California restaurants who don’t want third-party delivery companies to deliver their menus without their consent will be protected from this controversial tactic starting in 2021.
On Thursday, Calif. Gov. Gavin Newsom signed into a law AB 2149, or the Fair Food Delivery Act. The bill was first introduced before the pandemic by State Assemblywoman Lorena Gonzalez (D-San Diego) to stop last-mile delivery operators from delivering food from restaurants without having a signed agreement.
The law goes into effect Jan. 1, 2021.
DoorDash, which has practiced this tactic for years as a way to introduce its value to restaurants, said it will comply with the new law when it is enacted.
"We’re proud of the role DoorDash plays in helping restaurants connect with new customers and generate additional revenue, particularly during these tough times. We intend to fully comply with this new rule once enacted and will continue to demonstrate the value of DoorDash and the variety of options we provide to support our merchant partners," the company said Friday in a statement.
Grubhub, which started to practice this strategy last year to remain competive, said it supports efforts that level the playing field in the delivery space.
"We’ve long advocated that partnering with restaurants is the best way to create a positive experience for restaurants, diners and drivers," the company said in a statement. "Some companies built their businesses by listing non-partnered restaurants on their platforms and delivering food without an agreement so they could expand their restaurant supply, but this strategy fails to drive long-term value in the food delivery industry. We strongly support this effort in California to level the playing field, help restaurants better control where and how their food is delivered, bring lower fees to diners, and improve food delivery operations for everyone involved."
Chicago-based Grubhub began adding “non-partner” restaurants to their app last year to boost daily orders in regions where they have fewer restaurant choices. In February, Grubhub said it doubled its restaurant inventory in the fourth quarter of 2019 after adding non-partner restaurants to its platform.
That same month, Gonzalez introduced the bill in California.
“When Uber Eats, DoorDash and other gig companies operate under their own rules, businesses and consumers are harmed,” Gonzalez said in Sept. 24 statement. “I’m grateful to see the Legislature and governor stand up for small and family-owned businesses against massive overreach by delivery app companies.”
Restaurants, especially independent eateries, have decried the tactics because their food is being delivered without their prior knowledge. If the something goes wrong with the delivery, food quality is likely diminished. When that happens, customers tend to blame the restaurant not the delivery app.
Non-negotiated restaurant agreements typically result in higher fees, which can also “misinform customers about prices and menu changes,” according to Gonzalez.
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Updated: This story was edited to include comments from Grubhub and DoorDash.