DoorDash, Grubhub, and Uber Eats have settled a lawsuit with New York City concerning the city’s permanent cap on delivery fees, marking a significant development for the U.S. food delivery sector.
Background: Why the Lawsuit Happened
In May 2020, at the height of the COVID-19 pandemic, New York City enacted a temporary cap on delivery charges:
15% for food delivery
5% for marketing and other services
These measures aimed to protect struggling restaurants from what were often 30%+ commission fees, citing the risk of “social and economic devastation”.
When the cap became permanent in August 2021, the delivery platforms sued, claiming the law:
Violated their constitutional right to contract
Forced them to operate at a loss
Resulted in hundreds of millions in lost revenue
Terms of the Settlement
Filed in Manhattan federal court, the settlement:
Allows occasional higher charges than the current cap
Requires New York City Council to enact proposed changes
Results in the lawsuit being dismissed with prejudice, meaning it can’t be filed again
This resolution ends a nearly three-year legal battle, though final terms hinge on City Council approval.
Implications for the Food Delivery Market
Restaurant operators could face higher service fees again, potentially impacting pricing for consumers.
Delivery companies may regain operational flexibility in one of their biggest urban markets.
The deal could set a national precedent for how municipalities regulate food delivery commissions post-pandemic.
Investor Angle
For investors tracking the evolving dynamics in food tech and gig economy platforms:
Analyze company-level revenue exposure using the Full Financial as Reported API
Track performance impact across peer companies using the Ratios (TTM) API
Bottom Line
This lawsuit settlement marks a turning point in platform–city relations. As regulatory frameworks adapt to post-pandemic realities, platforms like DoorDash, Uber Eats, and Grubhub are now better positioned to renegotiate their economic models—and New York City may become the blueprint for similar reforms nationwide.
