NY Liquor Authority adopts new rules on food delivery fees

Two years after threatening to crack down on food delivery firms like Grubhub and Uber Eats, the New York State Liquor Authority has delivered a ruling that has each restauranteurs and delivery firms hopping mad.

The SLA on Wednesday adopted new rules that can require New York eating places with a liquor license so as to add up all of the fees a delivery firm expenses them every year to make sure the fees don’t exceed 10 % of the restaurant’s annual income. 

If the fees exceed 10 % of the restaurant’s annual revenues, the delivery firm will should be added to the restaurant’s liquor license.

The SLA adopted the new rules in an effort to cope with issues food delivery apps like Grubhub, Uber Eats and Doordash could also be violating long-standing rules prohibiting companies with a liquor license from sharing their earnings or revenues with anybody not already on that license.

The solely exception to this rule has been for landlords, who’re allowed to take as much as 10 % of a restaurant’s or bar’s earnings.

A green Uber Eats delivery bag in front of a McDonad's.
The NY state liquor regulators say delivery apps like Uber Eats have to be named on a restaurant’s liquor license if their fees whole 10 % of annual revenues.

The difficulty got here to a head in 2019 when the regulatory agency held hearings on food delivery app fees that ranged from 15 % to 30 % of every order, elevating questions on whether or not these firms are violating the SLA’s rules.

Many restaurateurs anticipated the company to resolve the difficulty by capping fees at 10 % of every order, akin to the exception made for landlords. Alternatively, the SLA might need ordered food delivery apps to adapt a flat charge for NY eating places with a liquor liscence.

“Under our view of the law, they [third party marketers] shouldn’t be charging anything, percentage-wise,” SLA chairman Vincent Bradley stated in Oct. 2019. “They can charge a flat fee, whatever they want, whatever the market will bear. But they shouldn’t be taking a percentage of profits, revenues, whatever the case may be.”

Neither the delivery firms or the eating places are completely happy now.

Restaurateurs are involved that the new rules simply creates extra work for them by forcing them to calculate the typically inscrutable fees they pay food delivery firms for the whole lot from delivery to advertising and marketing to help with orders.

The owners of Schnipper's outside their Times Square location. John (right)  and Andrew (left) Schnipper.
Andrew Schnipper (left) says he’ll surrender his liquor license over assist with food deliveries.
Tamara Beckwith

At least one restaurateur stated he would drop his liquor license if he had to decide on between it and sustaining his relationship along with his principal delivery firm, GrubHub.

“Why would they want to go on my license and assume that liability,” stated Andrew Schnipper, co-owner of burger joint Schnipper’s. “I’m not even sure I’d want that.”

The delivery firms are additionally objecting to the change, saying small companies will now “be forced to decide between forgoing their liquor license or not partnering with delivery apps that provide a valuable service by helping to reach a much broader customer base,” in response to a letter from Amy Healy, head of presidency relations for GrubHub, who additionally claimed the SLA is overstepping it’s authority.

The SLA, for its half, pointed to its current rule permitting landlords to share in a restaurant’s revenues — with out being listed on its liquor license — so long as the owner’s take doesn’t exceed 10 % of the restaurant’s revenues.

But eating places wished extra, stated Andrew Rigie, govt director of the NYC Hospitality Alliance. “We believe third party delivery companies should not be able to take more than 10 percent of a single order.”

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