New York City approves licenses, commission ceilings for food delivery apps

By Hilary Russ and Tina Bellon

NEW YORK (Reuters) – New York City council on Thursday approved legislation to license food delivery apps, including Grubhub, DoorDash Inc and Uber Eats, and to permanently set aside commissions that they can charge restaurants.

The companies say the price controls are unfair and promised to fight them.

“This permanent price control is manifestly unconstitutional and will harm local restaurants, delivery workers and diners across NYC. We will vigorously combat this illegal act,” Grubhub, a unit at Just Eat Takeaway.com, said in a statement.

Mayor Bill de Blasio has 30 days to sign the legislation, which comes into force 120 days after he became law.

The bills limit the amount that companies can charge restaurants to use their platforms to 15% of food orders for delivery services and 5% for advertising and other non-delivery services.

Restaurants have complained that commissions as high as 30% drained their finances, so the city adopted temporary ceilings on these fees during the pandemic, as so many restaurants were forced to close or rely on delivery and execution alone.

The bills also require companies to obtain operating licenses that are valid for two years.

DoorDash said commission ceilings are “unnecessary and unconstitutional … New York’s restaurants need elections more than ever, and this dangerous government overhaul will greatly limit the opportunities small businesses rely on every day to succeed.”

Uber did not immediately comment.

San Francisco has also adopted permanent commission ceilings for the services.

New York City’s restaurant delivery market is almost evenly distributed across the major platforms, according to Bloomberg Second Measure, which collects payment data from customers.

DoorDash consisted of 36% of sales in July in the city, Grubhub 34% and Uber Eats and Postmates a combined 30%.

(Reporting by Hilary Russ in New York and Tina Bellon in Austin, Texas; editing by Chris Reese and Matthew Lewis)

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