CHICAGO (WBBM NEWSRADIO) -- Chicago aldermen are giving overwhelming support to a measure capping the fees that food delivery companies can charge the restaurants they serve.
Before aldermen discussed the cap on total fees third-party delivery services could charge restaurants, Amy Healey, spokeswoman for Grubhub tried to highlight the company’s charitable work.
"We estimated more than $2 million to date to organizations and drivers in Chicago, including support of the reopening of the Union League Boys and Girls Club and major funding for...an organization that purchases and donates unused food from local restaurants," she said.
But by the end of the joint City Council committee hearing, just about all of the aldermen participating signed on as co-sponsors of an ordinance putting a 15 percent cap on the total fees delivery services, like Grubhub and Uber Eats, can charge restaurants.
Illinois Restaurant Association President Sam Toia praised the move.
"The reality is that delivery services often take 30 percent or more of the total cost of every purchase a diner makes from a restaurant. Right now, if you make a $10 order from a third-party delivery service it is likely a restaurant may get $7 of that order," he said.
Beverly Kim owns two Chicago restaurants—Parachute and Wherewithal—but Wherewithal has temporarily closed, because of the pandemic restrictions and her business is suffering.
"Before the pandemic, we would average $70,000 in sales a week between two restaurants. Now, we are struggling to make $15,000 in sales with one restaurant," Kim said.
She’s surviving on takeout and deliveries, but said the high fees charged by companies like Grubhub and Uber Eats are erasing any profits. So Aldermen like Matt O’Shea are supporting a 10 percent limit on delivery charges to restaurants and a 15 percent total limit including other fees.
"This is offering them a lifeline, offering them the opportunity to spend their money on keeping staff employed and able to keep operating," he said.
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Downtown Alderman Brian Hopkins said the measure is needed to help restaurants to stay alive while indoor dining’s prohibited.
"What we have seen from some of these third-party services, I don't want to lump them all together, is absolutely rapacious and predatory behavior and it has to stop," Ald. Hopkins said.
Alderman Brendan Reilly, 42nd Ward, agreed with all the others that restaurants are being strangled by currents fees up to 30 percent.
"When you have these app companies, some worse than others, really gouging these restaurants with surprise invoices and hidden promotional fees, that takes away all of their margin and then some," he said.
Grubhub is headquartered in Reilly’s Ward.
The ordinance would expire in about 90 days.