The New York City Council wants to limit the commission fees that third-party delivery services like Grubhub and DoorDash can charge restaurants while dining rooms remain closed in response to the COVID-19 pandemic.
According to the New York Post, the bill being considered would seek to to cap the delivery fees that third-party services charge restaurants at 10 percent.
Currently, the commission fees third-party delivery services charge restaurants can stretch up to 30 percent and sometimes higher. The economics of those exorbitant fees were barely justifiable for a restaurant back when they had dine-in customers to offset the cost. In these coronavirus times, when people are being forced to shelter in place, and millions are losing their jobs, handing over 30 percent of an order is untenable.
The proposed cap expands on existing legislation that was introduced in NYC in February of this year. Deliver services that violate this provision could be fined up to $10,000 per infraction — up from the $1,000 fine during non-emergency times, according to Eater.
New York isn’t the only city looking to reign in third-party delivery fees. Earlier this week Toronto Mayor John Tory said he was exploring similar measures in his city and actually calling up delivery services himself in an effort to fight commission fees. And last week, San Francisco Mayer London Breed issued an emergency order capping delivery commissions at 15 percent.
Talk of caps on delivery fees is a good example of shooting the wolf closest to the sled. High fees are an immediate problem for restaurants and customers when money is tight but everyone still needs to eat. But there is a deeper, systemic problem around the economics of third-party delivery in general. Famed restauranteur David Chang knows it, and it’s been a bit of a crusade for my colleague, Jenn Marston, who wrote recently:
Temporary caps in the wake of this unprecedented restaurant industry fallout are fine for now. But until we start addressing some of the fundamental flaws with the inherently greedy — not to mention unprofitable — third-party delivery model, the problems will proliferate, pandemic or no. Restaurants and their hourly workers will shoulder the bulk of those burdens.
According to the Post, the New York City Council will take up the proposed cap on fees at their virtual meeting on April 29.
Update: Chicago is now also considering a cap on third-party delivery commission fees. A bill to cap those fees at 5 percent is currently in front of the city council, who will vote on the matter. If passed, this would be the lowest commission fee cap yet.
