go on forever.

~~~
dannyw
We're talking about knowing how much a _middleman_ is charging here.

To use your example, when I rent an airbnb, yes I absolutely want to know how
much Airbnb is pocketing. Airbnb happily discloses this as an itemised
"Service Fee", and they charge hosts a fair 3% fee to cover payments
processing.

When I hire a cleaner on Thumbtack, I absolutely want to know how much the
cleaner is paid. I want to make sure everyone is earning a liveable wage.

And when I order something through a delivery app, I absolutely want to know
how much the restaurant is paid.

~~~
baron816
The middleman is providing value, is it not? In the case of the food ordering
app (let’s say you’re picking up, not getting delivery), they’re increasing
discovery for the restaurant, simplifying payment and the ordering experience,
organizing and managing the orders for the restaurant, give you a reasonable
estimate on when the order should be ready, and provide decent customer
service if something goes wrong. I use several apps custom built by
restaurants, and they never come anywhere close to the fidelity of a
DoorDash/GrubHub.

I don’t know why you think it’s your business to know who is making what. I
don’t need to know the salaries of all the engineers at Thumbtack. No one who
works for them is a slave. They can quit if they don’t like their
compensation. I don’t need to stick my finger in their business and start
making demands when I don’t have an inkling of what their financials and
contracts even remotely look like. I hope their clearers make a liveable wage,
but for someone with no real competitive skills, just having a job may be all
you can ask for. If we fix a certain wage floor, some people could end up
without a job at all.

Labor markets are hard to regulate well. There are cases under monopoly or
monopsony conditions where it’s desirable to do so, but “I just don’t like
that” isn’t cause to interfere with efficient markets. You can’t regulate the
world to perfection.

~~~
watwut
The transparency is good for competition and market in general.

~~~
loceng
Yes because then people aren't competing on price but the value of goods and
services. Arguably transparency brings us closer to a true free market system
as well - with the same other potential pitfalls if not managed for.

------
imgabe
> "Stop believing you are supporting your community by ordering from a 3rd
> party delivery company," Badalamenti wrote. "Out of almost $1,100 of orders.
> Your Restaurant you are trying to support receives not even $400. It is
> almost enough to pay for the food."

Then why even have your restaurant on the app?

More and more, it seems like "restaurant" is not a viable business. They
already don't pay their employees, offloading that on to customers via tips.
Where does all the money go? Rent, I guess.

~~~
awinter-py
[https://medium.com/@joelleparenteau/why-are-restaurants-
so-f...](https://medium.com/@joelleparenteau/why-are-restaurants-so-fucked-
ca07c4624745)

> it wasn’t always this way — margins used to be double, if not triple, what
> they are now. But for the past couple decades, while menu prices should have
> been rising to keep up with things like inflation and rapidly increasing
> rent, price wars instead drove them down ($1 value meal anyone?). All this
> eroded margins til restaurants were left with nothing but bread crumbs. This
> failure to manage expectations has simultaneously obliterated margins, all
> the while skewing and reinforcing our perception of what food should cost.

~~~
chongli
_reinforcing our perception of what food should cost_

It's supply and demand. Our perception of what food should cost has nothing to
do with it (and this argument is an unhelpful culture war framing). Food is in
extremely abundant supply. Same goes for cheap restaurant labour (which is
often dodging labour laws). What is scarce in this equation is real estate in
high traffic locations. That is why rent goes up and margins go down.

During the virus lockdown, restaurants are trying to operate a low margin
business (food service) while paying high rents for valuable real estate they
aren't benefitting from, at all. You don't need a fancy restaurant in a high-
traffic urban location to prepare orders for delivery. You'd do just as well
with a commissary kitchen in a warehouse somewhere.

------
mc32
I hope more localities/jurisdictions do this.

