‘Unconstitutional’: Food Delivery Services Sue New York City Over Delivery Fee Regulations

DoorDash, Uber Eats, and Grubhub are suing New York City for its “unconstitutional” caps on delivery fees.

As COVID-19 hit New York City in the spring of 2020, the City Council temporarily limited the fees that the delivery apps could charge restaurants — specifically, a 15% cap for online orders. The policy, according to The New York Times, was intended as a “lifeline” for restaurants, which complained over fees as high as 30% per order.

However, the City Council voted last month to make the regulation permanent.

The New York Times explains:

Girding the argument from food delivery apps is the idea that restaurants do not have to enter into agreements with them. The City Council does not regulate fees from other marketers that restaurants might use, such as Google, Yelp or online reservation apps. The fee caps chosen by the City Council are also arbitrary and not supported by economic impact studies, the lawsuit charges.

Grubhub, DoorDash and Uber Eats have argued that third-party delivery apps allow restaurants to tap into a huge customer base that the apps have spent millions of dollars to cultivate.

“The Ordinance is unconstitutional because, among other things, it interferes with freely negotiated contracts between platforms and restaurants by changing and dictating the economic terms on which a dynamic industry operates,” the companies’ lawsuit argued.

“Price controls increase delivery fees for consumers, and therefore lead to a reduction of orders for both restaurants and couriers,” Grubhub executive Katie Norris noted in a statement. “While Grubhub remains willing to engage with the City Council, we unfortunately are left with no choice but to take legal action.”

The Daily Wire has previously reported that businesses and workers are increasingly wary of New York City due to its harsh COVID-19 regulations — including lockdowns for purportedly nonessential businesses.

Last month, outgoing Governor Andrew Cuomo (D-NY) warned the Association for a Better New York that unless residents who fled the city to work remotely elsewhere promptly return, the city will continue to struggle economically.

“Remember, we have to get people back and we have to get people back in volume,” explained Cuomo. “If you were to see a 15% decline of people coming back to New York City, that would have a devastating impact on the commercial market.”

Indeed, a report from Newmark found that despite plummeting rental prices, office spaces in the Big Apple are observing record high vacancy rates. As of June, the vacancy rate in downtown Manhattan reached 21.1%; reports for Midtown and Midtown South reveal similarly high availability rates.

Meanwhile, Wall Street executives are reportedly flooding recruiters’ offices with requests to transfer from New York to Florida. Companies such as Goldman Sachs have recently considered new headquarters outside of New York City.

New York lags almost every other state in economic activity following last year’s recession. The Back-to-Normal Index, a project of Moody’s Analytics and CNN Business tracking economic recoveries across the country, reveals that New York is operating at 81% of pre-recession capacity — far below the national average of 92%.

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