Officials in Montgomery County say the fees that apps such as Uber Eats charge restaurants are often invisible to consumers.

Handout image / Uber

This story was updated Oct. 21.

Montgomery County is officially warning consumers about the high fees that third-party food delivery apps charge restaurants that use their services.

The county’s Office of Consumer Protection released an alert Tuesday encouraging customers to order directly from local restaurants, rather than placing orders through apps like Grubhub, Uber Eats and DoorDash. Restaurants pay a hefty price to deliver food through the apps, with an average fee of 38% of the total order cost, according to a recent report from Washington Consumers’ Checkbook.

These fees are often invisible to customers because the companies don’t disclose them on receipts. But restaurant owners have complained about them for years, calling the apps a “necessary evil” because they’re often the only way restaurants can offer delivery. The issue has taken on more urgency as restaurants across the region face decreasing sales during the pandemic.

A spokesperson for Uber responded to the alert, saying, “We support efforts to help the hospitality industry, which is why we continue to focus the majority of our efforts on driving demand to independent local restaurants.” A DoorDash representative said the company is “open to working with policymakers to increase understanding of our platform.”

In May, the D.C. Council passed a temporary 15% cap on delivery app commissions after restaurant owners said the fees were eating away their profits during the pandemic. Portland, Seattle, San Francisco, and other cities approved similar legislation.

Grubhub, DoorDash, Uber Eats and Postmates waged unsuccessful battles against the caps in multiple cities, warning D.C. Council Chairman Phil Mendelson and other city leaders that restricting commission fees would force apps out of the market and limit delivery options for restaurants and consumers. Later, media reports revealed that some delivery companies failed to comply with the new commission caps.

“Regulating the commissions that fund our marketplace forces us to radically alter the way we do business and ultimately hurt those that we’re trying to help the most: customers, small businesses and delivery people,” an Uber spokesperson tells WAMU/DCist.

Two months into the ongoing health emergency, the owners of D.C. bar Ivy and Coney launched their own pickup and delivery app to compete with the tech companies. A similar effort is underway in Baltimore City, according to the Baltimore Business Journal.

D.C. does not require apps to tell customers how much they charge restaurants that use their services, unlike Chicago, which adopted a rule in May requiring the companies to disclose commission fees to customers before they place an order.

“Consumers have an interest in understanding how the third-party delivery services they use impact the local restaurants they patronize in their communities,” the Chicago rule says. “Given the choice between carry-out, delivery by the restaurant, or delivery by a third-party, the consumer may wish to choose the method that maximizes the amount of the consumer’s money that is retained by the local restaurant.”

There’s no similar rule in Montgomery County, and the jurisdiction doesn’t limit the fees apps can charge, either. But County Executive Marc Elrich hinted that could change in a press release announcing the official alert.

“While we explore legislative remedies, I believe Montgomery County is best served by full disclosure and knowledge [of the fees],” Elrich said.

Eric Friedman, director of Montgomery County’s Office of Consumer Protection, said the apps “come with a side order of confusion and lack of transparency.”

“Small restaurants may feel forced to pay steep fees and commissions in order to stay in business,” Friedman added. “Full disclosure is essential to ensure integrity in the marketplace.”

Representatives for Grubhub and Postmates did not immediately return a request for comment.

This story was updated to include statements from Uber and DoorDash.