DoorDash sues New York City over new law that requires delivery companies to share customer data with restaurants
DoorDash is suing New York over a new law that requires delivery companies to share customer data with restaurants.
The lawsuit, filed Wednesday, is the latest in a series of legal battles between delivery companies and local governments, reflecting the unease over the phenomenal growth of delivery and its impact on restaurants. Last week, DoorDash, Grubhub and Uber Eats sued New York City over a separate bill capping the fees delivery companies can charge restaurants. DoorDash and Grubhub are also suing San Francisco over the fee caps that were passed there.
In its retrial, DoorDash claims that an ordinance passed by New York City Council in late July is unconstitutional and violates customer privacy. By law, delivery companies must share collected customer data —— including names, addresses, phone numbers, and order content —— 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 —— fed up with delivery costs and lack of transparency —— supported the bill. The NYC Hospitality Alliance, which represents bars and restaurants in New York City, says the bill reduces the leverage of delivery companies on restaurants because it ensures they won’t lose access to their customers if they decide to leave a delivery hub. This also gives them the ability to market directly to customers.
Delivery companies have seen big sales gains over the past year as pandemic closures have shut down restaurant dining rooms and more people have eaten at home. DoorDash recorded a record 345 million orders in its most recent quarter, and sales jumped 83% from a year ago to $ 1.24 billion.
Delivery companies say they help restaurants by connecting them to diners and handling delicate logistics. But their commission fees, which can reach 30% per order, have squeezed restaurant owners’ already slim margins in an unprecedented era. The National Restaurant Association estimates that 90,000 American restaurants have closed permanently or long term due to the pandemic.
This relationship between delivery companies has come under closer scrutiny by local lawmakers as the pandemic has progressed. Dozens of cities have adopted temporary fee caps. In July, Massachusetts sued Grubhub, claiming it was charging restaurants illegally high fees during the pandemic. And last month, Chicago sued DoorDash and Grubhub, accusing them of deceptive marketing practices, including delivering to restaurants without their consent. Both companies have denied the allegations.