A new proposal in California disguised as a consumer protection measure would actually end up being a backdoor for large restaurant chains and Travis Kalanick’s startups to access competitors’ business information.

The bill, SB 1490, has many well-intentioned proposals aimed at increasing transparency about prices on food delivery apps. However, there are a few provisions that don’t quite fit with the bill’s overall consumer focus and reveal the true intentions of the bill’s corporate supporters.

Specifically, the bill requires food delivery apps to disclose the commissions and fees restaurants pay every time a customer orders from them. Large chain restaurants, who have the power to negotiate exclusive agreements with different delivery platforms, would love to be able to see what kinds of fees their competitors are paying.

The restaurant fee-sharing provision helps explain why the Digital Restaurant Association, a group dominated by large restaurant chains and notorious Uber founder Travis Kalanick, are sponsoring the bill. Kalanick’s startups, including a ghost kitchen company and restaurant payment facilitator, would have their market access and access to business and consumer data guaranteed in California. The large restaurant chains stand to get a huge anti-competitive advantage by getting access to the private contractual information of their competitors.

We don’t think California lawmakers should be spending time helping billionaires and billion-dollar companies get richer.

“Digital Restaurant Association” is an astroturf organization funded by Uber founder Travis Kalanick

  • The Delaware Valley Journal reported, “On the surface, the Digital Restaurant Association seems innocuous, [yet] everyone listed as either a current or former DRA official has also been affiliated with Tusk Strategies.”

  • The Financial Times reported in 2022 that Digital Restaurant Association “was currently ‘fully operated and funded’ by Tusk Holdings…a lobbying firm founded by Bradley Tusk, an early Uber investor and former adviser who spearheaded efforts by the ride-hailing app founded by Kalanick to bat away regulation in New York City.”

  • Tusk’s investment vehicle Pericles lists Kalanick’s CloudKitchens as one of the companies in which had taken a stake – in exchange for public policy and regulatory advice.

  • An executive at Kalanick’s new company, City Storage Systems, was listed on the Digital Restaurant Association’s board of directors. He was removed after the connections were first mentioned in the Financial Times.

Data-sharing legislation would help Kalanick’s new startup

  • As part of Kalanick’s umbrella of companies under City Storage Systems, he has founded the startup service Otter, which helps restaurants manage orders from several food apps at once.

  • According to the Delaware Valley Journal, most of Otter’s customers are national restaurant chains. These same chains are listed as “members” of the Digital Restaurant Association, including Bloomin’ Brands, Hooters, IHOP, and Portillo’s.

  • In mid-June 2023, DRA advertised membership in the association without any fees for 2023 – an indicator of trying to use restaurants as cover for Otter’s mission.

  • Legislation forcing third-party delivery apps to turn over customer data to restaurants would be an immediate boon to Otter’s business and clients.

  • The bill would also permanently enshrine restaurants’ ability to use consultants or other services to coordinate with food delivery apps. That right isn’t currently under threat–food delivery apps have no problem with restaurants hiring accountants, lawyers, or other consultants–but it would permanently protect Otter’s market access.

  • “If you look at the Digital Restaurant Association today, it’s mostly chain restaurants who I assume are customers of Otter,” said Adam Kovacevich, CEO of Chamber of Progress told Inside Sources. “The main thing that they’ve been pushing…would require Uber Eats, DoorDash, Grubhub to share data with restaurants. That is basically data that Otter would like to get their hands on to help their business.

Data-sharing legislation would also help large restaurant chains undercut their competition

  • The other members of the DRA would stand to gain access to private business information from their competitors.

  • Large restaurant chains often negotiate with individual delivery platforms for preferential placement in searches, marketing services, or better commission fees. These negotiations are confidential and take place in a competitive market–both for food delivery services and restaurants.

  • If the fees the delivery platforms charge to restaurants were forced to be shared, the large restaurant chains that dominate DRA’s membership would be able to see the deals their competitors negotiated with every delivery platform, undercutting competition.

  • The fee-sharing requirement would only help cement the dominant position of large restaurant chains, and would do nothing to help consumers or small, independent restaurants.

  • As the California Black Chamber of Commerce said in their opposition to the bill, “The last thing our membership needs is an out-of-state group coming in and imposing new laws that don’t serve their best interests”