Mie Katsumata, owner of Japanese restaurant Cha-Ya
Mie Katsumata, owner of Japanese restaurant Cha-Ya, holds up a bowl of vege-tofu curry SOBA. Photo by Yujie Zhou. Taken Jan. 27, 2023.

San Francisco was the first city in the nation to place a permanent cap on food fees that delivery services could charge to restaurants. But, as of Tuesday, that 15 percent cap has been removed, and fees will begin moving up.

DoorDash, for example, will offer restaurants three options: The standard 15 percent, 25 percent with access to DashPass customers and a bigger delivery area, and 30 percent with a guaranteed minimum of 20 orders per month. (Pickup orders will remain at 6 percent.)

Many restaurant owners, most of whom have yet to recover from the pandemic, have responded to the change with bitterness, discontent and perplexity. 

“I always said that if they ever went back to 30 percent, I’m out,” said Mie Katsumata, owner of vegan Japanese restaurant Cha-Ya, who professed to be “kind of prepared” to “say goodbye” to the third-party delivery service, which currently accounts for around seven to 12 percent of her sales. 

Already, Katsumata is facing the major challenge of a dramatic increase in ingredient prices, and customers will only pay so much for soba. Katsumata held up a $17 bowl and said, “In my case, the No. 1 seller is a veggie tofu curry noodle soup. Can I charge $20 for that? No, but that’s what I would need to charge.”

Cha-Ya’s 18-year history on Valencia between 18th and 19th streets has given Katsumata a loyal customer base. Many are willing to call to pick up, rather than order through Uber Eats, which gives Katsumata the backbone to stand up to the apps. Plus, Katsumata is confident that Cha-Ya, as one of the rare 100 percent vegan restaurants in the city, would rank high in the vegan search results on any platform, which has saved her from agonizing over whether to pay a percentage to the apps to improve visibility.

Restaurants, she said, now face a situation similar to how Uber and Lyft treat their drivers. “They’re using the drivers to make more money. They’re getting more money from us,” she said. But despite being the ones really making the money, less and less of it is going to them. “Like, where is this money going?” she asked.

The pandemic brought the lower fee levels, but after the city made the 15 percent cap permanent, food delivery giants DoorDash and GrubHub sued the city over the policy. In exchange, for the companies dropping the lawsuit, the city greenlighted a selection of commission fee options that start at 15 percent. The higher the fee, the more services provided.

“You know, lawsuits can go either way. It’s not a slam dunk that the city was going to win,” said Laurie Thomas, executive director of the Golden Gate Restaurant Association, which played a role in the city’s negotiation with the platforms. “It’s a negotiated compromise, where no sides are entirely happy. But this is what it is.”

Lawsuits to keep the lower cap are also underway in  New York, Boston and Chicago. “If one of those ones goes the way where the city wins, then we should re-look at it here,” said Thomas.

Katsumata said he was disappointed in the city’s decision to walk away from the lawsuit. As “the people who have managed to find our way through the pandemic and through everything else, you should give us a little credit to push back to these companies,” she said. 

Danny Barrious, manager of Luna Kitchen & Cocktails, said he’s not concerned. “Right now, as we don’t really have a big push in takeout, it doesn’t really affect us.”

According to the ordinance, all restaurants and bars that use delivery services should have received and opted into a new contract by Jan. 30. Otherwise their fees will revert to the rates in their pre-pandemic contract which, depending on the restaurant, could reach 25 to 30 percent.

As part of their agreement with the city, the delivery platforms promised to notify restaurants of changes to their contract. But, as of Jan. 27, many of those Mission Local contacted had yet to hear of the changes. 

“What change?” asked James Choi, owner of renowned sandwich restaurant Rhea’s, who does around 20 percent of his business through Uber Eats. “That’s disappointing,” but “we might forego,” said Choi. 

When asked if he would pay 30 percent for higher visibility, Choi responded, “No way,” emphasizing instead his newly launched social media accounts. “If you are great at what you do, people will come looking for you,” he said. 

Michael Ho, owner of Chic n’ Time, became visibly worried when he learned about the new changes, frowning as he jotted notes in a small notebook and remaining silent for several moments. It seems that a representative from the platform had called that day, but failed to explain clearly what the situation was, Ho said.

