Legislators Lorigo, Rath, Todaro, and Mills introduce law to cap fees food delivery services charge local restaurants

Modified: December 4, 2020 11:04am

12/04/2020

As local restaurants have been forced to close dining rooms and offer takeout only, Erie County Legislators Joe Lorigo, Ed Rath, Frank Todaro, and John Mills have introduced a local law that would cap the fees delivery services like Uber Eats, Grub Hub, or Door Dash are able to charge small businesses during a declared emergency such as COVID-19.

The COVID-19 pandemic has forced hundreds of restaurants throughout Erie County to alter their business models and under the current Orange Zone restrictions, dining establishments that wish to stay open are left to rely on takeout orders. Many use third party services for delivery, despite the high fees that are associated with doing business with them. The proposed law would prohibit third-party food delivery services from charging a delivery fee that totals more than 15% of the purchase price of each online order. It would also cap other service fees at 5% of the total order.

Legislator Lorigo said, “This year has been a nightmare for small businesses, including restaurants and other dining establishments. Months of COVID-19-related closures have forced these businesses to turn to takeout orders as their only source of revenue. Unfortunately, third-party delivery services are extremely costly for restaurants to use. This needs to change. The law I am proposing would limit the fees these companies are allowed to charge during a time of emergency such as the one we are faced with now. I believe we need to do anything we can to help the struggling local restaurant industry and this is one way to put money back into small business owners’ pockets where it belongs.”

Other counties in New York State have enacted similar legislation and received positive feedback (Board moves to cap third party delivery service fees on takeout orders). The same legislation was also introduced in Ontario, Canada in November (Toronto Sun: Ontario government to cap fees on food delivery in lockdown areas). If approved in Erie County, the law would end the cap 90 days after a state of emergency has ended.

“I hope that given the situation we are in, my colleagues will agree that this is something we should consider immediately,” Legislator Lorigo added. “I have received positive feedback from restaurants throughout the community that could benefit from this legislation.  In the meantime, I encourage everyone to continue shopping local and supporting the restaurants we are fortunate to have here in Erie County.”

Legislator Todaro said, “What we are proposing mirrors legislation that recently passed in Ontario, Canada and in Westchester County. In less than a year, restaurants have had to close, limit capacity, and in most cases, only offer takeout. Our law would help them by limiting the fees third-party apps like UberEats or Grubhub can charge. This would make things a little easier on our struggling restaurant community that badly needs our help right now.”

Legislator Rath said, “One thing we hear from local restaurant owners is that it’s costly to do business with these third party delivery services. In many cases, restaurants don’t sign up because it simply isn’t affordable. We hope that this law would ease the burden and prevent delivery apps from overcharging. Anything we can do to help our struggling restaurants stay afloat should be a priority.”

Legislator Mills said, “The Covid-19 pandemic has hit the restaurant industry hard. They have been faced with complete closure, operating at limited capacity, and operating by take-out only. Fees from third-party delivery service apps just add to the frustration. We need to get this law passed to ease the burden on local restaurants trying to survive.”

A copy of the proposed local law can be found here.

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