May 13, 2021 (from www.rationaloptimist.com)
Not long ago, my local paper editorialized about supposedly exorbitant fees charged by meal delivery services. With many people still using this option, its economics remains a lively topic. Here’s the letter to the editor I wrote:
Your editorials endorse “protecting” restaurants by “clamping down” on third-party meal delivery fees which can range up to 30%. You call it “gouging.”
On a $17 meal, 30% would be five bucks. To have someone drive to a restaurant, pick it up, drive it to a home, and deliver it? Sounds like a bargain to me.
I actually believe free market economics is a good thing. You mention at least three companies delivering meals. Are their profits exorbitant? In fact competition among them has been keeping fees down to where they’re earning little if anything! That’s the beauty of competition in a free market, giving consumers the lion’s share of the benefits from any economic activity.
And nobody forces anyone to use these services. If they weren’t providing value commensurate with their fees, they’d get no takers.
Meantime you also favor a $15 minimum hourly wage. How many meals can be delivered in an hour? Could drivers be paid $15 if the fee for delivering a modestly priced meal is capped at 15%, as you advocate? More likely these companies could not operate at all. A loss to them, as well as to their drivers, to restaurants, and to foodies.
Government should step back and leave this issue to be sorted out by people’s own choices in a free market.