Montreal restaurant is launching class action lawsuit against delivery companies for allegedly exorbitant and abusive commissions charged during the pandemic.
Deli Boyz, the main plaintiff in the case, is targeting the food delivery companies that run these platforms, including Uber Eats, DoorDash and SKIP. He asks a judge to rule on the invoicing of a commission not exceeding 15% of the total order of the customer. Currently, some charge a 30% fee on each order.
Having to subtract 30% of an order eliminates a good chunk of the restaurateur’s profit. This frustrating situation for many is added to the vagaries of the major periods of confinement that we are currently experiencing. It’s hard not to sympathize with entrepreneurs who are dedicated and innovate for all of us. Their legacy to the national agri-food heritage is invaluable.
However, we must remain cautious. Thanks to their subscribers, these applications have enabled restaurateurs to expand their clientele. So, biting the hand that feeds the industry is not the idea of the century. Forcing companies to change the rules of the game would be awkward.
Not pink, but not the apocalypse
Let’s look at some facts. According to the Office of the Superintendent of Bankruptcy in Ottawa, there have been between 60 and 80 restaurant bankruptcies in Canada since August, while there are nearly 98,000 restaurants in the country. Most of the closed restaurants, around 10,000 in all, are waiting for better days or will remain closed permanently. The vast majority of restaurants that are in operation will survive. According to Statistics Canada figures for the month of December, the sector employs about 74% of the staff it had before the pandemic. The situation is not rosy, of course, but not apocalyptic either.
In addition, restaurateurs are under no obligation to use these delivery services, which did not even exist ten years ago. Without them, restaurateurs would have no choice but to close their shop or deliver the meals themselves. These innovative companies have enabled several restaurateurs to survive and expand their market. The extra charges are paid to delivery services that generate sales for them that would probably not exist without those services. Before the pandemic, some restaurant owners grumbled about the fees, but nothing more. The pandemic context has changed many things and offers a golden opportunity for restaurateurs to gain public support. The intention remains good, but the argument is a little dishonest.
The other embarrassing truth for restaurateurs is the menu prices. These prices take into account the costs that restaurateurs must assume with the delivery service. This explains the reason why the prices on the menus have increased enormously in recent months.
Since the start of the pandemic, restaurateurs have shown impressive resilience. But this pursuit goes a little too far. British Columbia decided to act, but the Western Province may not have made the best decision either.
If by any chance the costs for restaurateurs were to decrease by 15% or 20%, under a decree, then what if these costs were to increase again? It is doubtful whether restaurateurs would accept an increase after such a generous decrease. Market conditions will have changed. Innovative companies will lose any interest in establishing themselves in Quebec if, during the slightest crisis, the government intervenes to rule on prices and market conditions.
If Quebec decides to do so, good luck for the future.
♦ Dr Sylvain Charlebois, Full Professor Faculty of Management and Agriculture Dalhousie University