One restaurant owner spent three months in the middle of a pandemic developing her own online ordering platform. Another worked exclusively with the delivery app companies that charge the lowest commissions.
They were working to avoid the service fees apps like Uber Eats charge restaurants, which often reach up to 30%, while transitioning for the first time to exclusively take-out and delivery operations.
Now, nearly four months into the pandemic, no restaurant in New Jersey will have to provide more than 20% of its sale value to the company facilitating the delivery. That maximum is 10% when the order is delivered by someone the restaurant hired itself.
The legislation signed by Gov. Phil Murphy comes on the heels of local efforts to do the same, and both local officials and restaurant owners said they applaud the move.
“I’m proud of the effort that we put forth in Hoboken and that our statewide leaders listened to our local dialogue and carried it to a statewide law,” said Hoboken Councilman Mike DeFusco, who introduced a 10% service fee cap in the city that was never brought to a final vote.
In Jersey City, a 10% cap had been in place since early March, when Mayor Steven Fulop signed an executive order.
“I’m happy that the state has followed suit and we think that ultimately this will be a benefit to businesses and hopefully keep some of the businesses open long term,” he said.
Uber Eats instituted a $3 customer surcharge in light of the city’s legislation, which it has since lifted due to the state legislation being less restrictive than Jersey City’s.
Lizeth Morales, who owns El Gordo Peruvian Eatery in the Jersey City Heights and Passaic, said she was happy when the city passed the order and similarly supports the statewide move.
Though she saw an enormous spike in delivery orders in March, her monthly bills with Grubhub, Uber Eats and Seamless were maddening, she said.
“Here I am I’m exposing not just myself, my team every day because we want to work and I want to make sure that they still have a salary,” Morales said. “To just see them take a large chunk it was just very frustrating and not only that it was more frustrating because their logistics weren’t 100% effective. Drivers not showing up wearing masks, not showing up wearing gloves, not showing up on time.”
She spent three months working with a marketer to create a food ordering portal on her restaurant’s website, which wouldn’t cost her a commission for every order. It debuted in June.
A few weeks earlier, Jersey City’s legislation passed and Uber Eats’ began charging customers there a $3 surcharge. She saw about a 20% decline in orders, Morales said.
Still, she appreciates the service fee cap and wants the statewide cap to continue beyond the pandemic.
“(The apps are) easy to use,” Morales said. “Consumers love it. I tend to use it too sometimes ...but especially given everything they’re just not really helping out small businesses like mine.”
Even before Max’s Restaurant in Journal Square transitioned fully to delivery, owner Celeste Ferrer avoided partnering with the delivery companies that charged the highest fees. She couldn’t justify the profit margin, she said.
“If they really want our restaurant, they’re going to look for it wherever they find it,” she said of her customers.
The state’s 20% cap means that Jersey City’s original 10% cap has now doubled. Fulop said he’s fine with that.
“I think that the proof that it was the right decision is when you are copied,” the mayor said. “We’ll follow the structure of the state.”