Food-Delivery Apps Are Charging Businesses Too Much In Fees, Downtown Alliance President Jessica Lappin Says

Businesses are hurting: Those that aren’t shuttered entirely during the pandemic are trying to operate with limited staff and resources and are still struggling. At such a rough time, third-party delivery app fees are adding to the stress and strain of businesses already stretched thin.

That’s why Downtown Alliance President Jessica Lappin testified (via Zoom) at the New York City Council hearing Wednesday in support of Int.1908-2020, a bill that would cap third-party delivery fees at 10%. Here’s what she said:

Like in the rest of the city, the novel coronavirus has had a devastating impact on retail in Lower Manhattan. Only a small number of “essential” businesses have managed to stay open and provide critical services to our 63,000 residents, health-care workers and first responders in the neighborhood. Some of them are food service establishments — and they desperately need our help. That’s why I am urging the immediate passage of Intro. 1908, which prohibits third-party delivery services from charging restaurants more than a 10% fee per order.

Our local restaurants, which already operate on razor-thin margins, are facing a once-in-a-generation crisis. They may be serving takeout and delivery, but are likely doing so at a loss just to keep their doors open and staff on payroll.

And yet, they are being charged exorbitant fees by delivery apps such as Seamless and Grubhub. While these apps have become an integral part of New York’s foodscape, these outsized fees are massively eating into what little profit restaurants are able to realize today. Charging a 30% fee, especially during an unprecedented crisis, is unconscionable.

We are also supportive of some of the other measures you are considering today, like prohibiting apps from charging restaurants for telephone orders that did not occur, requiring the disclosure of commissions to customers and creating a new licensing and regulatory system for these apps. But, by far and away, the single most impactful thing you could do is limit the amount that third-party delivery services can charge our food service establishments by passing Intro. 1908. We commend the City Council for taking action to support vulnerable small businesses and encourage the swift passage of this much-needed legislation.

There are a number of other proposals related to helping restaurants and small businesses during this tough time. If you live in Lower Manhattan, you can reach out to Council Member Margaret Chin’s office to add your voice to the debate.

photo: iStock