In A Win For Strangled Restaurants, Molinaro Restricts 3rd Party Delivery Apps From High Delivery Charges
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Dinner delivery.
Photo Credit: Katie Hellmuth Martin
Restaurants who are still open almost a year into the pandemic, after having been forced to shut down, and then open up with limited capacity, and now must close at 10pm, are relying on delivery and pickup in order to stay in business. Some restaurants have incorporated 3rd party apps like GrubHub and DoorDash, like Max’s on Main, Sukhothai, Isamu and Heritage. The apps can be a quick fix for a restaurant not needing to manage their own drivers or pay additional commercial auto insurance, but the quick fix can come with a price, to the tune of 30% of an upcharge as well as changing of the price on the app’s version of the menu, according to Dutchess County Executive Marcus Molinaro, a Republican, who just signed into emergency temporary law that that upcharge must be lowered.
Homespun, Meyers Olde Dutch (MOD) and Eat Church are using their own websites and POS systems (point of service) to publish their menus on, and avoided the 3rd delivery apps, partially based on avoiding the high take.
As Molinaro has been working to help struggling businesses throughout the pandemic, he took a highly targeted action today that regulates the business models of these technology companies by temporarily limiting how much money they can make off of the restaurant. A Little Beacon Blog is inquiring as to how this will be enforced, and if the change is showing up on the apps already.
The measure was encouraged by Beacon based Dutchess County Legislator, Nick Page (Democrat) . The press release issued by the County Executive’s office describing the action and reasoning behind this bipartisan move is in its entirety is below:
Dutchess County Executive Marc Molinaro today signed Local Emergency Order No. 13, which supports local restaurants by temporarily capping service fees charged by third-party food delivery companies to no more than 15 percent of the cost of the food order.
Third-party food delivery companies, such as Grubhub and Door Dash, among others, provide customers with easy-to-use apps for ordering food online. These apps are vital for restaurants during the COVID-19 pandemic, as they are more reliant than ever on takeout and delivery orders. However, fee structures used by these companies, which can be as much as 30 percent for delivery orders, are cutting into local restaurants’ profits during this time of hardship for the entire food services and hospitality industry.
The Executive Order also prohibits third-party delivery services from publishing restaurants’ menus on the services’ apps and increasing the price of a food item to include an delivery fee – an additional concern that was brought to the County’s attention.
County Executive Molinaro said, “The economic fallout from the COVID-19 pandemic has negatively impacted many industries, but none more so than the foodservice and hospitality industry. By temporarily capping the fees to no more than 15 percent, the Emergency Order will provide much-needed relief to struggling local businesses and help ensure the survival of our local restaurants. I thank Legislator Nick Page for bringing this important issue to our attention.”
Between November 2019 and November 2020, employment in the leisure and hospitality industry dipped by more than 25 percent in the Dutchess-Putnam counties region; this was the largest drop in employment in the region among all of the tracked sectors. The struggles facing this region are indicative of a national crisis for the industry. A recent survey conducted by the National Restaurant Association found on average, sales were down nearly 30 percent, and 81 percent of respondents reporting staffing levels remain below normal levels. As of December 2020, 17 percent of restaurants nationwide – or over 110,000 establishments – had closed.
Gregg Pulver, Chair of the Dutchess County Legislature, said, “The misrepresentation of small businesses by third-party apps is a disruption of carefully curated business strategies. We support local entrepreneurs and will do everything we can to ensure a level playing field. I’m pleased the County Executive is exercising his authority to place local restaurants back in charge of their own products. As this is likely a statewide issue, Albany must act effectively and quickly to enact a permanent resolution.”
During the Local Emergency Order, the County will work with the restaurant industry and our local delivery drivers to manage any unintended consequences and ensure the best outcome for our community and our economy.
Assistant Minority Leader of the County Legislator Nick Page said, “I applaud the County Executive for enacting my caucus’ initiative to prioritize the survival of local restaurants in their time of crisis. Acting together, we can best weather the storm.”
In addition to the latest Emergency Order, Dutchess County Government has taken active steps to support local restaurants and other small businesses. In December, it was announced Dutchess County partnered with Community Capital New York (CCNY) to provide $430,000 to assist microenterprise businesses negatively affected by COVID-19. In June, the County Executive issued an order waiving local regulations and requirements to expedite the opening of outdoor dining. Throughout the last year, County staff has provided guidance on State requirements, advocated for support for small businesses from the Federal government, and worked with New York State officials to help provide foodservice establishments with flexibility and relief from onerous mandates.
County Executive Molinaro said, “Our local restaurants are part of the fabric of this community — they employ thousands, support local charities and organizations, and add to the character of our County — and we cannot sit by and do nothing as they struggle. We will continue to support small businesses in any way we can, whether it is working to find solutions on the local level, to provide flexibility to serve their customers in creative ways, provide direct support, or advocate for them at the State and Federal level.”
