City Council Moves Against GrubHub And Other Restaurant Apps

The New York City Council is close to passing a law that would temporarily limit the commissions ordering apps charge restaurants.

Companies like Grubhub can take more than 30 percent the price of each order and many restaurant owners have said the fees are eating into already thin revenues as they struggle to stay afloat.

"These third-party apps are bleeding mom and pop restaurants dry," said Councilmember Francisco Moya, a Queens Democrat. "These restaurants are barely keeping the lights on." 

Moya has proposed a bill that would temporarily cap all fees combined at 20% of the total order. Third-party ordering apps wouldn't be able to charge more than a 15% commission on deliveries, and more than 5% combined for marketing, pick-up, or credit card processing. 

The cap would end 90 days after restaurants are allowed to open up for table service. The bill will be voted on Wednesday and Moya said he expected it to pass.

Grubhub and other companies oppose the bill, saying it could raise prices on customers.

"We believe that any cap on fees nullifying contracts between two businesses represents an overstep by local officials and will not withstand a legal challenge," Grubhub previously said in a statement.

But council-member Mark Gjonaj of the Bronx, one of the bills co-sponsors, told WNYC he's up for the court battle.

"This is being on the right side of the issue, and I'm up for the challenge," he said.

Jersey City, San Francisco, D.C. and Seattle have all passed similar caps.