Case 3:21-cv-05502-EMC Document 28 Filed 10/15/21 Page 1 of 33
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`DENNIS J. HERRERA, State Bar #139669
`City Attorney
`WAYNE K. SNODGRASS, State Bar #148137
`JEREMY M. GOLDMAN, State Bar #218888
`Deputy City Attorneys
`City Hall, Room 234
`1 Dr. Carlton B. Goodlett Place
`San Francisco, California 94102-4682
`Telephone:
`(415) 554-6762
`Facsimile:
`(415) 554-4699
`E-Mail:
`jeremy.goldman@sfcityatty.org
`
`
`Attorneys for Defendant
`CITY AND COUNTY OF SAN FRANCISCO
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
`
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`DOORDASH, INC. and GRUBHUB INC.,
`
`
`Plaintiffs,
`
`
`vs.
`
`CITY AND COUNTY OF SAN FRANCISCO,
`
`
`Defendant.
`
`
`
`Case No. 3:21-cv-05502 EMC
`
`DEFENDANT CITY AND COUNTY OF
`SAN FRANCISCO’S NOTICE AND
`MOTION TO DISMISS FIRST AMENDED
`COMPLAINT; MEMORANDUM OF
`POINTS AND AUTHORITIES
`
`Hearing Date:
`December 9, 2021
`Time:
`1:30 p.m.
`Place:
`Courtroom 5
`
`
`
`MOTION TO DISMISS FAC; MPA
`CASE NO. 3:21-cv-05502 EMC
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`Case 3:21-cv-05502-EMC Document 28 Filed 10/15/21 Page 2 of 33
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`TABLE OF CONTENTS
`
`II.
`
`B.
`
`TABLE OF AUTHORITIES .......................................................................................................... ii
`NOTICE AND MOTION ................................................................................................................1
`MEMORANDUM OF POINTS AND AUTHORITIES .................................................................1
`ISSUES TO BE DECIDED .............................................................................................................1
`INTRODUCTION ...........................................................................................................................1
`STATEMENT OF FACTS ..............................................................................................................2
`A.
`The Ordinance ..............................................................................................2
`B.
`Plaintiffs’ Business Practices .......................................................................4
`LEGAL STANDARD FOR MOTION TO DISMISS .....................................................................4
`ARGUMENT ...................................................................................................................................5
`I.
`THE FAC FAILS TO STATE A CLAIM FOR VIOLATION OF THE
`CONTRACT CLAUSE OF THE FEDERAL AND STATE CONSTITUTIONS ..5
`A.
`There Is No Substantial Impairment of a Contractual Relationship ............5
`B.
`The Ordinance Is an Appropriate and Reasonable Way to Advance a
`Significant and Legitimate Public Purpose ..................................................7
`THE FAC FAILS TO STATE A CLAIM FOR AN UNCONSTITUTIONAL
`TAKING UNDER THE FIFTH AMENDMENT OR FOR INVERSE
`CONDEMNATION UNDER THE CALIFORNIA CONSTITUTION ................11
`A.
`Plaintiffs’ Contracts Do Not Give Rise to a Claim Under the Taking
`Clause .........................................................................................................11
`Even If Plaintiffs’ Contracts Are Property for the Purposes of the Taking
`Clause, the FAC Fails to Establish a Regulatory Taking...........................12
`THE FAC FAILS TO STATE A CLAIM FOR VIOLATION OF ARTICLE XI,
`SECTION 7 OF THE CALIFORNIA CONSTITUTION .....................................14
`THE FAC FAILS TO STATE A CLAIM FOR VIOLATION OF DUE
`PROCESS ..............................................................................................................16
`THE FAC FAILS TO STATE A CLAIM FOR VIOLATION OF EQUAL
`PROTECTION .......................................................................................................17
`THE FAC FAILS TO STATE A CLAIM FOR RETALIATION .........................20
`VI.
`VII. LEAVE TO AMEND SHOULD BE DENIED .....................................................24
`CONCLUSION ..............................................................................................................................25
`
`
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`III.
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`IV.
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`V.
