Ontario officially capped app delivery fees but it's not as low as restaurants hoped

The Ontario government is finally following through on its promise to take regulatory action against food delivery apps charging exorbitant fees to struggling restaurants by capping food delivery fees. 

The province's new Supporting Local Restaurants Act, 2020 officially came into effect on Dec. 19, and it requires food delivery companies to limit the total rates they charge to 20 per cent for each transaction, with no more than 15 per cent for commission for food delivery services. 

This is in line with what the government said it was aiming to implement nearly one month ago following similar delivery fee caps introduced in New York, though it's not quite as low as some restaurant owners had hoped considering the challenging times they're facing. 

Our cap on delivery fees will come into effect on Sat. Dec 19th at 12:01am!

The Supporting Local Restaurants Act, will cap food delivery fees at 15% & all fees at 20% in an effort to keep costs lower for our restaurants.

Lower fees help local businesses stay in business🍔🍕🌮 pic.twitter.com/jW9JjAwYSy

— Prabmeet Sarkaria (@PrabSarkaria) December 18, 2020

The new cap applies only in areas where indoor dining is prohibited, such as Toronto, "to help restaurants stay in business and continue contributing to their communities," according to the province. 

Any time indoor dining is prohibited in a new region, the cap will then also apply in that location, meaning it will come into effect province-wide once the pre-Christmas lockdown begins.

To further support this change, the government says it's providing food delivery company employees or contractors with protection that their compensation will not be reduced in response, and it's also enabling restaurants and food delivery company employees or contractors to file online complaints if they are charged fees that exceed the cap or if their compensation or payments are reduced.

The province also says it intends to impose fines of up to $10 million to food delivery service companies that do not comply with the law.

This move comes after Premier Doug Ford repeatedly pleaded with delivery app owners to stop charging restaurants ridiculous fees, which are often as high as 30 per cent. 

"This new cap will provide needed support for small and independent restaurants in communities weighed down by the devastating effects of COVID-19," said Associate Minister of Small Business and Red Tape Reduction Prabmeet Sarkaria in a statement.

"We're all in this together. Food delivery companies, consumers and communities are all part of the solution. This holiday season, let's support local restaurants by getting takeout, ordering delivery, or buying gift cards for family and friends. By giving to the people who mean so much to us, we can give back to the restaurants that make our main streets bright."