New York City and Los Angeles both voted to extend caps on third-party delivery orders with open dining rooms still out of reach for most of their areas.
In May, NYC Mayor Bill de Blasio’s signed legislation that caps third-party delivery platform fees at 5 percent and delivery fees at 15 percent and penalizes bogus telephone fees charged by these platforms for calls that don’t result in orders. The law was set to expire September 18, but the recent vote extends the cap until 90 days after restaurants are allowed to re-open dining rooms at 100 percent capacity.
“Today, the New York City Council took significant action to stand by and protect local restaurants struggling to survive during an unprecedented global health crisis,” said NYC Councilman Mark Gjonaj in a statement
Los Angeles, which passed its legislation in the same month, caps delivery fees at 15 percent. The ordinance was supposed to end Monday, but just like NYC, the law will extend until 90 days after in-restaurant dining returns to 100 percent.
The caps were passed in response to high fees from third-party delivery providers amid the pandemic, which sometimes reached as high as 30 to 40 percent. Several other cities like Seattle, San Francisco, Philadelphia, and Washington, D.C. passed similar temporary laws.
Third-party delivery companies of course aren’t in favor of limiting delivery fees, which led Grubhub to take out digital ads in districts of NYC council members who were in favor of the cap. In the advertisements, Grubhub referred to the caps as a “food delivery tax.” The third party claims that caps result in fewer orders and higher fees for consumers.
New York City’s indoor dining room plan was put on pause in July amid rising COVID cases across the country. The city has allowed outdoor dining since late June.
De Blasio said earlier in August that NYC isn’t considering the reopening of indoor dining anytime soon. In response, organizations like the New York Hospitality Alliance have demanded the government come up with a timeline to assist struggling restaurants.
“Despite the fact that the City exceeds and sustains the metrics that have allowed restaurants throughout the rest of the State to reopen, government leaders have still yet to provide any guidance on when small business owners, workers and customers can expect indoor dining to return,” said Andrew Rigie, executive director of the NYC Hospitality Alliance, in a statement. “Our industry’s survival over the next several months depends on government immediately developing and implementing a plan that allows restaurants in New York City to safely reopen indoors like our counterparts everywhere else in the State.”
California Gov. Gavin Newsom closed in-restaurant dining in more than a dozen counties July 1, including Los Angeles. About two weeks later, he closed dining rooms for the entire state. Restaurants are now operating via off-premises and outdoor dining.
On Friday, Newsom announced a new reopening plan beginning Monday that divides counties into tiers—widespread, substantial, moderate, and minimal—based on the number of cases and positivity rate. When the plan goes into effect, 38 of California’s 58 counties, including most of the larger counties, will be in the most restrictive category. In the other three tiers, counties are permitted to serve guests in dining rooms at limited capacity.