Wisconsin Legislature Considers Bill to Regulate Third-Party Food Delivery Services
The use of third-party food delivery services has skyrocketed during the COVID-19 pandemic. Companies such as Grubhub, Uber Eats, and DoorDash provide customers with greater access to their favorite restaurants without having to leave the comfort of their own homes. But the use of such delivery services has also caused troubles for customers and restaurants alike. Hidden fees, late or missing deliveries, and quality control problems are only the tip of the iceberg when it comes to identifying these problems.
Over the past few years, nine states have enacted legislation regulating third-party food delivery services, and Wisconsin now may follow suit. Last month, a bipartisan group of Senators and Representatives introduced legislation addressing many of the harms posed to restaurants and customers by such delivery services. The proposed legislation establishes requirements for delivery services from the initial listing of a restaurant on the delivery service’s website or app to the customer’s receipt of the food, and non-compliant delivery services may be penalized up to $10,000 per violation.
At the outset, the proposed bill requires that third-party food delivery services obtain written consent from a restaurant’s operator before utilizing the restaurant’s likeness and offering the restaurant’s food to consumers. Then, if granted such permission, delivery services must work with the restaurant to ensure that the menu and pricing are accurate. These requirements target common issues with delivery services that do not have established relationships with a particular restaurant. Unaffiliated delivery services tend to disrupt a restaurant’s normal operations, overburden the staff at inconvenient times and feature outdated menu items and pricing. By prohibiting unaffiliated delivery services from fulfilling orders, the proposed legislation allows restaurants greater control over their operations, thereby preventing many of these issues from arising.
If enacted, delivery services will also be obligated to provide restaurants with a considerable amount of information. Under the bill, a delivery service would be required to disclose the amount of any commissions, delivery fees, and promotional charges. The legislation goes a step further requiring delivery services provide restaurants with the contents, timing, and origination of orders, any promotional attachment, the average delivery time after orders leave said restaurant, and whether the orders are from new or returning customers. This information is crucial for restaurants to keep track of their demand and throughput throughout the day.
The proposed legislation also addresses concerns with food safety and quality control. First, the proposed law would require delivery services to ensure that their couriers understand basic food safety principles, including personal hygiene, contamination concerns, and cleaning. The law would also prohibit the couriers from touching the food ordered by a customer. Next, the proposed legislation targets the issues that arise from a restaurant’s inability to control the quality of the delivery service. Despite a restaurant’s lack of control, customers tend to associate a negative delivery experience with the restaurant, at times causing the restaurant to deal with an avalanche of scathing reviews. Under the proposed law, delivery services would be obligated to provide restaurants with the ability to view and respond to customer feedback and reviews, as well as the opportunity to communicate directly with customers.
Third-party food delivery services that fail to abide by any of the above requirements may face a $10,000 forfeiture for each violation. This penalty is enforced by the Department of Agriculture, Trade and Consumer Protection, and the statute does not explicitly grant restaurants a private right of action. The lack of a private right of action may hamper the ability of restaurants to combat a delivery service’s non-compliance. Rather than being able to seek immediate relief, restaurants will likely need to file complaints with the Department and wait for the Department to take action. Although the proposed law addresses many of the issues experienced by restaurants and customers, this lack of redress is a shortcoming.
If the proposed bill (as it may be amended) is enacted, Stafford Rosenbaum LLP’s experienced dealership and franchise law team will be ready to assist both restaurants and delivery services in navigating their obligations and rights under the law.