Big Apple takes a bite from food delivery

The New York City Council has long had the bones to choose from on the food delivery platform Grubhub. During the pandemic, as market share leveled, the animus seems to expand to reach a wider sector. The city’s attitude is very important as it has about 10% of the US market and can be a precursor to regional action elsewhere.

The conflict intensified last week. On Thursday, the council said it passed five bills intended to shift some of its power balance from food delivery platforms to “difficult moms and pop shops.” The bill includes some simple legislation, such as providing the restaurant’s direct phone number to the eater and prohibiting the platform from charging the restaurant for phone orders that do not lead to a transaction. increase.

But they also contain more controversial and perhaps more important rules. One is to extend the temporary cap imposed on the Commission if it goes into effect as expected. The food delivery platform can be billed to restaurants until at least mid-February 2022. Beyond what was decided last week, the city council also says it plans to review this month’s permanent commission cap bill.

The long-term cap sounds ominous to food delivery companies, but the true extent of its impact is not entirely known. For example, US market leader DoorDash reports profits for the past four quarters, or almost the entire pandemic, based on interest, taxes, depreciation, and pre-amortization adjusted profits.

At the same time, the company said in a blog post in April that the commission cap had a “concrete impact” on the business in terms of reduced demand as customers paid more to recover the lost dollars. ..

Big Apple takes a bite from food delivery

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