Quijano Bill to Limit Service Fees Charged to Restaurants by Food Delivery Apps During Emergencies Becomes Law

(TRENTON) – When a customer places an order for takeout or food delivery through a third party app like DoorDash, Grubhub or UberEats, the restaurant they are ordering from has to pay a sizable fee to the app. Restaurants have reported this fee can be as high as 40 percent of the order.

To prevent third party food takeout and delivery apps from charging high service fees to restaurants during the COVID-19 pandemic, legislation sponsored by Assemblywoman Annette Quijano (D-Union) was signed into law Friday by Governor Phil Murphy. It passed the Assembly 75-1-2 earlier this month, and the Senate 39-0-0 in May.

The new law (formerly bill A-3978) prohibits apps or websites from charging restaurants service fees higher than 20 percent of the cost of the individual order, or greater than 10 percent of the cost of the individual order when the order is delivered by an employee of the restaurant or an independent contractor with whom the restaurant has contracted directly. The limits are in effect during a state of emergency and until the first day of the third month following any state of emergency declared by the Governor in response to COVID-19 that restricts restaurant dine-in service to less than 25% of the maximum capacity allowed by law.

Assemblywoman Quijano released the following statement:

“Since the COVID-19 pandemic began, restaurants have been limited to offering takeout and delivery options to customers. As a result, customers have been turning to food takeout and delivery apps to simplify the process of ordering food from their favorite restaurant. It’s likely many don’t know that the restaurant they are trying to support is actually paying an enormous fee to the app they’re ordering from. 

“There’s no reason for apps to be charging outlandish fees to restaurants during the middle of a global public health emergency. Apps can be a vital tool in helping restaurants stay in business, but that won’t be the case if they are charging unreasonable fees. It’s time we put a stop to this unfair practice and ensure restaurants will only be responsible for a fair fee per order.”