More price transparency in everything, plane tickets, medical care, these
third party tack on services that shame people into tipping... Bring it on!

~~~
SilasX
What about regular retail stores? If you buy a box of cereal should Walmart
have to say:

Wholesale unit price: $1.40

Retail storage fee: $0.60

rather than

Box of cereal: $2.00 ?

(Not saying that's necessarily a bad idea, just a thought.)

Note: This came up before and I made the same point:
[https://news.ycombinator.com/item?id=18677023](https://news.ycombinator.com/item?id=18677023)

~~~
dannyw
If everyone had to disclose their margins and we removed this information
asymmetry, it could be a great thing for consumers, and a great thing for
efficient markets.

There are a lot of grandmas and tech illiterate people buying laptops for
incredibly inflated prices, from often smaller and more questionable computer
shops. We're talking about 5 year old CPUs, 4GB of RAM, sometimes even a hard
drive and no solid state drive.

If they had to disclose that the $999 laptop they're selling only costs $400
and they make a margin of $600 on it, and the consumer takes their money
elsewhere and buys a genuinely reasonable laptop, I think that's a fantastic
outcome.

~~~
kube-system
It would also likely disproportionately harm small business and businesses
that rely on value-add services.

~~~
jee1shi
It's not really a value-add service if the customer isn't willing to pay $x
for it.

~~~
kube-system
The customer can make that decision without seeing margins. While I generally
argue in favor of transparency, I think this would end up incentivizing the
wrong things.

There's a lot of examples of industries where the price of the actual
materials used is not as important as the expertise/training/tools of the
person who assembles/installs/prepares/etc it. A policy encouraging consumers
to make decisions on _margin_ would would favor companies that skimp on their
employees and punish those who are smart about their materials costs.
Ultimately, it could end up encouraging wastefulness and inefficiency.

------
pkaye
> Unfortunately, this unnecessary and overreaching regulation, issued under
> the guise of the current emergency, will only lead to confusion and hurt
> restaurants and delivery workers...

How will this change lead to confusion?

~~~
domador
It will confuse customers as to the virtue these third-party delivery
services. They might even question their own decency in using these services
and may change their behavior as customers, possibly in restaurants' but not
these middlemen's favor.

~~~
posguy
Is there any virtue in these third party services, or is concealing their fees
allowing them to extract significantly more value than they would otherwise be
able to in an honest marketplace?

~~~
creddit
Who doesn't conceal their fees? What consumer industry gives you detailed cost
break downs?

I assume when you are looking at, say, getting a Netflix subscription, your
first question is "what portion of my dollars are going to AWS, and of the
dollars going to AWS, what go to Intel and of the dollars the go to Intel,
what go to buying sand"?

~~~
dannyw
When I send a payment through my bank, PayPal, or even Western Union, I am
always aware of how much the middleman charges and what their rent is.

A Netflix subscription is a not a middleman. Food delivery is a middleman: it
processes orders on behalf of restaurants.

When I hire someone on Thumbtack, I'd LOVE to know how much of my % goes to
the cleaner that actually comes and does the work.

When I buy something from eBay, I'd LOVE to know how much of my $155 bid goes
to the seller, and how much if it is taxed by eBay.

When

~~~
kube-system
> When I send a payment through my bank, PayPal, or even Western Union, I am
> always aware of how much the middleman charges and what their rent is.

Maybe for sending money and gifts, but not for payments. PayPal doesn’t list
merchant fees when you check out.

If you pay with your bank account’s debit or credit card, you don’t see those
merchant or interchange fees itemized anywhere either.

> Food delivery is a middleman: it processes orders on behalf of restaurants.

Food _delivery_ also brings the food to your house. An ordering system
processes orders.

~~~
GeneralTspoon
> If you pay with your bank account’s debit or credit card, you don’t see
> those merchant or interchange fees itemized anywhere either.

But arguably you should - most people have no idea that they’re paying a large
tax on all their card purchases to private companies.

In fact, if these charges were actually appended to the bill, I reckon we’d
see proper competition in this space, as users would be incentivised to choose
the lowest fee option.

Unfortunately EEA legislation has gone in the opposite direction and
processing surcharges are no longer allowed, largely due to merchants taking
the piss and making up surcharge numbers (but I’d also suspect some lobbying
went on by payment processors here too, since this it’s in their interest to
hide their fees).

This effectively means that customers are incentivised to use their Amex
(which charges stupid fees to the merchant) and everyone ends up subsiding
Amex users because prices must increase across the board to compensate.

