Add Jersey City, N.J., to the fast-growing list of municipalities that are capping the commissions charged to restaurants by third-party delivery services.
Jersey City Mayor Steven Fulop signed an executive order last week to limit the fees to 10% of delivery orders while the city’s restaurant dining rooms remain closed. The charge normally runs from 15% to 40%.
One of the services, Uber Eats, has responded by tacking a $3 fee onto customers’ charges for meals originating from a restaurant in Jersey City, a sizable city across the Hudson River from New York City. A spokesman told website NJ.com that customers can avoid the added charge by ordering from restaurants elsewhere.
Fulop’s order specifies that the services cannot offset the lower commission rates by reducing their delivery personnels’ pay or garnishing any part of their tips.
The Jersey City limit of 10% is also lower than most of the other caps that have recently been adopted or are currently under consideration. The typical maximum amount the services can charge in those locations is 15%.
Caps are in place in Seattle, San Francisco and Santa Cruz, Calif. The City Council of Washington, D.C., passed a 15% limit last week. Legislation setting caps for the duration of the COVID-19 crisis is under consideration in New York, Chicago, Toronto and the Massachusetts cities of Boston, Cambridge and Newton.
Restaurants contend that commissions of 20% or 30% take an unreasonably large bite out of their revenues and profits at a time when many are heavily reliant on delivery for their survival while dining rooms are closed because of the COVID-19 pandemic. Third-party services counter that the fees are needed to make their economic model work.
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