Proposals in multiple states would hit small and medium sized businesses the hardest

Platforms like Grubhub play a vital role for small and medium-sized restaurants, helping them reach customers they otherwise wouldn’t be able to reach. However, despite economic uncertainty already hitting the restaurant industry hard, several states—including Massachusetts and Maryland—have proposed new taxes on delivery services that would drive up prices for customers, leading to a dramatic drop in orders at a time when local restaurants need our support.

These taxes couldn’t come at a worse time: Inflation hovers around 3% while many restaurants continue to struggle. In Massachusetts, 38% of restaurant operators said they were unprofitable in 2024, while 66% reported fewer diners in their restaurants. Boston restaurants’ revenue can’t seem to keep pace with inflation. And the same is true in Maryland, where restaurant owners are reporting business being down since the pandemic as a result of economic and other factors. 

In addition to driving millions of orders to these restaurants each year, Grubhub provides them with essential support, offering a range of tools like marketing resources and grant programs designed to help them thrive in a competitive market and connect with a wider customer base. This support is particularly vital in such challenging economic times.

Internal Grubhub data show that even a small delivery tax could lead to significant drops in order volume and lost revenue, disproportionately hurting small and medium sized businesses.

Here’s what could happen if these proposed delivery taxes were to be implemented:

• In Massachusetts, 
  • A 15 cent tax per delivery will result in a reduction of tens of thousands orders to small restaurants and could result in millions in lost revenue every year. That’s real money being taken out of the pockets of small business owners.  
  • A 75 cent delivery tax will result in hundreds of thousands fewer orders coming in and nearly $10 million in lost revenue for MA restaurants annually.
  • A $2 tax per order would lead to nearly three quarters of a million fewer orders and tens of millions of dollars in lost revenue annually, again with the bulk of that burden being shouldered by small and medium-sized businesses. 
• In Maryland,
  • A 15 cent tax means tens of thousands fewer orders coming into restaurants and nearly a million dollars in lost revenue every year.
  • A 75 cent tax will result in tens of thousands of fewer orders annually, hurting businesses of all sizes.
  • A $2 tax will lead to half a million fewer orders per year and lost revenue in the tens of millions of dollars. 

No matter where they’re proposed, delivery taxes = fewer orders, and the higher the tax, the more small mom-and-pop restaurants will suffer. 

Grubhub welcomes the opportunity to work with lawmakers considering such proposals to help them understand the impact they will have on local businesses, and we stand ready to work on solutions that support the communities we serve while keeping delivery affordable. At a time when small restaurants are feeling the squeeze, we should work together to give these businesses a leg up – not take them out at the knees.