Senator Jehlen on Restaurants

 

Dear Neighbors, Today, the legislature approved the budget for the rest of FY21.  I am pleased that it included provisions I worked on in the Senate to:    - provide protections against evictions    - protect restaurants from predatory delivery services    - allow payment extensions to the unemployment trust fund for nonprofits who have had layoffs because of Covid19 This newsletter focuses on the restaurant delivery issue.  Moroccan Hospitality offered really delicious food a few blocks from our house.  It is one of many restaurants that have closed permanently. Restaurants face many challenges during the pandemic.  The Mass. Restaurant Association estimated that we would lose 25-30% of our restaurants, mostly the small independent ones.   The legislature has tried giving them more takeout options including grocery boxes, wine, beer, and cocktails; allowing easier options for outdoor dining, and more.  But the restaurants that enhance our communities, that make our dining choices so diverse and fun, are on the ropes. In October, I invited restaurant owners Steve Kurland of Za, Jess Willis of the Independent, and Maria DeSisto of Mike's Food and Spirits to join Joe Lynch and me on Somerville Media Center to talk about issues facing restaurants.  You can watch the show here.  And here are comments two guests sent later: These companies have, on more than one occasion, posted our name and menu on their website without our consent. A guest contacts the company and someone at the company calls in an order posing as a regular guest and then send in a driver to pick it up. The driver poses as a regular guest and pays with a credit card. The driver then takes the order and brings it to the original customer... We have also received calls from the real guest when there is a problem with the order. Additionally, when we have contacted GrubHub and Postmates and asked to be removed from their website, it has not been a simple process. This practice is deceptive to the restaurant and to the guest. We have had frustrated guests call about missing or delayed orders that we were not aware of. Our name and information are being used without our permission. Of course, we also take our reputation for guest service very seriously... If a "sneaky" order comes in from Grubhub and the order is mishandled, delayed, or never arrives, we have no recourse. -- Steve Kurland, Za and Evoo We recently learned that our restaurants are listed on Grub Hub without our knowledge or permission. Grub Hub is featuring outdated menus, inaccurate pricing and information and they do not have our permission to provide delivery services. Postmates... does the same thing - they take orders through their website (without our permission) and call into the restaurant to place the orders by phone. Because these 3rd party sites are using old menus, when they call in to place the orders and learn that menu items are no longer available, they tell our staff to "just substitute something similar" - without consulting the customer who placed the order! Not only terrible service (which erodes our restaurants' reputation) but extremely dangerous for customers with food allergies! Our managers have contacted both Postmates and GrubHub and asked to be removed from their website, but have not been successful. Very frustrating!  - Jess Willis, The Independent Restaurant Group Many restaurants sign agreements with delivery services that give them up to 23% commission on a food order for marketing and 10% for delivery.  This is a significant cost to a business that has low margins to begin with, and has lost most of its income.  John Schall of El Jefe's Taqueria wrote to the Globe: "Restaurants that weren’t doing delivery or had delivery as only 5 to 15 percent of their sales are now doing 70 to 80 percent of their sales through the delivery companies. Rather than paying delivery companies 2 to 3 percent of their total revenue, they are now paying 15 to 20 percent. For restaurants which, even in good times average only 10 percent profit, this is unsustainable." The House economic development bill, following a bill by Rep. Mike Day, would limit delivery company charges to 15%.  It is awaiting action in a conference committee. My amendment, now in the final budget, will protect restaurants from deceptive practices by those delivery companies with which they don’t have contracts. Some delivery companies make shadow or ghost sites which appear above restaurant’s in searches and appear to be the restaurant’s site.  They may use photos and items from the restaurant's actual menu, though it may not be the whole menu, may include items no longer available, and may have higher prices than on the restaurant’s menu. The phone number doesn’t goes to the actual restaurant.  It goes to the delivery company.  The delivery service may take orders for restaurants that don’t have contracts with them, send their own driver and collect fees.   Here is an example of something similar, related to Moroccan Hospitality.  A search for the restaurant includes this for UberEats, including their menu, saying they'll open at 5:00 (remember, they're closed) and suggesting you order now from another restaurant. The Verge reports that "a lesser known method GrubHub uses to extract money from small businesses involves putting its own custom phone number on business pages that redirects calls to the partner restaurant. That way, when a customer thinks they’re calling the restaurant directly, they’re instead calling GrubHub first, which allows the company to then charge that business a fee. Even if a customer doesn’t end up ordering something, GrubHub still collects more than $6 in some cases just for the phone call." There's not room here to tell you all the problems of delivery services!  It's worth reading American Economic Liberties Project's report, which concludes "What the apps have done, instead of competing to serve customers and restaurants, is use Wall Street money to accumulate market power, raise barriers to entry, and then merge with each other and set up regional monopolies" which "virtually guarantee that all orders placed to independent restaurants over delivery apps are unprofitable for the restaurants." Strangely, GrubHub actually supported the provision banning ghosting, saying they’ve done it because of competition, but acknowledging that it results in a poor customer experience and damage to the restaurant. Meanwhile, numerous lawsuits charge the delivery companies with deceptive and illegal practices.  Here's the most recent. So many more things to mention.  Just please: Order directly from a local restaurant, and pick up your order if you can.   Stay safe, and stay in touch,