| | | | | | | | | TO: | Neighborhood and Quality of Life Committee Members |
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| FROM:
| Jimmy L. Morales, City Manager
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| | DATE: | October 19, 2020
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| | SUBJECT: | DISCUSSION REGARDING CREATING A REIMBURSEMENT PROGRAM TO MIAMI BEACH RESTAURANTS FOR DELIVERY SERVICES. |
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| | | | | | | | HISTORY:
| At the September 16, 2020 City Commission meeting, Commissioner Góngora discussed the hardships faced by restaurants due to the COVID-19 pandemic and the associated emergency orders and guidelines. Although restaurants were authorized to remain open throughout the shutdown, the primary restaurant model of in-person dining was restricted and remains limited even during the reopening phases. The seating capacity limitations and imposed health and safety guidelines created a greater dependency on restaurant delivery services from third-party vendors such as Uber Eats, Postmates, DoorDash and GrubHub.
Commissioner Góngora discussed the potential to create a reimbursement program for Miami Beach restaurants to address the financial burden of delivery service fees. At the September 29, 2020 Budget Meeting, the City Commission allocated $60,000 for a reimbursement program to Miami Beach restaurants for delivery services.
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| | | | | | | | ANALYSIS
| The COVID-19 pandemic has and continues to threaten the Miami Beach restaurant industry as it has forced many restaurants to either close or switch their operations to focus on pickup or delivery. Many restaurants utilize third-party food delivery companies such as Uber Eats, Postmates, DoorDash and GrubHub. Third-party food delivery services are online platforms enabling consumers to place on-demand orders on a website/mobile application (app) for direct delivery of food from local restaurants. Both consumer and restaurant are charged for the on-demand service acting as an intermediary between them. The delivery service charges the consumer a small delivery fee (flat amount or a percentage of the order) and charges restaurants a commission rate for collecting orders and delivering food to the customer. While commission rates are negotiable, eateries generally pay around 30 percent on orders made through a third-party app and delivered by the app’s drivers. When restaurants use their own delivery staff, they typically pay 15 percent commission to the third-party delivery company for booking orders.
Before COVID-19
Online platforms helped transition food delivery from a small segment of the restaurant industry, dominated by pizza, to a growing new source of sales for all establishments. In the pre-COVID-19 era, delivery services were extremely beneficial for restaurants, particularly smaller restaurants that did not have online functionality to take orders and/or delivery staff to deliver food. Therefore, the costs associated with delivery fees represented a marketing expense. Overall, revenue generated from delivery sales accounted for a much smaller share of revenue as compared to in-person dining. Thus, restaurants accepted the expense as a nominal cost of doing business.
COVID-19 Impact
When onsite dining was initially restricted in March 2020, minimal-contact interactions and curbside pickup surged. Delivery services grew more popular by allowing quarantined customers to order from home and support their local small businesses. Delivery became a lifeline to reach customers, maintain revenue, and continue operations during the pandemic. In this sense, third-party delivery services helped compensate for lost revenue when dine-in spaces were ordered closed or scaled down due to social distancing guidelines. The burden to restaurants developed as consumers used delivery services for a greater share of their meals and delivery orders began to replace restaurants’ core business instead of complementing it. While ostensibly giving restaurants business, the delivery services and related commission fees were effectively taking it away. Commission fees charged to restaurants have become problematic for the industry.
Relief to Restaurants
The Florida Restaurant & Lodging Association worked with several delivery companies to develop incentives to help restaurants, including getting delivery companies to lower their commissions, and reduce or eliminate delivery fees. For example, during March, Uber Eats waived delivery fees charged to customers ordering from some independent restaurants (100,000 nationwide) and also waived commission fees charged to restaurants for pickup orders. In addition, the app prioritizes the promotion of local independent restaurants when users open the app. UberEats also developed a functionality allowing restaurants to get daily payouts instead of weekly cash payments. Delivery companies assisted many restaurants with getting set up to accept online orders from their own website. Restaurants were able to utilize existing staff as delivery people, which enables operators to retain and repurpose staff.
The Greater Miami Convention and Visitors Bureau (GMCVB) created its Miami Eats program, an online repository of current info about 1500 Greater Miami restaurants, including almost 200 in Miami Beach, each of which had been contacted to confirm information such as business hours and delivery options.
