SCHENECTADY COUNTY — The Schenectady County Legislature on Tuesday passed a law capping fees charged by third-party food delivery services, which have been accused of charging excessive amounts during the pandemic.
The legislation limits how much web-based food delivery services — companies like GrubHub, DoorDash and UberEats — can charge a restaurant, generally capping their fee at 15 percent of the cost of the food order.
Albany County Executive Dan McCoy took executive action to cap fees last month, and new Saratoga County Board of Supervisors Chairman Todd Kusnierz said he wants that county to take similar action, with the goal of supporting both residents and struggling restaurants.
The move to cap fees charged by such services began in larger cities including New York City last summer, with the delivery companies accused of price gouging. It is in part a response to a huge increase in delivery service demand during the pandemic, and has since spread to smaller cities like those in the Capital Region.
The New York State Restaurant Association supports the cap. A DoorDash representative sent a letter to the county, read aloud at Tuesday night’s public hearing, questioning the legality of the law and saying capping delivery and other fees could cause delivery companies to stop doing business in the county.
DoorDash also contends that its overall impact on the restaurant industry is positive, since it provides customers with a convenience, and restaurants don’t have the overhead of hiring their own delivery drivers.
The law limits fees charged by third-party food delivery services during states of emergency that expressly limit on-premise dining at food service establishments in the county. Pandemic restrictions limit indoor dining in the Capital Region to 50 percent of restaurant capacity.
“COVID has brutalized the restaurant industry,” said County Legislator Sara Mae Pratt, who sponsored the legislation along with legislators Cathy Gatta and Jeff McDonald. “The fees assessed on restaurants left the small restaurant with little or no room for profit.”
When using delivery service companies, the restaurants pay fees to have the food delivered and the customer is most cases sees the delivery as “free.”
The law caps fees or commissions charged to restaurants at 15 percent of the bill, prohibits increasing other fees on restaurants or customers, or reducing driver compensation. Some delivery services had reportedly been charging twice as much as a service fee.
There would also be a 5 percent cap on what companies could charge restaurants as a pickup fee. That fee would apply when a customer uses the service’s website to place a food order they then pick up at the restaurant themselves.
“I think it is going to be valuable and helpful for local restaurant. We know they are struggling,” said Legislator Gary Hughes of Schenectady, the Democratic majority leader.
The county would issue a notice of violation if a company continues to charge higher fees, but the law says the enforcement would ultimately be up to a restaurant to bring civil legal action to enforce the law.