Calls to introduce an emergency 10 percent commission fee cap on third-party delivery services in New York City are growing now that San Francisco has enacted a similar order. Elected officials and trade groups across the city and state are asking Mayor Bill de Blasio to issue an emergency order similar to the one issued by San Francisco Mayor London Breed on Friday, April 10 that would limit the amount of commission companies like Grubhub and DoorDash can charge restaurants during the ongoing COVID-19 crisis in the city.
The commission typically constitutes up to 30 percent of each restaurant order that is completed through a third-party delivery service — now deemed an essential business — while restaurants and bars are closed to dine-in customers to curb the spread of COVID-19. “This commission fee can wipe out a restaurant’s entire margin,” Breed explained in the announcement instituting the emergency order.
NYC City Council members Mark Gjonaj and Francisco Moya already introduced legislation earlier this year that stipulates that food delivery services like Grubhub, Seamless, and DoorDash shouldn’t be able to charge more than 10 percent commission on each order.
While that legislation is still under review, city comptroller Scott Stringer and council members including Gjonaj and Brooklyn’s Justin Brannan have publicly called for an emergency order in the city similar to San Francisco over the past couple of days. “The NYC Council has a package of legislation to regulate food delivery apps squeezing New York City restaurants,” Brannan said on Twitter. “In the meantime, New York City must institute an emergency 10 percent commission cap on all apps like Seamless, Grub Hub, DoorDash and Uber Eats now.” The city officials are joined at the state level by Senator Brad Hoylman who had called for companies like Grubhub and UberEats to cap fees or waive them entirely last month, and is now calling on the mayor’s office to take action as well.
The original legislation addressing food delivery regulation was introduced in late February — before the COVID-19 crisis shut down the city — but parts of the legislation have taken on new urgency now that restaurants in the city are only allowed to offer delivery and takeout while the city battles the pandemic.
The New York State Restaurant Association sent a letter to Mayor Bill de Blasio on March 30 that asked for an emergency 10 percent fee cap on delivery services, co-signed by representatives from the New York City Hospitality Alliance, NYU’s School of Global Public Health, and several restaurateurs in the city.
“Many restaurants lose money on their deliveries during normal market conditions,” the letter stated. “We must preserve some profit for restaurants so they can serve New Yorkers who rely on restaurants to cook their meals and allow some employees to earn a paycheck.”
Both the NYSRA and the NYC Hospitality Alliance confirmed that they have not yet heard a response from the mayor’s office on the food delivery fee caps. When Eater reached out to the mayor’s office on Friday, April 10 to inquire about the possibility of an emergency order similar to San Francisco’s, a spokesperson for the mayor said that “we are looking into it.”
In San Francisco, enforcement on the cap started on Monday, April 13. If any delivery service wishes to continue operating in the city, the company has to abide by the 15 percent fee cap for any restaurant listed on its platform. The emergency order marks the first type of food delivery fee regulation to be enforced anywhere in the country.