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.”
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.
The bills, which are expected to be subject to a public hearing in late April, are not guaranteed to pass. But they will likely have ample council support: more so ৩০ City Council members signed a letter in October threatening to “explore possible legislative solutions” if Groov received a complaint from a restaurant owner alleging that they were being made to make phone calls that would result in the order not hiring an outside company to carry out the complaint.
“It’s resonating with a large number of members who are working with restaurant fees in their district,” said Queens Councilor Francisco Moa, co-sponsor of the lawyer package.
Jennifer Fermino, a spokeswoman for City Council Speaker Corey Johnson, said she would review the law once it was introduced.
The law does not address concerns about how food distribution applications treat their workers, such as tips for using payroll distribution wages. Mr Gajnaz, however, said his committee’s investigation was “not done”.
Andrew Rigby, executive director of the New York City Hospitality Alliance, a nonprofit representing the restaurant and nightlife industries, said the proposed regulations were necessary.
“It’s no secret that Grubb has been exploiting restaurants around the city for years. They have been regulated and they have been collecting restaurant bogus fees without any response,” Mr Rigby said in an interview. “New Yorkers love delivery. It’s great for restaurants and it doesn’t require any hostile relationships. Hopefully, this legal package will help level the playing field and give restaurants some basic rights. “
State liquidity authorities are considering rules for capsizing fees at a 10 percent rate through food delivery applications.
In the fall, Groobhub’s share price dropped more than 40 percent when it analyzed sales figures that were lower than analysts’ estimates. The company blamed its slow growth on “prompt” dinners, which were tempted by other applications, especially DoorDash, that have aggressively spent adding restaurants to its platform.
To keep the competition going, Groove began posting menus on its app without reaching a formal agreement with the restaurant, with other tactics to deliver supplies have been used to sell more.
This practice has drawn criticism from restaurant owners. But it seems to have helped the company reach more customers. This month Grohub reported sales of $ 341 million for the quarter ended December, an increase of about 20 percent over the prior year.