A New York regulator said third-party food-delivery companies like Grubhub and Uber Eats appear to be breaking state laws by charging restaurants stiff fees that are based on a percentage of their orders.
During an at-times testy hearing in Harlem on Monday, the New York State Liquor Authority’s chairman, Vincent Bradley, likewise brushed off concerns that a controversial proposal to cap those delivery fees at 10 percent would make things impossible for delivery services.
“At the end of the day, if they fail because of this, then they were probably going to fail anyway,” Bradley said.
Critics including New York City council member Mark Gjonaj have blasted delivery companies for taking commissions as high as 30 percent of the bill for delivering everything from burgers to dim sum — a punishing pound of flesh for most mom-and-pop eateries, he contends.
Grubhub has countered that it brings “incremental” business to restaurants, including more profitable patrons who come and sit down for dinner.
Whatever the case, the state liquor board on Monday signaled that these companies will either have to comply with a 10 percent ceiling on fees or charge flat rates instead.
“There is a proliferation of companies out there, most on the tech side but not all, that are charging percentages well beyond what they should be,” Bradley said.
“Under our view of the law, they shouldn’t be charging anything, percentage-wise,” he added. “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.”
If food deliverers don’t comply, they could face decades-old state regulations forcing them to register as partners on restaurants’ liquor licenses — a potential bureaucratic nightmare that would involve thousands of such applications.
The Monday hearing at the Adam Clayton Powell Jr. state office building on West 125th Street was attended by about 40 lawyers and company representatives. None of the delivery companies’ reps spoke at the hearing.
Grubhub’s director of public policy, Sami Naim, walked in about a half-hour after the meeting started, and later declined to comment.
The meeting grew heated about 40 minutes after it started, when Zachary Hecht, policy director for Tech:NYC, said the proposed rule “could impede innovation” in the delivery industry.
“How?” Bradley said, interrupting Hecht, whose trade group represents Postmates, Delivery.com, Uber and dozens of other big tech firms.
“Based on what I’ve witnessed with these tech companies, should anyone go out of business because of this — which is not our goal at all — I would imagine there’s 20 other people willing to step right in and follow the law, as we dictated it,” he said, drawing laughter from the attendees.
After the hearing, Hecht told The Post he was “not really satisfied with the lines of questioning or the framing,” adding that state officials ought to study how a flat fee would affect restaurants.
“The regulatory uncertainty contained in the advisory would be very concerning for tech companies,” Hecht said. “It appears they’re trying to regulate in a vacuum, and that’s not how it should work.”
Katie Norris, a Grubhub spokeswoman, said “it was promising that the next version of the guidelines will clarify vague and confusing language from the first draft,” declining to comment further.