Delivery fees were killing North Miami restaurants. Here’s how the city is helping
Karen Tuvia wasn’t sure how much longer she could keep her 9-year-old North Miami coffee shop afloat without help.
The fast-moving coronavirus forced Miami-Dade County to shut down inside dining at all restaurants and eateries such as her Alaska Coffee Roasting in North Miami, leaving her with only takeout and delivery and less than half of her usual income.
Then the third-party delivery apps — Uber Eats, Postmates, Grub Hub — took their bite, up to 30 percent on every sale they made, wiping away all her profits.
“Thirty percent is our mark up, so we were literally giving away our food,” she said.
Now the city of North Miami has stepped in.
The city of North Miami will reimburse independent restaurants within the city’s community-redevelopment district for service fees they pay to Uber Eats, up to $5,000 a month per restaurant, the agency’s director said Wednesday. They have also negotiated $5 off through Uber Eats for anyone ordering from a restaurant within the redevelopment area, effectively covering any delivery fees to customers. The city is said to be working on plans to negotiate with other major delivery apps.
“We need to make sure the small mom-and-pop restaurants get this support,” Rasha Cameau, executive director for the North Miami Community Redevelopment Agency, said. “We don’t know how long this pandemic is going to last.”
More than 50 restaurants have already signed up for the service, Cameau said. The redevelopment agency covers more than 60 percent of the city of North Miami, she said, capturing a wide swath of restaurants. No large chains will be eligible for the subsidy.
“The whole point of this is helping them survive the pandemic and helping them provide for their employees,” she said.
There are more than 100 independent restaurants within the city limits, Cameau said, but 83 within the district that are eligible. The city council approved redirecting $250,000 from the CRA’s funds to pay for the fees and Cameau said she would ask for another $250,000 when that amount runs out.
North Miami believes it is the first city to subsidize restaurants for the fees they pay to third-party delivery companies.
“Our focus through this innovative partnership ... is to give the restaurants as many flexible options as possible to leverage the Uber Eats platform to reach more customers, given that their dining rooms are closed,” Uber spokesman Javi Correoso wrote the Miami Herald in an email.
Around the country, several major cities and counties have taken steps to limit the amount of service fees third parties can charge restaurants during the pandemic, since most eateries are limited only to takeout and delivery. In Miami-Dade, outside seating is available to restaurants, but heat and unpredictable weather have limited how much restaurants can rely on it.
San Francisco was the first, in April, to cap fees third-party delivery apps can charge at 15 percent, when the mayor passed an emergency order, according to the San Francisco Chronicle. That soon spread throughout Northern California, then to other major cities, including Los Angeles, Seattle, Washington, D.C., New York City and part of New Jersey.
No South Florida city or leader, however, has passed legislation or an emergency order to limit what third-party companies can charge.
Meanwhile, Uber bought out food-delivery competitor Postmates in July for $2.65 billion, as it saw its ride-sharing go down but demand for its food delivery arm, Uber Eats, go up. Use of Uber Eats has been up 20 percent in North Miami alone during the pandemic, Uber spokesman Correoso wrote the Herald.
Some South Florida restaurants responded early on by delivering food themselves, with staff that would otherwise have to be laid off. But over the months, many have come back to the delivery apps that have become ubiquitous among diners.
For small businesses like Alaska Coffee Roaster, the innovative aid immediately will make a difference.
Tuvia said her business received a forgivable federal loan to cover payroll and a low-interest, 30-year Economic Injury Disaster Loan from the Small Business Administration. Still, because of the 30 percent fees they must pay on every order to delivery apps, she had to go further into debt to pay her bills.
“The customer gets a discount and we get our fees picked up. For us, that’s huge,” Tuvia, the shop owner said.
The city has come to her aid in the past. When her shop was damaged in a fire three years ago, the redevelopment agency helped pay to get it repaired and she reopened within two months.
“They want to see restaurants in North Miami survive,” she said. “I haven’t seen any other city do what they’re doing.”
This story was originally published August 19, 2020 at 3:25 PM.
