June 11, 2023
DCI Analysis Finds Negative Effects of New Minimum Deliverer Pay Rates on the NYC Restaurant Delivery Economy
Washington, DC (June 11, 2023): Today, New York City’s Department of Consumer and Worker Protection approved its final rule for a minimum pay rate for app-based restaurant food deliverers. Data Catalyst Institute’s (DCI’s) rapid-reaction policy analysis found that NYC’s new guaranteed wages will dramatically increase the fees consumers pay (as wage costs are passed through) or even result in app delivery companies reducing service availability or pulling entirely out of NYC. Further “downstream” effects include chain restaurants out-competing independent ones, disadvantaging lower-margin customers and underserved neighborhoods (creating “food delivery deserts”), and delivery app companies launching their own “ghost kitchens” that directly compete with local restaurants.
These newly imposed restaurant food deliverer minimum pay rates, on top of existing limits on fees that delivery services are permitted to charge restaurants, will “break the model” of the NYC Restaurant Delivery Economy by disrupting the economic equilibrium between diners, restaurants, delivery services (apps), and deliverers. The most significant effect of this will be to make the cheapest customer orders the most unprofitable ones for the delivery service companies.
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