NYC Puts a Cap on Third-Party Delivery Fees

    The Big Apple joins San Francisco, Seattle, and Washington, D.C.

    A restaurant employee carrying a brown paper bag of food.
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    The City Council measure will remain in effect for the duration of the pandemic and 90 days after emergency orders are lifted.

    New York’s City Council voted May 13 to pass legislation that should provide some relief to restaurants clawing for survival during the COVID-19 pandemic.

    Chief among them, a 20 percent cap on third-party delivery fees. Initially, according to Eater, the City Council considered passing an all-encompassing 10 percent fee cap on aggregators like Grubhub, DoorDash, and UberEats. The 20 percent cap includes a 5 percent cap on orders placed through third-party apps and an additional 15 percent cap on restaurants using the apps for delivery.

    Violations of the cap by third-party vendors will result in penalties of up to $1,000 per day, per restaurant.

    The package of bills, expected to be signed by Mayor Bill de Blasio, also include the temporary elimination of sidewalk licensing fees and a temporary suspension on personal liability clauses in restaurant leases.

    It does not feature, however, some goals put forward when the legislation was introduced in April, such as a bill to extend the moratorium on evictions through April 2021, hazard pay for grocery workers, and paid sick leave for delivery workers. Eater noted some of those measures could still be passed in the coming months.

    NYC isn’t the first major metropolitan to put a cap on delivery fees. San Francisco, Seattle, and Washington, D.C. all have 15 percent emergency caps on vendor apps. It’s worth noting, though, restaurants not using third-party apps for delivery in NYC might benefit more than those cities due to the 5 percent cap, Eater said.

    The City Council measure will remain in effect for the duration of the pandemic and 90 days after emergency orders are lifted.

    Another point: delivery platforms won’t be able to charge restaurants for phone calls that don’t result in orders. Grubhub said in January it was working to solve system issues on this matter.

    The City Council’s legislation will impose penalties of $500 per day, per restaurant for all third-party apps that violate this order.

    The sidewalk licensing fee note is a critical one for restaurants looking to open in the coming months with outdoor seating. The City Council suspended NYC’s ability to collect sidewalk licensing fees for restaurants, which typically count in the thousands of dollars each year, Eater said. The order runs through February 28, 2021. Restaurants that already paid their dues from March 1 onward will get a refund.

    However, restaurants without a sidewalk café permit hoping to capitalize on outdoor space to alleviate social distancing fears, still need to go through the process of obtaining one.

    The landlord bill addresses the restaurant fear tied to commercial lease provisions that allow landlords to go after the personal finances and assets of tenants in cases where business closes and fail to meet lease requirements. The City Council’s bill provides relief for restaurant owners who have had to shut temporarily, or perhaps permanently.

    It applies to commercial tenants impacted by COVID-19. A separate bill passed Wednesday ensures that tenants affected by COVID-10 won’t be harassed by landlords for payments and other issues. Landlords will be on the hook for penalties ranging from $10,000 to $50,000.