City Council extends apps’ delivery fee cap

A bill that would continue to limit delivery app fees is headed to the Mayor for signature. Photo by Seth Werkheiser/Flickr

This story was updated Monday, Aug. 2 at 12:15 p.m. to reflect a new statement.

By Rachel Vick

A bill to extend prohibition of excessive third party delivery app fees introduced by Councilmember Francisco Moya was passed in City Council with a collection of legislation to protect restaurants last week.

Platforms like DoorDash and Seamless will be prohibited from charging restaurants more than 15 percent per order for delivery and more than 5 percent per order for all other fees.

“For far too long, there’s been an imbalance of power between these third-party food delivery services and restaurants,” Moya said. “Small businesses should not be pressured into accepting these fees in order to remain viable and competitive.” 

“We have the opportunity and a responsibility to protect our mom-and-pop shops and ensure they can survive,” he added. “To allow the temporary cap to expire would completely handicap the recovery of so many businesses that are just starting to get back on their feet.” 

Local Laws 52 and 88 were passed in 2020 to provide a buffer for restaurants struggling as deliveries soared during the pandemic, and if signed into law by the mayor, the caps will extend until the end of February 2022.

Violations would still result in fines of up to $1,000 per day, per restaurant. 

The initial legislation only offered the protection only until 90 days after the emergency order was lifted, and though delivery platforms opposed the limits, they largely chose to comply, according to the Office of Special Enforcement.

Doordash spokesperson told the Eagle that they “remain concerned about the impacts of price controls on merchants, Dashers, and customers, [and] are pleased that policymakers recognize the harmful impacts of a permanent price control. We remain focused on partnering with the City Council on better long-term solutions to help restaurants.”

David London, the company’s head of government relations for the East Coast, submitted testimony against the bill at a July 1 hearing on the basis that the third party delivery platform expected the cap to be temporary. He claimed that the continued limits would have a “negative downstream impact” on New  Yorkers, delivery workers and restaurants relying on the volume that the apps support.

“Restaurants have options in how they offer off-premise consumption, and now that doors have reopened and restaurants are back to full indoor capacity, delivery can once again be one of many tools restaurants have at their disposal,” he said. “We have maintained service to restaurants under the temporary cap… however this service could not be maintained at the same levels with permanent restrictions imposed on contracts with our restaurant partners.”

The sentiment was echoed by other major third party services including Uber Eats and opposed by groups like the New York State Restaurant association, which said that capping fees was the “responsible” thing to do.

Restaurants in Queens said that the fees, even with the cuts, made it impossible for them to continue their relationships with the services. 

Michael Fuquay, co-owner of The Queensboro in Jackson Heights, said that while the delivery apps present to small businesses as their partners, restaurants like his made it through by taking on their own deliveries.

“We pivoted to offering take-out and delivery through our own website and used our own staff to make deliveries,” he said. “This was key to our business and our employees surviving the pandemic.”