Starting on Feb. 23, Hoboken will cap fees third-party food delivery providers can charge businesses.
The ordinance, adopted by the city council on Feb. 6 and signed into law on Feb. 8 by Mayor Ravi Bhalla, aims to support small businesses who are forced to rely on income from takeout and delivery due to pandemic restrictions.
The new law places limits on the fees third-party delivery services and websites can impose on restaurants during the current State of Emergency, filling the gap left by similar statewide legislation that expired with the start of the new year.
The local cap will remain in effect throughout the State of Emergency, according to the ordinance.
The new law prohibits third-party food takeout and delivery service applications or websites from charging a fee to a restaurant for takeout or delivery service greater than 15 percent of the cost of the individual order or, greater than 5 percent of the cost of the individual order when the order is delivered by an employee of the restaurant or an independent contractor with whom the restaurant has contracted.
Could end up in the Big House
According to the adopted ordinance, each violation of the law will be punishable by a fine of up to $2,000 and/or imprisonment for a period of up to 90 days or a period of community service not to exceed 90 days.
“Our business owners should have the peace of mind that they won’t be stuck with exorbitant delivery fees at a time when they’re struggling to make ends meet,” Bhalla said. “This legislation will help our businesses keep as much revenue as possible to pay employees, pay rent, and more. My administration has been in touch with GrubHub which has pledged to comply with our ordinance, and I thank them for their cooperation. I am confident all third-party delivery services will do so as well.”
Councilman Michael DeFusco and Council Vice President Jen Giattino sponsored the legislation which was originally floated last year before the state instituted its own cap.
“Restaurants and cafes have struggled to stay afloat since the onset of the pandemic, and now more than ever they need all available resources to keep their doors open” DeFusco said. “This is an important piece of legislation that the administration should have acted on when it was first proposed nine months ago instead of taking a backseat on an issue that would have benefited the very businesses that make our city so special. I’m glad the City Council finally adopted this law and that Mayor Bhalla is supportive of these fair regulations that give the hospitality industry a fighting chance, especially during these cold months.”
“Hoboken’s restaurants, cafes, and eateries contribute greatly to the overall charm of our city and their absence following the pandemic would greatly impact our community,” Giattino said. “Regulating the commission fees app-based delivery companies can charge small businesses will help them generate additional revenue to pay their bills, their employees, and continue serving the residents of Hoboken for years to come.”
Hoboken’s restaurant and business community applauded the legislation.
“I’m pleased that Mayor Bhalla and the City Council have successfully secured a reduction in third-party delivery fees for the hospitality industry of Hoboken,” said Anthony Pino, owner of Bin 14 and Anthony David’s. “The savings businesses like mine could realize from this could be thousands of dollars over the course of the pandemic. These funds will assist restaurant owners keeping their staff employed, and the lights on. During these difficult times, we are thankful for the steadfast work the City of Hoboken has done to help keep small businesses, in business.”
“On behalf of the Hoboken Business Alliance, we are pleased to support the city’s efforts to keep money in the hands of small businesses,” said President of the Hoboken Business Alliance Gregory DellAquilla. “This is the latest example of Hoboken’s government working with business owners to understand the difficulties that they are facing on a daily basis due to the pandemic. This is a welcome change for our City.”
The city is also considering amending the ordinance to allow businesses to opt-in to additional marketing opportunities with third-party delivery services, if they so choose, without any rate increase.
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