New York – DoorDash is suing New York City over a new law that requires delivery companies to share customer data with restaurants.
The lawsuit, filed on Wednesday, is the latest in a string of legal battles between delivery companies and local governments over the unprecedented growth of delivery and the unease over its impact on restaurants. Last week, DoorDash, Grubhub and Uber Eats sued New York for a separate bill that would limit the fee delivery companies can charge restaurants. DoorDash and Grubhub are also suing San Francisco over the tariff cap adopted there.
In its new lawsuit, DoorDash says an ordinance passed by the New York City Council in late July is unconstitutional and violates customer privacy. Under the law, delivery companies must share __ data collected on customers, including names, addresses, phone numbers and the contents of orders, with any restaurant requesting that information. Customers can opt out and keep their information private, but only on an order-by-order basis.
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“In an era of heightened concerns about data privacy and identity theft, this forced disclosure is a shocking and aggressive intrusion of consumers’ privacy,” the San Francisco company said in its court filing. The company explained that diners in person will never be asked to share the same information with restaurants.
But many restaurants __ fed up with delivery charges and lack of transparency __ supported the bill. The NYC Hospitality Alliance, which represents bars and restaurants in New York, says the bill undercuts leveraged delivery companies more than restaurants, as it ensures that they can use their Will not lose access to customers. It also gives them an opportunity to directly market to the customers.
Delivery companies saw bigger sales gains than last year as pandemic lockdowns closed restaurant dining rooms and more people ate at home. DoorDash booked a record 345 million orders in its most recent quarter, and its sales jumped 83% from last year to $1.24 billion.
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Delivery companies say they help restaurants connect with diners and handle difficult logistics. But their commission fees, which can be as high as 30% per order, have cut into the already low margins of restaurant owners in an unprecedented era. The National Restaurant Association estimates that 90,000 US restaurants have closed permanently or permanently due to the pandemic.
The relationship between the distribution companies received more scrutiny from local lawmakers as the pandemic wore on. Dozens of cities have exceeded temporary duty limits. In July, Massachusetts sued Grubhub, claiming it illegally charged restaurants high fees during the pandemic. And last month, Chicago sued DoorDash and Grubhub, accusing them of deceptive business practices, including making deliveries from restaurants without their consent. Both companies denied those claims.