Grubhub lobbies to loosen NYC’s pandemic-era fee cap law — even as it sues the city

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Grubhub is quietly lobbying New York City legislators to amend legislation that limits the fees food delivery companies charge restaurants for take-out orders — even as it sues the city to overturn the fee cap, The Post has learned.

The delivery giant says it has secured the support of 17 City Council members — mostly new members who were not around for the contentious hearings in 2019 between the city 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 would allow the delivery companies to charge more for their services than the current 15% cap.

The amendment would expand the current 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 seeking to shore up support for the amendment, according to the missive from a lobbyist representing the delivery business, which was reviewed by The Post.

“As business returns to normal, the New York City Council needs to know that well intentioned emergency ordinances put in place at the height of the COVID-19 pandemic have run their course and are now poised to harm the very small businesses they set out to help in the first place,” wrote Adam Witkowski, who works for the lobbying firm Court Street Strategies, in the Nov. 16 letter.

Doordash, Grubhub and UberEats sued New York City in 2021 over the fee cap, which limits the amount they can charge restaurants to 15% 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 write to the City Council asking them to give independent restaurants more flexibility to incur benefits from 3rd party delivery groups,” according to the letter.

Grubhub and the other food delivery apps, including Doordash and UberEats, sued New York City last year arguing that the fee cap — which was implemented in 2020 and limits their fees to 15% of a food order —  is an “act of government overreach.” The complaint also disclosed that the cap has cost them “hundreds of millions of dollars” in lost revenue.

The city filed a motion to dismiss the complaint and the court is expected to rule on the issue early next year, according to sources familiar with the situation. A hearing on the proposed amendment has not been set.

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

A Grubhub delivery person rides in Manhattan.
Grubhub says that more 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 again opt in to accessing” a bevy of marketing services Grubhub can offer that level the playing field with large restaurant chains that have big marketing budgets.

Restaurants, however, want the fee caps to remain in place, according to a trade group that represents thousands of restaurants in the city and community groups. 

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

Other community groups like LISC also received the letter, which did not identify Witkowski’s ties to Grubhub, they say. Witkowski only identified himself as representing Grubhub after they asked who he worked for, sources told The Post.

Witkowski did not return a call for comment and Grubhub did not comment on the letter.

“I think there is a lot of misinformation being put out there and this [Grubhub] campaign insinuates that there is a grassroots campaign to allow the delivery companies to charge more and that is 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 most of the city legislators supporting the amendment are too green to know about the city’s rocky relationship with the delivery companies.

“They don’t understand how the third-party delivery companies exploited restaurants because they didn’t sit through hours of City Council hearings and read the articles about how the delivery companies were harming small businesses in 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 they wanted to or not by creating websites 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 benefit small businesses owned by immigrants and families, which do not have access to the same marketing resources as major brands,” Grubhub spokesperson, Liza Dee said in a statement.

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

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