Uber Eats, DoorDash, and Grubhub have sued New York City over caps on the fees they’re allowed to charge participating restaurants for orders placed via their respective platforms.
New York City introduced the caps in May 2020. The rule said third-party delivery services “would be prohibited from charging more than a 15% fee per order for providing delivery services to a restaurant, and more than a 5% fee per order for all other types of charges,” until at least 90 days after the city’s restaurants were allowed to offer on-premise dining services again.
The city voted to make the caps permanent in August. A few weeks later The Verge reported that the companies had filed their lawsuit seeking monetary damages resulting from the fee caps, a jury trial, and an injunction that would prevent the city from enforcing the rule. But New York City Councilman Mark Gjonaj told The Wall Street Journal that the caps would be enacted anyway.
These conflicts are happening in cities across the country. DoorDash and Grubhub filed a lawsuit protesting similar restaurant fee caps in San Francisco in July, and in August, Chicago sued the companies “for engaging in deceptive and unfair business practices that harm restaurants and mislead consumers.” Other cities might follow suit as the COVID-19 pandemic continues.
DoorDash and Grubhub both told The Verge that New York City’s fee caps might actually harm restaurants instead of helping them. “Imposing permanent price controls is an unprecedented and dangerous overreach by the government,” DoorDash said, “and will limit the options small businesses rely on to compete in an increasingly competitive market.”
But many restaurants have complained about the food delivery services. Grubhub has been accused of adding restaurants to its platform without their permission, for example, and Uber Eats has compensated for the fee caps with new charges specific to each city. DoorDash also settled a lawsuit in 2020 related to its practice of pocketing gratuities intended for its drivers.
