The NYC Hospitality Alliance thanks all the restaurateurs who joined us yesterday at City Hall where we testified in opposition to Int. 813, dubbed the Bigger Fees for Big Delivery Bill. It was a long day so thank you to everyone who testified and was able to attend in-person, in solidarity. If you couldn’t attend, but contacted your Council Member to express opposition, or even tuned in virtually to the hearing, thank you for the support. It is very important that we advocate together, on this matter, and so many other issues impacting our industry! So even if you were unable to join us, no worries, join us next time, and stay engaged!
We will keep you updated on this important issue, and you may find our testimony from yesterday’s hearing below.
If you’re not a dues paying member of the NYC Hospitality Alliance or need to renew, click here. Thanks for the support.
READ OUR TESTIMONY: SAY NO TO THE BIGGER FEES FOR BIG DELIVERY BILL
Wednesday, March 29th, 2023
My name is Andrew Rigie and I am the executive director of the NYC Hospitality Alliance, a not-for-profit association representing thousands of restaurants across the five boroughs. Today I am here to deliver the truth behind a lobbying campaign seeking to gut the third-party delivery fee cap with troubling legislation, Int. 813, what we’ve dubbed the Bigger Fees for Big Delivery Bill.
Even though the big delivery companies are suing the City of New York to overturn this law – which sets the maximum rate these corporate giants can charge restaurants to list them on their apps and deliver their food – they’ve simultaneously engaged in an aggressive and expensive lobbying campaign to gut the fee cap under the guise of wanting to help small businesses and turning restaurants against each other as well as delvieristas. It’s unfortunate. They imply their campaign is all about helping immigrant-, minority- and woman-owned businesses by letting them pay higher marketing fees to compete against large chain restaurants. But seriously, who can better absorb these bigger fees and better afford to buy more advertising? It’s not the neighborhood taqueria, it’s the international taco chain.
If these delivery companies didn’t have such dominance over the marketplace, the fee cap would not have been necessary. But when customers sue Grubhub for antitrust violations because they’re price fixing menus at restaurants, and when you know the history of big delivery in the Big Apple, you’ll understand why this sector must be regulated. Think about the hypocrisy, they are suing and lobbying to eliminate price controls on themself, while they are being sued for price controlling at restaurants. Do as I say, not as I do, I guess!
Before the Covid-19 pandemic shut down our city’s restaurants, an onslaught of investigative reports in the media exposed the unethical, if not illegal business practices of a certain delivery company, which led to U.S. Senator Chuck Schumer calling on the federal government to investigate, and the City Council to hold hearings that highlighted the exploitation of restaurants by big delivery.
The public and elected leaders finally learned that restaurants were exploited for years by Grubhub charging them bogus fees for orders they didn’t receive. Delivery companies listed restaurants on their apps without permission, causing confusion and chaos for small businesses, workers, and customers. They created secondary websites and phone numbers for restaurants, so they could take more fees and steal their customers. A quick Google search will return articles from around the country describing these exploits, including all the governments, attorneys general, restaurants, workers, customers, and their own investors who’ve taken legal action against third-party delivery companies over their business practices, some of which I’ve attached to my testimony for your review.
We can’t trust these delivery companies when they say the Bigger Fees for Big Delivery Bill is simply about letting small restaurants market themselves to get more deliveries, which everyone supports! If it was about marketing, the big delivery companies wouldn’t charge small restaurants the same high fees on repeat customer orders – which aren’t the result of any enhanced marketing.
Big delivery companies purchase advertisements on Google above restaurants' own websites and within their organic search listings, so they can steal their direct customers and take big fees. Seriously, why should restaurants pay higher fees to third-party delivery companies that then use the money to steal the restaurants’ own customers and charge them even more fees?
The delivery companies say they make it easier for small restaurants to access services like menu photography and website design by paying a higher per-order fee to them, instead of a lump upfront payment they can’t afford. Sounds great until you realize that delivery company wants to continue taking that higher per-order fee from the restaurant even after they paid off the cost of the service.
History has shown us that restaurants that don’t pay the ever-increasing third-party delivery fees are buried in the search results, making it difficult for customers to find them. Suppose a restaurant doesn’t continue to pay increasing fees. In that case, their delivery sales decrease as their visibility diminishes, and the small business can’t afford to stay on the platform. Still, they can’t afford to leave it because they’ll lose access to their customers, who are controlled and manipulated by the big delivery companies. That’s why the same delivery companies are also suing to overturn a law passed by the City Council requiring them to share a restaurants own customer information with them. We must tear down this digital divide! Don’t let these big corporations continue to steal customers from local restaurants. Let restaurants nurture their relationships with their own customers so they can offer them direct deals and offers.
This fee cap law passed with overwhelming support by the City Council, carrying with it a requirement, requested by the delivery companies themselves, that the city publish a report on its impact to allow lawmakers to determine if it should remain in effect, be modified, or eliminated. We must wait until the report is released in September of 2023 before considering changes to the law. Employing the details and data from the report, lawmakers, restaurants, and delivery companies should use it to inform and cook up a new recipe for a fairer marketplace and fee structure.
The City Council has before it a critical choice for a beloved New York industry. If it passes the Bigger Fees for Big Delivery Bill now, it will be the small restaurants who will be left holding the bag – all while big delivery gets their hands back in the pockets of small businesses.
Even considering all of this, the NYC Hospitality Alliance remains committed to working constructively with the delivery companies and elected leaders to develop a fairer marketplace that works for restaurants, deliveristas, and the delivery companies. But Int. 813, the Bigger Fees for Big Delivery Bill is not the answer.
We urge the City Council to reject this misguided proposed legislation.
Thank you for your consideration of our comments.
NYC Hospitality Alliance