Now, he was at a bit of a loss as to what to do. “I can charge more, but nobody will buy it,” said the owner of the two-year-old Vietnamese garlic noodle place, which was once listed in the top 100 of the Bay Area. Still, Ho is worried how this might affect his visibility on the apps and position in the search results. “I don’t want to get to the bottom of the list,” he said.

“Maybe I’ll try 15 percent for a month,” Ho said hesitantly.

Curry Up Now does half of its business through DoorDash and Uber Eats. Manager Peter Rzedzian assumed the restaurant would pay an extra seven percent to stay relevant. “Let’s say this way, you might not need extra labor to get all those extra sales that you can get when you’re in this marketing gear,” he said. 

As far as he knows, the core service provided by DoodDash doesn’t include free delivery for customers. “When you stay at 15 percent, DoorDash will try to offset that percentage to the customer. Customers are not gonna want to pay that. So technically, you’re being left out with less orders,” he said. 

For Biriani House, another Indian restaurant just a few blocks away, the expected competition from their peers has already dictated their choices. “We’re gonna choose it, because the market is pretty competitive right now. Everybody’s using it. There’s not really much of an option here not to use it,” said Samson Eric, co-owner of the restaurant and the only server working at 6:40 on a Friday night. 

It was far from an easy decision to make. Half a dozen Indian restaurants are looking over their shoulders in the surrounding blocks. Two-year-old Biriani House wants to bring customers to try their food, but they also want dine-in prices to match prices on the apps. And if all restaurants have increased visibility, is that equivalent to all of them not increasing?

“I don’t know,” Eric said, after a while. 

Among all these worried restaurateurs, Nick, co-owner of Boba shop BoBop, had a more optimistic outlook. “I may have a little different perspective, because I’ve been on that side of the road,” he said, emphasizing his tech-savvy background. “I know how those parts work. It was gonna happen, as part of business is a competitive sport, you’re competing in all kinds of stuff.”

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REPORTER. Yujie Zhou is our newest reporter and came on as an intern after graduating from Columbia University's Graduate School of Journalism. She is a full-time staff reporter as part of the Report for America program that helps put young journalists in newsrooms. Before falling in love with the Mission, Yujie covered New York City, studied politics through the “street clashes” in Hong Kong, and earned a wine-tasting certificate in two days. She’s proud to be a bilingual journalist. Follow her on Twitter @Yujie_ZZ.

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  1. As a small restaurant owner, my problem is not with the new law, but lack of information and clarity. I knew about it from city outreach last year and waited for word from the third-party delivery companies, but never got anything. I spent 3 weeks back and forth with them trying to get information before finally being able to get my contract on the new tiers available. And after speaking with other restaurant owners and managers, the companies absolutely did not keep up their end of the bargain as far as notifying all their customers in a timely manner (which was supposed to be in early December 2022, according to the new law).

  2. The delivery companies have never been profitable. While the fees are high, they’re still not enough to make a profit. It’s a pretty competitive business. If the restaurant owners don’t like the terms, they can opt not to partner with the delivery firms. I would push all costs of delivery to the delivery customer. If they want the service, they can pay for it. If no one uses it, that’s fine.

    Another option is ChowNow, which is a flat price app for restaurants. No commissions, just a flat fee. Customers can place online orders for pickup with no up-charges. Or restaurants can run their own deliveries if they think that they can do it more economically than third-party firm.

    Personally, I hate paying 30%-50% extra for food delivery and I hate how the delivery companies try to hide all the additional costs via menu upcharge, delivery fees, tips, subscription, etc. I usually place an order online and then go pick it up.

    I think that the only delivery model that might make sense is for ghost kitchens+delivery. They don’t have a dining room and front of house staff to pay but they can charge a price similar to a regular restaurant. And you can run several ghost kitchens out of a single facility, consolidating a lot of costs that way.

  3. I am unable to go out to restaurants easily due to disability. The fees these apps charge are out of this world to us, often 50% or more of the actual food price! I suppose I will have to stop ordering from restaurants that do not do their own delivery. I hope this motivates more restaurants to have their own delivery driver. I bet that would be cheaper than giving horrible company UBER or DoorDash 30%!

  4. Maybe I’m just old fashioned, but I either eat in the restaurant or pick up takeout myself. I’ve never used any app to have food delivered. How lazy do you have to be to not enjoy walking a couple of blocks there and back?

  5. I just want thank Youji Zhou for her article about the cap on fees for restaurateur’s, this is one of the most informative and straightforward news I’ve heard on Kron 4, without all the opinions from the writer and their bias views inserted. So thank you writer, keep of the good work.

