WWD : The Met Gala Will Be Serving a Plant-based Menu This Year

The Met Gala Will Be Serving a Plant-based Menu This Year
The dinner will be a collective effort, representing dishes from 10 notable chefs.

Was the Met Gala influenced by Eleven Madison’s plant-based pivot?

Guests attending this year’s highfalutin charity event, slated for Sept. 13, will be served a plant-based (aka, vegan) menu. Not only that, but the dinner will be a collective effort, representing dishes from 10 notable New York-based chefs and Instagram influencers, selected by Marcus Samuelsson and Bon Appétit.

The lineup includes Junghyun Park of Atomix, Aquavit executive chef Emma Bengtsson, Le Bernardin pastry chef Thomas Raquel, Fabian von Hauske of Wildair and Sophia Roe, who boasts more than 300,000 Instagram followers. Fariyal Abdullahi, Nasim Alikhani, Lazarus Lynch, Erik Ramirez and Simone Tong were also selected.

Through a partnership with Instagram, the chefs will create Instagram Reels to share plant-based recipes — with a summertime picnic angle — in the weeks leading up to the gala. The #MetGalaChefs initiative kicked off with a video of Roe cooking a nicoise-inspired salad (it’s sans tuna).

Plant-based dining got a major boost earlier this summer when chef Daniel Humm reopened his three-Michelin-starred restaurant with a new plant-based dining vision.

“We have always operated with sensitivity to the impact we have on our surroundings, but it was becoming ever clearer that the current food system is simply not sustainable, in so many ways,” wrote Humm in a note revealing the decision in early May.

WWD : Victoria’s Secret Renamed as It Prepares for Life on the Public Market

Victoria’s Secret Renamed as It Prepares for Life on the Public Market
Shares of Victoria's Secret & Co. began trading provisionally Monday and were priced around $45 each.

On Monday, the lingerie business, along with Victoria’s Secret Beauty and Pink, officially separated from Bath & Body Works to be its own public company on the New York Stock Exchange.

Once part of L Brands — which includes the Bath & Body Works brand — Victoria’s Secret is now Victoria’s Secret & Co. will begin trading under the stock ticker “VSCO” on Tuesday. L Brands Inc., meanwhile, will become Bath & Body Works Inc., with the stock ticker going from “LB” to “BBWI.”

Shares of VSCO, which were trading provisionally on Monday, closed up 2.72 percent to $46.01 a piece. Shares of L Brands closed down 0.20 percent to $79.91 a piece. Shares of VSCO will be distributed to eligible stockholders of L Brands at 11:59 p.m. EST Monday evening.

The spin-off is part of the retailer’s greater growth strategy, after last year’s plans to sell off the Lingerie, Beauty and Pink divisions fell through amid the pandemic. The company has said the spin-off will unlock value in the lucrative soap and hand sanitizer brand, while also helping the lingerie division win back consumers and market share, which have been dwindling in the last few years thanks to shifts in consumer preferences toward more comfortable and inclusive looks.

Victoria’s Secret, once known for its overtly sexual Angels, has also hired plus-size and transgender models, added more comfortable styles to the assortment, including athleisure, reintroduced swimwear into the mix, canceled its high-profile fashion show and is now in the process of updating its store fleet to reflect a changing image.

The brand also filed for credit protection of its U.K. business in June 2020 to help curb costs. The move was followed by a joint venture with Next plc three months later where Next became the majority stakeholder of the 25 U.K. and Ireland-based stores. (Victoria’s Secret U.K. recently went into liquidation.)

But Stateside, growth plans seem to be working. Shares of L Brands are up approximately 228 percent, year-over-year. Consumers seemed to be swayed, too — at least some of them. Revenues at the innerwear brand topped $1.5 billion in the most recent quarter.

Last month, the company also revealed a mid-quarter earnings update, with net sales increasing by nearly a billion dollars in the nine weeks ending July 9, compared with the same time a year earlier. Victoria’s Secret’s revenues were more than $1.1 billion, compared with $625 million last year. Sales during the first nine weeks of the current quarter also surpass 2019’s pre-pandemic sales of $2.1 billion by 12 percent thanks to better-than-expected merchandise margin rates, disciplined inventory management, reduced promotional activity and positive consumer response to the updated assortment.

