New law makes B.C. first in Canada to cap delivery fees

About one-third of B.C. residents use food delivery apps to order takeout, results from a Research Co. poll suggest. (Shutterstock)

A new law in British Columbia is the first in Canada to support the restaurant sector through permanent caps on the fees charged by delivery apps.

Under the Food Delivery Service Fee Act, which the province announced Friday has received royal assent, the fees delivery companies can charge B.C. restaurants for core services can’t exceed 20 per cent of the food order's value.

“We’re leading Canada in providing more stability and certainty to the sector itself, and to the delivery drivers who work within it,” B.C’s Jobs, Economic Recovery and Innovation Minister Ravi Kahlon said in a news release.

The province first introduced a temporary cap on delivery fees in December 2020, when pandemic restrictions forced restaurants to rely on take-out orders, and delivery fees were as high as 30 per cent. The 15 per cent cap on food, plus another 5 per cent cap on additional fees, was extended twice last year and was set to expire on Dec. 31.

“Restaurants still have some incredible hurdles to overcome in recovering from the pandemic and inflation," Restaurants Canada vice-president Mark von Schellwitz said in Friday’s release.

Data from the BC Restaurant and Foodservices Association show restaurants across the province were closed fewer days than any other jurisdiction in North America during the height of the pandemic. But B.C.’s government is not the first in North America to pass legislation of this kind.

In June 2021, San Francisco put a permanent 15 per cent delivery fee cap into law, becoming the first U.S. city to do so. Following push-back from food delivery giants like GrubHub and DoorDash, the city has amended the cap to 30 per cent, which applies to food order costs as well as marketing and advertising services.

On its website, DoorDash argues price controls don’t work.

“If governments make it illegal for a restaurant to pay more to market themselves on DoorDash or to reduce delivery fees for customers, restaurants may see fewer orders and therefore less revenue,“ the company said.

In a statement to CTV News, DoorDash said its goal is to empower local businesses.

“We will continue to work to ensure that our restaurant partners have solutions that meet their business needs and flexibility in how they want to partner with us.”

B.C.’s Food Delivery Service Fee Act also protects employees and contractors by prohibiting delivery companies from reducing driver compensation.

“We've made sure this legislation protects food-delivery drivers from costs being downloaded onto them from providers, so they can continue to receive fair compensation,” Adam Walker, the parliamentary secretary for the new economy, said in a statement.

According to the province, B.C.’s restaurant sector comprises 12,594 restaurants and employs roughly 170,683 people.