New Jersey Caps Service Fee Charges on Food Delivery

Gov. Phil Murphy recently signed legislation placing limits on service fees charged to restaurants by third-party delivery applications and websites during state of emergencies declared in response to COVID-19.  

The governor noted the legislation provides much needed relief to restaurants across New Jersey that have faced excessive fees while being limited to takeout and delivery service.

“By following public health guidelines, restaurants across New Jersey have contributed to flattening the curve and to the enormous progress we have made against COVID-19,” said Murphy. 

By the Numbers

“Through this legislation, now law, dining establishments throughout our state will receive much needed relief from excessive service fees if public health necessitates the return of dine-in restrictions.”

The legislation prohibits third-party food takeout and delivery service applications and websites from charging service fees greater than 20% of the cost of the individual order or greater than 10% 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 state in response to COVID-19 that restricts restaurant dine-in service to less than 25% of the maximum capacity allowed by law.

Helping Small Businesses

One of the primary sponsors of this legislation was North Jersey Assemblywoman Aura Dunn.

“Third-party services are no longer fringe experiments, but rather a mainstream piece of the restaurant business,” said Dunn (R-25). “For all their hard work to keep afloat, this cap helps those restaurants stay in business.”

Others Assembly sponsors noted since restaurants have been limited to offering takeout and delivery options to customers during the pandemic, customers have been turning to food takeout and delivery apps to simplify the process of ordering food from their favorite restaurant. 

High Fees No More

“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.” said Assemblywoman Annette Quijano (D-20).

“There’s no reason for apps to be charging outlandish fees to restaurants during the middle of a global public health emergency. It’s time we put a stop to this unfair practice and ensure restaurants will only be responsible for a fair fee per order.”

“It’s a margin killer for many of our Main Street businesses,” said Assemblywoman Serena DiMaso (R-13). “They’re keeping 32% of the order payment in a restaurant business where margins are maybe 15% or 20%.”

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