California Legislature Advances Bill to Regulate Food Delivery Platforms

Ervin Cohen & Jessup LLP

Ervin Cohen & Jessup LLP

California’s legislative season is in full swing, and the California State Assembly and State Senate are advancing bills that will affect the food, beverage, and hospitality industry, with a focus on the restaurant industry.

State legislators have shown an interest in regulating food delivery platforms. Several cities, including San Francisco and Los Angeles, have capped delivery fees that these platforms, including Grubhub, Door Dash, Uber Eats and Postmates, can charge restaurants at least for the duration of the COVID-19 pandemic.

Concerns have also been raised by restaurant owners and industry groups about food delivery platforms advertising restaurants without obtaining the consent of the restaurant. These concerns have been exacerbated by the rapidly increasing market share of food delivery platforms. According to a 2019 CBRE Research Report, third party delivery platforms accounted for 58% of all restaurant delivery sales in the U.S. CBRE estimated that this number would grow to 70% by 2022. 

Assembly Member Lorena Gonzalez, who also authored the sweeping AB5 bill regarding independent contractors, proposed a bill to regulate this practice. Assembly Bill 2149 would prohibit food delivery platforms from listing restaurants, posting menus, or using the image of a restaurant without express written consent. Initially, the bill included a requirement that the delivery platform share consumer data with restaurants, but this part of the bill was struck due to privacy confirms.

The California State Assembly overwhelmingly voted in favor of Assembly Bill 2149 ba vote of 68 to 5. The bill was referred to the California State Senate on June 10, 2020.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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