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Food Delivery App Shares Gain as Firms Sue New York City Over Fee Caps

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By Dhirendra Tripathi

Investing.com – Shares of food delivery companies were trading firm in Friday’s premarket as they sued New York City over its law that permanently caps the commissions the apps can charge restaurants for their services.

DoorDash (NYSE:DASH) was up 1% and Uber (NYSE:UBER) 0.6%. ADRs of Just Eat Takeaway (NASDAQ:GRUB), which completed the acquistion of Grubhub in June, were up 1.3%.

The limit on fees has cost them hundreds of millions of dollars through July, the companies said in the suit filed in federal court in New York.

Seeking an injunction against the order, the companies argue that a cap will need rewriting contracts with restaurants, reduce their ability to market and promote in the city and raise costs for consumers.

The fee cap is harmful and constitutes government overreach, according to the companies.

The cap, first imposed on a temporary basis during the pandemic, was made permanent last month by New York City. It said food-delivery companies are prohibited from charging restaurants more than 23% per order, accounting for delivery, listing on the app and credit-card fees.

 

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