New York City’s decision to permanently cap the commission rates food delivery services can charge at 23 percent could take a bite out of companies like Grubhub, DoorDash and Uber, and possibly cost them hundreds of millions of dollars.
San Francisco has also made its 15 percent commission cap permanent. Other major cities may follow their lead, according to Financial Times.
New York’s city council on Thursday (Aug. 26) approved legislation that caps food delivery commissions at 15 percent for delivery services, 5 percent for add-ons such as marketing and 3 percent for transaction fees. Before the cap, some of the apps charged up to 30 percent.
“We are not here to enable billion-dollar companies and their investors to get richer at the expense of restaurants,” said council member Francisco Moya.
Just Eat Takeaway acquired Grubhub for $7.3 billion earlier this year after talks with Uber fizzled out.
“This permanent price control is flagrantly unconstitutional and will hurt local restaurants, delivery workers and diners across NYC,” said Grubhub. “We will vigorously fight this illegal action.”
Food delivery companies are challenging San Francisco’s decision in court and are likely to do the same in New York City. Los Angeles, Seattle, Chicago, Washington D.C. and Las Vegas also have temporary commission caps on food delivery.
Meanwhile, Fiserv announced Wednesday (Aug. 25) that Clover’s POS, ordering and business management platform is integrating with Grubhub. Restaurants will now be able to take Grubhub orders through Clover’s tools, and restaurants can also sign up for Grubhub through Clover’s platform.
“Integrating Clover and Grubhub makes management of delivery orders much easier for restaurants, enabling them to reach more customers while operating more efficiently,” Ellen Linardi, senior vice president of product and design at Clover, said in a statement, adding other food delivery services will be available through Clover soon.