DoorDash is suing New York City over a new law requiring delivery companies to share customer data with restaurants
DoorDash is suing New York City over a new law requiring delivery companies to share customer data with restaurants.
The lawsuit, filed Wednesday, is the latest in a series of legal disputes between delivery companies and local authorities, reflecting unrest over the phenomenal growth in delivery and its impact on restaurants. Last week, DoorDash, Grubhub and Uber Eats sued New York for a separate bill covering the fees that delivery companies may charge to restaurants. DoorDash and Grubhub are also suing San Francisco over fee limits agreed there.
In its new lawsuit, DoorDash says an executive order passed by the New York City Council in late July is unconstitutional and violates customers’ privacy. By law, delivery companies must share data collected about customers – including names, addresses, telephone numbers and order contents – with any restaurant that requests this information. Customers can opt out and keep their information private, but only on an order-by-order basis.
But many restaurants – – tired of delivery fees and lack of transparency – supported the bill. The NYC Hospitality Alliance, which represents bars and restaurants in New York, says the bill reduces delivery companies’ leverage over restaurants because it ensures they do not lose access to their customers if they decide to leave a delivery platform. It also gives them a chance to market directly to the customers.
Delivery companies experienced huge sales gains over the past year as pandemic shutdowns closed restaurant dining rooms and more people ate at home. DoorDash reserved a record 345 million orders in its most recent quarter, and sales jumped 83% from the previous year to $ 1.24 billion.
Delivery companies say they help restaurants by connecting them with diners and handling difficult logistics. However, their commission fees, which can be as high as 30% per. Order, has cut into the already thin margins for restaurant owners in an unprecedented era. The National Restaurant Association estimates that 90,000 U.S. restaurants have closed permanently or long-term due to the pandemic.
This relationship between supply companies gained more control from local lawmakers as the pandemic went on. Dozens of cities passed temporary fee limits. In July, Massachusetts sued Grubhub, claiming it charged restaurants illegally high fees during the pandemic. And last month, Chicago sued DoorDash and Grubhub, accusing them of misleading business practices, including delivery from restaurants without their consent. Both companies denied these allegations.