Seven Public Policy Principles for Third-Party Delivery

Creating a national framework designed to protect restaurants and guests by promoting transparency, the National Restaurant Association, in partnership with DoorDash, Grubhub, Uber Eats and Postmates, released Public Policy Principles for Third-Party Delivery to better define best practices for third-party delivery and guide lawmakers in developing public policy. 

This marks the first time the restaurant industry and third-party delivery companies have come together to create guidelines and culminates a year-long effort by the Association to develop national policies based on the experiences of restaurant operators of all sizes. 

The seven principles are:

• Restaurants have a right to know and determine when and if their food is delivered.
• Customers should expect the same degree of food safety from delivery as they do when dining in a restaurant.
• Restaurants should be able to offer alcohol to customers through third-party delivery in a safe and legal manner.
• Restaurants deserve transparency on fees (including commissions, delivery fees, and promotional fees) charged by third-party delivery companies.
• Third-party food delivery contracts need contractual transparency, and issues surrounding fees, costs, terms, policies, marketing practices involving the restaurant or its likeness, and insurance/indemnity should be clear.
• Sales tax collection responsibility must be clear in terms of which party is collecting and remitting the specific sales tax to the appropriate authority.
• As a best practice, third-party delivery companies should offer restaurants access to anonymized information regarding orders from their restaurant that originate on third-party platforms.

“Even before the pandemic, delivery – and decisions related to delivery – had major impacts on restaurant operations,” said Mike Whatley, vice president for State and Local Affairs for the National Restaurant Association. “Until now, the relationship between restaurants and third-party delivery companies lacked a national framework to protect restaurants. These new principles, which center around permission and transparency, add consistency and structure that will benefit all restaurants. This agreement represents an important first step in an ongoing dialogue between restaurants and third-party delivery companies about ways to improve our relationship going forward.”

Delivery represents one of the most important segments of growth for the restaurant industry. In a National Restaurant Association online survey of 1,000 adults conducted Dec. 7-9, 2020, 70 percent of adults say they ordered delivery from a restaurant and 40 percent had used a third-party delivery company for their delivery. The pandemic has accelerated restaurant customers’ comfort with technology, and with that new level of access comes a lasting desire for easier ways to satisfy their pent-up demand for their favorite restaurant meals. 

Several major cities including Seattle, New York City, San Francisco, and Los Angeles have capped fees that third-party delivery platforms can charge restaurants for delivery and takeout orders. In September, California Governor Gavin Newsom signed Assembly Bill 2149 to prohibit food delivery platforms from listing restaurants, posting menus, or using the image of a restaurant without express written consent, also known as menu scraping. 

Most of the principles are well on their way to becoming enacted in law," Pooja S. Nair, Partner at Ervin, Cohen & Jessup, LLP, told Modern Restaurant Management (MRM) magazine. "If large national delivery companies adopt policies consistent with these principles, it will certainly set a framework for national policy.  California has already enacted laws enshrining three of these principles.  The Fair Food Delivery Act, which goes into effect in January 2021, prohibits food delivery platforms from arranging for the delivery of food delivery orders without the express authorization of the food facilities, and requires transparency on fees.  AB-3336, passed in September 2020, sets food safety standards for delivery companies in California.  Because DoorDash and other third-party delivery companies are acting on a national scale, once a major market sets a policy, it makes sense for them to enact some version of that policy for all markets."

The only principle she sees that will continue to be decided on a local level is the third principle regarding alcohol delivery, which, she said. will continue to be decided in a deliberate, state-by-state manner regardless of what restaurants, delivery companies, and consumers want because of the way alcohol licensing and sales works at a legal level.

"Ultimately, given the success of Proposition 22 in California, and the fact that so many local and state jurisdictions are looking to regulate third party delivery services, I think the industry will want to work cooperatively to set a framework for national policies that it can work within," Nair concluded.

Another legal expert,  Matthew Murphy, a Shareholder at Nilan Johnson Lewis added: “The first identified Public Policy Principle—that restaurants have the right to determine “when and if their food is delivered”—will tilt the scales against a finding of fair use if third-party delivery companies continue to advertise delivery services for non-partner restaurants without their consent.  I think it was a close call before this  announcement whether consumers would likely believe that every restaurant listed on a third-party delivery application was affiliated with or endorsed that application.  As I see it, the first Public Policy Principle may shift consumer perceptions because it creates a presumption that if a third-party delivery company offers delivery from a restaurant, then the restaurant must have endorsed delivery of its food through the application. "

"At the same time, I believe the fifth Principle, which calls for transparency around third-party delivery companies’ contracts with restaurants, provides something of a safe harbor for third-party delivery companies that are transparent with consumers as to which restaurants’ they do, and do not, have contracts," Murphy added. " I have said before, a great way for third-party delivery companies to avoid confusing consumers (and trademark infringement claims) is to clearly distinguish between partner and non-partner restaurants.”

The delivery companies also chimed in. 

“We are grateful for the opportunity to have partnered with the National Restaurant Association in developing these principles, which will help platforms like DoorDash continue to empower restaurants to reach new customers and grow their revenue,” said Max Rettig, global head of Public Policy at DoorDash. “We are proud to support these principles through the range of products and services we’ve developed for restaurants, and we look forward to continually improving our offerings to best serve our restaurant partners.” 

"These principles will help strengthen the critical relationship between the diners, drivers and restaurants that has grown even more important during the pandemic," Seth Priebatsch, chief revenue officer at Grubhub, said. "We look forward to continuing to work with the National Restaurant Association to deliver for the hundreds of thousands of restaurants we’re proud to partner with every day."

“The teams at Uber Eats and Postmates are committed to the restaurant community,” said Stephane Ficaja, head of Uber Delivery for the U.S. & Canada. “As one company, we’ve recently made commitments to listening to and learning from merchants and have worked together to support the National Restaurant Association’s development of these new principles that are designed to address the most pressing interests of the industry.”