Devastation soon to be unleashed on Massachusetts restaurant industry

The Harvard Square Business Association (HSBA), along with its long-time member, John Schall, owner of El Jefe’s Taqueria in Harvard Square, as well as the Cambridge Chamber of Commerce, Cambridge Local First, the Central Square BID, East Cambridge Business Association and the Kendall Square Association has partnered with the American Economic Liberties Project and Love Live Local to bring awareness to the devastation soon to be unleashed on the restaurant industry in the Commonwealth of Massachusetts. The temporary 15% cap on third-party delivery fees passed by the state legislature at the beginning of this year is set to expire on June 15th. Meanwhile, restaurants are still struggling to survive the pandemic.  

According to Moe Tkacik, Senior Fellow at the American Economic Liberties Project, “Right now, food delivery apps like Grubhub, Uber Eats, Postmates, and Doordash are causing huge problems for restaurants and communities. While restaurants grapple with the catastrophic consequences of COVID-19, these Wall Street-funded predatory actors are charging hidden fees, roughly 30% of every transaction, manipulating delivery workers, and exploiting restaurants, workers, and consumers, in some cases driving restaurants out of business. Increasingly food delivery apps are opening their own ‘ghost kitchens’ so that they compete with the very restaurants dependent on their services. This is wrong. Food delivery apps are a simple technology that should simply help connect people who want to order from restaurants with restaurant owners and workers who make their food.” 

John Schall recently received an e-mail from the territory manager of Grubhub stating that the delivery fee for his Boston restaurant will soon be changing to 38%. Schall said, “At 38%, delivery is just no longer viable. Given how much delivery is now a percentage of total sales, this percentage is unsustainable for me and I’m sure, for many Massachusetts restaurants. Receiving 62% of your menu price in an industry that lives on 5-10% profit margins just doesn’t work. But the delivery genie is out of the bottle and it is not going to be put back any time soon. Delivery sales as a percentage of a restaurant’s total sales is going to be significantly larger post-pandemic than it was pre-pandemic.”  

This is especially true for Cape Cod. Amanda Converse, founder of Love Live Local, a small business advocacy organization noted, “Restaurants on the Cape, like everywhere, have been hit hard. However, we have the additional challenge of a seasonal staffing shortage which is already impacting dining service. Given that scenario and record numbers of tourists returning, many will have to resort to deliveries. Delivery fees of 38% is a crisis for Cape restaurants. It is price gouging.”  

Denise Jillson, executive director of the HSBA, said, “We have over 80 eateries in Harvard Square that are operating far below their pre-COVID numbers. Using El Jefe as a benchmark during the 18 week cap period, they saved over 70K in fees which were used to hire people back and provide them with a living wage and benefits. During the same period, third-party delivery companies continued their growth and expansion. Whether it is Cape Cod or Cambridge, additional havoc is about to befall an already beleaguered industry. This oligopoly, like all oligopolies, must be regulated. We encourage everyone to contact their senators and representatives to ask them to support a permanent third-party delivery fee cap of 15%.     
Additional Contacts:
Jason Alves
Amanda Converse: 
Nancy Donohue
John Schall:
Michael Monestime
Theodora Skeadas
Moe Tkacik:
C.A. Webb