WSJ : Reese Witherspoon’s Hello Sunshine to Be Sold to Media Company Backed by B

Reese Witherspoon’s Hello Sunshine to Be Sold to Media Company Backed by Blackstone
Firm led by former Disney executives Kevin Mayer and Tom Staggs plans to acquire other content companies

Reese Witherspoon’s media business, Hello Sunshine, is selling itself to a firm backed by private-equity giant Blackstone Group Inc., the companies said, part of a plan to build an independent entertainment company for Hollywood’s streaming era.

The companies didn’t disclose the terms of the deal. People familiar with the matter said it values Ms. Witherspoon’s company, whose production slate has included programming such as the HBO drama “Big Little Lies,” at about $900 million.

The as-yet-unnamed media venture Blackstone is backing will be run by former Walt Disney Co. executives Kevin Mayer and Tom Staggs. Hello Sunshine will be its first acquisition. Ms. Witherspoon and Hello Sunshine Chief Executive Sarah Harden will join the board of the new company and will continue to operate Hello Sunshine.

Blackstone is spending more than $500 million in cash to purchase shares from existing Hello Sunshine investors, including AT&T Inc. T 0.21% and Emerson Collective, some of the people familiar with the matter said. Ms. Witherspoon and some Hello Sunshine executives and investors will roll over the remaining equity into ownership stakes in the new company Blackstone is forming.

Ms. Witherspoon, the actress and entrepreneur who founded Hello Sunshine in 2016, said in an interview that the deal is a major endorsement of her bet that Hollywood needs more stories told by and for women. Other Hello Sunshine titles include Hulu’s “Little Fires Everywhere” and Apple Inc.’s “The Morning Show.”

“I’m going to double down on that mission to hire more female creators from all walks of life and showcase their experiences,” Ms. Witherspoon said. “This is a meaningful move in the world because it really means that women’s stories matter.”

Messrs. Mayer and Staggs are hunting for content companies amid a land-grab for high-quality programming in Hollywood. Streaming services—from incumbents such as Netflix Inc. to new services launched by traditional giants—are trying to feed their platforms with as much premium TV and movie content as possible.

Amazon.com Inc. recently agreed to purchase the studio MGM Holdings for $8.45 billion including debt, and SpringHill Co., the firm founded by LeBron James, is exploring a sale seeking a valuation of $750 million, according to a person familiar with the matter.

The Blackstone-backed company is separate from a special-purpose acquisition company Mr. Staggs runs with Mr. Mayer. The two executives have scoped out deals with other firms including Westbrook Inc., the media company co-founded by Will Smith and Jada Pinkett-Smith.

The changes in streaming-driven Hollywood are having an impact on the business of creating programming. As major studios direct movies and shows to their own streaming platforms, that can sometimes put them in conflict with actors and producers who want to ensure that the value of their work is being maximized. That was illustrated last week when Scarlett Johansson filed suit against Walt Disney Co. over the Marvel movie “Black Widow,” saying the company violated her contract by releasing the film on Disney+ at the same time it went to theaters.

Mr. Mayer said that the new company, like Hello Sunshine, will be free to license programs to any studio or network, giving it an edge over major studios that must feed their own streaming services.

“The big guys aren’t licensing their content outside of their own closed walled gardens,” Mr. Mayer said. “And that’s where a scaled, independent entity like ours can really have an advantage in the marketplace.”

The value that the new Blackstone-backed company will get from Hello Sunshine’s past titles will vary. For example, Hello Sunshine co-owns titles such as “Little Fires Everywhere,” and retains the right to sell them to other distributors after initial licenses expire, some people familiar with the deal said. For some other shows, such as “Big Little Lies” and “The Morning Show,” Hello Sunshine serves as a producer, but doesn’t retain co-ownership.

The new company would have an ownership interest in any fresh programming from Ms. Witherspoon’s company. Hello Sunshine, which will be profitable this year, also has a kids and animation division with a coming slate that includes four projects with four different streaming services, according to people familiar with the matter.