  6. If you really love a restaurant, make the effort to call them directly to order take-out, or check to see if they have a preferred delivery method from their website if they have one. I will only use the apps if they are the only option for delivery.

  7. This article failed to mention all the additional fees that Uber eats or door dash or any of these online ordering companies are charging the customers to get their food. So the restaurant and the customers ordering are being charged and in most cases the online ordering companies are profiting more on the items order than the people selling the product. This article clearly did not do a good job and showing both sides of the ordering process. Let’s not forget that the driver that delivers the product is also paying close to 50% of the fees.

  8. Cha-Ya is a family favorite — thanks for featuring them in this piece. One of the few fully vegan, and reasonably affordable, places in the city.

    We have never ordered from a delivery app. I miss the times when it was the norm to have some semblance of a relationship with those who prepare our food, instead of taking advantage of everyone down the line.

    These apps have only truly improved the lives of but a few, and clearly those few are really, really protective of what they claim as theirs. Even if they are leaving SF in droves, they are still “working” here remotely.

  9. I have become somewhat disabled, & can no longer walk to nearby Mission restaurants. I don’t want to be the annoying person double parking on Valencia, & won’t use Doordash , Uber Eats etc. because they gouge restaurants. My cooking is ok, but I miss getting takeout.
    I have to use Instacart. I have no idea how much Instacart pays their shoppers, so I always tip $25-30. Does Instacart the grocery stores? What percentage?

    1. Old Mission: You might like Mel’s Drive In on Geary. It’s a few miles away, but sometimes they will actually take your order and bring it to the car. If not, they have parking and you can eat at a table outside. We used it a lot during the lockdown.

      Beep’s Burgers is closer. It’s a couple miles away on Ocean Ave. You do have to get out of your car to order, but many people get back in their car to eat.

      I wish I had more choices for you. I know what you’re saying: there’s almost nowhere in the Mission where you can quickly park your car and pick up a takeout order.

      1. Another out-of-Mission suggestion is Dinosaurs on Ocean/J. Serra.

        Small locally owned business, very easy parking, and a pretty sweet parking-lot-turned-park to eat in.

        It’s too bad that Rainbow Grocery stopped their local delivery and curbside pickup. The programs were so well run, but sadly, I think got quashed by delivery apps.

        We used instacart a few times when our family had Covid at the start of the pandemic. We were careful to always tip in cash and let the shopper know our plans in advance so they would still take our order. Instacart takes a cut of tips, and I assume the same of all delivery apps.

        1. At some point, it was reported that some apps were appropriating a portion of tips. I thought I read that Instacart was embarrassed enough to stop.
          This would be a helpful investigation.

    2. They increase the cost on every item you buy. So you pay more for each item, then pay fees to app company then tip driver.

  10. My husband and I live in The Mission and get “take away” several times a week from our favorite small restaurants – but instead of delivery, we walk over to pick up – saving the owner the minimum 15% DoorDash fee + we tip the restaurant 15-20% of the bill. These small businesses need our support. A little extra effort on our part makes a big difference + we enjoy saying hello and thank you to the restaurants that feed us great food when we’re too busy to cook. And who couldn’t use a little extra cardio before a meal? 🙂

      1. Ron—-why not? It doesn’t have to be huge tip but –why not? It helps out the back kitchen for starters (tips are usually split as far as I know)

  11. SF continues to run the vibrancy of the city straight into the ground, then wonder why people are leaving in droves

    1. Although this decision will surely and unfortunately lead to more restaurant closures in the city, people are bailing in droves from San Francisco and the Bay mostly because they are losing their jobs coding style sheets for pizza-boba delivery apps and see no reason to continue paying exorbitant rent here, and not because there are fewer local pizza-boba delivery options.

  12. I would make it more clear the nuance, there is still a law in place saying the services must offer a 15% option, it just gives them the bare minimum of being on the platform at all.

    1. Not only would that nuance be helpful to describe more fully; but, the article should have also pointed out that the new legislation allowing for tiered pricing matches similar laws in effect in other progressive municipalities (e,g., Seattle, Philadelphia, Minnesota, and even Vancouver in Canada). Indeed, it was considered a common sense change to the law by not only all members of the SF Board of Supervisors (who unanimously supported it); but, also the Golden Gate Restaurant Association (who helped draft the amendment).