But many restaurants — fed up with delivery fees and lack of transparency — supported the bill. The NYC Hospitality Alliance, which represents 25,000 bars and restaurants in New York, says the bill ensures that restaurants can market directly to their customers. The law also makes it easier for restaurants to leave delivery platforms without losing access to their customers.
“DoorDash spends millions of dollars to take restaurants’ customers and withhold their information so they can control the market and extract more fees from small businesses," said Andrew Rigie, the executive director of the alliance.
Delivery companies saw big sales gains over the last year as pandemic lockdowns closed restaurant dining rooms and more people ate at home. DoorDash booked a record 345 million orders in its most-recent quarter, and its sales jumped 83% from the prior year to $1.24 billion.
Delivery companies say they help restaurants by connecting them to diners and handling tricky logistics. But their commission fees, which can be as high as 30% per order, have cut into the already thin margins of restaurant owners in an unprecedented era. The National Restaurant Association estimates 90,000 U.S. restaurants have closed permanently or long-term because of the pandemic.
That relationship between delivery companies got more scrutiny from local lawmakers as the pandemic wore on. Dozens of cities passed temporary fee caps. In July, Massachusetts sued Grubhub, claiming it charged restaurants illegally high fees during the pandemic. And last month, Chicago sued DoorDash and Grubhub, accusing them of deceptive business practices, including delivering from restaurants without their consent. Both companies denied those claims.
FILE - In this April 21, 2021 file photo, a delivery man bikes with a food bag from Grubhub in New York. The three biggest food delivery companies, DoorDash, Grubhub and Uber Eats, are suing the City of New York, Friday, Sept. 10, over its law to permanently limit the amount they can charge restaurants that use their services.(AP Photo/Mark Lennihan, File)
Credit: Mark Lennihan
Credit: Mark Lennihan