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`TABLE OF AUTHORITIES
`
`CASES
`Allied Properties v. Dep’t of Alcoholic Beverage Control
`53 Cal.2d 141 (1959) .................................................................................................................15
`
`Allied Structural Steel Co. v. Spannaus
`438 U.S. 234 (1978) ...................................................................................................................10
`
`Animal Legal Def. Fund v. Wasden
`878 F.3d 1184 (9th Cir. 2018) ...................................................................................................20
`
`Apartment Ass’n of Greater Los Angeles v. City of Los Angeles
`No. 220CV04479ODWJEMX, 2021 WL 2460634 (C.D. Cal. June 1, 2021) .............................7
`
`Apartment Ass’n of Los Angeles Cty., Inc. v. City of Los Angeles
`10 F.4th 905 (9th Cir. 2021) ........................................................................................................7
`
`Armour v. City of Indianapolis, Ind.
`566 U.S. 673 (2012) ...................................................................................................................17
`
`Ashcroft v. Iqbal
`556 U.S. 662 (2009) ...............................................................................................................4, 24
`
`Associated Home Builders etc., Inc. v. City of Livermore
`18 Cal.3d 582 (1976) .................................................................................................................15
`
`Bd. of Trustees of W. Conf. of Teamsters Pension Tr. Fund v. Thompson Bldg. Materials, Inc.
`749 F.2d 1396 (9th Cir. 1984) ...................................................................................................12
`
`Birkenfeld v. City of Berkeley
`17 Cal.3d 129 (1976) .................................................................................................................15
`
`Blair v. Bethel Sch. Dist.
`608 F.3d 540 (9th Cir. 2010) .....................................................................................................22
`
`Boardman v. Inslee
`978 F.3d 1092 (9th Cir. 2020) ...................................................................................................20
`
`Brown v. Hovatter
`561 F.3d 357 (4th Cir. 2009) .....................................................................................................17
`
`California Bldg. Indus. Assn. v. City of San Jose
`61 Cal.4th 435 (2015) ..................................................................................................................8
`
`California Grocers Ass’n v. City of Long Beach
`No. 221CV00524ODWASX, 2021 WL 3500960 (C.D. Cal. Aug. 9, 2021) ...............................5
`
`Campanelli v. Allstate Life Ins. Co.
`322 F.3d 1086 (9th Cir. 2003) .....................................................................................................5
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`Capp v. Cty. of San Diego
`940 F.3d 1046 (9th Cir. 2019) ...................................................................................................21
`
`Chang v. United States
`859 F.2d 893 (Fed. Cir. 1988) .......................................................................................12, 13, 25
`
`City of Las Vegas v. Foley
`747 F.2d 1294 (9th Cir. 1984) ...................................................................................................23
`
`Classic Cab, Inc. v. D.C.
`288 F. Supp. 3d 218 (D.D.C. 2018) ...........................................................................................12
`
`Comm. for Reasonable Regul. of Lake Tahoe v. Tahoe Reg’l Plan. Agency
`311 F. Supp. 2d 972 (D. Nev. 2004) ..........................................................................................25
`
`Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Trust for S. Cal.
`508 U.S. 602 (1993) ...................................................................................................................13
`
`Connolly v. Pension Benefit Guaranty Corp.
`475 U.S. 211 (1986) .............................................................................................................11, 12
`
`Cycle City, Ltd. v. Harley-Davidson Motor Co.
`81 F. Supp. 3d 993 (D. Haw. 2014) .............................................................................................8
`
`Desoto CAB Co., Inc. v. Picker
`228 F. Supp. 3d 950 (N.D. Cal. 2017) ...........................................................................18, 20, 25
`
`Duquesne Light Co. v. Barasch
`488 U.S. 299 (1989) ...................................................................................................................17
`
`Energy Rsrvs. Grp., Inc. v. Kansas Power & Light Co.
`459 U.S. 400 (1983) .................................................................................................................5, 9
`
`Exxon Corp. v. Eagerton
`462 U.S. 176 (1983) ...................................................................................................................10
`
`F.C.C. v. Beach Commc’ns, Inc.
`508 U.S. 307 (1993) .............................................................................................................17, 18
`
`Fayer v. Vaughn
`649 F.3d 1061 (9th Cir. 2011) .....................................................................................................4
`
`Fed. Power Comm’n v. Hope Natural Gas Co.
`320 U.S. 591 (1944) ...................................................................................................................17
`
`Fed. Power Comm’n v. Nat. Gas Pipeline Co. of Am.