~~~
kube-system
Some of this stuff is reaching the limits of practicality. Many of the costs
that a business might incur when doing business are non-linear with respect to
a single sale and/or undefined at that point in time.

If a payment processor charges (made up numbers):

* $100/month/account

* $250 flat hardware cost per POS

* $50/month/POS

* $0.30 + 2.9% per transaction for the first $10k transactions per month

* $0.25 + 2.5% per transaction for all transactions after $10k per month

* $50/hr technical support

... then what do you put on any given receipt?

~~~
GeneralTspoon
Only the per-transaction costs are relevant. Just like VAT, you don’t include
that you had to pay a VAT registration fee and accounting costs of X per year
to process it.

Agreed that it does become complicated when you have multi-tiered fee
structures like that though.... Also the fact processors charge different
amount to process payments from different countries.

It definitely needs some thought - but the current state of things is not an
ideal place (users incentivised to use expensive and inefficient payment
solutions while private corporations siphon off large amounts of money from
the economy just for the privilege of being able to move money around).

------
troydavis
Here's the official policy:
[https://www.chicago.gov/content/dam/city/depts/dol/rulesandr...](https://www.chicago.gov/content/dam/city/depts/dol/rulesandregs/Third%20Party%20Delivery%20Services%20Rules.pdf)

More from Chicago Tribune: [https://www.chicagotribune.com/coronavirus/ct-
food-coronavir...](https://www.chicagotribune.com/coronavirus/ct-food-
coronavirus-third-party-delivery-rules-20200512-c4aojule7fenbfb7n4hfpa7hiu-
story.html)

------
vadym909
Just not fair /s

More important as Uber tries to monopolize the space by buying GrubHub. These
delivery companies are going to encourage fly-by-night/cloud kitchen operators
to increase their margins and reduce prices on the already hurting
restaurants. Wish a not-for-profit platform for delivery existed that didn't
squeeze the maker or the delivery driver.

~~~
hedora
Yeah. It doesn’t seem hard for a few independently wealthy activists to make a
“craigslist for restaurant delivery”, where the restaurants handled the
delivery logistics directly, and the website took ~zero cut.

I’d switch to that in a heartbeat.

------
runako
This looks super confusing. So now in addition to presenting me an itemized
breakdown of what I am paying, I have to also see an itemized breakdown of
what the restaurant is paying?

In the example invoice in TFA, how would they allocate the promotional fee
without knowing in advance how many customers the fee will generate?

How would a consumer know what a fair delivery commission is? Was my driver
carrying multiple orders on this trip? If so, should I reduce my tip?

Adding this kind of complexity to bills is silly when there are options like
ChowNow out there that handle the website + app + booking part for a flat
monthly fee. (And let the restauranteurs determine the difficulty of offering
delivery themselves.)

~~~
dannyw
I'd be happy with a rule saying...

* Order total: $34.00

* Paid to restaurant: $16.20

* Paid to Uber Eats: $12.30

* Paid to driver: $5.50

~~~
runako
Sounds simple, but there are at least two obvious problems with this approach:

1) It does not take into account that driver comp and Uber Eats commissions
may both well be on a sliding scale, where the percentages depend on order
volume on prior days/weeks.

This will make it difficult for consumers to compare these fees across orders,
making the actual numbers less meaningful. Did the driver earn less on this
order because it's her first order this month, or because the restaurant
doesn't do much volume, or because the driver was carrying 3 orders at the
same time and delivery fees scale with mileage or time or some other metric,
etc. The calculations may involve more context than is reasonable for a
consumer to process.

2) This may reward the richer restaurants. Big restaurants & chains may
negotiate better deals and get a bigger "Paid to restaurant" number. Choosing
to display information to consumers in this fashion might incentivize people
to choose bigger restaurant owners at the expense of small shops like those
highlighted in TFA.

