business news in context, analysis with attitude

The Los Angeles Times reports that California Gavin Newsom has signed into law a pair of bills that require app-based delivery companies - think DoorDash, Grub Hub, Postmates and Uber Eats - to have formal agreements with local restaurants before they start selling and delivering food from those establishments.

The argument behind the new legislation is that these delivery companies can hurt the restaurants' reputations and competitive viability if they can take orders, charge random fees, and then deliver the items in any condition they want without any accountability to the restaurants.

The bills also mandate that delivery companies maintain adequate temperature controls and safety protocols.

The laws, the Times writes, "are the latest effort by state lawmakers to ratchet up oversight of an industry that has resisted attempts at regulation as it grows rapidly in size and profitability."  They go into effect on January 1, 2021.

KC's View:

I like the idea of this legislation, and think it should be extended to that all third-party delivery companies - think Instacart - are prohibited from shopping at and delivering products from supermarkets with which they do not have formal agreements.

There are retailers out there who were pretty much forced into doing business with Instacart because it was going into their stores and shopping them, marking up the items (thus hurting the stores' value proposition), and then delivering them while creating the illusion that they were working with the retailer.  That's absurd … and I hope that California not only extends the protections to supermarkets and other kinds of retail, but also that other states provide these protections for their retailers, as well.