Those convenient food delivery apps are not so convenient for restaurants. New York’s City Council is poised to introduce a legislative package that aims to regulate their ballooning fees and commissions, making it one of the first cities in the country to push back on these middlemen apps.
The New York Times reports that, should the legislation pass, delivery apps such as Uber Eats, Grubhub, DoorDash, and Postmates will be capped at charging restaurants no more than 10% commissions (current charges are often between 15% and 30%) and require licenses through the city, which could be revoked for infringements. The guidelines would apply only to apps that deliver for more than 20 separately owned restaurants. The bills will undergo a public hearing in April.
Grubhub dominates two-thirds of the New York market, while DoorDash and Uber Eats are in a dead heat for 15%. Nationwide, DoorDash accounts for 38% of meal deliveries, and Grubhub 31%. But although they’ve come to dominate the restaurant industry, these apps have struggled with their business models. Postmates delayed a planned 2019 IPO after lackluster starts from Uber and Lyft; Grubhub reported wider-than-expected fourth-quarter losses earlier this month; and Softbank-funded DoorDash is now preparing for an IPO, after merger talks with Uber reportedly fell through last year.
Complaints of well-funded apps pillaging their brick-and-mortar partners are not unique to food delivery. ClassPass, the fitness studio app, is facing similar accusations.