`315 U.S. 575 (1942) ...................................................................................................................16
`
`Fitzgerald v. Racing Ass’n of Cent. Iowa
`539 U.S. 103 (2003) ...................................................................................................................18
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`Fortune Players Grp., Inc. v. Quint
`No. 16-CV-04557-TEH, 2016 WL 7102735 (N.D. Cal. Dec. 6, 2016) .....................................21
`
`Fraternal Ord. of Police Hobart Lodge No. 121, Inc. v. City of Hobart
`864 F.2d 551 (7th Cir. 1988) .....................................................................................................22
`
`Gallinger v. Becerra
`898 F.3d 1012 (9th Cir. 2018) .............................................................................................20, 25
`
`General Motors Corp. v. Romein
`503 U.S. 181 (1992) .....................................................................................................................5
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`Hawkeye Commodity Promotions, Inc. v. Miller
`432 F. Supp. 2d 822 (N.D. Iowa 2006) ......................................................................................14
`
`Hell’s Angels Motorcycle Corp. v. Cty. of Monterey
`89 F. Supp. 2d 1144 (N.D. Cal. 2000) .........................................................................................1
`
`Hernandez v. City of Hanford
`41 Cal.4th 279 (2007) ............................................................................................................8, 19
`
`Hettinga v. United States
`677 F.3d 471 (D.C. Cir. 2012) ...................................................................................................17
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`Hotel & Motel Ass’n of Oakland v. City of Oakland
`344 F.3d 959 (9th Cir. 2003) .....................................................................................................19
`
`Huskey v. City of San Jose
`204 F.3d 893 (9th Cir. 2000) .....................................................................................................21
`
`In re Seltzer
`104 F.3d 234 (9th Cir. 1996) .......................................................................................................5
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`Inman v. Hatton
`No. 17-CV-06612-SI, 2018 WL 1100959 (N.D. Cal. Mar. 1, 2018) .........................................21
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`Kavanau v. Santa Monica Rent Control Bd.
`16 Cal.4th 761 (1997) ................................................................................................................16
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`Kawaoka v. City of Arroyo Grande
`17 F.3d 1227 (9th Cir. 1994) .....................................................................................................23
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`Keith Fulton & Sons, Inc. v. New England Teamsters & Trucking Indus. Pension Fund
`762 F.2d 1124 (1st Cir. 1984) ....................................................................................................12
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`Keystone Bituminous Coal Ass’n v. DeBenedictis
`480 U.S. 470 (1987) ...........................................................................................................7, 8, 12
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`Laurel Park Cmty., LLC v. City of Tumwater
`698 F.3d 1180 (9th Cir. 2012) ...................................................................................................13
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`Lefrancois v. State of R.I.
`669 F. Supp. 1204 (D.R.I. 1987) .............................................................................................6, 7
`
`Litmon v. Harris
`768 F.3d 1237 (9th Cir. 2014) ...................................................................................................19
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`MHC Fin. Ltd. P'ship v. City of San Rafael
`714 F.3d 1118 (9th Cir. 2013) ...................................................................................................13
`
`Missouri Pet Breeders Ass’n v. Cty. of Cook
`106 F. Supp. 3d 908 (N.D. Ill. 2015) ...........................................................................................7
`
`Mountain Water Co. v. Montana Dep’t of Pub. Serv. Regul.
`919 F.2d 593 (9th Cir. 1990) .....................................................................................................20
`
`Navarro v. Block
`250 F.3d 729 (9th Cir. 2001) .......................................................................................................4
`
`Nebbia v. People of New York
`291 U.S. 502 (1934) ...................................................................................................................16
`
`Nekrilov v. City of Jersey City
`No. CV1922182KMJBC, 2021 WL 1138360 (D.N.J. Mar. 24, 2021) ......................................14
`
`Nordlinger v. Hahn
`505 U.S. 1 (1992) .......................................................................................................................17
`
`Norman v. Baltimore & Ohio R. Co.
`294 U.S. 240 (1935) ...................................................................................................................11
`
`Novell, Inc. v. Microsoft Corp.
