HomeMy WebLinkAbout2021.02.02 - Minutes - Study SessionCITY OF DIAMOND BAR
MINUTES OF THE CITY COUNCIL
STUDY SESSION
FEBRUARY 2, 2021
STUDY SESSION: M/Lyons called the Study Session to order at 5:30 p.m.
Mayor Lyons announced that consistent with COVID-19 regulations, all Council Members
and staff participated via teleconference and there was no physical location for public
attendance. The Public was invited to join the meeting online or by phone at the numbers
printed on the agenda.
ROLL CALL: Council Members Andrew Chou, Stan Liu, Steve Tye
Mayor Pro Tern Ruth Low, Mayor Nancy Lyons
Staff participating telephonically: Dan Fox, City Manager; Dave DeBerry, City Attorney;
Ryan McLean, Assistant City Manager; Anthony Santos, Assistant to the City Manager;
Alfa Lopez, Senior Management Analyst; Ryan Wright, Parks and Recreation Director;
Christy Murphey, Recreation Superintendent; David Liu, Public Works Director; Dianna
Honeywell, Director of Finance; Ken Desforges, Director of Information Services;
Marsha Roa, Public Information Manager; Cecilia Arellano, Public Information
Coordinator; Kristina Santana, City Clerk
Public Comments:
Daniel Kennedy disagreed with C/Chows premise that third -party delivery services are
causing local restaurants to lose money and need to have their commission fees capped
and to him, to propose such a solution is unwarranted during a pandemic when delivery
service owners, drivers and customers are depending on providing this essential service
for their livelihood.
► CONSIDERATION OF TEMPORARY CAP ON COMMISSION FEES CHARGED
BY THIRD -PARTY DELIVERY SERVICES
SMA/Lopez provided a presentation and reported that LA County Board of
Supervisors passed an ordinance in JUIy that placed a cap of 20 percent
inclusive of all fees charged to restaurants and made it unlawful for companies
to reduce compensation by any tip and/or gratuities paid to workers by
customers. Should the City Council wish to proceed with an ordinance it is
requested that the City Council provide direction to staff to prepare an ordinance
for consideration at the February 16th Council Meeting based on the LA County
Ordinance or, take no further action on this matter at this time.
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/Tye asked who pays the menu fee and SMA/Lopez responded that the
restaurant pays the menu fee. This fee represents the actual charge for food
that it is ordered by the customer, but it can be marked up in combination with
the delivery (commission/processing) fee by the service provider to achieve a
pre -determined overall charge.
FEBRUARY 2, 2021 PAGE 2 CC STUDY SESSION
APT/Low asked for an explanation for the terms "commission fee",
"pickup/takeout fee", "marketing fee", and "delivery fee". SMA/Lopez responded
that the commission fee is the fee charged to the providing restaurant for use of
the application (app) and typically includes the credit card processing fee; the
pickup/takeout fee is the commission paid by the restaurant to the service
provider for any takeout or pickup orders placed via the mobile app; the
marketing fee is an optional add -on fee to increase the restaurant's visibility
within the search listings on mobile app; and the delivery fee is the difference
between pickup and delivery fee if someone uses the app to place the order
versus calling the restaurant directly for which the delivery service company
would pick up a commission.
MPT/Low asked for clarcation on fees paid for by restaurant versus fees paid
for by customers. SMA/Lopez explained that the fees paid by restaurant are
agreed upon fees set by an agreement signed by the restaurant, and the fees
paid by customers includes fees charged by the delivery service directly to the
customer.
C/Tye asked if the delivery service is making delivery fees on both sides
(restaurant and customer). SMA/Lopez said C/Tye was correct and that it is
called a three-way model approach where the customer and the restaurant and
the driver are all committing to the model.
C/Chou explained that his request to have this item considered by the Council
came up in discussions with local restaurant owners. One owner said that when
he uses these delivery services, he loses money on every single delivery. Most
restaurant owners agree with some kind of fee because they understand this is
a service they are using which helps them get their name out and get more food
out of the door. What they object to is the 3040 percent commission which eats
into their profit and affects their bottom line.
