Philadelphia's 15 percent delivery commission cap for restaurants

Philadelphia is one of the few American cities that limits the commission a delivery app can charge a food business. If your restaurant, cafe or bar lists on a third-party app and sells to customers in the city, the cap affects the percentage you pay, the way the app presents the fee and what you can ask for if something looks wrong. This guide explains the city's guidance. Because the rules are enforced by the city and platforms change their terms, check the current city page and your agreement before you rely on it.

What is the cap?

According to the city's August 2023 guidance, the maximum that third-party delivery platforms can charge a food business is 15 percent overall, split into a limit of 10 percent for delivery fees and 5 percent for other fees. A fee above that is unlawful unless the business has opted in to a higher fee in return for additional services. The guidance cites Bill No. 210670, and the cap began as an emergency measure during the pandemic before being made permanent. Check the city page for the current text.

What counts as a fee?

The city's guidance distinguishes delivery fees from other fees, and the 15 percent total includes both. The practical point is that the headline commission is not the only line on your statement: marketing fees, promotional charges, processing fees and other add-ons may count toward the cap or may be limited separately. Read the city page for the definitions, and then match them against your statements for a month. If you cannot tell which line is which, ask the platform in writing.

What is the opt-in higher tier?

The legislation let a food business choose a higher fee tier in exchange for additional services, such as more visibility on the app, wider delivery areas or marketing. The business has to choose it. A platform cannot impose it. Reports in 2023 said platforms had tried to move partners back to pre-pandemic plans, and whether a restaurant was properly given the choice became a dispute, so check that your plan is the one you chose.

What should you check on your agreement?

1. Which plan are you on, and who chose it? Look for the date and the signature or the click that opted you in.
2. What percentages apply to delivery, pickup and the other fees listed on your statement?
3. Do the numbers on your statements for Philadelphia orders add up to less than 15 percent, unless you opted in?
4. Are the fees shown to the customer before they pay? Ask the city whether the ordinance requires platforms to display the fees they charge the restaurant, and check your platform's order screen.
5. Is there a different rate for orders that are outside the city? The cap applies to Philadelphia; an order delivered in a neighboring county may be priced differently.

What if you are charged more than the cap?

Keep your statements and screenshots of your plan page. Contact the platform in writing, cite the city's guidance, and ask for a refund of the excess. If that fails, look at the city's guidance page for the agency that handles complaints about the ordinance. Ask the city what penalty applies to a platform that charges above the cap. A trade group, such as the local restaurant association, may help members to file together.

How does the cap change your decision about delivery?

A cap of 15 percent is still a significant cost on a thin margin. Restaurant profit margins are thin, and a fee of that size, plus food and packaging, can turn a delivery order into a loss. Do the math on a typical order from your own records: menu price, food cost, packaging, labor and the fee. Some businesses raise prices on the app, offer a limited delivery menu or restrict delivery to peak hours. Others send app customers to their own ordering page with a pickup discount. Check your agreement, since some platforms prohibit different menu prices or discourage promotions.

What are the alternatives?

Direct online ordering for pickup and delivery lets you keep the customer relationship and avoid a marketplace commission, though you pay payment processing fees and need a way to deliver. Some restaurants use a shared courier service for their own orders, and others deliver within a small radius with their own staff. A phone line is still the cheapest channel for many neighborhood restaurants. Most businesses end up with a mix, and a clear policy for which orders go where. Our guide to direct ordering explains how to set it up.

What should you do this month?

Pull three months of delivery statements. Add up the total fees as a share of Philadelphia sales. If it is above 15 percent and you did not opt in, write to the platform. If you did opt in, decide whether the extra visibility is worth the extra cost. Tell your manager what the plan is so that no one clicks a new offer by accident. Then check the city's page again in six months, since policies change.

More guides for your business:

• Philadelphia paid sick leave for restaurants after the POWER Act
• Philadelphia wage theft rules: what restaurant owners should know
• Philadelphia's Fair Workweek law: does it apply to your restaurant?

More in the US guides for food businesses.