`505 F.3d 302 (4th Cir. 2007) .......................................................................................................9
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`Nw. Grocery Ass’n v. City of Seattle
`No. C21-0142-JCC, 2021 WL 1055994 (W.D. Wash. Mar. 18, 2021) .......................................8
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`Olson v. Bonta
`No. CV1910956DMGRAOX, 2021 WL 3474015 (C.D. Cal. July 16, 2021) .....................19, 20
`
`Olson v. California
`No. CV1910956DMGRAOX, 2020 WL 6439166 (C.D. Cal. Sept. 18, 2020) .....................5, 20
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`Olson v. California
`No. CV1910956DMGRAOX, 2020 WL 905572 (C.D. Cal. Feb. 10, 2020) ............................20
`
`Peick v. Pension Ben. Guar. Corp.
`724 F.2d 1247 (7th Cir. 1983) ...................................................................................................12
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`Penn Central Transportation Co. v. New York City
`438 U.S. 104 (1978) ...................................................................................................................12
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`Pennell v. City of San Jose
`485 U.S. 1 (1988) .......................................................................................................................16
`
`Permian Basin Area Rate Cases
`390 U.S. 747 (1968) ...................................................................................................................16
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`Pro-Eco, Inc. v. Bd. of Comm’rs of Jay Cty., Ind.
`57 F.3d 505 (7th Cir. 1995) .......................................................................................................12
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`Reddy v. Litton Indus., Inc.
`912 F.2d 291 (9th Cir. 1990) .....................................................................................................24
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`Ruckelshaus v. Monsanto Co.
`467 U.S. 986 (1984) ...................................................................................................................13
`
`RUI One Corp. v. City of Berkeley
`371 F.3d 1137 (9th Cir. 2004) ...................................................................................................18
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`Safeway Inc. v. City & Cnty. of San Francisco
`797 F. Supp. 2d 964 (N.D. Cal. 2011) .......................................................................................18
`
`San Francisco Taxi Coal. v. City & Cty. of San Francisco
`979 F.3d 1220 (9th Cir. 2020) ...............................................................................................8, 18
`
`San Remo Hotel L.P. v. City And Cty. of San Francisco
`364 F.3d 1088 (9th Cir. 2004) ...................................................................................................11
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`Schmidt v. Contra Costa Cty.
`No. C 05-197 VRW, 2011 WL 13244831 (N.D. Cal. Feb. 22, 2011) .......................................21
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`Smith v. Pelican Bay State Prison
`No. 15-CV-04875-EMC, 2016 WL 285062 (N.D. Cal. Jan. 25, 2016) .....................................24
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`Snake River Valley Elec. Ass’n v. PacifiCorp
`357 F.3d 1042 (9th Cir. 2004) .....................................................................................................7
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`Somers Realty Corp. v. Harding
`886 F. Supp. 386 (S.D.N.Y. 1995) ............................................................................................24
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`Sprewell v. Golden State Warriors
`266 F.3d 979 (9th Cir. 2001) .......................................................................................................4
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`Sveen v. Melin
`138 S. Ct. 1815 (2018) .................................................................................................................5
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`Taylor v. United States
`959 F.3d 1081 (Fed. Cir. 2020) .................................................................................................13
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`TCF Nat. Bank v. Bernanke
`643 F.3d 1158 (8th Cir. 2011) .............................................................................................16, 19
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`Thinket Ink Info. Res., Inc. v. Sun Microsystems, Inc.
`368 F.3d 1053 (9th Cir. 2004) ...................................................................................................24
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`United States Trust Co. v. New Jersey
`431 U.S. 1 (1977) .........................................................................................................................5
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`United States v. O’Brien
`391 U.S. 367 (1968) ...................................................................................................................23
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`United States v. Padilla-Diaz
`862 F.3d 856 (9th Cir. 2017) .....................................................................................................17
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`United States v. Wilde
`74 F. Supp. 3d 1092 (N.D. Cal. 2014) .......................................................................................20
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`Wright v. Incline Vill. Gen. Improvement Dist.
