Businesses see delayed start to home alcohol delivery
Iowans might be waiting for to-go alcohol by delivery apps for a little while longer.
The Iowa Legislature this year approved House File 766, a bill that creates more opportunities for third-party delivery of alcohol in Iowa. As of July 1, retailers and grocery stores can use food delivery apps to deliver products to customers without jeopardizing their liquor licenses.
Iowa grocers, retailers, restaurants and third-party apps are divided over the new legislation. The execution of the bill for restaurants might be a little slow, said Jessica Dunker, president and CEO of the Iowa Restaurant Association.
“Whenever you introduce a third party, we lose control of the quality,” she said. “We don’t know if it gets to you on time or if it’s temperature controlled. And we aren’t going to be super quick on wanting to do this (to-go alcohol) because so often we lose money on these things, and we don’t ever want to risk liquor licenses.”
Some apps are ready to go with enacting the legislation. GrubHub Spokesperson Grant Klinzman said in an email to Iowa Capital Dispatch that the 17-year-old food ordering app plans to roll out the service in Iowa.
“When we roll the service out in Iowa, date TBD, the technology and procedures will be similar to what we do in places like Chicago and (New York City),” he said. “The most important initial step for us is driver education about how to facilitate the orders and verify age.”
He said GrubHub delivers alcohol for businesses with liquor licenses in parts of Arizona, California, Florida, Illinois, Michigan, Minnesota, New Jersey, Virginia, and D.C. Every state has their own regulations, he said, whether delivery is for bars and liquor stores only or for only specific counties in a state.
DoorDash also plans to use the legislation to add options to their service.
However, some apps aren’t ready to use the legislative changes yet. Adam Weeks, a co-founder of the Iowa-based delivery service CHOMP, said the app doesn’t plan on utilizing the alcohol to-go service due to the vast amount of underage drivers. The bill requires drivers to be 21 to deliver orders with alcohol.
“Our options now would be to eliminate drivers that are under 21, which isn’t going to happen,” he said. “We can’t do that to all the drivers who have served us so well especially during the pandemic. Or, we work with our software provider to identify these orders … which will take some time.”
Ames’s Cyclone Liquors is one of the stores that is opting against using third-party apps for delivery. Managing partner of the store, Roger Esser, said the store isn’t opposed to ever using the service, but doesn’t find it financially best for the business.
“The type of store that we are, we have so many different items and higher-end wine, spirits and liquors, and I think the stuff that is going to be wanted by third-party sales is lower-margin stuff,” he said. “It wouldn’t be worth it right now when you have to give third parties certain percentages.”
Fareway grocery stores in Iowa will also not be using the service yet. Emily Toribio, a spokesperson for the company, said they are still researching the option and have yet to come to a conclusion on if they will use third-party apps.
“We are currently working to finish our online order option and to offer it at all our locations,” she said. “So, we’re currently still researching the new legislation.”
Another issue for CHOMP, Weeks said, is the technology needed to ensure there are no hiccups in the execution of to-go alcohol delivery.
Since app companies are liable for the alcohol between the business with a liquor license and the customer’s house, he said they have to have specific technology to verify the product gets directly to the person who ordered it and that they are 21.
“Unlike GrubHub or DoorDash or Uber, we don’t own our software, we lease it,” he said. “We don’t have developers that can make these changes quickly … So we’ve inquired with our company, but they’re in the middle of rolling out all sorts of different features. It’ll be added to the pipeline at some point, but we don’t have any guarantees.”
According to DoorDash’s website, their system only allows specific IDs to be a proper form of identification. The Dasher app comes with an ID scanner to ensure the customer is of age and drivers are instructed to use their judgment and not complete orders if they feel the situation “does not seem reasonable to deliver alcohol.”
Dunker said contactless delivery is not an option for these orders because of the technological verification necessary.
Weeks said while CHOMP plans to eventually offer this service, he is concerned about potential losses for the company.
“There’s a chance that because delivery of alcohol is elsewhere that it could put us at a disadvantage to a degree,” he said. “But I’m hoping at some point that we can also do it, but we won’t even entertain it unless we can do it correctly.”
New contracts add protection
Usually, third-party apps do not need a contract with restaurants to serve their food on their platforms. House File 766 changes this, a protection Dunker said her organization fought for.
“We had to work really hard this session to make sure our restaurants and bars wouldn’t be held responsible if there was behavior by third parties that would jeopardize liquor licenses,” she said. “And that’s why the legislation is written to have a contractual relationship that has to be on file.”
These relationships protect restaurants, Dunker said, because they give insight into who’s purchasing these orders and ensuring that age verification continues outside of restaurants. She said businesses will now know the name of customers on orders with alcohol, which is not typical with app purchases. These contracts add to the time needed to prepare for proper use of this legislation, Dunker said.
“Consumers might be frustrated and might wonder why we aren’t doing it right away,” she said “… We will get it done, and we’re working with these third-party delivery services to do it profitably and to ensure consumer safety, which will take time.”