Grubhub petitions against food delivery fee caps implemented during coronavirus

The third-party delivery service is reportedly petitioning against caps on its commission fees in New York City

Grubhub is reportedly petitioning against commission caps mandated in New York City and other places during the coronavirus pandemic to help restaurants devastated by shutdowns retain whatever profits they can.

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Third-party delivery service Grubhub, which also owns Seamless, is launching an ad campaign targeted at te New York City Council urging customers that the commission caps will cause restaurants to lose business, according to the New York Post.

A woman on a bike delivers for GrubHub during the coronavirus pandemic. (iStock)

Grubhub in the petition argues that the fee caps are a "food delivery tax" and will lead to customers having to pay more for food. The ads also urge that the caps will result in restaurants getting less business if customers have to pay more, according to the Post.

Grubhub did not immediately return a request for comment.

CORONAVIRUS PUSHES CITIES TO CAP THIRD-PARTY DELIVERY FEES 

Third-party delivery services can charge a restaurant anywhere up to 40 percent on commission fees for its service cutting out a significant chunk of profit particularly for a small business even before the pandemic hit. But when restaurants throughout the country were forced to close dining rooms making delivery and take out the only option, restaurants were unable to afford to lose any more money.

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GRUBGRUBHUB INC72.98+2.75+3.92%

As a result, a number of cities, including New York, San Francisco, Seattle, Chicago and Boston, set caps ranging between 5 to 15 percent as the most a third party delivery service like Grubhub, UberEats or Doordash could charge restaurants.

DOORDASH REDUCES RESTAURANT FEES BY 50 PERCENT

New York City Council members spoke last week about potentially carrying out the cap through 2021, which would mandate the app to charge restaurants only 20 percent of a meal order.

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