Capital

New York City Extends Third-Party Delivery Fee Cap as Restaurant Closures Escalate

The Coyote Ugly bar in East Village: closed. Fedora, the original speakeasy from 1917 turned modern-day supper club: closed. Iconic landmarks that acted as focal points, drawing in locals as well as visitors from around the world, have shut their doors forever.

New York City has seen over 1,000 restaurants and bars close their doors, permanently, since COVID-19 decimated the industry. The number, some suggest, is much greater, but difficult to determine due to the incredible speed with which the current pandemic is laying to waste those in the hospitality industry.  A recent survey conducted by the New York State Restaurant Association concluded that, without further financial assistance, nearly 64 percent of New York restaurant owners believe they will be closed by year’s end.

RESTAURANTS Act of 2020

While some operators remained hopeful that regulators would see the destruction and act to save an industry that has led the pack in terms of providing much-needed services as well as jobs—more than 15 million in the U.S.—it appears that the chance of the RESTAURANT Act getting through Congress is slim, at best.

The bill, that would have provided $120 billion in grants to support independent restaurants, has, according to Skopos Labs, about a 3 percent chance of being enacted.

One step the New York City councilmembers did take to help restaurants was extending the third-party delivery cap. Set to expire on September 18, the regulation caps third-party delivery commissions to 20 percent, with delivery fees set at 15 percent and marketing services the other 5 percent. The other step was a bill allowing restaurants to add a COVID-19 surcharge to guest’s checks, capped at 10 percent of the total bill. The “COVID-19 Recovery Charge” is awaiting the signature of Mayor Bill de Blasio. Both laws will remain in effect until 90 days after restaurants are able to open at 100 percent indoor dining capacity.

Will New York City Restaurants Open Their Indoor Dining?

Currently, restaurants in New York City are limited to outdoor dining. As of September 30, restaurants will have the option of opening for in-house dining at 25 percent capacity. Additional rules include mandatory temperature checks, no bar service, obtaining contact information on all customers for tracing purposes, and filtration upgrades. Many operators are wondering if opening will be worth it, at least until restrictions lift to 50 percent capacity, which, if all goes well, should be on November 1.

Third-party Delivery Fee Debate

While restaurant operators sort through the mess that is left in the wake of the current pandemic and the many regulations, some third-party delivery partners are voicing their discontent regarding the cap on delivery commission fees.

Grubhub has asked diners to protest the cap, suggesting that they will have to bear the increased cost. The company told NRN, “…it’s clear that fees go up for diners since Grubhub needs to make $4 to $5 per order to cover marketing services for restaurants, fixed driver costs, and other hard costs to operate our marketplace.”

Councilman Mark Gjonaj thinks otherwise. “Make no mistake about it. This is a corporate attempt to gaslight New Yorkers and blur the truth…It would be far more helpful if the company committed to focusing its energy on helping its restaurant partners get back on their feet and save their employees’ jobs. Now is not the time for runaway corporate greed.”

Los Angeles, Seattle, San Francisco, Washington D.C., Philadelphia, and Clark County, home to Las Vegas, have all temporarily capped commission fees.

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