Food Delivery Services Sue NYC Over Restaurant Fee Caps

Three food delivery companies sued New York City on Thursday over restaurant fee caps.

DoorDash, GrubHub, and Uber Eats say that the city’s limit on the amount they can charge restaurants is unconstitutional, has cost them a lot of money, and forces them to past cost to consumers.

The three companies said in their suit that “the ordinance sets a dangerous precedent.” They seek an injunction to collect monetary compensation and prevent enforcement of the bill currently in place and a jury trial.

New York City Mayor Bill de Blasio signed a bill last year in May to limit the percentage that food delivery services can charge restaurants. The bill was implemented during the height of the COVID-19 pandemic. The food-delivery apps cannot charge any more than 15%.

“Let me be clear, none of the reform measures are meant to target or impede any business from providing a service or making a profit,” City Councilman Mark Gjonaj, chairman of the city’s Small Business Committee, said.

The councilman believes that the lawsuit is “a misguided effort to protect what they feel is their right to fleece local mom-and-pop eateries out of every dime that they can squeeze from them. It’s unfortunate but not surprising.”

San Francisco has also set limits for food delivery services.

DoorDash and Grubhub filed a lawsuit against San Francisco in July.

“The City of San Francisco passed hasty, detrimental, and unconstitutional price controls which leave us no choice but to resolve this matter in court,” a spokesperson for DoorDash said. “Not only do permanent price controls violate the US and California Constitutions, but they will likely harm the very restaurants the city purports to support. Imposing permanent price controls is an unprecedented and dangerous overreach by the government and will limit the options small businesses rely on to compete in an increasingly competitive market.”

 

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