3) Doesn't address the invoice shared in TFA, where ~20% of the fee to GrubHub
was for a promotion that could be CTA or the like and not directly tied to
specific deliveries. So you could implement your suggestion and the restaurant
could still post the same invoice & complaint.

~~~
JAlexoid
#3 is fun. Where does the promotional discounts go to? How do I know if the
restaurant is price dumping to gain ground or GrubHub is actually screwing
them?

~~~
runako
Bingo. I would expect that if GH just started separately delivering invoices
for marketing & other non-commission charges, a lot of the furor would
subside.

------
fnord77
> including: the menu price of the food,

does this mean the apps have to disclose the amount they're marking up the
food from the menu prices in the restaurant?

~~~
hedora
That’s my reading of the article. If so, this is huge.

I prepared a few DoorDash orders in the past, and noticed that what was
normally about $60 for dine in was somehow $110 after a $10 delivery fee and a
“50% off delivery” coupon.

At that point I started spot checking prices from menus on yelp. I don’t
appreciate gaslighting, and haven’t used DoorDash since.

------
rickpmg
Silly.

Why stop there? I want to know how much of my chicken dinner was labor, the
chicken itself, and the spices.

The delivery companies aren't cheating anybody. It's not like they change the
price after the fact on either the restaurant or the consumer.

Lori is doing this to what... get people to bully the delivery companies?

Suddenly delivery companies are getting accused of being greedy because...
they're suddenly in demand?

------
tzs
It says they were announced today (May 12th) and go into effect May 22nd, and
applies to "all websites, phone apps and other internet services that offer
the sale of food or beverages by a dining establishment".

Has this been in the works a while, and the app and site makers knew it was
coming, or do the app and site makers really only have 10 days to design and
implement this?

------
awinter-py
hooray supply chain transparency

consumers are starting to care

~~~
JAlexoid
And... Do you think that anyone will drop the commission rates? UberEats isn't
profitable. GrubHub isn't profitable.

What do you think is going to happen? They're going to charge less?

~~~
awinter-py
it's a long road

transparency gives consumers the ability to shop on fairness

'we pay our workers better and don't stiff restaurants' isn't a line anyone
has every used to sell a product but 'fair trade' has been a real thing for a
few decades now without transparency

 _if_ adding in the transparency justifies a higher price (big if), the luxury
consumer economy changes for the better

------
badfrog
It's not obvious that this well help anything, but at least it's better than
Jersey City. They put a cap on how much apps can charge restaurants, so
obviously the apps just added more fees for the customer.

[https://www.nj.com/hudson/2020/05/uber-eats-slaps-
surcharge-...](https://www.nj.com/hudson/2020/05/uber-eats-slaps-surcharge-on-
customers-of-jersey-city-eateries-in-response-to-10-commission-cap.html)

~~~
bogomipz
NYC put forth legislation today to cap at 20%:

[https://ny.eater.com/2020/5/12/21256244/food-delivery-fee-
ca...](https://ny.eater.com/2020/5/12/21256244/food-delivery-fee-cap-
legislation-nyc)

~~~
JAlexoid
And what is that going to achieve?

------
ebalit
It would be a great way to make this market clearer.

There is 3 visible actors in each order on these apps. The restaurant, the app
and the delivery man are all independent and are putting their reputation on
the line.

Knowing how much each received is the only way for me to decide if I received
the value I expected from each of those actors.

------
zhoujianfu
I ordered kfc on grubhub, one item didn’t come. I marked it as such and they
refunded me the cost of the item and the sales tax. They did NOT refund me the
pro-rata share of their 12.5% fee or “20%” tip though.

~~~
ikiris
This is why i stopped using grubhub. If they screw up in any way, they try not
to make the user whole, or offer any incentive for their time wasted. Doordash
is much better

------
cordite
Why not healthcare while we are at it? It’s been in the complaint list for
over a decade now.

------
rootsudo
Seattle also has locked the price of delivery which is good.

------
ryansmccoy
Are hospitals next?

