By: Ilana Siyance
Food-delivery platforms including Grubhub, DoorDash and Uber Eats have a different kind of order coming their way.
On Thursday, the New York City council said it passed five bills which they hope will shift some of power away from food-delivery platforms and toward “struggling mom and pop” eateries. As reported by the Wall Street Journal, the bills include expected measures such as mandates for the apps to provide the restaurants’ direct telephone number to eaters, and will prohibit platforms from charging restaurants for phone orders that don’t end up bringing transactions.
There are also more controversial bills, which will require delivery services to share user information with restaurants monthly if restaurants request it. The data will likely include eaters’ names, phone numbers, addresses, email, and what is ordered—which would give restaurants the ability to better access customers themselves.
Another consequential bill, if put into effect as planned, would extend the temporary caps on commissions food-delivery platforms can charge restaurants until at least until mid-February 2022. The city council says it also is scheduled to consider a permanent commission cap bill this month. Caps on commission for the platforms were first put into place during the pandemic, when indoor eating was not an option and restaurants were struggling, and at the mercy of the delivery platforms. As per the WSJ, U.S. market leader DoorDash, which posted a profit all through the pandemic, said in an April blog post that commission caps have made a “tangible impact” on its business. A spokesperson for Uber Eats said it lost more than $60 million in NYC alone due to pandemic-related commission caps. The delivery platforms say the caps negatively impact demand, because as restaurants pay less in commission, the prices for customers rise. The demand for the apps will be especially susceptible now that restaurants are open for dining.
Temporary caps have been used across many cities and suburbs around the country. In June, San Francisco became the first city in the U.S. to pass a permanent fee cap. What NYC does will greatly impact the food delivery apps, particularly since it accounts for about 10% of the total U.S. market, and may also be a leader the other cities follow. NYC is especially vital to Grubhub, since the city is its largest U.S. market, whereas DoorDash and UberEats also excel in other cities. As of June, Bloomberg Second Measure data show Grubhub and DoorDash were tied for the market share lead in New York City with 35% each, and Uber Eats holding 29% of the pie.
