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It wasn’t quite the resounding applause of 7pm around Hell’s Kitchen – but the tweet by New York City Council Speaker Corey Johnson that third-party food delivery services had been forced to cap their fees was a major cause for celebration by local business owners.
W42ST highlighted the issue at the end of April with a story Support your local restaurants — don’t use Seamless! The survival of Hell’s Kitchen’s restaurants – and the belly of the neighborhood – has been looking precarious. In a nationwide survey by the James Beard Foundation, only one in five restaurant owners were confident they could stay in business until the COVID-19 restrictions were lifted.
The situation was even more desperate with restaurants now 100% dependent on delivery customers and apps like Uber Eats, Seamless (and its owner Grubhub), Eat24, and Caviar able to carve off as much as a third of their revenue.
Before the City Council pushed through the bill, a Grubhub spokesman told Eater: “Any arbitrary cap – regardless of the duration – will lower order volume to locally owned restaurants, increase costs for small business owners, and raise costs on customers. Delivery workers would have fewer work opportunities and lower earnings. We also believe that any cap on fees represents an overstep by local officials and will not withstand a legal challenge.”
But New York City Council delivered the emergency bill today, capping third-party food fees for restaurants at 15% for delivery. It also set a 5% baseline fee cap on all orders placed through the platforms, stopping the third-party services from charging hidden fees for marketing services.
As the news sunk in with local business owners, the tone was one of relief and delight.
Charlie (a little calmer now) said: “This is a very welcome change and I hope it will make reopening for to-go and delivery more doable for other small, family-owned businesses like The Marshal. I also hope this is something that will remain permanent.”
Johnny Livanos, from Ousia, added: “The restaurant business isn’t known for having the best margins. Pre-COVID, our customers were already eating more and more at home and ordering delivery. The fees were unsustainable. And now, with 100% of our orders pickup or delivery, the expenses don’t make sense. This fee cap will help restaurants make ends meet as we continue to endure great food and service to go. But remember, when possible, it’s always best to place the order directly to your favorite restaurants. That way 100% goes to them and not a middleman.”
Abel Castro, from Ñaño Ecuadorian Kitchen, said: “OMG this is great news! To be fair, Grubhub is offering commission-free deliveries for restaurants for a limited time during this pandemic. I’m not sure to all restaurants though. But the other apps are still charging the same fee.”
“The fees for delivery business were strangling our business,” said Bryan Ware, from Fresh from Hell. “This help is the only way we can open back up and hope to survive!”
Corey Samuels, from Kashkaval Garden, told us: “We’d been trying to come up with a delivery/take out-focused business model, but with those hefty commissions charged by third parties, it was really hard to find something that made sense. By legislating a reduction in the fees to a reasonable and fair level, the NY City Council has given restaurants like ours a much better shot at reinventing ourselves and surviving through this crisis.”
Ray Park, from Red Poke, said: “That’s great! I hope it will bring down everyone’s expense so we have more room to breath. It will be delivery and pickup only for a while until the government orders to reopen the restaurant. Pre-COVID at Red Poke, we had 35% delivery and 65% walk in; now we need to rely on delivery/takeout only. This should save us several thousands of dollars, to utilize for payroll and other costs.”
Sally Chironis, from Rice ‘n’ Beans, said: “This is awesome news! Deliveries, deliveries, deliveries! Now it feels we have a chance to survive with the new normal since Rice’n’ Beans is too small to open for sit-down business.”
“We are very pleased with this bill from the City Council,” said Robert Guarino, CEO of 5 Napkin Burger, Nizza, and Marseille. “These are not normal times. It is not an overstatement to say that every restaurant in town is literally fighting for survival. Capping third-party delivery fees in this unprecedented situation is a logical first step in helping small businesses weather the storm. As great as this is, I still encourage everyone to order direct from your favorite restaurant when offered.”
Keep updated on which restaurants are open with our regularly updated Hell’s Kitchen is OPEN! list. And stay in touch with W42ST and be first to read stories like this when you subscribe to our daily newsletter at w42st.com