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Three of the largest food delivery companies in the United States – DoorDash, Uber Eats and Grubhub – have sued New York City to prevent it from placing a limit on the fees they can extract from restaurants.
In May 2020, the city temporarily ordered food delivery apps to charge restaurants no more than about 20% of the total of each order to deliver takeout – 15% for actual deliveries, 5% to be listed in the app, plus payment processing. costs. The Town of The order was supposed to end in 90 days, but it was then extended until February 2022.
A bill passed by the city in August this year, however, proposed to make this cap permanent. It has yet to be signed by Mayor Bill de Blasio. Now, in an attempt to block the bill, the three tech companies have jointly filed a lawsuit [PDF] against New York City in federal court Thursday. The trio are seeking an injunction to prevent the proposal from being passed.
New York city councilors believe the bill better supports restaurants and their customers. But DoorDash, Uber Eats, and Grubhub believe this is unconstitutional and will hurt 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 vibrant industry operates,” according to the complaint.
Representatives from Grubhub and DoorDash said The register the bill can cause shipping costs to increase for customers, making the experience more expensive for hungry New Yorkers.
Remember: these app companies charge the restaurant and customer for every order, so if delivery giants can’t charge restaurants more, punters will have to cough up the difference. These people will then be less likely to order from restaurants and, in turn, these businesses will earn less money.
“The price controls not only violate the constitutions of the United States and New York, but it will likely harm the very restaurants that the city claims to support,” a DoorDash spokesperson told us.
“In addition, price controls can result in higher prices for consumers, which can reduce Dasher orders and revenue. The imposition of permanent price controls is an unprecedented and dangerous overshoot on the part of the government and will limit the options on which small businesses can rely to compete in an increasingly competitive market. “
“Grubhub has worked hard during the pandemic to support restaurants in New York City and across the country,” a Grubhub spokesperson told us.
“Despite our best efforts, city council recently passed unprecedented and unconstitutional price controls targeting the food delivery industry. Price controls increase delivery costs for consumers, and therefore lead to reduced orders for restaurants and couriers. While Grubhub remains open to engaging with city council, unfortunately we have no choice but to take legal action. “
A similar bill was passed in San Francisco, and companies also sued that city in federal court in July, according to SF Chronicle. The Mayor of London Breed has indicated that she does not want to approve the law, and it was passed without her signature.
Uber, New York City Council and Mayor Blasio’s office were not immediately available for comment. ®
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