Denver City Council Extends Cap on Third-Party Delivery Fees

Feeling hungry for tacos, pizza, sandwiches or even a steak? All it takes is a few taps on the screen of your mobile device to get the food you're craving delivered to your house. And if the price is a little higher than what you'd pay at the restaurant you're ordering from, no problem — convenience comes at a cost. After all, those delivery companies with the euphonious names — Uber Eats, Grubhub, DoorDash, Postmates — have to make a buck, too.

But by the time you factor in the menu price markup (which many delivery companies build in if you're ordering from their app or website), the service fee, the delivery fee and the tip, you could be paying up to 40 percent more on the cost of your delivered meal, according to some calculations. And the restaurant itself only gets back the original price of each dish — or so you'd think. But many third-party delivery companies also charge the restaurant a back-end commission, sometimes as much as 30 percent, so if you buy a $10 sandwich (before all the fees, taxes and tips), the delivery company gets $3 of that while only $7 goes to the restaurant.

Even before the pandemic, some city and state governments were already fighting the back-end commissions by capping the fees at a certain percentage, and since COVID-19 hit, others have done the same thing to help restaurants already struggling with capacity restrictions and fewer customers. For example, Denver City Council passed a 15 percent cap on third-party delivery fees — the commissions that restaurants pay — that ran from October 9, 2020, through February 9 this year.

And on January 25, city council voted to extend that cap for another four months, with an expiration date of June 14. The measure also includes language to protect delivery drivers, so that the companies they work for can't reduce their pay or tips to make up for the reduced fees; delivery companies are also prohibited from listing restaurant menus without permission.

As a result, you can continue to order delivery knowing that your favorite eateries aren't being gouged. But you could also save yourself a little money by picking up the phone and ordering takeout, or checking with the restaurant to see if it handles delivery itself.  And in both of those cases, you could even throw in a few drinks on your order.

You'll be doing both yourself and the restaurant some good.