New Bill Would Limit Food Delivery Apps Charges To NYC Restaurants

Marla Diamond
February 27, 2020 - 8:48 am
Grubhub Restaurant Sign

© Tina MacIntyre-Yee/Rochester Democrat and Chronicle via IMAGN

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NEW YORK (WCBS 880) -- New York City is looking to crack down on food delivery apps that overcharge restaurants.

Several bills that are being considered by the City Council would limit how much food delivery apps can charge restaurants.

Major food delivery apps such as Grubhub and Uber Eats charge restaurants anywhere from 15 to 30 percent in commission and Grubhub was accused of billing restaurants for calls that did not result in orders. 

The City Council has warned these food delivery apps that legislation to regulate the industry might happen because their business practices were harming local restaurants in New York.

The package of bills are believed to be the first local effort to regulate commissions, phone fees or some other aspect of on-demand food delivery apps.

If passed, food delivery apps would be required to be licensed through the city’s Department of Consumer Affairs and would not be able to charge restaurants more than 10 percent commission.

Food delivery apps will also have to disclose to consumers the amount of fees and commissions that they charge restaurants.

"David and Goliath is what you have here," said Mark Gjonaj, the chairman of the Council’s small business committee who is one of two sponsors of the legislation to be introduced on Thursday. "We just want to give the traditional brick-and-mortar, mom-and-pop restaurants a fighting chance."

John Collins, a spokesman for Grubhub, however, feels the legislation would only hurt the restaurants and argues that restaurants benefit from the app by bringing in new customers from the millions of dollars it spends in advertising.

"This bill will slash business to mom-and-pop restaurants and hurt consumers in the process," Collins said in a statement.

The bills are expected to be the subject of a public hearing by the end of April and will likely have abundant Council support.