New York City to Limit Company Fees for Online Food Delivery
New York City to Limit Companies’ Fees for Online Food Delivery
(Bloomberg) -- New York’s City Council is set to approve emergency restrictions on fees charged by companies such as Grubhub Inc. and DoorDash Inc. amid a flourish of demand for online food-delivery during the coronavirus outbreak.
The council vote on Wednesday would bar charging restaurants delivery fees exceeding 15% per order, and limit fees for marketing or other services to 5% per order, with violators fined up to $1,000 per restaurant per day. Another bill would prohibit companies from charging restaurants for phone calls that don’t result in orders, carrying $500 penalties.
“During this unprecedented public health crisis, many restaurants are struggling just to stay afloat,” said Councilman Mark Gjonaj, the bills’ sponsor. “These bills could mean the difference between remaining open or closing their doors and laying off their employees.”
The laws would remain in effect for 90 days after the emergency is lifted and restaurants are able to accept in-house diners. Mayor Bill de Blasio said Tuesday he supports the laws.
The City Council “saw something that wasn’t fair to everyday people going through so much, and it’s smart legislation so I will support it,” de Blasio said.
In New York, at least a dozen food delivery services compete for customers who are increasingly ordering from multiple platforms. Outside of New York, other city and state regulators have been scrutinizing delivery companies, with concerns about high delivery fees, tipping policies and the way they classify their workers. Grubhub sales have been hurt by the increased competition and the closing of restaurants in New York City.
Grubhub spokesman John Collins said the laws would not withstand the company’s legal challenge. “Any arbitrary cap - regardless of the duration - will lower order volume to locally-owned restaurants, increase costs for small business owners, and raise costs on customers,” he said. “Delivery workers would have fewer work opportunities and lower earnings.”
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