New York City Moves to Limit Fees From Meal-Delivery Apps. Measures aim to bolster restaurants struggling during the pandemic

Wall Street Journal ^ | May 13, 2020 | Katie Honan

[karpov]

New bills passed Wednesday in the New York City Council will cap delivery fees charged by services like Grubhub and prohibit other charges, a move lawmakers say will help struggling businesses as the city fights the coronavirus.

Under the changes, delivery apps will be prohibited from charging restaurants more than 15% per delivery order and more than a 5% fee on other service. These third-party services could face civil fines of up to $1,000 a day per restaurant, if they violate the new laws, officials said.

Another bill passed Wednesday prohibits the services from charging restaurants for phone calls made through an app that didn’t result in a transaction. The civil fine for this violation is up for $500 a day per restaurant.

In a press conference Tuesday, Mayor Bill de Blasio said he supported the bills and would sign them into law. They would go into effect a week after being enacted and would continue up to 90 days beyond the current state of emergency, which was signed by Mr. de Blasio in March due to the spread of Covid-19.

Councilman Francisco Moya of Queens, who sponsored the bill to limit delivery fees, said these charges were hurting small businesses, especially during the pandemic.

“By capping the fees third-party food apps can charge restaurants during declared states of emergency, restaurants can continue providing essential services while not putting themselves out of business in the process,” Mr. Moya said in a statement.

A spokesman for Grubhub Inc., John Collins, said the bill is an “overstep” by city officials that could be challenged in court.

Food-delivery apps are struggling to make a profit even with many people stuck at home because of the pandemic. While sales are growing, it’s costlier to pay for promotions and safety equipment.

[karpov]

This is stupid. Nothings is stopping restaurants from delivering their own food if they can do it more cheaply than Grubhub.

Don't bail out local governments. They won't stop doing stupid things until the money runs out.

[wejjr235]

Absolutely right. Effect of order will be to shut down third party delivery.

[Interesting Times]

Because top-down command and control economies have such a sparkling record of success.

[G Larry]

That’s ok, the taxes on the visiting nurses will make up for it.....

[Reno89519]

What?! Companies can charge whatever they want!!! If the restaurants don’t like the rates, they do not have to use their services!

[piasa]

Price controls always boomerang...

[sickoflibs]

If only these big brains running NYC were running the country we could have the success they did in NYC on Corona.

[KarlInOhio]

And what happens when delivery companies refuse to deliver for cheap restaurants or require a $40 minimum order? Will New York then require Grub Hub to deliver anything for 15% including a handful of ketchup packets?

[Fledermaus]

Have you tried running a restaurant? It isn’t easy to do your own delivery.

I know.

So many variables it would be impossible in this format to explain. I could write paragraphs.

[piasa]

Soon deliveries to low-tipping areas will be a thing of the past.

[vpintheak]

Dems are so bass ackwards it isn’t even funny.

[tbw2]

Go after Grubhub and Yelp for creating fake restaurant pages to capture phone orders and take a 10-15% marketing fee. That’s fraud and theft from the restaurant.

[bigbob]

Next thing you know they’ll try to outlaw big sodas...

[aquila48]

This may end up having just the opposite effect.

[Mark]

When delivery services decide not to make deliveries, will New York City Council members start delivering?

[Junk Silver]

Clearly any problems New York restaurants and diners are having are caused by not enough government regulation and interference. We can only hope that bills such as this will rectify that. /s

[cherry]

bailing out one group and putting the screws to another.

[Persevero]

I don’t understand how a government can set prices by law?

I mean suppose grubhub charged a millioN are we setting prices now?

[John Milner]

Artificially limiting the market value of a service will only cause that service to decrease or go away - since the incentive to provide the service is reduced or even eliminated.

End result - fewer deliveries mean more people out and about to pick up their orders - thus spreading the virus around.

[montag813]

This isn’t about “free enterprise” or “innovation”. These Silicon Valley parasites are blood suckers, and this is the right move.