Let's begin with a basic understanding: every business needs to make money.

That said, when the Massachusetts House passes a bill 156 to zip, you might think it's time to eat humble pie if you're GrubHub or DoorDash.

The pols pushed through legislation that will temporarily cap the fees that delivery services can charge during the COVID-19 pandemic at 15 percent. Maybe they should cap themselves on the amount of money they spend during this emergency, but I digress.

It was done to help restaurants recover from their falling dine-in sales since the shutdowns. Quite a few restaurants didn't have the setup to offer delivery, so they called on delivery app services like GrubHub, DoorDash, Uber Eats and Postmates. The problem is that the restaurants were complaining that by using these apps, they weren't making enough money on the meals because the delivery services charge the restaurant 30 percent.

Truth be told, companies like GrubHub say they only charge you, the consumer, a service fee based on the percentage of the order cost, reportedly $4-$8. What they don't tell you about is the 30 percent charge to the restaurant itself. And many times, as a consequence, the restaurant passes that charge on to you by means of upping their item costs on their GrubHub menus.

It doesn't take long to figure out the math behind third party delivery is unsustainable on these margins. But that's how these delivery companies make their money to pay all their people on the road, home office, support staff, advertising expenses – and don't forget the need to turn a profit, something quite a few pols have no idea about.

Let's say the food bill would have cost you $42, but with the add ons and markups, it ends up costing you $57. It won't be long before you start looking elsewhere for a better deal. So the politicians vote unanimously to cap what a delivery company can charge restaurants. I'm not sure, but is that legal to do? It just doesn't sound kosher to me, but as I said, I digress.

The bill now goes to the Senate for consideration.

Phil Paleologos is the host of The Phil Paleologos Show on 1420 WBSM New Bedford. He can be heard weekdays from 6 a.m. to 10 a.m. Contact him at phil@wbsm.com and follow him on Twitter @PhilPaleologos. The opinions expressed in this commentary are solely those of the author.

WBSM-AM/AM 1420 logo
Enter your number to get our free mobile app

More From WBSM-AM/AM 1420