New York City could become the next city with a permanent limit on what third-party delivery companies can charge restaurants.
Council Members Francisco Moya and Mark Gjonaj are introducing legislation that would remove the expiration date for New York's 20% fee cap. The existing law limits delivery charges to 15% and any other charges to 5%, and was enacted in May 2020 to help restaurants during the pandemic. It will expire 90 days after restaurants are allowed to return to 100% of their seating capacity, unless the new legislation is approved.
On Tuesday, San Francisco took a major step toward becoming the first city in the U.S. with a permanent cap when its Board of Supervisors unanimously passed a resolution to erase the sunset date from its 15% limit. That measure is pending amendments and the mayor's OK.
Andrew Rigie, executive director for the New York City Hospitality Alliance and a staunch advocate of a permanent fee cap, said the pandemic brought to light the delivery companies' "crazy high fees and unethical business practices."
"Since then, these billion-dollar corporations have only grown more powerful, so it’s critically important to enact a permanent fee cap to better ensure a fair marketplace for independent restaurants," he said in an email.
Temporary caps exist in dozens of cities and counties and a handful of states. Restaurants have generally welcomed them, saying they ease delivery charges that can rise to as high as 30% or more. But delivery companies argue that they will ultimately hurt restaurants because costs will be passed to the consumer.
"A permanent cap would result in unprecedented, damaging and long-term consequences for locally-owned businesses, delivery workers, diners and the local economy," a Grubhub spokesperson said of San Francisco's new legislation.
New York officials have been particularly aggressive in attempts to regulate companies like DoorDash, Uber Eats and Grubhub. A bill introduced last month would require delivery providers to share more data with restaurants. And last week, Gjonaj introduced a raft of bills aimed at delivery companies. One would prohibit them from listing a restaurant without its consent; another would require more transparency around how restaurants' phone numbers are displayed.
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