The New York City Council wants to ban food-ordering apps like Grubhub from charging most of their usual fees to restaurants during any government-ordered state of emergency, The Post has learned.
The bill seeks to prohibit food-ordering and delivery apps like Grubhub’s Seamless Web site, UberEats and Doordash from profiting from Big Apple restaurants during any state of emergency except for charging food-delivery fees, which will be capped at 10 percent of an order.
The ban could be particularly devastating to Grubhub, whose Seamless Web site gets most of its revenue from charging fees for its ordering platform, and the marketing charges and credit-card fees associated with it.
Seamless, meanwhile, tends to leave Big Apple deliveries to third-party courier companies like Relay.
Gov. Andrew Cuomo declared a state of emergency tied to the coronavirus pandemic on March 7, followed by New York City Mayor Bill de Blasio on March 12. De Blasio warned at the time that the coronavirus outbreak “could easily be a six-month crisis.”
If what de Blasio predicted holds true, this bill could be passed before the current states of emergency are lifted, sources said.
“Forcing restaurants to pay sky-high commissions during a pandemic is the opposite of being a good corporate citizen,” said Mark Gjonaj (D-Bronx), who heads up the council’s small business committee and sponsored the bill.
A source with direct knowledge of the bills told The Post they appear to have widespread support within the City Council and that the council’s Small Business Committee expects them to be passed as soon as May or June. The first virtual hearing is scheduled for April 29.
In addition to banning the bulk of fees during states of emergency, the City Council added a new bill to require app companies to include restaurants’ sanitary inspection letter grade on their platforms. It’s also now seeking to increase fines for overcharges to $10,000 from $1,000.
The small business subcommittee is pushing the fee ban as part of a package of bills introduced in February to reduce what food delivery apps can charge city restaurants to 10 percent overall, down from anywhere from 12 percent to 40 percent.
The package of bills would also require food-ordering apps to apply for licenses to operate in the Big Apple, as The Post has previously reported.
“We’re proposing a commonsense package of legislation that will go a long way toward leveling the playing field and giving local restaurants a fighting chance of keeping their doors open and saving jobs,” Gjonaj told The Post. “I’m encouraged by the support that these bills have received from my colleagues and I look forward to passing them into law.”
Food-ordering and delivery companies have come under scrutiny for the fees they charge restaurants since before the coronavirus sent the industry into a tailspin.
In March, Grubhub announced a $100 million “economic relief effort” for restaurant partners struggling from lockdown orders that dramatically reduced their operations, saying it would be “temporarily suspending collection of up to $100 million in commission payments from impacted independent restaurants nationwide.”
But restaurants say Grubhub has merely offered to defer marketing commission fees for select restaurants. Delivery and order processing fees still apply.
Restaurants that apply to receive the benefit are then required to agree to keep Grubhub as their delivery provider for the next year.
The Big Apple is not the only major city cracking down on the ordering and delivery industry. Chicago’s City Council is considering an ordinance that would cap the delivery companies’ fees at 5 percent, according to reports this week. San Francisco already passed an emergency law capping such fees at 15 percent.
Doordash declined to comment about the bills, touting instead its own $100 million relief effort, which it says has been “cutting commissions for small restaurants in half through May.”
Grubhub also didn’t comment on Thursday.
In the past, Grubhub has blasted the City Council’s fee crackdown as anticompetitive.
“If you tell New York restaurants that they can only sell pizza for a quarter and coffee for a nickel, no one will serve pizza or coffee,” the company said. “Simply put, this bill will slash business to mom and pop restaurants and hurt consumers in the process.”