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In bid to help restaurants, NYC caps fees for third-party delivery platforms

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Posted at 4:13 PM, May 13, 2020
and last updated 2020-05-13 16:24:20-04

NEW YORK CITY — The New York City Council overwhelmingly passed a bill Wednesday providing financial assistance to restaurants struggling under strict coronavirus restrictions.

The council voted 46-4 in favor of a bill to cap fees that third-party food delivery platforms may charge restaurants during a state of emergency.

The legislation was part of a package of five bills aimed at helping small businesses impacted by the COVID-19 outbreak. All five measures were approved.

“Small businesses and restaurants are the heart and soul of New York City and right now, they are hurting,” City Council Speaker Corey Johnson said in a statement. “They are paying high fees, getting harassed and are worried about losing their homes. They need help and this small business package is designed to protect them during this pandemic.”

As COVID-19 ravages New York City, restaurants have seen a dramatic drop in patronage while also shouldering the burden of altering operations from dine-in services to delivery and pickup only.

Now, restaurant owners will be able to keep a little more of their earnings in their pockets, bill sponsor Council Member Francisco Moya said Wednesday.

“Mom-and-pop restaurants across New York City are being bled dry by billion-dollar tech companies,” Moya said. “Exorbitant fees from third-party food delivery services threatened restaurants before the COVID-19 outbreak but like so many other issues, this crisis has amplified and expanded that inequity to devastating effects."

The legislation restricts third-party delivery fees to 15% per order during a state of emergency that prohibits restaurants from offering dine-in services. Additionally, third-party delivery services will not be able to charge more than 5% per order for all other types of fees.

“By capping the fees third-party food apps can charge restaurants during declared states of emergency, restaurants can continue providing essential services while not putting themselves out of business in the process,” Moya added.

Violators could be subject to civil penalties of up to $1,000 per restaurant per day.

The bill allows the cap to remain in effect for the duration of and for 90 days after any qualifying state of emergency.