`665 F.3d 1128 (9th Cir. 2011) ...................................................................................................19
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`Young Am.’s Found. v. Napolitano
`No. 17-CV-02255-MMC, 2018 WL 1947766 (N.D. Cal. Apr. 25, 2018) ...........................24, 25
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`CONSTITUTIONAL PROVISIONS
`California Constitution
`Article I, Section 9 .......................................................................................................................5
`Article I, Section 19 ...................................................................................................................11
`Article XI, Section 7 ..................................................................................................................14
`
`U.S. Constitution
`Article I, Section 10 .....................................................................................................................5
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`SAN FRANCISCO CODES AND REGULATIONS
`S.F. Police Code
`§ 5300(a)-(j) ...................................................................................................................2, 3, 9, 20
`§§ 5303-5305 .............................................................................................................................22
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`NOTICE AND MOTION
`PLEASE TAKE NOTICE THAT on December 9, 2021, at 1:30 p.m., or as soon thereafter as
`the matter may be heard, in the United States District Court, Northern District of California,
`Courtroom 5, before the Honorable Edward Chen, Defendant City and County of San Francisco (“the
`City”) will and hereby does move the Court for an order dismissing the First Amended Complaint
`(“FAC”) under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The motion is based on this
`Notice and Motion, the accompanying Memorandum of Points and Authorities, the other documents
`filed in connection with this motion, the papers and records on file in this action, and such other
`written and oral argument as may be presented to the Court.
`
`MEMORANDUM OF POINTS AND AUTHORITIES
`ISSUES TO BE DECIDED
`
`Whether the FAC fails to state a claim for (1) violation of the Contracts Clause of the federal
`and state constitutions; (2) an unconstitutional taking under the federal and state constitutions; (3)
`exceeding the scope of the police power under the state constitution; (4) violation of due process under
`the federal and state constitutions; (5) violation of equal protection under the federal and state
`constitutions; and (6) retaliation in violation of the rights to free speech and to petition under the
`federal and state constitutions.
`
`INTRODUCTION
`
`Taking “a smorgaşbord approach to pleading,” Hell’s Angels Motorcycle Corp. v. Cty. of
`Monterey, 89 F. Supp. 2d 1144, 1147 (N.D. Cal. 2000), Plaintiffs DoorDash and Grubhub assert six
`causes of action—down by one as compared to the original complaint—under a host of federal and
`state constitutional provisions, all seeking to have this Court invalidate the City’s decision to cap at
`fifteen percent the commissions that third-party delivery service platforms may charge independent
`restaurants. The City took the action because the high commissions that the largest third-party
`platforms have been able to impose through their market dominance threaten the profitability, and
`thereby the survival, of businesses that are critical to the economic and social vitality of San
`Francisco’s commercial corridors.
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`MOTION TO DISMISS FAC; MPA
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`Plaintiffs’ numerous claims are variations on a handful of legally flawed ideas. Plaintiffs posit
`as the basis for several claims that a law is arbitrary or impermissibly discriminatory if it benefits some
`business entities at the expense of others, but that supposition is simply incorrect. They condemn the
`City’s law as “confiscatory” and a regulatory taking while overlooking their own allegations that they
`can and will raise consumer fees in response—and their own prior disclosures to investors that they
`may face future laws regulating their commissions, and that could result in changes to their business
`model. And they seek invalidation of the law, regardless of whether it serves a legitimate purpose, by
`implausibly portraying themselves as victims of animus and retaliation because the Board of
`Supervisors previously opposed Proposition 22—a measure DoorDash supported—on the ground that
`it would deny app-based drivers the panoply of workplace protections afforded employees. The
`argument is a non-sequitur, and the very statements on which Plaintiffs rely show that officials were
`concerned about the plight of San Francisco’s restaurants when enacting and extending the
`commission cap beyond the pandemic. Because all of these claims are irredeemably flawed, as
`illustrated by Plaintiffs’ unsuccessful amendments, the Court should dismiss the FAC without leave to
`amend.
`
`A.
`
`The Ordinance
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`STATEMENT OF FACTS
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`Ordinance No. 234-20, which added Article 53 to the San Francisco Police Code, was enacted
`on November 20, 2020. ECF#25 ¶ 55 & Ex. D. While it contains several additional provisions that
`are not challenged in this litigation, at issue here is its imposition of a fifteen percent cap on the
`commissions that third-party delivery service companies may charge restaurants. Id. ¶ 57. The
`Ordinance followed by approximately seven months an emergency order by the Mayor likewise
`imposing fifteen percent cap. Id. ¶ 39. The findings of the Ordinance include the following:
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`• “Restaurants are vital to the character and community fabric of San Francisco (‘City’). They
`reflect and nurture the cultural diversity of the City, while offering access to food, an essential
`foundation of human health and basis for social connection. Restaurants are also important
`engines of the local economy, providing jobs and serving as commercial anchors in
`neighborhoods across the City.” ECF#25 Ex. D, S.F. Police Code § 5300(a).
