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Grubhub lobbies to loosen NYC’s pandemic-era fee cap law — whilst it sues the town

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Grubhub is quietly lobbying Recent York City legislators to amend laws that limits the fees food delivery corporations charge restaurants for take-out orders — whilst it sues the town to overturn the fee cap, The Post has learned.

The delivery giant says it has secured the support of 17 City Council members — mostly latest members who weren’t around for the contentious hearings in 2019 between the town and the food delivery apps over a myriad of issues involving fees. 

On Nov. 3, the legislators — including Marjorie Velazquez (D-Bronx), Eric Dinowitz (D-Bronx), and Vickie Paladino (R-Queens) — sponsored a proposed amendment that may allow the delivery corporations to charge more for his or her services than the present 15% cap.

The amendment would expand the present 5% cap on all other fees, including marketing, while retaining the 15% cap on delivery fees.    

Soon after, Grubhub sent a letter to community groups in search of to shore up support for the amendment, in accordance with the missive from a lobbyist representing the delivery business, which was reviewed by The Post.

“As business returns to normal, the Recent York City Council must know that well intentioned emergency ordinances put in place at the peak of the COVID-19 pandemic have run their course and are actually poised to harm the very small businesses they got down to assist in the primary place,” wrote Adam Witkowski, who works for the lobbying firm Court Street Strategies, within the Nov. 16 letter.

Doordash, Grubhub and UberEats sued Recent York City in 2021 over the fee cap, which limits the quantity they will charge restaurants to fifteen% of a take-out order.UCG/Universal Images Group via G

The letter also says that a “campaign” involving restaurants will soon launch. 

“We’re asking community organizations to jot down to the City Council asking them to present independent restaurants more flexibility to incur advantages from third party delivery groups,” in accordance with the letter.

Grubhub and the opposite food delivery apps, including Doordash and UberEats, sued Recent York City last yr arguing that the fee cap — which was implemented in 2020 and limits their fees to fifteen% of a food order —  is an “act of presidency overreach.” The grievance also disclosed that the cap has cost them “lots of of tens of millions of dollars” in lost revenue.

Town filed a motion to dismiss the grievance and the court is predicted to rule on the problem early next yr, in accordance with sources aware of the situation. A hearing on the proposed amendment has not been set.

The app corporations have argued that independent restaurants are harmed by the cap because they’re prevented from paying more to have the delivery corporations advertise and market their businesses.

A Grubhub delivery person rides in Manhattan.Grubhub says that greater than 50 restaurants support a proposed amendment to loosen the delivery fee cap.REUTERS

Witkowski’s letter claims that “by removing the fee cap, independent restaurants can once more opt in to accessing” a bevy of promoting services Grubhub can offer that level the playing field with large restaurant chains which have big marketing budgets.

Restaurants, nonetheless, want the fee caps to stay in place, in accordance with a trade group that represents hundreds of restaurants in the town and community groups. 

“The cap on fees by third-party delivery services has been an incredible help to Recent York City’s independent restaurants. In speaking with those we now have worked with, we now have not heard any express interest in removing this cover,” in accordance with Valerie White, senior executive director of Local Initiatives Support Corporation, a community development nonprofit, who received Witkowski’s Nov. 16 letter. 

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Other community groups like LISC also received the letter, which didn’t discover Witkowski’s ties to Grubhub, they are saying. Witkowski only identified himself as representing Grubhub after they asked who he worked for, sources told The Post.

Witkowski didn’t return a call for comment and Grubhub didn’t comment on the letter.

“I believe there may be lots of misinformation being put on the market and this [Grubhub] campaign insinuates that there’s a grassroots campaign to permit the delivery corporations to charge more and that’s misleading,” Andrew Rigie, executive director of the NYC Hospitality Alliance, a trade group that represents the restaurant industry, told The Post.

Rigie also contends that the majority of the town legislators supporting the amendment are too green to know concerning the city’s rocky relationship with the delivery corporations.

“They don’t understand how the third-party delivery corporations exploited restaurants because they didn’t sit through hours of City Council hearings and browse the articles about how the delivery corporations were harming small businesses of their district,” Rigie said.

In 2019, the City Council’s head of small business, Mark Gjonaj, spearheaded a series of public hearings over the industry’s business practices, including charging restaurants for bogus fees, as The Post first reported, and for forcing restaurants to work with them whether or not they desired to or not by creating web sites on their platforms purporting to represent the restaurants for take out ordering. 

A spokesman for Grubhub said some 50 restaurants support the amendment and have sent letters to City Council.

“This bill will especially profit small businesses owned by immigrants and families, which wouldn’t have access to the identical marketing resources as major brands,” Grubhub spokesperson, Liza Dee said in an announcement.

“We must provide our businesses with the crucial tools to succeed, and by supporting common sense laws that lifts arbitrary rules on restaurants, this council will provide that chance,” said Velazquez, chair of the committee on Consumer and Employee Protection, said in a press release.

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