The New York City Council has approved legislation to license food-delivery apps including Grubhub, DoorDash and Uber Eats and to permanently cap commissions they can charge restaurants.
The companies say the price controls are unfair and vowed to fight them.
“This permanent price control is flagrantly unconstitutional and will hurt local restaurants, delivery workers and diners across NYC. We will vigorously fight this illegal action,” Grubhub, a unit of Just Eat Takeaway.com, said in a statement.
Mayor Bill de Blasio has 30 days to sign the legislation, which would go into effect 120 days after becoming law.
The bills limit the amount that companies can charge restaurants to use their platforms to 15% of food orders for delivery services and 5% for advertising and other non-delivery services.
Restaurants have complained that commissions as high as 30% were draining their finances, so the city enacted temporary caps on those fees during the pandemic when so many restaurants were forced to close or rely on delivery and carry-out alone.
The bills also require the companies to obtain operating licenses, which are valid for two years.
DoorDash said commission caps are “unnecessary and unconstitutional … New York’s restaurants need choice more than ever, and this dangerous government overreach will severely limit the options small businesses rely on everyday to succeed.”
Uber did not immediately provide a comment.
San Francisco has also enacted permanent commission caps on the services.
The New York City restaurant delivery market is split almost evenly among the major platforms, according to Bloomberg Second Measure, which collects payment data from customers.
DoorDash commanded 36% of July sales in the city, Grubhub 34% and Uber Eats and Postmates a joint 30%.
The team at Platform Executive hope you have enjoyed the ‘New York City approves licenses, commission caps for food-delivery apps‘ article. Automatic translation from English to a growing list of languages via Google AI Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Hilary Russ in New York and Tina Bellon in Austin, Texas. Editing by Chris Reese and Matthew Lewis.
You can stay on top of all the latest developments across the platform economy, find solutions to your key challenges and gain access to our problem-solving toolkit and proprietary databases by becoming a member of our growing community. For a limited time, our subscription plans start from just $16 per month. What are you waiting for?