Third-party capped food delivery service fees could affect New York’s restaurant industry – Bronx Times

A set of bills that would impose permanent reforms on third-party food delivery services in New York — including a 20% cap on service charges — will even out a “David versus Goliath” playing field between small restaurants and platforms such as DoorDash, Uber Eats and GrubHub, according to a councilman.

During the pandemic, the New York City Council placed a temporary cap of 20% on delivery and non-delivery fees as well as commissions that may be charged by third-party platforms from telephone ordering fees for calls. that did not result in a completed order. . However, these temporary measures are due to expire on August 17, which covers the first three months of Democratic Gov. Andrew Cuomo’s statewide tenure who has lifted all COVID-related restrictions to allow a full capacity restaurant to inside on May 19.

The bill is part of a series of pieces of legislation co-sponsored by Mark Gjonaj, a Democratic councilor representing the Bronx’s 13th District and Democrat Francisco Moya, who represents Queens’ 21st District.

“New York’s restaurant industry is an indispensable part of our local economy,” Gjonaj said in a statement sent to The Bronx Times. [of the city Small Business Committee]my mandate is to ensure a fair and level playing field in the David vs. Goliath relationship that many moms-and pop restaurants have venture capital-backed food delivery platforms.

An additional measure in the package of four bills currently in committee would also ban third-party platforms from displaying restaurants. listings of NYC restaurants and establishments without their permission.

If approved by the council, Mayor Bill DeBlasio, a Democrat, has 30 days to sign it.

During the pandemic, more than 1,000 New York food establishments closed. Gjonaj said at Thursday’s city small business committee hearing that while New York’s restaurant industry has been gutted by the pandemic, third-party platforms have seen increased business.

“The [third-party] platforms were seeing a dramatic increase in business while restaurants were seeing a burnout of business,” Gjonaj said.

MarketWatch tracked the revenue of the top four US third-party delivery apps — DoorDash, UberEats, GrubHub and Postmates — and reported that the four companies generated around $5.5 billion. in combined revenue from April 2020 to September 2020, more than double their combined revenue of $2.5 billion during the same period in 2019.

Conversely, NYC restaurants lost a report $10.3 billion from March to November 2020.

At Thursday’s five-hour hearing, about 20 restaurant owners and hospitality industry advocates came out in favor of the permanent cap and cited “exploitative practices” by third-party platforms – such as listings. that rely on outdated menus and bypass restaurants as the first point of contact for orders – which have reduced restaurant revenue and customer base.

“Today City Council is seizing the bold opportunity to consider making fee caps permanent, and we fully support this decision,” said Kathleen Reilly, government affairs coordinator for the New York City Restaurant Association. “The lived experience of restaurant owners and their important testimonies during this hearing … clearly show that third-party delivery platforms have found ways to leverage their role in the restaurant ecosystem.”

Cynthia Shepard, who owns and operates Queens-based restaurant Corazon de Mexico, said she had to close a restaurant in Long Island City during the pandemic and that permanent caps on third-party delivery apps may help restaurants facing to similar financial situations.

“Thanks to these platforms, I was able to at least pay the employees who were working during the COVID period…due to the [temporary] ceiling that was placed, we were able to survive,” she said.

The amended bill, if approved, would continue to impose a fine of $1,000 per day per restaurant for third-party delivery platforms that violate local laws.

At Thursday’s Small Business Committee hearing, Christian Klossner, executive director of the city’s Office of Special Enforcement, said third-party platforms were generally meeting temporary caps set during the pandemic, with the exception of an offense that was not disclosed during the hearing or subject to a fine.

At the meeting, representatives from third-party platforms opposed permanent caps, saying it would limit how restaurants can promote or market themselves, invalidate legal contracts between private businesses, and violate due process under the Constitution. American and the equal protection clauses.

GrubHub’s senior director of public affairs, Amy Healy, said she wants local law to reflect restaurants’ ability to operate under the fees they choose when partnering with a third-party platform.

“We are a publicly traded company and we would need to raise costs somewhere and make business decisions to stop the losses under which we operate. [with] this artificial cork,” Healy said. “I want to see [the local law] return to the price of a suite of services that the restaurant chooses.”

She added, “so we have different prices for whatever fare the restaurant chooses to buy.”

DoorDash spokesman Campbell Matthews told The Bronx Times that if the city council chooses to implement a permanent price controls option, it could ultimately have a bigger impact on the delivery workforce. of the city, or Dashers.

“With all restrictions lifted in New York, restaurants have the freedom to choose the options that work for them, including not offering delivery at all,” she said. “In addition, we offer pricing options that meet the unique needs of each restaurant and provide choice, flexibility and transparency. We urge City Council to reject this proposal and seek other options that will truly help restaurants. »

Earlier this year, DoorDash implemented a new pricing structure that allowed local restaurants to choose a pricing plan with a delivery commission rate as low as 15%.

DoorDash, which went public on the NYSE in late 2020, said it also offers local restaurants another service called Storefront which allows restaurants to connect and receive orders directly through their website which can be delivered by Dashers. .

According to DoorDash officials, these orders have 0% commission and only pay payment processing fees.

“While we commend the city council for exploring options to further support restaurants,” Matthews said, “price controls are generally reserved for entities responsible for civic necessities like electricity or water.”

Travis Gilliam said he became a Dasher in the Bronx and Manhattan during the pandemic as a “side gig” to weather the effects of the statewide economic shutdown. Gilliam said he averages between $2 and $10 per order, plus extra payment for promotions and 100% tip. DoorDash, on its website, estimates that most Dashers will be paid in that $2-10 range based on the “estimated time, distance, and timeliness of the order.”

“Without the Dashers, I don’t see how food was getting to people during the pandemic,” Gilliam told The Times. “People don’t even tip much when they get it, so I feel like any law that disrupts any delivery method will impact us.”

Another dashing Valentina Ruiz said whatever decision the city council makes is unlikely to affect struggling delivery drivers or small restaurants.

“I think there are a lot more possibilities than the city council and these [third-party delivery] services can do to improve the lives of restaurants and delivery drivers,” she said. “None of that is discussed at this time, and I think it really starts with who is ordering through these apps and how they treat our service.”

Contact Robbie Sequeira at [email protected] or (718) 260-4599. For more coverage, follow us on Twitter @bronxtimes and Facebook @bxtimes.

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Cecil N. Messick