Up to Murphy Whether to Cap Delivery Fees Charged to Restaurants
Restaurants that depend increasingly on takeout orders during the coronavirus pandemic might get a break on the fees they are charged by third-party delivery services such as DoorDash, GrubHub and UberEats, under a bill waiting action by Gov. Phil Murphy.
Legislation that was passed nearly unanimously, S2437/A3978, says third-party food delivery services can't charge a service fee to a restaurant greater than 20% of the cost of the individual order or 10% if the food is delivered by a restaurant employee or independent contractor.
Bill sponsor Assemblywoman Serena DiMaso, R-Monmouth, said one pizzeria received a little less than $400 from $1,200 in sales through a third-party delivery service.
“The restaurant industry came to us because they were paying some pretty exorbitant fees for people who were using GrubHub and UberEats and the like,” DiMaso said. “During a regular time, that was just the people who couldn’t get in or decided to stay home, so they didn’t mind paying the 30% to sometimes 50% because it was extra money.”
“But now when they have no choice – well now we have outdoor dining for some of them – but before when there was only takeout available, this was really crushing the industry,” she said.
Restaurants could continue to choose to pay up to 25% of the cost of the order to access additional advertising and other services offered by the third-party app or website.
The proposed law would be in effect during the COVID-19 pandemic anytime the state restricts dine-in service to less than 25% of maximum capacity. If dine-in restrictions are lifted but then return in another wave of the emergency, the cap on fees would return.
Third-party delivery companies have fought similar fee caps that have been popping up in cities around the country. DiMaso said the legislation is a negotiated compromise.
“Everybody would give and take a little bit because everybody should feel a little bit of the pain during the pandemic,” DiMaso said.
In its original version, the bill would have capped the fees at 15%, not including the optional advertising markup, and would have applied in any emergency lasting longer than a week.
Jersey City capped third-party food delivery service fees at 10% last month through an executive order issued by Mayor Steve Fulop. If Murphy signs the bill into law, it would supersede and preempt that and any other local orders.