`• “Restaurants occupy a substantial percentage of ground floor retail space along the City’s
`commercial corridors,” but “in recent years the City’s restaurant industry has been in decline,”
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`with the number of closures exceeding the number of openings for at least the past five years.
`Id. § 5300(b), (c).
`• That decline has “coincide[d] with the rapid rise of third-party delivery services,” just four of
`which controlled “approximately 98% of the entire market” as of November 2019. Id. §
`5300(d).
`• “The increasing market dominance of a small number of third-party food delivery service
`companies has resulted in increasingly difficult economic conditions for City restaurants,
`which must contract with these companies if they wish to access the growing share of
`customers who rely on delivery platforms to obtain meals.” Id. § 5300(e).
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`• These companies’ “market dominance” has given them “disproportionate leverage in contract
`negotiations with restaurants,” which they have used to extract high fees that “diminish
`restaurants’ already-narrow profit margins.” Id. § 5300(f).
`• “Sample contracts … reflect that these companies commonly charge restaurants a 10% per-
`order fee for ‘delivery services,’” and impose additional fees “as much as 20% of the order cost
`for what are described as ‘marketing’ or ‘logistics’ services,” which have high profit margins.
`Id. § 5300(g).
`• “While money spent by consumers at local restaurants circulates within communities and
`bolsters the vitality of commercial corridors, third-party food delivery services companies have
`amassed concentrated wealth without providing similar community benefits. And increasingly,
`these companies are using their market leverage to extract unfairly high payments from
`restaurants, hastening the closure of City restaurants and the resulting decline of City
`commercial districts.” Id. § 5300(h).
`• The pandemic has “worsened the economic picture for City restaurants,” which have become
`“dependent on delivery and takeout orders, and increasingly vulnerable to unfair contract terms
`demanded by delivery services companies,” which “have enjoyed unprecedented revenue.” Id.
`§ 5300(i).
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`The Ordinance describes the commission cap as an “important step[] to ensure that restaurants can
`thrive in San Francisco and continue to nurture vibrant, distinctive commercial districts.” Id. §
`5300(j). It applies to third-party platforms that serve twenty or more restaurants, and covers any
`restaurant that does not meet the definition of a “formula retail use” under section 303.1 of the
`Planning Code (in brief, eleven or more establishments in operation, with two or more of standardized
`merchandise, façade, décor/color scheme, uniform apparel, signage, and trademark or service mark).
`ECF#25 ¶¶ 59-60.
`The law originally had a sunset date of sixty days after the amendment or termination of the
`pandemic “Stay Safer At Home” order or any subsequent order allowing restaurants to resume at
`100% capacity. ECF#25 ¶ 62. However, in June 2021, the Board of Supervisors voted unanimously
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`to repeal the sunset date, so that the cap would continue in effect. Id. ¶ 71. The Mayor declined to
`sign the repeal measure, but it became effective without her signature. Id. ¶ 73.
`Plaintiffs’ Business Practices
`B.
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`Grubhub alleges that restaurants opting to use its marketplace “select a negotiable marketing
`package that typically ranges from 5-20% per order,” and that for contracts that include delivery
`facilitation, the total commission rate is “generally greater” than fifteen percent. ECF#25 ¶ 29.
`DoorDash alleges that it offers a plan in which it “facilitates the delivery of online orders for a flat
`commission rate of 15%,” but that “most restaurants have opted for plans with commissions of 25% or
`30%.” Id. ¶ 64.b; see also id. ¶ 28. Both companies’ contracts are generally terminable at will, id. ¶¶
`24-25, and restaurants are free to leave the platforms “for any reason,” id. ¶ 18.
`Commissions “represent a substantial part of Plaintiffs’ revenue streams,” ECF#25 ¶ 19, but
`they also earn revenue from consumer fees, see id. ¶ 80. The FAC alleges that, “[f]or several years,
`there has been a robust public debate about the amount of commissions restaurants pay to third-party
`platforms” and their impact on restaurants’ profitability. Id. ¶ 30. Plaintiffs allege that they will “try
`to offset the revenue lost due to lower commissions with restaurants” by increas