The Erie County Legislature passed a resolution in support of a statewide bill that would place a cap on the rates third-party companies could charge restaurants.
Many area restaurants have relied on third party companies to provide food delivery services during the pandemic. But some restaurant owners, associations, and elected officials have accused these services like GrubHub and DoorDash of jacking up their rates, especially at times when establishments relied on take-out and delivery to be able to serve customers.
Erie County Legislature Minority Leader Joe Lorigo said something needs to be done to make sure restaurants stay afloat.
“Their costs are going up in unanticipated ways, because they're having to purchase more and more to go containers. So that's eating away at their profits,” Lorigo said. “Then as the third party delivery apps continue to raise their prices, that eats away even more. They're operating on razor thin margins as it is, and they continue to get hammered by additional costs. This is one way to cap that.”
The proposed cap would only be in effect during declared states of emergencies, and would be set at twenty percent of the total amount of each order.
“I believe that it is the free market that determines the way things go, but we're not currently operating in a free market economy when under the rule of state government, has determined that these businesses can't operate,” said Lorgio. “If we can help repair some of that decimated playing field, to allow these businesses to continue to operate and continue to make money [until] they're at the end of the state of emergency, we have a responsibility to do that.”
The New York State Senate has sent a bill to the Assembly which almost mirrors a proposed Erie County law from several months ago. If passed in Albany, companies who ignore the cap could face fines and requirements to reimburse restaurants for the overcharge. Provisions would also be in place to prevent delivery companies from cutting down on payments to its drivers to make up for decreased profits.
In a statement to WBFO News, a spokeswoman for DoorDash said if legislation passes, costs could be passed on to customers:
"DoorDash has always supported restaurants. Pricing regulations could cause us to increase costs for customers, which could lead to fewer orders for local restaurants and fewer earning opportunities for Dashers. Pricing regulations can also remove options available to restaurants by limiting their ability to opt-in to additional services to help their business. We are eager to engage with policymakers on solutions that better support restaurants, customers, and Dashers."
Minority Leader Lorigo said if the state does not act, his Republican caucus would look into submitting a localized version of the proposed law to the Erie County Legislature, as it had done over the summer.