Hello Sunshine also operates Reese’s Book Club, which curates titles for readers and holds events for members. The company’s relationship with authors helps when its executives are bidding for the rights to turn books into shows and movies, Ms. Harden said. “The advantage that we have is in tentpoling a book and putting a spotlight on it,” she said.

For Blackstone, which is financing the media venture through its main private-equity fund, the deal is an example of the thematic investing style the firm has embraced in recent years. Developing theses about the way the world is heading and finding ways to put money to work that benefit from those trends has led it to plow billions of dollars into fast-growing companies.

“We’ve had among our highest conviction investment themes the continued and long-dated demand for high quality content,” said Joseph Baratta, Blackstone’s global head of private equity.

The firm’s real-estate business is a major owner of offices and studio space in Burbank and Hollywood. It announced a deal Sunday to develop new film and TV studios in the U.K. in partnership with Hudson Pacific Properties Inc.

Blackstone also owns music-rights organization Sesac Performing Rights LLC through its long-term private-equity fund, and in March it said it would invest in royalty-free music platform Epidemic Sound through its growth fund.

FT : Smiths Group agrees $2.3bn sale of medical division to US private equity

Smiths Group agrees $2.3bn sale of medical division to US private equity
UK-listed group to focus on industrial technology after buyout deal with TA Associates

Smiths Group has agreed to sell its medical division to US private equity firm TA Associates for $2.3bn as the UK conglomerate seeks to concentrate on industrial technology.

The FTSE 100 group expects to receive net cash proceeds of $1.8bn from the sale and to retain a 30 per cent stake in the division, which made £918m of sales last year. The sum could rise by $200m contingent on future performance.

The British group declared in 2018 its intention to separate Smiths Medical, which makes specialist medical equipment and single-use devices, to become more focused on industrial technology but it eventually decided to sell the business instead of demerging it.

Analysts have said that the company’s shares have been depressed by the medical division, which does not fit neatly with the rest of the group’s businesses that make equipment ranging from baggage scanners used at airport security to components for satellites.

Paul Keel, who joined Smiths Group as chief executive from 3M of the US in May, said that: “This transaction positions Smiths as a more focused industrial technology company with compelling opportunities for growth, a common operating model and shared purpose.”

It plans to balance the use of the proceeds between investing in growth and shareholder returns.

The deal is the latest sale of a UK-listed business to US private equity investors, which have benefited from the low cost of capital during the pandemic.

While the proposed buyout deals for supermarket Wm Morrison and aerospace and defence groups Ultra Electronics and Meggitt have sparked concerns among UK government officials, the sale of Minnesota-based Smiths Medical is considered less controversial with fewer than 100 employees based in the UK and the US accounting for most of its sales.

Smiths Medical played a key role, however, in the UK’s efforts to produce its own ventilators at the start of the coronavirus crisis last year.

Boston-based TA Associates has a history of buying medical companies, completing more than 70 healthcare investments in about 30 years.

Birker Bahnsen, managing director of TA Associates, said he sees many opportunities to invest in technology at Smiths Medical to reinforce “leading positions in its key franchises of infusion systems, vascular access and vital care”.

Shares in Smiths Group gained 0.9 per cent to trade at £15.68 on Monday but the announcement was made after the market closed.

>>> US Close Dow -0.28% S&P -0.18% Nasdaq +0.06% Russell -0.48%

Closing Stock Market Summary

The S&P 500 (-0.2%), Nasdaq Composite (+0.1%), and Dow Jones Industrial Average (-0.3%) closed mixed and little changed on Monday, with risk sentiment pressured by a noticeable decline in long-term interest rates. The Russell 2000 lost 0.5% after being up 1.4% in early action, while the large-cap indices were up as much as 0.6-0.7% intraday. 

The positive start was attributed to several factors: new inflows on the first trading day of the month; the Senate finalized the text of the $1 trillion bipartisan infrastructure bill; Square (SQ 272.38, +25.12, +10.2%) announced a $29 billion, all-stock acquisition of Australian company Afterpay; and July manufacturing activity in Asia and Europe remained in expansionary territory. 

