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Two years after threatening to crack down on food delivery companies like Grubhub and Uber Eats, the New York State Liquor Authority has delivered a ruling that has both restauranteurs and delivery companies hopping mad.<\/p>\n
The SLA on Wednesday adopted new rules that will require New York restaurants with a liquor license to add up all the fees a delivery company charges them each year to ensure the they don\u2019t exceed 10 percent of the restaurant\u2019s annual revenue.\u00a0<\/p>\n
If the fees exceed 10 percent of the restaurant’s annual revenues, the delivery company will need to be added to the restaurant\u2019s liquor license. <\/p>\n
The SLA adopted the new rules to address concerns that food delivery apps like Grubhub, Uber Eats and Doordash may be violating long-standing rules prohibiting businesses with a liquor license from sharing their profits or revenues with anyone not already on that license. <\/p>\n
The only exception to this rule has been for landlords, who are allowed to take up to 10 percent of a restaurant\u2019s or bar\u2019s profits.<\/p>\n
The issue came to a head in 2019 when the regulatory agency held hearings on food delivery app fees that ranged from 15 percent to 30 percent of each order, raising questions about whether these companies are violating the SLA’s rules. <\/p>\n
Many restaurateurs expected the agency to resolve the issue by capping fees at 10 percent of each order, akin to the exception made for landlords. Alternatively, the SLA might have ordered food delivery apps to adapt a flat fee for NY restaurants with a liquor licence. <\/p>\n
\u201cUnder our view of the law, they shouldn\u2019t be charging anything, percentage-wise,\u201d SLA chairman Vincent Bradley said in Oct. 2019. \u201cThey can charge a flat fee, whatever they want, whatever the market will bear. But they shouldn\u2019t be taking a percentage of profits, revenues, whatever the case may be.\u201d<\/p>\n
Neither the delivery companies or the restaurants are happy now. <\/p>\n
Restaurateurs are concerned that the new rules just creates more work for them by forcing them to calculate the sometimes inscrutable fees they pay food delivery companies for everything from delivery to marketing to assistance with orders. <\/p>\n
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At least one restaurateur said he would drop his liquor license if he had to choose between it and maintaining his relationship with his principal delivery company, GrubHub.<\/p>\n
\u201cWhy would they want to go on my license and assume that liability,\u201d said Andrew Schnipper, co-owner of burger joint Schnipper\u2019s. \u201cI\u2019m not even sure I\u2019d want that.\u201d<\/p>\n
The delivery companies are also objecting to the change, saying small businesses will now \u201cbe forced to decide between forgoing their liquor license or not partnering with delivery apps that provide a valuable service by helping to reach a much broader customer base,” according to a letter from Amy Healy, head of government relations for GrubHub, who also claimed the SLA is overstepping it\u2019s authority.<\/p>\n
The SLA, for its part, pointed to its existing rule allowing landlords to share in a restaurant\u2019s revenues — without being listed on its liquor license — as long as the landlord\u2019s take does not exceed 10 percent of the restaurant\u2019s revenues.<\/p>\n
But restaurants wanted more, said Andrew Rigie, executive director of the NYC Hospitality Alliance. \u201cWe believe third party delivery companies should not be able to take more than 10 percent of a single order.” <\/p>\n