NYC Bill To Cap Third-Party Commissions From Grub Hub, Food Apps
New York City Mayor Bill de Blasio is expected to sign a bill that would limit fees that delivery food services charge to local participating restaurants to alleviate money burdens to the city’s economy.
In a press conference on Tuesday May 13, Mayor de Blasio stated he supported the bill City Council voted for on Wednesday. “This is one where we want to make sure people are treated fairly. And they saw something that wasn’t fair to everyday people going through so much, and I think it’s smart legislation, so I will support it,” de Blasio said. The proposed bill would restrict third-party vendors such as Grubhub in charging restaurants ordering fees more than 15 percent and for other services more than 5 percent during the pandemic and 90 days after restaurants readmit dine-in customers.
In an email correspondence with communications associate Charles Lutvak, New York City Wired received a statement by DoorDash’s Senior East Coast Policy Lead David London. DoorDash raised concerns about the cap. According to DoorDash the commissions enable the company to pay its food couriers and provide a number of other employee necessities such as face masks, free Covid-19 screenings and reduced price tele-health appointments, as well as offering 50 percent reduction commissions for family restaurants and 0 percent commissions to first-time DoorDash eatery users.
“At DoorDash, we feel a responsibility to help our communities during this crisis, which is why, over a month ago, we cut commissions for small restaurants in half through May as part of an estimated $100 million in commission relief and marketing support we’re providing,” the statement said. “We don’t just connect restaurants to customers—we facilitate the delivery of each order, and commissions help us cover a number of expenses on behalf of restaurants[…],” the statement said.
“We continue to have concerns about an arbitrary permanent cap that would limit our ability to power delivery for local restaurants that may not be able to stay open without it and provide economic opportunity to workers who may not have any other source of income.”
Ashley De Smeth, Postmates spokesperson provided a similar statement to New York City Wired. “Commissions are privately negotiated agreements between the restaurant or a consumer goods business and the Postmates platform,” she said, referring to goods such as marketing, customer and courier support, insurance, and payment to couriers.
“Commissions are not ‘fees’, they are the main source of revenue for our company and they are how we pay for the services that we provide to businesses and our customers. Arbitrarily setting on-demand delivery prices has real consequences that undermine our ability to operate, fund relief efforts and benefit programs for merchants, couriers and customers, and kills the whole industry’s ability to provide the services restaurants need to stay open during this national emergency.”
New York City Wired emailed multiple eateries and received a response from Gonzalez y Gonzalez. Evan Cohen, co-owner, utilizes the food carrier, Grubhub and expressed concern on both the bill’s incapability of cost relief and his experience with third-party delivery fees outnumbering any benefits.
“I have a feeling the cap will have no effect on our business. Grubhub and the like have always been a problem. To us, it seems as pay to play. You pay them more and they promise you better placement. They make it seem as the best reviewed restaurants get the best placement, but in our experience that is misleading. There should be transparency to the business’ and the customers in regards to why restaurants are being shown in the order they are,” Cohen said.
“Restaurants run on a tiny profit margin. Although these third-party apps do drum up the business. But they absolutely do take too much,” Cohen added.
New York City Wired reached out to Grubhub but did not receive a response.
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