In the U.S., the July ISM Manufacturing Index marked the 14th straight month of expansion for the sector, but the index missed expectations and decelerated to 59.5% (Briefing.com consensus 60.7%) from 60.6% in June. The Prices Index of the report decreased to 85.7% from 92.1% while the construction spending report for June also missed expectations. 

The 10-yr yield was trading at 1.21% right before the two reports were released at 10:00 a.m. ET, then dropped to 1.15% over the next two hours as the data reinforced expectations for growth/inflation rates to moderate. The 10-yr yield settled the session at 1.17%, or seven basis points below Friday's settlement. 

Stocks faded their early gains as long-term rates extended their declines, leaving the S&P 500 sectors mixed after each started in the green. On the downside, the materials (-1.2%), industrials (-0.7%), and energy (-0.7%) sectors lagged while the consumer discretionary (+0.3%) and utilities (+0.8%) sectors outperformed. 

The Philadelphia Semiconductor Index (+0.6%) was a pocket of relative strength, as components keyed off ON Semiconductor's (ON 43.64, +4.58, +11.7%) better-than-expected earnings report and upside Q3 guidance. Global Payments (GPN 171.79, -21.62, -11.2%) was a notable earnings loser in the information technology sector (-0.4%).

Separately, Tesla (TSLA 709.67, +22.57, +3.3%) was initiated with an Outperform rating at KGI Securities while Pfizer (PFE 43.96, +1.15, +2.7%) hit a 52-week high on news that its COVID-19 vaccine could receive full FDA approval as soon as next month. 

The 2-yr yield decreased one basis point to 0.17%. The U.S. Dollar Index decreased 0.1% to 92.07. WTI crude futures fell 3.5%, or $2.56, to $71.31/bbl amid demand concerns.

Reviewing Monday's economic data:

  • The July ISM Manufacturing Index checked in at 59.5% (consensus 60.7%), down from 60.6% in June but up from 53.7% a year ago. A number above 50.0% is indicative of expansion. July marked the 14th straight month of expansion for the manufacturing sector, albeit at a slightly slower pace than what was seen in June.
    • The key takeaway from the report is the acknowledgment that manufacturers and suppliers continue to struggle to meet increasing demand levels due to a range of factors that includes record-long raw material lead times, shortages of basic materials, transportation difficulties, worker absenteeism, and difficulty filling positions.
  • Total construction spending increased 0.1% m/m in June (consensus +0.5%) following an upwardly revised 0.2% decline (from -0.3%) in May. Total private construction rose 0.4% m/m while total public construction spending fell 1.2%. On a year-over-year basis, total construction spending was up 8.2%.
    • The key takeaway from the report is the ongoing strength in private residential construction spending, which is a byproduct of strong demand driven by a scarce supply of existing homes for sale.
  • The final IHS Market Manufacturing PMI for June checked in at 63.4, up from 63.1 in the preliminary reading.

Looking ahead, investors will receive Factory Orders for June on Tuesday. 

  • S&P 500 +16.8% YTD
  • Dow Jones Industrial Average +13.8% YTD
  • Nasdaq Composite +13.9% YTD
  • Russell 2000 +12.2% YTD

FT : Who‘s afraid of the bad Big Tech?

Who‘s afraid of the bad Big Tech?
Central banks, that‘s who. Now the BIS suggests watching them like big banks.

The disappearance of Jack Ma had Chinese characteristics. Yet the reasons behind it spoke volumes about the nature of money the world over. 

As FT Alphaville wrote in January, it didn’t surprise us in the slightest that what lay behind Ma’s chastening was not just his big mouth, but the success of Alipay, one of two firms that has come to dominate China’s payments landscape. That success in electronic payments — and in the data collection and network effects that come with it — sparked talk that Ant Group could branch out into other avenues of finance and take on China’s government-controlled lenders by extending credit and selling other financial products, such as insurance.

Central banks’ supreme power lies in their capacity to control currency issuance. The flip side is that it comes with the responsibility to keep money sound — that is, valuable in the eyes of those who use it. Naturally the People’s Bank of China were going to become a little peeved when a tech billionaire as outspoken as Ma was wading onto its patch. 

