City Council Just Passed a Slew of Temporary Restaurant Relief Measures

In a move to offer some protections to a restaurant industry that’s reeling from the ongoing COVID-19 crisis, the City Council voted on May 13 to pass a sweeping set of legislation, including a long-demanded cap on third-party app fees, the temporary elimination of sidewalk licensing fees, and a temporary suspension on personal liability clauses in restaurant leases.

The Council, however, fell short of passing some of the more stringent aspects of the legislation that were introduced in April, including a bill that would extend the moratorium on evictions through April 2021, a 10 percent cap on third party app fees, hazard pay for grocery workers, and paid sick leave for delivery workers. Some of those bills may still be passed in the coming months though. The package of bills will now make its way to Mayor Bill de Blasio’s office. He has expressed support for the fee cap on third party apps, at least, and the bills are expected to become law seven days after the mayor signs them.

For now, here’s a look at the legislation the City Council passed Wednesday and what it means for restaurants and the dining industry.

Third party apps won’t be able to charge restaurants more than 20 percent in fees per order

The City Council initially considered passing an all-encompassing 10 percent fee cap on third party delivery services like Grubhub, Doordash, and UberEats during the pandemic, but that bill has now transformed into a 20 percent cap: a five percent cap on orders placed through third party apps, and an additional 15 percent cap on restaurants using these apps for delivery as well. Violations of the cap by these companies will result in penalties of up to $1,000 per day per restaurant.

In comparison, other major cities like San Francisco, Seattle, and D.C have all enacted 15 percent emergency caps on apps, though by some measure, restaurants not using third party apps for delivery in New York may benefit more than their counterparts in other major cities due to the five percent cap here.

Restaurants are frequently charged up to 30 percent in fees — and sometimes more — for the services offered by third party apps including marketing and delivery. Businesses have complained for years about what they perceive as predatory behavior on part of these companies. While the City Council measure is temporary — it will only remain in effect for the duration of the pandemic and 90 days after emergency orders are lifted — it should still come as a relief for restaurants experiencing a historic decline in sales and customers.

Delivery platforms can’t charge restaurants for phone calls that don’t result in orders

In January, Grubhub pledged that would it work to solve kinks in its system that resulted in restaurants being charged for phone calls that didn’t result in orders. Yet at least one NYC restaurant was allegedly still being charged as of April this year.

The City Council’s move will now reign in that practice — at least for the duration of the pandemic and 90 days after — and impose penalties of $500 per day per restaurant for all third-party apps that violate this order.

Restaurants will see pricey sidewalk licensing fees waived for a year

With many restaurants now contending with possible reopenings in the coming months, several may have to turn to outdoor sidewalk seating to maintain appropriate social distancing norms and to overcome fears diners might have about eating in tight, closed spaces. To that effect, the Council has now suspended the city’s ability to collect sidewalk licensing fees for restaurants, which usually total thousands of dollars each year, through February 28, 2021. Restaurants that had already paid their dues from March 1 onward, will see their fees refunded.

However, any restaurant that doesn’t have a sidewalk cafe permit now will still need to go through the process of obtaining one.

Restaurant owners won’t be held personally liable by landlords for closing their businesses

Provisions in certain commercial leases allow landlords to go after the personal finances and assets of tenants in cases where businesses close and don’t meet the requirements of the lease. With several businesses having to shut temporarily — and many even permanently — the Council’s order will come as a relief for restaurant owners worried about complete financial ruin in the face of depressed sales and the possible loss of their businesses.

In April, celebrated restaurateur Gabriel Stulman was one of the first major dining industry figures to publicly address these concerns in a letter he sent to the City Council. The Council’s measure is a temporary relief, but it applies to commercial tenants that have been impacted by COVID-19, particularly restaurants and bars that had to stop dine-services since March 16.

A separate bill that passed on Wednesday also ensures that tenants affected by COVID-19 won’t be harassed by landlords for payments and other issues. Landlords can face penalties ranging from $10,000 to $50,000 for infractions.