New York City Delivery Fee Caps Settlement: What Restaurant Should Know?

In a landmark development for New York City's restaurant industry, major third-party food delivery platforms—DoorDash, Uber Eats, and Grubhub—recently reached a significant legal settlement regarding fee caps initially imposed during the pandemic. This settlement could reshape restaurant operations, financial strategies, and consumer interactions. Here’s everything restaurant owners and operators need to understand about this major update, its implications, and effective strategies to manage these changes.

Background: Why Were Fee Caps Introduced?

During the height of the COVID-19 pandemic in 2020, New York City implemented emergency measures designed to support local restaurants struggling with steep commissions charged by third-party delivery apps. These measures capped:

• Delivery fees at 15%

• Marketing and miscellaneous fees at 5%

In August 2021, these temporary measures were made permanent, prompting DoorDash, Uber Eats, and Grubhub to file lawsuits against the city, arguing that the caps violated their contractual freedoms and significantly impaired their profitability.

The Recent Settlement: What Changed?

In June 2025, an agreement was finally reached between NYC and the delivery platforms. The New York City Council has passed new legislation adjusting these fee structures, allowing third-party delivery platforms to potentially charge restaurants up to 43% per order, broken down as follows:

• Delivery fees: 15%

• Credit card processing fees: 3%

• Other platform fees: 5%

• Optional “enhanced services” fee: up to an additional 20%

This legislation also protects certain rights of restaurants, such as the ability to include their marketing materials in deliveries and set different pricing for in-house versus delivery platform menus.

What Does This Mean for Restaurants?

While these changes offer flexibility, the increased potential for fees may pose substantial financial challenges for restaurants:

1. Higher Operating Costs

The ability for delivery platforms to charge significantly higher fees through "enhanced services" could drastically affect restaurants’ profit margins.

2. Strategic Pricing Adjustments

With permission to set different pricing for delivery orders, restaurants now have the chance—and the necessity—to strategically adjust menu prices to offset higher third-party costs without impacting dine-in customers.

3. Negotiating Power

Restaurants might face pressures to engage in costly "enhanced services" to remain competitive on delivery platforms, potentially creating an imbalance between large chains and smaller independent establishments.

Industry Reactions: A Mixed Response

Reactions have varied widely across the industry:

• Third-Party Platforms: Praise the new legislation for providing clarity and operational freedom.

• Restaurant Advocates: Express concern that increased fees could disproportionately affect smaller and independent restaurants already grappling with tight margins.

Strategies for Navigating the New Landscape

Given the increased complexity and potential financial impacts, restaurants must carefully strategize:

Evaluate Delivery Partnerships

Review and renegotiate contracts with third-party platforms. Assess which services genuinely benefit your restaurant and customer base.

Optimize Pricing

Carefully balance delivery menu pricing to ensure profitability without alienating customers. Transparent communication about pricing adjustments can help manage customer expectations.

Enhance Direct Ordering Channels

Boost your restaurant’s direct online ordering capabilities to lessen reliance on costly third-party platforms.

Diversify Revenue Streams

Consider introducing catering, pickup specials, or subscription services to diversify revenue sources and reduce dependency on high-cost third-party delivery.

An Alternative to Third-party Delivery Platforms: Sauce, Zero Commission Delivery

Sauce is a commission-free online ordering and delivery platform specifically designed to empower independent and small-chain restaurants. Unlike major third-party platforms, Sauce provides:

• Zero Commission Fees: Maintain full control of your profits with no hidden or escalating fees.

• Branded Customer Experience: Directly manage and enhance the customer relationship without third-party interference.

• Advanced Marketing Tools: Built-in marketing and loyalty features to boost repeat business and customer satisfaction.

• Transparent Pricing: Simple, predictable pricing structure that allows better financial planning and stability.

Switching to Sauce allows your restaurant to sidestep the volatility of third-party fee structures, providing a sustainable, profitable alternative that directly supports your business’s growth and stability.

Ready to reclaim control of your restaurant’s profitability and customer relationships?

[Discover how Sauce can help your restaurant thrive →]