Three of America’s largest food delivery teams – DoorDash, Uber Eats and Grubhub – have sued New York to stop imposing restrictions on restaurant fees.
In May 2020, the city temporarily ordered food delivery apps to charge restaurants no more than about 20% of each home delivery order – 15% for actual deliveries, 5% for listing in the app plus processing of payments fees. The city order was to end in 90 days, but was later extended until February 2022.
A bill passed by the city in August this year, however proposed making this cap permanent. It has not yet been signed by Mayor Bill de Blasio. Now, in an attempt to block the account, all three technology companies have filed a lawsuit together [PDF] against New York before federal court on Thursday. The trio is seeking a ban to stop accepting the proposal.
New York City councilors believe the bill better supports restaurants and their patrons. But DoorDash, Uber Eats and Grubhub believe it is unconstitutional and will harm businesses and their customers.
“The ordinance is unconstitutional because, among other things, it interferes with freely negotiated contracts between platforms and restaurants by changing and dictating the economic conditions under which a dynamic industry operates,” the complaint said.
Representatives of Grubhub and DoorDash told The register the bill could lead to increased shipping fees for customers, making the whole experience more expensive for hungry New Yorkers.
Remember: these app companies charge the restaurant and the customer for each order, so if delivery giants can’t make restaurants pay more, players will have to cough up the difference. Then people will rarely order from restaurants and in turn these companies will earn less money.
“Price controls not only violate the US and New York constitutions, but are likely to harm the restaurants themselves that the city intends to maintain,” a DoorDash spokesman told us.
“In addition, price controls can lead to higher prices for consumers, which can reduce orders and profits for Dashers. Imposing constant price controls is an unprecedented and dangerous problem on the part of the government and will limit the opportunities that small businesses rely on to compete in an increasingly competitive market. “
“Grubhub is working hard during the pandemic to support restaurants in New York and across the country,” a Grubhub spokesman said.
“Despite our efforts, the city council recently adopted an unprecedented and unconstitutional price control aimed at the food supply industry. Price control increases delivery charges for consumers and therefore leads to a reduction in orders for both restaurants and couriers. While Grubhub remains ready to commit to the city council, unfortunately we have no choice but to take legal action. “
A similar bill was passed in San Francisco and the companies also sued the city in federal court in July, According to to the SF Chronicle. Mayor London Breed said he did not want to sign the law and he passed without her signature.
Uber, the New York City Council and Mayor de Blasio’s office were not immediately available for comment. ®