Opinion

As restaurants’ COVID-19 crisis ends, government’s emergency powers should end too

It’s time to join other cities in lifting the fee caps imposed during the pandemic

Fee caps were imposed on restaurants during COVID-19.

Fee caps were imposed on restaurants during COVID-19. Tetra Images

In America, consumer protection laws guarantee “truth-in-pricing” and honest commerce, but it is highly unusual – and generally unconstitutional – for governments to set, approve or limit private sector prices. For example, in New York City, there are only three private markets where the city government determines prices: rental housing, taxicabs, and (surprise!) restaurant delivery services. 

Rent control and taxi price regulation have existed for decades. Rent control has survived many legal challenges and applies to a diminishing percentage of New York City housing – primarily lower-priced housing that helps teachers, first responders, and other underpaid community contributors afford to live where they work. Taxi price regulation is tied to the highly regulated medallion system and perhaps was once based on antiquated (pre-Uber) public benefit reasoning because so few New Yorkers own automobiles. 

But restaurant delivery price controls? These are new, enacted during the pandemic in response to concerns about delivery services’ market power when restaurants were desperate to get online after indoor dining was prohibited. Understandably in a near-panic, restaurants were hastily signing contracts with delivery apps, likely barely reading the contracts and thinking they had no negotiating power. The Council jumped into action, as did more than 100 cities nationwide.

As a Brooklynite, I’m thrilled that the Council helped distressed, local restaurants avoid overpaying VC-funded delivery apps. But as a matter of law and policy, I have questions about why the fee cap continues after indoor dining restrictions have ended, and doubts about the cap’s legality. 

Once the restaurant crisis ended, the risk of hastily-signed, unfair contracts ended also, so there is no more concern of delivery services’ excessive market power from which restaurants need protection. That’s why the great majority of fee caps have been lifted as cities ended their states of emergency - except in New York City and San Francisco where the caps have been made permanent and have been challenged in court. Already the judge reviewing the San Francisco cap has expressed skepticism, and the odds are that both permanent fee caps will be thrown out for violating the U.S. and New York State constitutions, which prohibit government interference in legally binding contracts and government taking private property – in this case, the contractually agreed to fees – without compensating the parties involved.

It’s also notable that the Council did not protect only small, locally-owned, and independent restaurants. Why are Mastro’s, Morton’s, The Palm, and Del Frisco’s protected? I don’t think high-end steakhouses owned by a Texas-based, multibillion-dollar, 600-restaurant conglomerate need the Council’s protection.  

Perhaps most importantly, I’m confident that, if restaurants act collectively, they won’t need government protection because they already have the tools to help themselves. In Jersey City, Las Vegas, Knoxville, and other cities, hundreds of restaurants are building innovative delivery coops that compete against Doordash, GrubHub and UberEats. The coops have great apps, pay drivers well, and charge restaurants lower fees. And residents who want to eat local also have a “deliver local” option. 

Before the pandemic, my law students were helping a group of bike delivery people trying to build a worker-owned cooperative to compete against the venture-backed delivery platforms. When COVID-19 hit, restaurants quickly jumped into contracts with the big companies. During desperate times, our insurgent consortium couldn’t compete. If instead of a fee cap, the city had empowered restaurants or delivery people to self-organize, it would have been a market-oriented competitive solution that helped workers and restaurants, and it would have been legal. 

In extraordinary circumstances, the government should take extraordinary action. But when  crises end, governments in democratic societies should lay down their extraordinary powers. Now is the time for restaurants to thank Council members for helping and then take charge of their own delivery destinies. They can band together to negotiate group discounts with the big delivery services, or build a local coop, perhaps in partnership with workers. Whichever they choose, it should and will be competition, rather than raw government power, that drives down prices. 

Jonathan Askin is a Professor of Clinical Law at Brooklyn Law School and Director of the Brooklyn Law Incubator and Policy Clinic.

NEXT STORY: Opinion: Polling numbers show a fearful and anxious NYC

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.