New York City can crack down on GroHub and other food delivery applications

New York City can crack down on GroHub and other food delivery applications

For nearly a year, the City Council has warned major food delivery applications, such as GrubHub and Uber Eats, that their business practices are harming local restaurants in New York, and that the law could be effective.

Restaurants were being charged a commission of 15 to 30 percent, and grooves were routinely billed by restaurants for calls that didn’t order.

Groove corrected its phone ordering system to minimize inaccuracies in the face of investor scrutiny, and ended the practice of creating a competitive website for restaurants that use the services.

The changes were not enough.

The City Council will soon consider a package of bills that are thought to be the first local effort to regulate commissions, phone fees or any other aspect of the on-demand food supply economy.

The bills suggest that restaurants that charge food delivery applications are not limited to more than 10 percent of commissions at restaurants, and they need to be licensed through the city’s consumer affairs department. By creating a licensing mechanism, the city will be empowered by disciplinary agencies, such as false advertising or fraudulent practices.

Food delivery applications, companies defined as entities that use the Internet or mobile apps to provide food for one-day pickups or catering to more than 20 wholly owned food companies, will also have to disclose fees and commissions for restaurants they charge to consumers.

“What you have here is David and Goliath,” said Mark Gajnaz, chairman of the council’s Small Business Committee, among the two sponsors of the law on Thursday. “We just want to give brick-and-mortar brick-and-mortar, mom-and-pop restaurants a chance to fight.”

Credit …Gina Moon for The New York Times

Grubhub, Which controls two-thirds of New York City’s market, Argued that its application brings in new customers and allows restaurants to benefit from the millions of dollars spent on advertising. They did not immediately respond to a request for comment.

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