NYC Council To Look Into Food Delivery App Fees
NEW YORK (CBSNewYork) -- It may be convenient for the consumer, but it's killing local restaurants.
Many say the fees and subscription costs to use the food delivery app Grubhub is cutting into their profits.
Now, the city plans on stepping in.
The kitchen is busier than ever at Telio on the Upper West Side, but that doesn't mean the Greek restaurant is seeing a surge in profits. The owners said the only thing that's increasing is the fees to use Grubhub, CBS2's Dick Brennan reported Monday.
"Couple years ago they said to me, 'No less than 20 [percent],' and I said, 'I don't want to pay 20 [percent]. I can't afford it,'" Telio owner Yianni Berbeis said.
The third-party food delivery app, which also owns Seamless, has become a double-edged sword for his three restaurants.
"We were doing 80 percent of the deliveries Grubhub and Seamless," Berbeis said.
In total, he had to pay $300,000 to them last year in subscription costs and charges, Brennan reported.
"You can't deny it. If you take them out, you're going to close business," Berbeis said.
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While he offers 10 percent off to customers who order through his website to avoid the fees, other restaurants like The Kitchen in the Bronx started its own delivery service app to compete, and an Amsterdam Avenue deli quit delivering altogether because of Grubhub.
"They charge too much fees, way too much and customer, they are not happy about it," said Sayed Ahmed, manager of Amsterdam Gourmet.
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But Grubhub said it is helping out businesses, claiming one year after joining its app, restaurants grow monthly takeout by an average of 30 percent, six times greater than restaurants not using an online marketplace.
"We can't have a third-party service provider hijacking the entire industry," City Councilman Mark Gjonaj said.
Which is why Gjonaj is having the council investigate Grubhub's fees, especially ones that make no sense, like a simple inquiry call triggering a Grubhub charge.
"These fees that are allegedly being charged without a sale going through," Gjonaj said.
It's a delivery debate that restaurant owners want settled.
The city will be hold a hearing about the fees on June 27. It is inviting restaurant owners to attend. Grubhub officials told CBS2 they will be in attendance to hear the complaints.
