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BACKGROUND Prior to COVID-19, most restaurants that focused their operating model on in-person dining did not have the needed infrastructure to support a delivery service model that became essential during the pandemic. Restaurants become reliant on third-party food delivery companies which in some cases charged up to 30 percent of the purchase price of items ordered, thereby reducing their ability to maintain profitable levels when indoor and outdoor dining were restricted. After hearing from restaurateurs about the increasing delivery fees from third-party food delivery companies and seeing that other cities in Alameda County and the Alameda County Board of Supervisors (for unincorporated areas of the county) were taking similar actions to cap delivery fees, City staff recommended that the City Council adopt an urgency ordinance to cap all commission fees to 15 percent and prohibit third-party food delivery service from reducing the compensation, including any tip or gratuity, paid to any of its workers or the restaurant. An urgency order was adopted, and the fee cap went into effect immediately on October 6, 2020. In preparation for the urgency ordinance to expire on October 6, 2021, one year from the effective date, City Council at its meeting on August 17, 2021, considered an extension of the ordinance. Based on input from Pleasanton restaurateurs that expressed support of an extension of the fee cap citing the continued need to recover from drastic losses due to the pandemic, the Council adopted Ordinance 2219 extending the provisions of Urgency Ordinance No. 2211 for a period of six months. The ordinance is set to expire on April 21, 2022, or upon termination of the local state of emergency, whichever comes first; or as otherwise terminated, modified, or extended by the City Council. DISCUSSION A second six-month extension would continue to cap food delivery service fees at 15 percent per order. It would also prohibit a third-party food delivery service from reducing the compensation, including any tip or gratuity, paid to any of its workers or the restaurant because of the cap. As discussed at the August 17, 2021, Council meeting, third-party food delivery companies and restaurants may work out marketing fees in a separate contract if a restaurant wishes to choose a level of marketing support. City staff solicited feedback from local restaurateurs to ask about the current condition of the market toward gauging the continuing need for the cap as a result of the COVID-19 pandemic. The restaurateurs expressed that while business has improved, impacts from previous restrictions had not fully abated and they would support an extension of the delivery cap indicating that the cost of third-party delivery services affects their already diminished revenue margins. Some noted they would also be in favor of a cap indefinitely. Additionally, City staff solicited input from the Pleasanton Downtown Association and Pleasanton Chamber of Commerce, both of which expressed support for a six-month extension after which the cap would terminate. Given the feedback received, staff recommends the City Council adopt an ordinance extending the 15 percent cap for six months (Attachment 1), unless otherwise terminated or modified by the City Council prior to the six-month period. At the end of six months — on October 19, 2022 — no further extension will be requested, pending the state of the COVID-19 pandemic and restrictions on dining capacity. Page 2 of 3