The New York City Council plans to impose limits on the fees delivery apps can charge restaurants for delivery, Bloomberg reported.
The council plans on Wednesday (May 13) to impose limits of 15 percent fees per order and 5 percent for marketing and other services.
Councilman Mark Gjonaj, who sponsored the bill, said it would be a boon for restaurants struggling to remain open during the pandemic.
“These bills could mean the difference between remaining open or closing their doors and laying off their employees,” Gjonaj said, according to Bloomberg.
Companies disobeying the bill could face fines of $1,000 per restaurant per day. There’s another bill, too, that would prevent apps from charging restaurants for phone calls that don’t result in orders, which would have a $500 penalty.
Grubhub spokesman John Collins, in response to the news, told Bloomberg the proposed restrictions wouldn’t hold up. He said adding restrictions on apps would only drive up costs for small business owners, slow down order volumes, and cause costs on customers to rise.
New York’s food ordering ecosystem is a crowded one, with dozens of apps vying for customers’ attention. Grubhub has seen a hit in sales from the number of options, compounded with the increase in restaurants shutting their doors.
The number of fees, along with tipping policies and concerns about how workers are classified, have invited scrutiny to gig worker delivery apps outside of New York City. Recent controversy in Los Angeles has centered around the AB5 legislation, which forces companies like Uber to classify workers as employees rather than gig workers. In response, Uber and others have vowed to spend money on advertising to defeat the measure in the next election.
The pandemic’s shutdown of dine-in restaurants has been a plus for Grubhub, which saw a 24 percent increase in active diners, along with an 8 percent rise in gross food sales compared to the same time last year.