New York Wants To Cap Third-Party Delivery Fees, And Apps Are Not Happy

The New York State Liquor Authority is considering a new rule that would require third-party delivery apps to charge restaurants either a flat fee or no more than 10% of the total order for their services, or else be listed as partners on the restaurants' liquor licenses. In a hearing yesterday, a regulator said that GrubHub, UberEats, and their ilk appear to be breaking state laws by charging restaurants fees of as much as 30% of the total order. Restaurants have complained that the fees are eating into their profits.

When representatives of the the delivery companies protested that limiting fees was would cut into their own profits, Vincent Bradley, the chair of the Liquor Authority, dismissed them, reports the New York Post. "At the end of the day, if they fail because of this, then they were probably going to fail anyway," Bradley said.

Grubhub in particular feels unfairly targeted. Its founder and CEO, Matt Maloney, told Crain's that there's been a widespread "misunderstanding" about how the fee structure works, which leads to frustration, and that Grubhub is bearing the brunt of that frustration because it's the largest third-party delivery service in New York City. He also claims that research by the firm Technomic shows that eight out of 10 restaurants believe that Grubhub increases customer frequency.

Yesterday's hearing reached no conclusions. The Liquor Board will be presenting a clarified version of the guidelines at the next meeting. Given the long and acrimonious relationship between Grubhub and restaurants, we're not expecting conflict over the proposed ruling to be resolved any time soon.