Quashing hidden fees

Jersey City officials cap third-party food delivery company fees to protect restaurants

Fees third-party food delivery vendors can charge restaurants will now be capped at 10 percent during a declared State of Emergency in Jersey City.
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Fees third-party food delivery vendors can charge restaurants will now be capped at 10 percent during a declared State of Emergency in Jersey City.

Jersey City’s elected officials came together this week to help local restaurants suffering from not only the decrease in business due to the COVID-19 pandemic but also the negative impacts of delivery companies charging to deliver their meals.

Mayor Steven Fulop, Council President Joyce Watterman, and City Council members announced the joint effort after Fulop signed an executive order on May 7 establishing a cap on hidden fees from third-party food delivery services when a State of Emergency is declared.

This comes after the Jersey City Council unanimously introduced an ordinance to the same effect during its virtual council meeting on May 6.

No more than 10 percent

Third-party food delivery vendors like GrubHub or UberEats charge commission fees directly to food establishments, typically between 15 and 35 percent of a customer’s bill, for every online delivery or takeout order made through the website or app.

Per the newly signed executive order, during any State of Emergency these service fees will be capped at a maximum of 10 percent to help reduce hardships local businesses face during a time of economic uncertainty.

The 10 percent cap applies to any website, mobile application, or other third-party service that arranges for the delivery or pickup of food and beverages prepared by a food service establishment.

“We have to find ways to protect the economy in which, I believe small businesses are truly the engines that power it,” said Watterman.  “In viewing it as the backbone, we must try and prevent third-party companies from exploiting our restaurants with high fees which ultimately affects them trying to retain their staffing on the payroll.”

“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.

“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.”

Helping now

By signing the executive order Fulop allows the cap to take effect immediately rather than having businesses wait an additional month for the legislation to become law.

The council would have had to pass the ordinance on second reading during its May 20 council meeting, and then 20 days would have to pass before the law could take effect unless the council adopted a resolution declaring the law an emergency.

“This order will allow local independent restaurants to hold on to more of their hard-earned money, and ensure that local spending stays in the community,” said Andrew Martino, owner of Ghost Truck Kitchen in downtown Jersey City who helped bring the issue to the council’s attention. “Relief from commissions as high as 35 percent is sorely needed now more than ever and will help us keep our doors open serving the neighborhood.”

Ward E Councilman James Solomon said, “Our restaurants are our lifeblood. In the blink of an eye, they’ve been forced to upend their business models to 100 percent delivery and takeout,” noting that fees charged by third-party apps are unsustainable.

“This emergency regulation keeps money in their pockets to pay their employees instead of large, billion-dollar corporations,” he added.

Many restaurants have urged customers to contact their establishments directly to place orders for delivery to help circumvent the fees associated with third-party delivery services, but not all restaurants have the ability or resources to provide delivery services in house.

Others have asked customers to pick up instead of ordering delivery.

“Our restaurants and small businesses are among the hardest hit throughout this pandemic, and without being able to rely on traditional tabletop business, they’ve had to adjust their entire business strategy which is heavily encumbered with astronomical service fees to further bloat bigger companies,” said Councilman-at-Large Daniel Rivera.

“On a city-level, we’re doing what we can to protect our residents and businesses alike, and after working alongside our local restaurant owners on this, I know it will truly be impactful for them.”

Jersey City also took steps to help restaurants early on, launching “Lets Eat Jersey City” on the city’s website.

The online directory lists restaurants and food shops open across the city and helps residents know which are open for takeout and delivery near them.

Roughly 200 restaurants across the city have registered.

Businesses can publicize their restaurants and sign up at https://www.jerseycitynj.gov/cms/one.aspx?pageId=16575221

The city also launched the Jersey City COVID-19 Community Relief Program which will invest in the local economy by helping small businesses and nonprofits get back on their feet as well as help to minimize hardships for needy families and seniors by improving access to food and other necessities.

Donations can be made at http://jcedc.org/.

For updates on this and other stories check www.hudsonreporter.com and follow us on Twitter @hudson_reporter. Marilyn Baer can be reached at Marilynb@hudsonreporter.com.