Price controls needlessly hurt Black-owned businesses 

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By Jade Stevens

Guest Columnist

In the last year, the economic disparities across different communities have become even more apparent as Black small businesses struggled to stay open. 

Caving to the pressures of the pandemic, 41% of Black-owned businesses closed permanently compared to just 17% of white-owned businesses, according to a recent report by the National Bureau of Economic Research.

In traditionally Black neighborhoods, like South Los Angeles and Compton, restaurant owners often face more obstacles than neighboring, more affluent merchants. Due to systematic challenges, the majority of black restaurant owners have a harder time qualifying for forgivable loans.

Those same restaurants are often family-run and operated by too few employees to qualify for the paycheck protection plan, which could have offset the financial stresses of the past year.

These systemic challenges and inequities threaten the best of our communities and unfairly suppress small businesses and restaurant owners. This is one of the main reasons I created Dine Black LA: we need a voice to advocate for Black-owned restaurants and illustrate how policies directly affect our communities.

One current example is the pending proposal before the county Board of Supervisors that would impose price controls on app-based restaurant delivery services. While that may not seem like an obvious, clear-cut threat, this is not a solution to help small restaurants. 

We know this because last year, Los Angeles County enacted temporary price controls on the fees that food delivery services can collect for the services they provide to restaurants. The temporary price controls did not relieve financial stress for restaurants; instead, it increased costs to the customer and extended wait times — while the restaurant took the blame.

The proposal refuses to take into consideration the crucial support and service these platforms provide to restaurants. The decision to intervene in a voluntary business-to-business contract means that the county Board of Supervisors not only limit which services restaurants can and can’t have, but also prevents platforms from offering additional products and services to businesses. 

The bottom line is, price controls could strip the essential delivery and marketing services many small restaurants rely on to reach customers.

To be clear, app-based services have benefited many Black-owned restaurants. Instead of juggling customer service, background checks for delivery workers and setting up an online storefront alone, restaurants partnered with delivery platforms to take on these more cost-intensive and time-consuming services. 

Many times, restaurants do not have the labor or resources to do these essential services in-house and need a partner such as these delivery platforms.

For example one restaurant owner I work with closely shared that he had built a successful business through word of mouth. When the restaurant had to shut down indoor dining, he needed the marketing services of the delivery-based apps. 

With featured placement on the app, his business was exposed to customers who had a craving for hot links, attracting new customers and allowing him to keep their doors open. In many instances, some of those new customers are now regular customers. 

But with a permanent artificial price control, small restaurants like Jordan’s Hot Dogs may not be able to afford or have the option to choose critical and affordable marketing packages to support their business.

Another local restaurant I work with normally serves as a community meeting place. You will see families gathering on Sunday after church for lunch and business partners meeting for a coffee. 

When forced to stop in-person services, the restaurant wasn’t set up to take and make deliveries. In the past, delivery wasn’t a part of the business and customers came directly to the restaurant. Then, to adapt, he partnered with an app-based delivery service to handle the stress and cost of managing orders and connecting to customers. 

This restaurant won’t be helped by the county’s proposed price controls — instead, the result will likely be an increase in the price of service customers rely on. Unsettling reliable customers may result in consumers choosing to not use these services — a choice that’s critical for restaurant owners.

While our elected officials tout the economy’s recovery, they seem to overlook that the economy does not recover at the same rate across all neighborhoods. In traditionally Black and underserved neighborhoods, our rate of recovery is slower than the growth in other communities. We need policies that will actually make a difference so that we can recover from the pandemic and keep growing. 

Permanent price controls are not the solution.

The bottom line is, price controls could strip the essential delivery and marketing services many small restaurants rely on to reach customers. 

Jade Stevens is the founder and executive director of Dine Black LA, a coalition that supports and promotes restaurateurs, small businesses and the entire Black restaurant community to ensure equitable economic growth of the sector. 

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