Food Delivery Fees Called ‘Abusive’ in Class Action Lawsuit Filed by Restaurant

Food delivery companies have been charging “abusive” and exorbitant fees during the COVID-19 pandemic, according to a class action lawsuit filed recently in Quebec Superior Court.

Plaintiff Deli Boyz, a Montreal restaurant, launched the food delivery fees class action lawsuit against Uber Eats, DoorDash and SkipTheDishes, which operate via smartphone applications.

Uber Eats, DoorDash and SkipTheDishes allegedly charge commissions in excess of 15%, which the food delivery fees class action lawsuit says is abusive during a time when restaurants are limited to takeout.

COVID-19 Pandemic Has Limited Restaurants to Takeout Only

The COVID-19 pandemic has caused widespread disruption globally, and has caused governments to impose restrictions on businesses. Restaurants in Montreal are currently limited to takeout because indoor dining is banned in an effort to prevent the spread of COVID-19.

According to CTV News, food delivery fees on apps can be as high as 30%.

“Restaurants work on 6 to 8 per cent [profit] margins in the best of times,” Peter Mammas, CEO of restaurant franchising company Foodtastic, said. “When an aggregator is taking 30 per cent out of that whole chunk, it’s a big number.”

Class Action Lawsuit: Food Delivery Fees Are Excessive

Deli Boyz says it paid Uber Eats $737 in commissions for approximately $2,550 in orders between Dec. 27, 2020 and Jan. 4, 2021. If the commissions had been capped at 15%, Deli Boyz says it would have paid just $368 in commissions.

“Consequently, an excessive disproportion exists when the defendants charge restaurants commission in excess of 15 per cent,” the food delivery fees class action lawsuit states.

The food delivery fees class action lawsuit seeks damages in the amount of money paid to the defendants in commissions in excess of 15% of customers’ orders since Jan. 8. Deli Boyz is also asking the court to prohibit the defendants from charging a commission in excess of 15% of the customer’s order.

“There can be no doubt that by maintaining these same high commissions during the pandemic and curfew period — when food delivery orders skyrocketed — that Uber Eats’ commissions are abusive and that it acted contrary to the requirements of good faith,” Deli Boyz alleges in the food delivery fees class action lawsuit.

Lawyer Joey Zukran, who is representing Deli Boyz, says restaurants have no choice but to work with food delivery companies that use smartphone apps if they want to stay competitive in the current market.

The food delivery fees class action lawsuit has not been authorized by a judge. Zukran says it may take as long as a year before a judge decides whether or not to authorize the case.

Food Delivery Fees Reportedly Capped Implemented in Other Regions

New York, California, British Columbia and Ontario have already reportedly capped delivery commissions at 15% of a customer’s order.

“So restaurants in Montreal have been saying, ‘Why do I have to pay double what a similar restaurant in Toronto has to pay?’” Zukran said.

Earlier this month, Montreal Mayor Valérie Plante asked the Quebec government to implement a temporary cap on delivery commissions. Premier François Legault told CBC News on Monday that he would be willing to look at the issue of food delivery commissions but did not commit to the idea of capping them.

According to CBC News, two lawsuits were filed last month challenging DoorDash and Uber Eats over undisclosed service charges.

What do you think about capping food delivery fees at 15%? Do you think food delivery services should be able to charge higher commissions during the pandemic? Let us know in the comments section below.

Deli Boyz is represented by Joey Zukran.

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