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Are Food Delivery Services ‘Violating’ Mandatory Fee Caps in NYC?

by Jennifer Marston
August 14, 2020August 14, 2020Filed under:
  • Business of Food
  • Coronavirus
  • Delivery & Commerce
  • Featured
  • Restaurant Tech
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NYC regulators are demanding stricter oversight of the recently mandated caps on delivery commission fees, according to the NY Post. NYC Councilman and head of the small business committee Mark Gjonaj this week urged Mayor De Blasio’s Office of Special Enforcement to fine the offending parties (i.e., the delivery services) found to be violating the fee caps.

Which is apparently happening. At a hearing this week, OSE’s executive director Christian Klossner said his office had received two complaints from restaurants that were charged more than fee caps allowed by the delivery companies. Klossner said the companies (unnamed) had refunded the money, but Gjonaj demanded the OSE “consider fining the offending company.” 

Two restaurants isn’t a lot, but Gjonaj, seems to suggest the actual number of businesses being overcharged could be bigger. Speaking at the hearing this week, he said, “If these companies have done it to one restaurant, it must be widespread.”

While not proven, that point wouldn’t exactly surprise, since third-party delivery services have disregarded legislation before, most notably around worker classification. Fee caps are so new on the third-party delivery regulatory front that there hasn’t been much time for companies to flout the rules, or for restaurants to make known that they’re being overcharged. Part of Gjonaj’s call over more enforcement of the caps seems aimed at bringing any violations into the light. “How are you getting the word out to the thousands of businesses that they need to bring this to your attention?” he asked attendees at this week’s hearing.

Like a growing number of U.S. cities, the Big Apple imposed mandatory fee caps on commission fees at the peak of shelter-in-place mandates brought on by the pandemic. The aim of those fee caps is to help restaurants, who normally fork over as much as 30 percent per transaction to third-party delivery companies in commission fees. Needless to say, those commission fees were gutting the already decimated restaurant industry, hence caps imposed by NYC, San Francisco, Los Angeles, Baltimore, and many others. 

Those fee caps are for the most part meant to endure only as long as cities remain in emergency states around the pandemic. Soon enough, though, these cities will have to weigh the ups and downs of mandating — and enforcing — the caps over the long term, along with other measures that can better protect restaurants in a delivery-crazed world. 


Related

Toronto, Canada Considering a Cap on Third-Party Delivery Fees

Toronto, Ontario mayor John Tory is considering imposing a cap on the commission fees third-party delivery services like DoorDash charge restaurants. He has said he will impose an emergency, temporary cap on those fees “if his emergency powers allow him,” according to an interview with Canada-based publication The Star. Tory’s…

Fight Club: Mischief. Mayhem. Third-Party Delivery Fee Caps.

This is the web version of our newsletter. Sign up today to get updates on the rapidly changing nature of the food tech industry. If you like a good fight, the one around restaurant commission fee caps is worth watching. I spent the better part of three-plus hours the other day tuned…

San Francisco Makes Restaurant Fee Caps for Delivery Services Permanent

San Francisco, California voted this week to permanently cap the fees delivery services charge restaurants at 15 percent. The San Francisco Board of Supervisors unanimously approved a resolution.  The 15 percent fee cap was first introduced in April 2020, when Mayor London Breed issued an emergency order that dictated the…

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