As a hospitality business owner, staying informed about regulatory changes is critical to managing costs and maintaining profitability. Recent updates to the third-party delivery fee cap law in New York City have introduced significant changes that could impact your operations. At Bartab, your trusted financial partner for hospitality businesses, we’re here to break down these updates and help you navigate the evolving landscape of third-party delivery services.
Background on the Third-Party Delivery Fee Cap
During the COVID-19 pandemic, many cities, including New York City, implemented temporary fee caps to support restaurants struggling with high commissions charged by third-party delivery platforms like DoorDash, Grubhub, and Uber Eats. These platforms often charged fees as high as 30% per order, eating into the already thin profit margins of hospitality businesses. In 2021, New York City made its fee cap permanent, limiting total commissions to 23%—15% for delivery, 5% for marketing, and 3% for credit card processing. This move was championed by groups like the NYC Hospitality Alliance to protect small businesses from exploitative practices.
Recent Changes: The Introduction of Int 762-B
On May 1, 2025, the New York City Council passed Int 762-B, a bill that significantly alters the third-party delivery fee cap structure. Here’s a summary of the key changes:
1. Increased Fee Cap to 43%: The new law allows third-party delivery platforms to charge up to 43% per order, nearly doubling the previous 23% cap. This includes:
- 15% for delivery services (unchanged).
- 3% for credit card processing (unchanged).
- 5% for basic marketing services (unchanged).
- An additional 20% for “enhanced services” (new addition).
Restaurants can opt into these enhanced services, which may include boosted promotions, search engine optimization, or premium placement on the apps’ platforms. However, businesses can still choose the basic service package (capped at 23%) for simple delivery and marketplace listing.
2. Safeguards for Restaurants: To address concerns about the higher fees, the legislation includes protections:
Restaurants paying the basic 5% marketing fee are guaranteed visibility in search results and delivery within at least a 1-mile radius.
Delivery apps are prohibited from purchasing a restaurant’s name for advertising purposes without consent.
Restaurants can include their own marketing materials in third-party delivery orders and have the flexibility to mark up prices on these platforms.
3. Settlement of Lawsuits: The passage of Int 762-B was part of a settlement agreement with delivery companies like DoorDash, Grubhub, Uber Eats, and Relay. These companies agreed to drop two lawsuits—one challenging the 2021 fee cap and another contesting a minimum wage law for delivery workers—in exchange for the relaxed fee structure. This compromise aims to balance the needs of delivery platforms and restaurants.
Impact on Hospitality Businesses
The increased fee cap has sparked mixed reactions within the hospitality industry:
- Opportunities: Delivery apps argue that the optional 20% enhanced services fee allows restaurants to access advanced marketing tools, potentially increasing order volume and visibility. This could benefit businesses looking to compete with larger chains or expand their customer reach.
- Challenges: Critics, including the NYC Hospitality Alliance, warn that the higher fees could pressure restaurants into paying more to avoid being buried in search results, especially given the apps’ significant market leverage. With profit margins typically ranging from 5-10%, the additional 20% fee could strain finances, particularly for small, independent establishments.
- Strategic Considerations: Restaurants must weigh whether opting into enhanced services justifies the cost. Those sticking with the basic package may face reduced visibility, while others may need to pass increased costs to customers, potentially affecting demand.
How Bartab Can Help
Navigating these changes requires careful financial planning, and we are here to support your hospitality business. Our financial solutions can help you:
- Optimize Cash Flow: Manage the impact of higher delivery fees with tailored financing options to maintain liquidity.
- Analyze Costs: Use our tools to assess whether enhanced delivery services align with your profit margins and business goals.
- Plan Strategically: Work with our experts to develop pricing strategies or explore in-house delivery options to reduce reliance on third-party platforms.
Disclaimer: This blog post is for informational purposes only and does not constitute legal or financial advice. Consult with a professional advisor for guidance specific to your business.