Ontario proposes legislation to cap third-party delivery fees

Following consultation with Restaurants Canada, the Government of Ontario is introducing new legislation to protect foodservice businesses from unreasonably high third-party delivery fees.

The proposed Supporting Local Restaurants Act, 2020, would cap fees charged by third-party delivery services in areas where indoor dining is prohibited to help more small and independent restaurants stay in business.

Currently, fees placed on restaurants by third-party delivery companies can reach as high as 30% in Ontario. After working with the foodservice sector, Minister Sarkaria said restaurants should expect a cap of 15% for delivery fees, similar to what has been put in place in New York City, with an overall cap of 20% inclusive of all fees. This approach aims to ensure that delivery drivers’ pay would be protected and delivery apps would not reduce service areas or restaurant selection.

The legislation introduced by Prabmeet Sarkaria, Associate Minister of Small Business and Red Tape Reduction, and the regulation under it proposes to:

• 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.

Once this legislation is passed, restaurants would be able to file complaints online if a food delivery service has overcharged fees in excess of the cap. Food delivery company employees or contractors who perform delivery services would also be able to file complaints if their compensation or payments were reduced once the act comes into effect.

If you have any questions or would like more information, you can get in touch with James Rilett, Restaurants Canada Vice President, Central Canada, at jrilett@restaurantscanada.org.