HOBOKEN & JERSEY CITY, NJ — What's all the hubbub about Grubhub?
Earlier this week, Jersey City Mayor Steven Fulop issued an executive order capping the amount that third-party delivery services can charge to restaurants—currently ranging anywhere from 15 to 35 percent of a customer’s bill—to 10 percent.
“Many of the restaurants have had to make a shift to relying solely on delivery and takeout under the circumstances, and this cap is our latest effort to identify any available options to provide relief to our local businesses,” Fulop said.
Hoboken responded in kind, as the City Council moved forward with a similar proposal amid widespread allegations of excessive rates exacerbating by the brutal small business environment since COVID-19 restrictions took hold.
"At the end of the day, our hospitality industry and mom-and-pop shops are facing an uphill battle, and they need all the support we can offer to them. Hoboken is built on a community of small businesses and their survival is key to the success of our Mile Square," said First Ward Councilman Michael DeFusco.
After reaching out to delivery companies for comment yesterday, they have responded with statements decrying the move, warning that the unintended knock-on effects will impact the drivers and the restaurants.
"The extreme executive order issued today in Jersey City to limit the amount that restaurants pay to offer delivery and market themselves to local consumers is misguided and potentially disastrous for the very businesses it purports to help. Without any input from stakeholders, including the delivery platforms or members of the public, this ordinance will devastate locally owned restaurants that are being kept afloat thanks to the delivery and take-out services these companies provide. It will also result in job losses for the workers who depend—now more than ever—on delivery work to supplement their incomes or bring in money after being laid off due to the Covid-19 crisis," reads a statement from delivery services DoorDash, Grubhub, Postmates, Uber Eats.
In a letter to Hoboken Council President Jen Giattino, Grubhub's Head of Public Affairs Amy P. Healy said, "On the face of it, a cap on fees seems to be an easy solution to help restaurants that are struggling due to the coronavirus. And there is nothing we want more than to ensure the health of independent restaurants - we don’t have a business without them. But this solution is exactly the wrong thing to do."
Healy explains, "In reality, this proposed cap will lower order volume to locally-owned restaurants, increase costs - and headaches for - small business owners, and raise costs to customers. Delivery workers, who are currently relying on Grubhub to earn an income including 100 percent of tips from diners, would have fewer work opportunities and lower earnings. In the middle of what is quickly becoming one of the worst economic downturns in a century, Grubhub is ensuring that workers in Hoboken can continue to provide for themselves and their families."
When asked about the legality of the Hoboken's proposed ordinance, City Spokesman Vijay Chaudhuri, said, "The Hoboken Corporation Counsel's office has determined that the City has no ability or jurisdiction to regulate the fees associated with a third party delivery service."
Grubhub's Healy underscored that point, saying, "Grubhub is neither a public utility nor simply a delivery service. In the simplest of terms, Grubhub is a marketing engine and an order generation business - connecting hungry diners to great, local restaurants. The platform is free for any restaurant owner who chooses to join, and Grubhub offers a fee-for-service model, meaning that restaurant owners select the services they want and only pay when Grubhub generates a sale. Restaurants have many options to drive business besides third-party marketplaces, none of which are seeing their fees regulated."
Nevertheless, restaurant owners are pleading for some sort of assistance.
“Relief from commissions as high as 35 percent is sorely needed now more than ever and will help us keep our doors open serving the neighborhood,” said Andrew Martino, owner of Ghost Truck Kitchen.
“In the blink of an eye, they've been forced to upend their businesses models to 100 percent delivery & take-out,” Jersey City Councilman James Solomon said. “The fees charged by third-party apps—up to 35 percent of an order—is unsustainable. This emergency regulation keeps money in their pockets to pay their employees instead of large, billion-dollar corporations."
(TAPinto's Al Sullivan contributed to this article)
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