Grubhub is quietly lobbying New York lawmakers to change legislation capping the rates food delivery companies charge restaurants for takeout orders, even as it sues the city to overturn the cap, The Post has learned. .
The delivery giant says it has secured the support of 17 city council members, mostly new members who weren’t present for the contentious 2019 hearings between the city and the food delivery apps on a myriad of cost issues .
On Nov. 3, lawmakers — including Marjorie Velazquez (D-Bronx), Eric Dinowitz (D-Bronx) and Vickie Paladino (R-Queens) — sponsored a proposed amendment that would allow delivery companies to charge more for their services. compared to the current limit of 15%.
Shortly after, Grubhub sent a letter to community groups seeking to build support for the amendment, according to a letter from a lobbyist representing the delivery industry, which was reviewed by The Post.
“As business returns to normal, the New York City Council should know that well-intentioned emergency ordinances enacted at the height of the COVID-19 pandemic have run their course and are now about to be lifted. they decided to help in the first place,” wrote Adam Witkowski, who works for lobbying firm Court Street Strategies, in the Nov. 16 letter.
The letter also says a “campaign” involving restaurants will be launched soon.
“We are asking community organizations to write to City Council asking them to give independent restaurants more flexibility to take advantage of third-party delivery groups,” according to the letter.
Grubhub and fellow food delivery apps including Doordash and UberEats sued New York City last year arguing that the commission cap – which was introduced in 2020 and caps their commissions at 15% of a food order – is an “act of excessive government. The complaint also revealed that the limit has cost them “hundreds of millions of dollars” in lost revenue.
The city has filed a motion to dismiss the lawsuit and the court is expected to rule on the matter early next year, according to people familiar with the matter. A hearing on the proposed amendment has not been scheduled.
The app companies have argued that independent restaurants are hurt by the cap because they can’t pay more for delivery companies to advertise and market their businesses.
Witkowski’s letter says that “by removing the rate cap, independent restaurants can once again choose to access” a number of marketing services that Grubhub can offer on a level playing field with larger restaurant chains with large marketing budgets.
Restaurants, however, want the rate caps to remain in place, according to a trade group that represents thousands of city restaurants and community groups.
“Capping commissions from third-party delivery services has been a huge help for independent restaurants in New York City. In talking to those we’ve worked with, we haven’t heard any expressed interest in removing this limit,” according to Valerie White, senior executive director of Local Initiatives Support Corporation, a non-profit community development organization, which received the Witkowski’s letter dated November 16.
Other community groups like LISC also received the letter, which doesn’t identify Witkowski’s ties to Grubhub, they say. Witkowski identified himself as a Grubhub representative only after asking who he worked for, sources told the Post.
Witkowski did not respond to a request for comment and Grubhub did not comment on the letter.
“I think there’s a lot of misinformation out there and so on [Grubhub] The campaign insinuates there is a grassroots campaign to allow delivery companies to charge more and this is misleading,” Andrew Rigie, executive director of the NYC Hospitality Alliance, a trade group representing the restaurant industry, told the Post. .
Rigie also argues that most of the city lawmakers supporting the amendment are too green to know about the city’s difficult relationship with delivery companies.
“They don’t understand how the third-party delivery companies exploited the restaurants because they didn’t attend the hours of city council hearings and they didn’t read the stories about how the delivery companies were hurting small businesses in their district,” he said Rigie.
In 2019, the city council’s head of small businesses, Mark Gjonaj, led a series of public hearings on the industry’s business practices, including charging incidentals to restaurants, as first reported by The Post. . whether or not to create websites on their platforms claiming to represent restaurants for takeout orders.
A Grubhub spokesman said around 50 restaurants support the amendment and have sent letters to the city council.
“This bill will particularly benefit small immigrant and family-owned businesses, which do not have access to the same marketing resources as big brands,” Grubhub spokeswoman Liza Dee said in a statement.
“We must equip our businesses with the tools to succeed, and by supporting common-sense legislation that eliminates arbitrary restaurant rules, this board will provide that opportunity,” said Velazquez, chair of the Consumer and Worker Protection Committee. to a press release.
