Liquor Licenses Could Save New York Restaurants From High Delivery Fees Charged by Grubhub and Other Services
Grubhub and other New York delivery services may be developing an alcohol problem. The state reportedly plans to attempt to cap the percentage that delivery companies can take from restaurants by allowing the New York State Liquor Authority to invoke an established precedent on "profiting" from a liquor license — a move that could reportedly cut fees from as high as 30 percent to no more than 10 percent at alcohol-serving eateries.
Speaking with the New York Post last month, William Crowley, a spokesman for the agency, explained that, under current rules, it's illegal to profit from a liquor license unless you're named on the license. One exception to that rule is for property owners. "Historically, we've allowed landlords to include a 10 percent of revenue [clause] in their leases," Crowley said. As such, it would appear that the Liquor Authority may try to use this existing rule as a way to cap the extent to which other groups can take a cut in revenue from businesses under their jurisdiction.
In theory, delivery services could apply to be named on the liquor licenses of the restaurants they work with, but doing so would be logistically and financially burdensome. So allowing the 10 percent courtesy to stand for delivery services would seem to be a sort of peace-offering, creating a de facto limit on fees without locking them out entirely until they get any paperwork in order.
The new plan is scheduled to officially come under review tomorrow, and Grubhub — which controls 69 percent of the New York City delivery market according to The Post — is already skeptical. "We're reviewing the draft proposal and look forward to continuing our dialogue with the SLA," Grubhub, which plans to have a representative at tomorrow's meeting, told Nation's Restaurant News. "The draft includes some internal inconsistencies and vague language that warrant clarification, not only for us, but the seven different categories of third parties referenced within the draft."
At the same time, Grubhub is somewhat to blame for this additional regulation. As billion-dollar businesses, delivery services were likely to see further government scrutiny at some point, but New York's recent involvement is a direct result of accusation by restaurants that Grubhub was charging excessive and possibly illegal fees. Grubhub has since updated its policies to address these criticisms.