New York's Liquor Authority Wants Uber Eats to Get a Liquor License
Proposed regulations would require food delivery apps to cut fees or be added to restaurants' liquor licenses.
Food delivery app services like Grubhub and Uber Eats might have to get liquor licenses if they want to keep doing business in New York state.
A proposal from the New York State Liquor Authority (SLA) would require third-party vendors who charge commissions on a liquor-license-holding restaurant's sales to be added as a principal on that liquor license, if those commissions work out be greater than 10 percent of the restaurant's profits.
The proposed rule would reverse a ruling issued by the SLA in 2017. That decision declared that delivery apps could remain off businesses' liquor licenses so long as their fees were less than 10 percent of the profits restaurants were making on beer sales.
The change puts food delivery app businesses, who typically charge restaurants a percentage of each order delivered, in a bit of a bind.
Businesses that are included on liquor licenses "would essentially be subject to any violations of the [alcohol beverage control] law in New York whether or not they are the guilty party so to speak," says John Olsen of the Internet Association, a trade group that represents several food delivery app businesses.
And trying to avoid those added liabilities—either by keeping their commissions below 10 percent of a business's profits or by switching to a flat fee—would require restaurants to share a lot more information with delivery apps, something that would probably prove logistically challenging. These same models might prove uneconomical for restaurants in regions of the state where order volumes are lower, says Olsen.
On the other side of the issue are New York City restaurants that rely on delivery apps to reach more customers but resent the high commissions they have to pay to participate on these platforms.
"This would be a major and positive change for our industry, as we currently suffer from unfair demands from companies like Grubhub-Seamless to hand over to exorbitant percentages of our sales," said the New York City Hospitality Alliance, which represents bars and restaurants in the city, in a press release about the SLA's proposal.
Andrew Rigie, the group's executive director, tells Reason the rule change could curb "excessive fees some companies are extracting from restaurants as a percentage of their sales."
The New York City government has also been looking hard at the fees charged by food delivery apps. At a June oversight hearing, the city council's Small Business Committee grilled representatives of Grubhub and Uber Eats over their billing practices.
City Councilmember Mark Gjonaj, who chairs the small business committee, floated the idea of a restaurant association negotiating collectively with app companies as a way of lowering the fees they could charge.
Restaurants that don't like Grubhub or Uber Eats' business practices or who find the fees they charge excessive could, of course, simply decide to not partner with these companies. That they still continue to do so shows that they derive some benefit from being able to reach customers through these apps. But they're happy to enlist the government in a dispute with vendors whose services they value.
The SLA's proposal was first posted in August. It will still have to be approved by the full SLA board, which will solicit feedback on the rules at its October meeting.
Rent Free is a weekly newsletter from Christian Britschgi on urbanism and the fight for less regulation, more housing, more property rights, and more freedom in America's cities.
Editor's Note: As of February 29, 2024, commenting privileges on reason.com posts are limited to Reason Plus subscribers. Past commenters are grandfathered in for a temporary period. Subscribe here to preserve your ability to comment. Your Reason Plus subscription also gives you an ad-free version of reason.com, along with full access to the digital edition and archives of Reason magazine. We request that comments be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of reason.com or Reason Foundation. We reserve the right to delete any comment and ban commenters for any reason at any time. Comments may only be edited within 5 minutes of posting. Report abuses.
Please
to post comments
“”Restaurants that don’t like Grubhub or Uber Eats’ business practices or who find the fees they charge excessive could, of course, simply decide to not partner with these companies.”
How dare someone say that.
I wonder if you order food below 90th street if a congestion pricing charge will be added to your meal?
I thought this was a serious article until I got to that line. I guess we’re all trying to be The Bee now.
What’s unserious about that? It’s a fairly canonical libertarian stance. As is the following disapproval of govt regulatory power lobbied against another company for the sake of securing a better bargaining position.
PUBLIC ACCOMMODATIONS BITCHEZ! A business can not be allowed to pick and choose customers.
Manhattan from ‘Escape from New York’ is looking like a better and better plan all the time for a place to deposit all our progtards.
Yeah, that makes sense.
Everyone should get a license to eat.
Otherwise you might be ingesting food incorrectly which will cause the stock market to crash.
“Otherwise you might be ingesting food incorrectly which will cause the stock market to crash.”
Both of which would clearly be Trump’s fault.
Perhaps some sort of new tax will fix this “problem”.
*holds fingers in a steeple fashion while grinning maniacally *
I couldn’t parse the difference between the new 10% threshold and the old one.
Businesses colluding on prices? Is that ok now?
Was it ever not?
“, if those commissions work out be greater than 10 percent of the restaurant’s profits.” vs “10 percent of the profits restaurants were making on beer sales.” confuses you?
Profits versus sales. So it’s a massive reduction in the rate. Also, it’s not directly calculable by Uber Eats.
As Restaurant margins are razor thin anyway, I would have to say that is essentially eliminates the low-volume exemption
They should get a gambling license, too.
“Liquor in front, poker in rear.”
Well what I think that if you are a facebook user then you defenietly should check this Fb auto liker
Don’t wait for Uber Eats to get a liquor license. There are many apps available on TutuApp from that you can order liquor easily.
Remote Desktop Connection Manager likes this post
Why should an entity not selling liquor fall under the SLA anyway?
Authoritarian mission creep.
Creeping authoritarianism IS the mission
Is there anything NYC won’t try to fuck up?