Grubhub is quietly undertaking a grassroots campaign to discourage New York’s City Council from extending a 20% cap on the charges restaurants can be assessed for meals delivered by third-party services.
The limit on commissions and marketing fees, passed by the Council in May to help restaurants survive the pandemic, is set to expire next month. Some members have shown interest in extending the cap at least through the end of 2020. Local restaurants have expressed strong support for an extension.
Grubhub hopes to thwart the re-up by rousing consumer resistance. As first reported by the New York Post, the delivery service is running digital ads targeted at the constituents of council members who have shown support for the commission cap and its extension. The spots call the fee ceiling “a food delivery tax,” without explaining how that descriptor applies, and urge citizens to sign a petition calling for a “no” vote on pushing back the cap’s expiration date.
The petition asserts that the fee limit will mean higher prices for consumers, fewer orders for restaurants and less work for delivery drivers. “It’s wrong – any way you tax it,” the petition reads. “My message is simple: say no to a food delivery tax and get your hands off my deliveries!”
"This grassroots campaign is just one step Grubhub will take to protect its business – from organizing customers and launching ads to filing lawsuits against this illegal, arbitrary, and hurtful tax," a spokesperson said in a statement to Restaurant Business. "We are urging diners to say ‘no’ to the city’s tax on food delivery."
Among the City Council members whose constituents have been targeted is Mark Gjonaj, chairman of the body's Small Business Committee and an outspoken supporter of the commission cap.
"Make no mistake about it: This is a corporate attempt to gaslight New Yorkers and blur the truth," Gjonaj said in a statement. "Instead of fighting for the ability to gouge restaurants with sky-high, business-killing commissions, it would be far more helpful if the company committed to focusing its energy on helping its restaurant 'partners' get back on their feet and save their employees’ jobs."
A number of municipalities and states have capped delivery commissions for the extent of the pandemic to bolster restaurants’ revenues and profits. Delivery services typically charge between 10% and 40% of a delivery sale as their cut. They maintain the fee is necessary to pay their employees and turn a profit.
Fee ceilings are in place in about a dozen municipalities, including Las Vegas, Philadelphia, Seattle, Oakland, Los Angeles, Portland, Ore., and Washington, D.C. With many front-of-house staffers sidelined by the closing of restaurant dining rooms, many operators attempted to circumvent third-party commissions altogether by using their own employees to deliver meals.
UPDATE: This version of the story has been updated to include comments from a Grubhub spokesperson and City Council Member Mark Gjonaj.