NYC Council extends cap on food delivery fees until indoor dining resumes

Posted On Fri, August 28, 2020 By

Posted On Fri, August 28, 2020 By In Policy, Restaurants

Photo by Patrick Connor Klopf on Unsplash

The New York City Council on Thursday voted to extend the cap on commissions that restaurants are charged by third-party delivery services. The legislation, first enacted in May, restricts fees services like Grubhub and Uber Eats can charge to 20 percent per order during a state of emergency. The cap will now be in effect until restaurants are able to resume indoor dining at maximum occupancy and 90 days following. There is still no plan to bring back indoor dining, despite the city meeting the state’s coronavirus metrics.

Before the cap was enacted, third-party services could charge city restaurants fees that could be as high as 40 percent of revenue. The legislation, which was put forth before outdoor dining was allowed and when establishments relied solely on take out and delivery, prevents apps from charging more than 15 percent commission on deliveries and more than 5 percent for all other charges, including marketing and credit card processing.

“It’s a bit of breathing room they desperately need. We’re all thankful to see the city’s positivity rate slow down but restaurants are well aware that we haven’t outrun COVID-19 yet,” said Council Member Francisco Moya, who sponsored the bill along with Council Member Mark Gjonaj.

“They know the industry will be reeling from the pandemic’s effects for months to come. As legislators, we can and must make sure that they’re not grappling with exorbitant fees from these third-party food apps while they’re struggling to keep their shops on life support.”

The Council on Thursday also extended the ban on delivery apps charging restaurants for telephone orders with customers that did not result in any orders. Grubhub last year reportedly charged restaurants with hidden fees from food orders that never happened.

Restaurant owners have pushed the city to release a plan to resume indoor dining, which has been allowed in every other region in the state but New York City. The city was set to resume indoor dining at 50 percent capacity on July 6, but Gov. Andrew Cuomo and Mayor Bill de Blasio put it on hold indefinitely, blaming the spike in coronavirus cases in other states.

The New York City Hospitality Alliance called on officials to create a plan for indoor dining to return. The group is considering filing a lawsuit against the indoor dining ban but hopes to work with officials first.

On Thursday, de Blasio said his administration continues “to look at the indoor question,” but added indoor dining could depend on how well the reopening of schools goes on September 10.

“If we continue to improve on the health front, like that’s the gateway to being able to consider things that we can’t do right now, is just continuing to have proof that we’re pushing back this disease and we’ll know a lot more in the next months,” de Blasio said during a press briefing when asked by a reporter about indoor dining.

“Plus as more and more people come back to work, as schools begin, you know, we’ll get to see a lot about what our long-term health picture looks like, and that’s going to help inform our decisions going forward.”

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