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
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In May 2020, at the height of the COVID-19 pandemic, New York City enacted a temporary cap on delivery charges:
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15% for food delivery
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5% for marketing and other services
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These measures aimed to protect struggling restaurants from what were often 30%+ commission fees, citing the risk of “social and economic devastation”.
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When the cap became permanent in August 2021, the delivery platforms sued, claiming the law:
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Violated their constitutional right to contract
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Forced them to operate at a loss
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Resulted in hundreds of millions in lost revenue
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Terms of the Settlement
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Filed in Manhattan federal court, the settlement:
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Allows occasional higher charges than the current cap
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Requires New York City Council to enact proposed changes
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Results in the lawsuit being dismissed with prejudice, meaning it can’t be filed again
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This resolution ends a nearly three-year legal battle, though final terms hinge on City Council approval.
Implications for the Food Delivery Market
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Restaurant operators could face higher service fees again, potentially impacting pricing for consumers.
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Delivery companies may regain operational flexibility in one of their biggest urban markets.
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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:
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Analyze company-level revenue exposure using the Full Financial as Reported API
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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.