Yet China’s monetary policymakers are far from alone here. The creation and proliferation of money is political the world over. We’ve seen central bankers around the globe become so spooked by Facebook’s Libra — now Diem — idea that, despite its back-of-a-fag-packet design credentials, a load of them are now talking about issuing their own forms of state-backed digital money.

As Benoît Cœuré, of Bank for International Settlements, put it, what we’re likely to see play out over the next few years is an international sparring match over “the balance of power between government and big tech in shaping the future of payments and related data rights and control”.

So far the fightback from officialdom has focused largely on rolling out central bank digital currencies (more on which, here and here). But today the BIS has a paper out looking at another weapon in monetary guardians’ armoury — regulation.

One reason for taking a tougher regulatory approach is that the likes of Ant Group and their peers in other parts of the world face far fewer rules than the traditional incumbents. Another perhaps more significant reason is that Big Tech is by its nature is designed to build on its data gathering capacity to enhance network effects.

Unlike the former, the latter is not a traditional competition problem per se. But the nature of how Big Tech operates means that we’ve seen market domination by one firm in sectors ranging from e-commerce to internet searches. 

Clearly that’s not healthy in any economic sphere.

So what to do? One of the ideas suggested in the note, which carries a co-writing credit from the BIS’s general manager Agustín Carstens, is that you address the Big Tech threat in the same way that you tackle the traditional incumbents deemed too big, or too important, to fail. These so-called “macroprudential” (catchy, we know) policies, aimed at addressing what is known in the central bank lexicon as “systemically important financial institutions”, were put in place following the great financial crisis of 2008.

Here’s how the paper thinks they could be imposed on Big Tech (our emphasis):

Thus far, there have been limited regulatory actions in domains other than in competition. An exception is the revision of the regulation of financial holding companies (FHCs) in China towards requiring all companies holding two or more types of financial institutions (not necessarily including a commercial bank) that satisfy specific size thresholds to apply for an FHC licence.

The [PBoC] may also require the formation of an FHC in accordance with macroprudential regulatory requirements, even if the size thresholds are not met. FHCs are subject to capital requirements at the level of the holding company and the financial subsidiaries, as well as a capital replenishment mechanism and bail-in measures (eg transfer of equity). These rules are aimed at ensuring that the shock-absorbing resources of systemically important big tech subsidiaries are in place where they are needed. FHCs must also satisfy a number of other requirements on risk exposures and governance. FHCs are supervised by the [PBoC], which will establish regulatory information-sharing arrangements between it and other relevant regulators.

We’ll leave readers to decide how wise, or otherwise, the idea of policing Big Tech like a big bank is. What we want to focus on here is the degree to which global central banks are now looking to China for inspiration. The PBoC has already become the first major central bank to pilot a central bank digital currency. Now it’s ahead of the pack in reining in Big Tech with rules too. 

When we wrote about the problems befalling Ant Group back in January, we also said that the sort of tussle Ma found himself in was likely to be repeated elsewhere in the world. If the BIS paper’s ideas get picked up by its membership, then the degree to which the global monetary agenda begins to ape that outlined by Beijing could be greater than even we had imagined. 

We don’t see the head of a US behemoth disappearing from public view for months on end, but we would expect any arbitrage Big Tech might seek to gain over traditional financial players — and indeed the state itself — to be stamped out pretty quickly in the rest of the world too.

FT : Allianz: why perfect hedges are perfect nonsense

Allianz: why perfect hedges are perfect nonsense
A cautionary tale on offering supposedly protected returns

The safest hedged portfolio would do no better than cash. Its perfect balancing of risks would earn nothing. That reality did not stop Allianz Global Investors, an offshoot of Europe’s largest insurer, from coming unstuck after offering supposedly protected returns.

Tempestuous markets in early 2020 damaged its US Structured Alpha Funds, triggering client lawsuits and now an investigation by the US Department of Justice.

The tale is a cautionary one, as a 6 per cent drop in Allianz shares on Monday indicated. But it will not stop alternative asset managers, prime brokers and corporate finance directors from claiming “we are fully hedged” when they are no such thing.