In Miami-Dade County, the North Miami Community Redevelopment Agency (NMCRA) initiated the NoMi Delivers Program to provide relief to customers as well as restaurants and breweries. For an initial one-month term, NMCRA has partnered with Uber Eats to offer $5 off delivery for any orders over $15. Additionally, the NMCRA will reimburse participating restaurants up to 30 percent of delivery service fees (through any delivery app) for up to $5,000 a month (total) for all delivery application fees and additional services. Over 50 restaurants are participating in the NoMi Delivers Program. The Program excludes chain restaurants, nightclubs, bars, mobile food trucks, restaurants within hotels, and home-based businesses.
Miami Beach Restaurant Reimbursement Grant (Proposed)
The City Commission has allocated $60,000 to create a reimbursement program for Miami Beach restaurants to offset expenses related to delivery service fees. As of October 7, 2020, the Finance Department has identified 628 restaurant Business Tax Receipts (BTRs) as follows:
Restaurant/Bar 581
Restaurant (Takeout) 37
Restaurant (No Bar) 10
Due to the volume of restaurants, a first-come, first-qualified, first-served grant program is proposed to distribute funds to eligible restaurants. To provide assistance to approximately ten percent of restaurants within the city, the Administration proposes a grant of up to $1,000 per restaurant utilizing the following guidelines:
• Eligible businesses
- Restaurant located within the City of Miami Beach
• Ineligible Businesses
- Nightclubs, bars (without restaurant), mobile food trucks or carts, restaurants within hotels and home-based businesses
- Restaurants utilizing a Pop-up permit
- Restaurants with outstanding code violation(s)
- Restaurants that are part of a chain/franchise
• Requirements
- Applicable City of Miami Beach/Miami-Dade County/State of Florida licenses must be up to date
- Miami Beach Business Tax Receipt must be in paid status (with consideration of the new BTR payment options)
- Applicant must be a business that was or became operational (as evidenced by a City of Miami Beach Certificate of Use or Business Tax Receipt) prior to October 31, 2020.
- Restaurant owner/operator/applicant shall have no outstanding code liens, fines or violations, pending litigation with the City of Miami Beach or any unpaid ad valorem property taxes (if owner of the property).
- Regardless of reimbursement amount being requested (up to $1,000), only one grant application per business is allowed.
- Grant application must be signed by the president/general manager/majority owner of the business.
- Applicants may not submit multiple applications using different partners, family members or other persons.
- If any individual is the president/general manager/majority owner for more than one eligible business, the individual may only apply on behalf of one business. (Note: this means that if one or more eligible businesses have an owner in common, only one of those businesses may apply for the Program, even if the business(es) has(have) more than one owner.
- To be considered, applications must be completed in full, signed and submitted via the designated e-mail/online platform. Applications may not be hand-delivered by the applicant.
- Submit appropriate invoice(s) and proof of payment with back-up documentation acceptable to the City of Miami Beach.
- To receive the reimbursement payment, the business must be “open and in business” as determined by the City of Miami Beach, in its sole discretion.
• Eligible expenses for reimbursement
- Expenses for delivery service fees from apps including UberEats, GrubHub, DoorDash and Postmates among others.
- Only those expenses incurred between the March 12, 2020 emergency declaration by the City Manager and October 31, 2020
• Proof of payment for reimbursement - to be reimbursed, businesses must provide the following:
- A copy of the paid invoice and a receipt which should clearly identify the business, the business address and a description of the services that were obtained by the business with a statement or stamp that says PAID.
- A copy of the method of payment:
- If paid by check, a copy of both sides of the cancelled check.
- If paid by credit card, a copy of the credit card receipt to confirm payment for the invoice was made to the vendor/service provider.
- If paid by cash, a copy of the cash receipt which must note CASH paid in full with the signature of the vendor/service provider.
• Grant application window
- Application available online on November 1, 2020 (proposed)
- Applications evaluated and processed on a first-come, first-qualified, first-served basis
- Application open until funds are exhausted
Potential partnership with Food Delivery Service companies
The Administration is exploring opportunities to partner with food delivery apps/companies to promote Miami Beach restaurants and increase patronage.
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| | | | | | | | CONCLUSION:
As the restaurant industry represents a substantial segment of the Miami Beach business community, it is imperative that restaurants are afforded every opportunity to bounce back. In addition to development of the Miami Beach Restaurant Reimbursement Grant Program, staff plans to work with the Florida Restaurant & Lodging Association, UberEats and other apps to establish promotional opportunities to further assist restaurants.
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| | | | | | | | | Is this a "Residents Right to Know" item, pursuant to City Code Section 2-14? | | Does this item utilize G.O. Bond Funds? | | | Yes | | No | |
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