M/Lyons said that while she understands what C/Chou is saying, it is the right
of individuals to use or not use restaurant services. There are at least four
different delivery services operating in Diamond Bar and she would suspect
there is competition among these services. She asked if fees are the same or
different for each of the companies and SMA/Lopez said she has found that the
agreements established between restaurants and delivery service companies
are confidential in nature. The survey was anonymous so that more restaurants
would feel free to disclose their fees which are negotiated and could be different,
depending on the restaurant.
C/Liu felt that because of the restrictions imposed on restaurants and residents
during the pandemic, they are unable to operate as they normally would and at
this point it appears that there is more urgency on restaurants to use these
services in order to continue to maintain their businesses. SMA/Lopez said that
revenues have tripled and quadrupled those of last year due to the demand of
the stay-at-home orders. As an example, restaurants will have a menu for $10
and pay $3 in order to net a $7 profit and that same item, under this program,
FEBRUARY 2, 2021 PAGE 3 CC STUDY SESSION
will be sold to the customer for $18 or $19 with the restaurant keeping the same
$7 profit. In fact, the demand for these services seems to have increased due
to people staying at home.
M/Lyons felt it was inappropriate for the City to regulate fees in this instance.
C/Tye said that in his discussion with restaurant owners, he learned that as the
pandemic has extended months and months, they have raised their prices to
accommodate the increased fees and he does not see that limiting fees would
change that circumstance. He does not agree with C/Chou or C/Liu because to
him, this is a free-market issue. When restaurants committed to outdoor dining,
they spent a great deal of money in the purchase of tables, heaters and plexi-
glass which was a decision made by the owners. Shortly after it was okay to
accommodate outdoor dining, the stay-at-home order was issued. And these
are business -decisions. One of the restaurant owners told him that probably 15
percent of his business was via delivery and that it was mostly millennials who
were taking advantage of the delivery service. C/Tye said that if he wants to
have restaurant food he picks it up. It is a personal decision whether people
wish to avail themselves of delivery service and whether restaurants offer the
delivery service. When there was no pandemic, fees were okay and now with a
pandemic fees are not okay. He does not understand that premise, and believes
it is government getting in the way of free enterprise.
C/Chou said that he appreciates everyone's comments on this recommendation
which was something he felt would help local restaurants.
M/Lyons pointed out that the City has done a great deal to help restaurants and
the Council continues to research all possibilities but does not believe this
particular step is necessary.
MPT/Low agreed that the City has done a lot for restaurants including
encouraging residents to do what they can to support them. She does not like
the idea of using the pandemic to impose caps on free enterprise or any kind of
restrictions that have not been fully vetted. The idea of interfering with the
contract between the restaurant and delivery service providers does not sit well
with her, especially, when as staff has pointed out, it involves advertising for the
restaurant. In addition, by trying to help restaurants in this manner we may be
depriving drivers of their livelihood, some of whom are residents who have
become unemployed from their regular jobs and are doing what they can to feed
their families making them subject to rising gas prices, etc.
Following discussion, C/Chou moved, C/Liu seconded, to direct staff to prepare
and ordinance based on the LA County Ordinance. Motion failed by the
following Roll Call vote:
AYES: COUNCIL MEMBERS: Chou, Liu,
NOES: COUNCIL MEMBERS: Tye, MPT/Low, M/Lyons
ABSENT: COUNCIL MEMBERS: None
FEBRUARY 2, 2021 PAGE 4 CC STUDY SESSION
ADJOURNMENT: With no further business to come before the City Council,
M/Lyons recessed the Study Session at 6:17 p.m. to the Regular Meeting.
Respectfully submitted:
Kristina Santana, City Clerk
The foregoing minutes are hereby approved this 16th day of February, 2021.
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