Allianz Global funds were supposed to produce positive returns regardless of market volatility. An investment strategy of selling volatility using options failed when all asset prices collapsed. One fund, the Alpha 750, shed three-quarters of its value in the first three months of last year.

Protection strategies tend to fall apart when the correlation between the main asset and its hedge does the same. This is particularly likely to happen under extreme market stress.

Good specialist hedge funds plan for such times. Big long fund managers are less likely to do so. Munich-based Allianz was apparently covering so-called “tail risk” with cheap derivatives, increasing the chances of mismatches.

A cynic would also point out that when a private hedge fund is hammered by markets it can simply wind itself up, imposing losses on clients. Failed hedge funds embedded in big quoted financial groups may transfer liabilities to these parents instead.

The patchy fortunes of hedge funds explain why top names such as Third Point and Marshall Wace want to invest more in unlisted companies. Private equity and debt managers have grown far more impressively. Private capital assets have more than tripled to $7.4tn since 2010, according to Morgan Stanley — well ahead of the total for hedge funds.

Hedges that cover big chunks of market risk are expensive and do not always work. Better, perhaps, to get out of public markets altogether.

NY Post : Obama expecting 700 to attend his 60th birthday party despite COVID

Obama expecting 700 to attend his 60th birthday party despite COVID

Former President Barack Obama will reportedly have nearly 700 people at his celeb-packed 60th birthday bash in Martha’s Vineyard — even as officials warn of the dangers of large gatherings during the ongoing pandemic.
The 44th commander in chief will have at least 200 staff on hand at his Massachusetts home this weekend to cater to the 475 invited guests, including Oprah Winfrey, George Clooney and Steven Spielberg, according to Axios and The Hill.
Pearl Jam will perform, with a local hairdresser retained to style the hair of an unidentified member of the band, Axios reported.
“It’s going to be big,” one source told The Hill of the bash for Obama, whose birthday is Wednesday.
The party will be outdoors at Obama’s $12 million, 30-acre waterfront property, the reports said.

All guests will be asked to be vaccinated and there will also be a “COVID coordinator” to ensure safety protocols are followed, Axios said.
The party comes just days after health officials on the tiny island issued a mask advisory even for vaccinated people while in indoor public spaces because of rising cases of the highly contagious Delta variant,

Martha’s Vineyard is also close to Provincetown, Massachusetts, where a spread among vaccinated people over July 4th prompted controversial new mask guidelines from the Centers for Disease Control and Prevention.
Though it doesn’t break any rules, big parties such as Obama’s do not follow the general guidelines pushed by the Biden administration.

Francis Collins, director of the National Institutes of Health, told CNN’s “State of the Union” Sunday that people need to use “common sense” before having large gatherings.
“If you’re talking about a small party like I might have at my house for six or eight people who are all fully vaccinated, I do not believe, at this point, we need to put masks on to be next to each other,” Collins said.
“But if there were 100 people, and, of course, how are you really going to be sure about people’s vaccination status?” he asked.

“Then the dynamic changes a little bit. There will be some need for common sense there,” he said.
The White House told Axios that the current commander-in-chief will not be among the guests at his old running mate’s big day.
“While President Biden is unable to attend this weekend, he looks forward to catching up with former President Obama soon and properly welcoming him into the over-sixty club,” a spokesperson told the outlet.

Obama has a history of big birthday blowouts. When he turned 50 in 2011, he had the likes of Jay-Z, Stevie Wonder, Tom Hanks and Chris Rock at a party in the White House.
Obama’s spokeswoman did not respond to requests for comment from either outlet.

