UPDATE: Hoboken + Jersey City Looking to Introduce Ordinance to Cap 3rd Party Delivery App Fees

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Since we’ve all been staying home for some time now, there’s no doubt that there has been an uptick in locals ordering delivery. Although restaurants are closed for physical business, many remain open for takeout and delivery to keep locals feed + keep the business running.

Of course, with this comes a whole new set of challenges when third-party delivery apps such as Grubhub and UberEats are involved, charging restaurants a hefty fee when delivering food — as much as 30%, which is coming directly from restaurants’ pockets.

uber eats jersey city delivery charges

The Details

According to NJ.com, “The City Council is expected to introduce an ordinance Wednesday [May 13th] that will prevent third-party food delivery apps from charging restaurants and eateries more than 10% of a delivery order.”

Essentially, the City is looking to lend restaurants a helping hand during this challenging time, as many rely on these third-party services to stay in business + get orders out during the current global pandemic.

Read More: Hoboken to Begin Public COVID-19 Antibody Testing, Piloting with First Responders Friday

Currently, delivery apps are allowed to charge restaurants as much as 30% of an order, according to NJ.com. For financially vulnerable businesses, that’s a huge chunk of change.

On Thursday, Jersey City Mayor Steven Fulop signed an executive order regarding the matter, saying via Twitter, “Nobody knows what the future holds for restaurants but we need to help them during this #coronavirus transition and not allow tech delivery services to exploit the restaurant industry’s vulnerabilities. Let’s find a fair balance until we have more clarity.”

The order allows the law to take effect immediately, rather than in 30 days after City Council approval.

“For all their hard work to stay afloat and achieve profitability, these third-party fees are hindering local restaurants’ chances of survival which is simply unfair and unethical amid this health and economic crisis,” Fulop said in a statement.

“Many of the restaurants have had to make a shift to relying solely on delivery and takeout under the circumstances, and this cap is our latest effort to identify any available options to provide relief to our local businesses.”

This order would only be in place during states of emergencies {local, state, and federal}.

The Response by 3rd Party Apps, Specifically Uber Eats to Jersey City’s Executive Order

We’ve reached out to GrubHub and have yet to hear a response, but Uber Eats just released a statement that it will be adding a $3 charge to Jersey City residents for its UberEats delivery in direct response to Mayor Fulop’s executive order capping 3rd-party delivery app charges to restaurants.

Uber Eats spokesperson shared with NJ.com that a 10% commission charge wouldn’t be enough to cover fair pay for delivery people.

“This was a tough decision, and we know it will impact customers and restaurants in Jersey City,” Hartfield said to the outlet. “The fee will only apply to Jersey City restaurants, so customers in Jersey City can still order from surrounding areas to avoid the additional cost.”

What’s Happening in Hoboken

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The Jersey City proposal comes just a week after a similar proposal was introduced in Hoboken by two councilmembers.

Councilman Mike DeFusco and council president Jen Giattino have proposed new legislation that will “lower the commission that third-party delivery companies can collect from local restaurants,” according to a press release issued last week. “This will cap the commission collected by third party delivery companies, such as GrubHub and UberEats, at 10% during a declared State of Emergency. Currently, companies are able to charge small businesses anywhere from 15-30% of each order value. The legislation also prohibits the corporation from reducing the compensation of its delivery drivers,” Defusco’s team said in a press release.

Regarding the Hoboken commission cap, the proposed legislation will “cap the commission collected by third-party delivery companies” get at 10% during the NJ State of Emergency as well.

These proposals, according to Defusco and Giattino, are aimed at helping local businesses and the local hospitality industry to bounce back from the effects of COVID-19 and were up for a first reading this past Wednesday evening.

After introducing this at Wednesday’s City Council meeting on May 8th, Defusco shared on his Twitter:

In an email to Hoboken Girl, the mayor’s Chief of Staff Vijay Chaudhuri responded to an inquiry about the situation, saying, “Mayor Bhalla is 100% supportive of any legislation that the City can legally enforce, that reduces unnecessary costs and overhead for our small businesses, which need our help more than ever,” noting that the mayor felt that this type of regulation on third party applications should not just be enacted at the local level.

“[It] should be a regional regulation that is adopted by the entire State of New Jersey. Ensuring that there is a state-wide, coordinated approach on third party applications will ensure that no community or small businesses are impacted with unintended consequences, and asks that our state legislators and Governor Murphy consider this as soon as possible to provide state-wide relief.”

See More: All The Headlines You Missed in Hoboken + Jersey City This Week

What Local Business Owners Are Saying

As this news directly affects local business owners, we spoke with a few local restauranteurs to get their take on the proposed legislation.

“The delivery cap on third-party aggregators is much needed and can offer some temporary relief to struggling restaurants,” said Gonca Esendemir, owner of Hoboken’s Flatbread Grill. “However, the entire system needs to be overhauled because it’s not just the delivery fees and commission that is hurting restaurants. There is a combination of issues that are cutting into our bottom line. The fee cap may help, but the entire system needs to be overhauled for long term sustainability.”

“Almost all these aggregators, especially GrubHub/Seamless, have been adding on fee after fee out of thin air. They don’t tell you what the fees are for… they just deduct them from your account,” she continued. “They call us ‘restaurant partners’ but none of us actually feel like a ‘partner.”

Tony Boloney’s owner Michael Hauke also has a similar sentiment, stating that the 30% fee is just not something that works in restaurants’ favor right now.

“[A] Thirty percent [fee] is not sustainable for any restaurant in this environment,” he shared with Hoboken Girl. “Bottom line, it’s not viable — now is not a time to let people do whatever they want to do. I’m not opposed to what they’re proposing because it’s hurting restaurants badly.”

On a State Level

Of course, all of this news comes just a few days following NJ Governor Phil Murphy’s decision to extend the statewide state of emergency for 30 days.

“I’m signing an EO to extend our public health emergency by 30 days. To be clear: this does not mean we’re seeing anything in the data which would pause our path forward. These declarations, unless extended, expire after 30 days. We’re still in a public health emergency,” Governor Murphy tweeted on May 6th. “If this extension signals one thing, it is this – we can’t give up one bit on the one thing that we know is working in this fight: social distancing. Remember, in the absence of a vaccine, or even proven therapeutics for #COVID19, our only cure is social distancing.” 

Both pieces of local legislation are designed to help local restaurant + food businesses stay afloat during this continued state of emergency.

Got a news tip? Let us know — email us at hello@hobokengirl.com! We appreciate it.

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Arielle is a born-and-bred Jersey girl and like a true NJ native, half her diet consists of bagels and the other half pizza. As a graduate of both American University and City, University of London, she’s been a passionate writer ever since she wrote her first “book” in the first grade. When she’s not furiously typing away at her keyboard, she spends her time ticking places off of her “to travel to” list, trying any and all new foods, and trying to stop herself from spending too much money at Zara.