Delivery Firms Push NYC to Lift Fee Cap

DoorDash and Grubhub are reportedly lobbying New York City to change its delivery fee cap.

The Wall Street Journal reported Monday (Dec. 12) that the bill would require these and other delivery companies to offer basic services at the 15% commission cap many other cities use but let them charge restaurants a premium for added services such as marketing.

While many cities put commission caps in place during the COVID pandemic, New York is the only major city where a hard-fee cap is permanent. DoorDash and other companies sued the city in an attempt to lift the permanent fee cap last year.

City Councilman Robert Holden is sponsoring the amendment bill and told the WSJ it made no sense to prevent restaurants from spending more on marketing if they wished.

“Why restrict businesses, especially in the free enterprise system? It’s counterproductive,” said Holden, a Democrat from Queens.

Opposing the bill is the New York City Hospitality Alliance, which represents hotels, bars and restaurants. Robert Bookman, an attorney representing the group, said the bill would “take the cap and make it a floor.”

The news comes days after Uber Eats agreed to pay a $10 million settlement to restaurants in Chicago, in part for violating the city’s emergency fee cap ordinance during the pandemic.

As PYMNTS noted at the time, these developers are happening when companies like Uber Eats are facing hurdles that could persist for some time.

Our recent research has found that orders using delivery aggregators account for a relatively small slice of restaurant-related commerce.

Nearly 40% of consumers used a food aggregator to place an order in the first half of the year, we noted in September, while aggregators made up just 2.5% of restaurant transactions. This percentage is far below the 10% of orders completed via restaurant-specific apps or websites.

In this climate, companies have begun to cut jobs and cease doing business in some regions. For example, Just Eat Takeaway.com subsidiary Menulog has laid off staff in Australia, while British aggregator Deliveroo has recently stopped its business in that country.