Ontario legislation capping commission fees for third-party food delivery services in the province's lockdown regions goes into effect this weekend.
Starting Saturday, food delivery companies will be limited to charging a rate of 20 per cent per transaction, with no more than 15 per cent for commission.
“This new cap will provide needed support for small and independent restaurants in communities weighed down by the devastating effects of COVID-19," Prabmeet Sarkaria, Associate Minister of Small Business and Red Tape Reduction, said in a statement issued Friday afternoon.
The Supporting Local Restaurants Act applies to non-franchised restaurants that generally have indoor dining but have been prohibited from serving customers due to a COVID-19 order.
As of Friday, only restaurants in regions placed in the final “grey” zone of the province’s five-tier COVID-19 framework have been shuttered to in-person dining. Curbside pickup and takeout are the only options left for restaurants in this category.
The regions in the “grey” zone include Toronto, Peel Region, York Region and Windsor-Essex.
The cap will not, however, apply in regions considered in the four, “red” zones, despite strict limitations on restaurant capacity. Under the “red” zone, restaurants are limited to 10 customers indoors, regardless of their size. Outdoor dining is allowed without any capacity limits.
The cap on fees will only apply to the largest food delivery companies, the province said, or ones that take orders from 500 or more restaurants.
The legislation allows for complaints to be made to the government and for penalties to be applied.
An individual convicted of an offence under the Supporting Local Restaurants Act may face a maximum fine of $50,000 or less than a year in jail. A corporation convicted of an offence is liable for a maximum fine of $10,000,000.
The City of Toronto has called for a cap on food delivery fees for months, noting that many restaurants are struggling due to the 30 per cent commission charged by some companies.