NYC Council Investigates Third Party Delivery Companies

This past June, the Small Business Committee within the City Council of New York conducted a hearing regarding third party delivery business practices. The investigation, entitled “The Changing Market for Food Delivery,” is arguably the first of its kind. The hearing endeavored to address the growing tensions between restaurant operators and third party delivery companies.

“New York continues to be a trailblazer,” said Committee Chairman Mark Gjonaj. “I’m proud to be part of this historic moment.”

Restaurant operators hope that the hearing will kindle new government regulations that better protect the needs of the industry. According to Robert Bookman, counsel for the local industry trade group New York City Hospitality Alliance, “We’re calling for both the federal government and the state attorney general to look into this matter.”

The Small Business Committee called on restaurant operators, third party delivery companies, and various trade groups to share their practices, concerns, and complaints. The hearing was open to the public. Discussion ran long, and largely focused on rate structures, questionable fees, and the future plans of third party delivery companies.

The difference in perspective between the restaurant operators and the third party deliverers was considerable. Operators like Robert Guarino, the co-founder of 5 Napkin Burger, argued that delivery companies have every intention of moving toward discarding restaurants and offering their own meals for delivery. Third party representatives emphatically denied this claim.

Andrew Rigie, the executive director of the Hospitality Alliance, provided the council with an extensive list of questions for third party deliverers. Some of the questions addressed:

  • If financial factors don’t determine where a restaurant is listed on a third party’s app, what variables do? How can restaurants be safeguarded against erroneous fees?

  • Who owns the information on a restaurant’s customers who order through a third party, and what happens to the data if the establishment pulls out of the arrangement?

  • Does the prominence and penetration of the big third-party delivery services constitute a restraint of trade?

Restaurant operators appear to universally agree that third party delivery companies need to interact with restaurants in a clearer and more transparent fashion, and third party representatives at the council pledged to provide that. Next steps for both sides of the industry, however, remain unclear.

A Hospitality Professional's Thoughts On Why Independent Restaurants Are Shutting Down

A Hospitality Professional's Thoughts On Why Independent Restaurants Are Shutting Down

The business model for independent restaurants is under threat.

At least, that’s what Andrew Rigie, executive director of the NYC Hospitality Alliance, believes.

“Successful restaurateurs are just as laser-focused on their restaurant’s financial model as they are on the food,” says Rigie, in his latest op-ed for Forbes.

Rising labor and rental cost are leaving a very thin profit margin for restauranteurs in an already slim-margin industry. Because of these factors, “...it is easy for a busy restaurant’s margin to dwindle to 5 [percent], or less,” says Rigie. Not to mention when a restaurant gets hit with unexpected costs.

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