State agency targets Grubhub with proposal to cap fees

In the latest attack on Grubhub’s businesses model, a New York state agency proposed a cap on how much third-party companies can earn helping restaurants with food orders.

The New York State Liquor Authority says it wants to prevent third-party food companies from charging more than 10 percent commission for delivering food or for helping to generate orders — unless they become partners on the state liquor license.

If the proposal goes into effect, it could seriously cut into the profits at Grubhub because it is NY state’s largest food ordering company. It could also affect Seamless, which Grubhub owns, Uber Eats, DoorDash, Postmates and other food ordering and delivery services that can charge as much as 30 percent per order.

Grubhub shares closed Wednesday down 7 percent, to $60.90, a 52-week low. Neither DoorDash nor Postmates is publicly traded and Uber Eats is a relatively small part of ride-hailing company Uber’s business.

Grubhub criticized the draft proposal, which would be the first of its kind in the nation.

“The draft includes internal inconsistencies, vague language, and an apparent attempt by the SLA to go beyond their jurisdiction,” a spokeswoman said. “These points warrant clarification, not only for us, but the seven different categories of third parties referenced within the draft.”

But local restaurants, some of which have been feeling crimped by high fees from the Silicon Valley food company, cheered the news.

“We need some relief,” NYC Hospitality Alliance counsel Max Bookman told The Post.

The proposal confirms The Post’s July report that the SLA was considering limiting the commissions to 10 percent of sales.

Credit: Source link

The post State agency targets Grubhub with proposal to cap fees appeared first on Fox USA Live.

from WordPress https://ift.tt/2KKG7ul