NEW YORK (WCBS 880) — The New York City Council on Thursday voted to put a permanent cap on the amount of fees that food delivery apps can charge restaurants.
The bill will solidify the current fee cap, which prohibits third-party food delivery apps – such as Uber Eats, DoorDash and Grubhub – from charging restaurants more than 15% per order for a delivery and more than 5% per order for all other fees. The cap does not apply to transaction fees, such as a 3% credit card swipe fee.
“This landmark legislative package will protect our small businesses from unfair practices that threaten their existence when they are the most vulnerable,” said Councilman Mark Gjonaj, who sponsored the bill. “As we enter into the post-COVID recovery phase, we send a message to the city and the rest of the country that Silicon Valley must engage fairly with our small businesses or face consequences.”
The cap was first implemented in June 2020 to help restaurants survive the pandemic.
If signed into law by Mayor Bill de Blasio, the bill would now also require food delivery apps to apply for operating licenses with the Department of Consumer and Worker Protection. The license would cost $200 and would be reviewed every two years.
To ensure compliance with the bill, Uber Eats, Grubhub, DoorDash and other services will be required to keep extensive records, including a list of restaurants on their platform, their written agreements with those establishments and documentation of the fees charged to the businesses.
If a service is found to be in violation of the requirements in the bill, they could face a fine of up to $1,000 per restaurant per day.
The bill would not take effect until 120 days after becoming law. Mayor de Blasio has 30 days to sign the legislation.
A similar cap on delivery fees was also passed in San Francisco earlier this year.
In statements to Reuters, Grubhub slammed the New York City bill as “flagrantly unconstitutional.” A DoorDash spokesperson added that it “unnecessary and unconstitutional.”