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Proposal Guts Third-party Delivery Fee Cap, Bigger Fees for Big Delivery Bill

june 21, 2024

Int 762 Would Allow Big Delivery Companies to Take Nearly Half the Money of Restaurant Delivery Orders, Hurting Small Businesses

The NYC Hospitality Alliance called on the City Council during a hearing today to trash a misguided proposal that would gut the cap on fees charged to restaurants by third-party delivery companies like DoorDash, Grubhub, and Uber. Fee caps and other marketplace regulations were implemented after delivery giants were exposed for egregious business practices targeting restaurants and workers.

Int 762 guts the fee cap and raises costs for struggling small businesses. A copy of the NYC Hospitality Alliance prepared testimony can be found READ HERE.  

“Third-party delivery companies have a long history of exploiting restaurants, so it’s no surprise they want to roll back the hard-fought cap on fees they charge small businesses by getting the City Council to pass the Bigger Fees for Big Delivery Bill,” said NYC Hospitality Alliance’s executive director Andrew Rigie.

Under the proposal, the fee companies like DoorDash, Uber, and Grubhub can charge restaurants would go up from 23% to a whopping 43% of each order, an untenable amount for small businesses that operate on single digit margins. Industry experts have said the delivery giants operate like public utilities because of their necessity and leverage over local restaurants and require more regulation due to their power over small businesses.

“The delivery giants’ say they just want to offer restaurant more “marketing services” but this political sleight of hand would let them bury restaurants in search results if they don’t pay up, and make it harder for New Yorkers to find local restaurants that can’t afford to, or don’t want to pay to play,” Rigie said.

Discussions around the cap on fees that third-party delivery companies charge restaurants (“the fee cap’) began prior to the COVID-19 pandemic and was largely the product of hearings the City Council held into these companies’ egregious business practices, and after now U.S. Senate Majority Leader Chuck Schumer called for an investigation into Grubhub. Meanwhile, these companies are deploying a subpoena strategy against the NYC Hospitality Alliance, restaurants, and others to quell opposition to their lobbying efforts and lawsuits against the City of New York to deregulate big delivery, as recently explained in the op-ed titled: “Corporate Giants Deploy Subpoenas to Squash Advocacy, Press.”