Los Angeles is taking a bold step towards creating a more level playing field for restaurants by capping fees charged by food delivery services like Uber Eats, Postmates, and Grubhub. The City Council has voted 14-0 to ask city attorneys to draft a law limiting delivery fees at 15% of the purchase price during the COVID-19 crisis. This move aims to help struggling restaurants, which currently pay as much as 30% in fees to these third-party apps.

Councilman Mitch O'Farrell, who championed this proposal, argues that restaurants have become "completely at the mercy" of these delivery apps. He believes that capping fees will prevent restaurants from being forced to raise prices and risk losing customers. "Why should restaurants, and their customers, be put in a position to subsidize delivery app companies?" O'Farrell asks.

The proposed law would not only cap delivery fees but also limit other service fees to 5% of the purchase price. Additionally, it would require that 100% of delivery tips from customers go directly to drivers. These restrictions would end 90 days after Los Angeles lifts its ban on dining inside restaurants.

Some council members, like Bob Blumenfield, proposed limiting the fee cap to only apply to smaller restaurants with five or fewer locations. However, this proposal failed, and the council voted to include all restaurants under the fee cap. This move aims to prevent larger chains from negotiating better fees for themselves.

Many restaurant owners have expressed frustration at having to pay high fees to keep up with demand during the pandemic. "Even before the madness, it was just a terrible deal no matter how you slice it," says Anca Caliman, co-owner of Lemon Poppy Kitchen and Parsnip. By capping fees, restaurants can focus on rebuilding their businesses rather than subsidizing delivery apps.

The planned cap has received support from labor unions like Teamsters Local 396 and UFCW Local 770, which represent workers in package delivery, grocery stores, healthcare, and other industries. However, some restaurant owners have signed a petition opposing the plan, arguing that capping fees would hurt restaurants.

The proposed law will now be drafted by city lawyers and return to the council for final approval before it can take effect. This move aims to create a more sustainable business environment for restaurants and delivery services alike, ensuring that both parties benefit from this arrangement.

Times staff writer Jenn Harris contributed to this report.