NY Post : Two American travelers to Canada fined $16,000 each for fake vaccine d

Two American travelers to Canada fined $16,000 each for fake vaccine docs

Canadian officials have charged two American travelers and fined them 20,000 Canadian dollars each – around $16,000 USD – for providing fake COVID-19 vaccination documents.
The unnamed travelers arrived from the US in Canada the week of July 18. Officials from the Public Health Agency of Canada (PHAC) fined each traveler four times for a total of 19,720 CAD per traveler.
The fake documents consisted of proof of vaccinations and pre-departure tests; officials also cited the pair for “non-compliance” with government requirements for accommodation and on-arrival testing, according to a PHAC press release.
Canada instituted travel requirements in January that any incoming traveler must provide a negative COVID test before boarding a plane. Further, all travelers arriving by air need to stay at a government-approved hotel for three nights, or until they receive a negative COVID test.
The hotel stay can cost more than 1500 CAD, though.
The agency also stressed that all travelers are obligated to answer questions truthfully and providing false information is a serious offense.
“Violating any quarantine or isolation instructions provided to travelers by a screening officer or quarantine officer when entering Canada is also an offense under the Quarantine Act and could lead to a $5,000 fine for each day of non-compliance or for each offense committed, or more serious penalties, including six months in prison and/or $750,000 in fines,” the PHAC noted.
The Canadian Border Service Agency (CBSA) said it is working closely with “domestic and international partners” to discover falsified documents.

WSJ : Big Apple Takes Bite Out of Food Delivery

Big Apple Takes Bite Out of Food Delivery
New bills passed in New York City could curb some appeal of companies like Grubhub, DoorDash and Uber Eats

The New York City Council has long had a bone to pick with food delivery platform Grubhub. During the pandemic, that animus seems to extend to reach the sector more broadly as market share has leveled. Home to about 10% of the U.S. market, and a possible harbinger of local measures elsewhere, the city’s attitude matters a great deal.

The conflict heated up last week. On Thursday, the council said it passed five bills meant to shift some of the balance of power away from food delivery platforms toward “struggling mom and pop shops.” The bills include some straightforward legislation like providing a restaurants’ direct telephone number to eaters and prohibiting platforms from charging restaurants for phone orders that don’t result in transactions.

But they also include more controversial and likely more consequential rules. One, if put into effect as anticipated, would extend temporary caps placed on the commissions food-delivery platforms can charge restaurants at least until mid-February, 2022. Beyond what was decided last week, the city council says it is also scheduled to review a permanent commission cap bill this month.


Long-term caps sound ominous for food delivery companies, but the true extent of their effects isn’t fully known. U.S. market leader DoorDash, DASH +0.11% for example, has reported profits on the basis of adjusted earnings before interest, tax, depreciation and amortization for the last four quarters—pretty much the entirety of the pandemic.

At the same time, the company said in an April blog post that commission caps have caused a “tangible impact” to its business in terms of lessening demand as prices paid by customers have risen to recoup lost dollars.

Food delivery companies don’t typically break out their economics by city, but a spokesperson for Uber Eats did say it had lost more than $60 million in New York City alone due to pandemic-related commission caps. For food delivery companies, consumers’ price sensitivity is likely to increase post-pandemic as they gain access to in-person dining and rely less on delivery.

There are also other threats. The council also voted to require delivery services to share monthly eater information with restaurants if restaurants request it. While it remains unclear as to exactly what data this rule will cover, a summary of the bill suggests it could include eaters’ names, phone numbers, email addresses, home addresses and what is ordered.


That would arm restaurants with information they could use to determine where their orders are coming from, helping them to assess delivery platforms’ individual worth. It could also significantly lower switching costs between platforms and help enable restaurants to better access customers themselves.

While a lot has been said of commission caps in food delivery, deciding who has access to eaters’ data is no less controversial. Food-delivery platforms have argued such a law would put eaters’ personal information at risk, noting consumers should be able to opt-in to data sharing rather than opt-out. Others have described third-party delivery as a “gatekeeper” of data with one source likening platforms to a “diner cartel” that is finally being busted.

New York’s move is of particular importance to Grubhub since the city is its largest U.S. market. As of June, Bloomberg Second Measure data show Grubhub and DoorDash were tied with the market share lead in New York City with 35% a piece to Uber Eats’ 29%. Elsewhere, temporary caps have been put into place across many cities and suburbs nationwide. In June, San Francisco became the first city in the U.S. to pass a permanent fee cap.

New York looms large for food delivery. If you can’t make it there, can you make it anywhere?