The Jersey City Council has unanimously adopted an ordinance that caps the fees third-party food delivery apps charge restaurants during the pandemic after the state’s similar law expired at the end of 2020.
The ordinance adopted Jan. 4 prevents third-party delivery apps and websites like Grubhub, UberEats, and Postmates from charging restaurants a service fee of more than 15 percent per order. The new law takes effect immediately; the council unanimously voted to waive the 20-day estoppel period. The law also limits charges to 5 percent of the order for restaurants with their own delivery staff.
Restaurants across the country have become more reliant on takeout and delivery as COVID-19 regulations have limited indoor capacities, and more individuals have chosen to stay home during the pandemic.
According to Andrew Martino, owner of Ghost Truck Kitchen at 356 Varick St. in downtown Jersey City, his establishment relies entirely on takeout and delivery for survival, after walk-in traffic became virtually nonexistent due to the pandemic, and his catering revenue dropped to $0.
He said by capping the fees, restaurants like his can keep more of their revenue, continue to pay vendors and staff, and keep their doors open.
“For us, it is a difference of a couple of thousand dollars a month,” he said. “That couple thousand dollars a month will allow us to pay our bills, keep people staffed, and keep the door open. We are 100 percent reliant on takeout and delivery.”
Elena Cartagena of Pasta Dal Cuore at 527 Jersey Ave. said the fees were “crazy” before the pandemic hit, noting that it reached as high as 33 percent at one point.
‘Crucial for survival’
She said now during the pandemic, using third party apps and offering delivery and takeout has been “absolutely crucial for survival.”
“Basically, since quarantine, it is has been the main way that we have been able to survive to scrape by,” she said during the council’s 10 a.m. virtual public meeting.
Mona Panjwani of Lokal Eatery & Bar at 2 Second St. said her establishment had been open for a year when the pandemic struck, and third-party delivery fees had prevented some customers from ordering in the past.
She said with the cap, she is hopefully able to “venture further into the delivery part of the business,” noting that in a year when every dollar counts it didn’t seem like a reliable option to use third-party delivery vendors.
The council introduced a similar ordinance this past summer, and Mayor Steven Fulop signed an executive order capping the fees of third-party food delivery vendors at 10 percent.
But, the state then passed its own law capping fees at 20 percent, or 10 percent if the company does not make the delivery but the order is instead picked up or delivered by the restaurant.
This state law expired on Dec. 31, prompting the Jersey City Council to act.
“When they are charged 30 percent per order and their business is now 90 percent takeout or delivery it is just making an extraordinarily negative impact on their business,” said Ward E Councilman James Solomon. “It just gives restaurants a little extra boost to try to get them through a very difficult next couple of months.”
He said the ordinance will remain in effect until the pandemic ends, or the state reestablishes its own cap.
The ordinance establishing the local cap on fees passed with an 8-0 vote. Ward F Councilman Jermaine Robinson was absent.