Proposed taxes on delivery services are causing concern within the restaurant industry, particularly in Massachusetts and Maryland, where they could drive up customer prices and reduce order volumes for small and medium-sized businesses. Platforms like Grubhub help restaurants reach customers they might not otherwise serve, but new delivery taxes could significantly impact their ability to do so.
In Massachusetts, the restaurant industry continues to struggle with inflation around 3%. In 2024, 38% of restaurant operators reported being unprofitable, and 66% noted fewer diners. Grubhub data suggests that a 15-cent delivery tax could result in tens of thousands fewer orders and lost revenue in the millions annually. A 75-cent tax could decrease orders by hundreds of thousands and nearly $10 million in revenue per year, while a $2 tax might drop orders by nearly three-quarters of a million, with lost revenue in the tens of millions.
Similarly, Maryland restaurant owners report downturns in business since the pandemic. Here, a 15-cent tax could result in tens of thousands fewer orders and nearly a million dollars in lost yearly revenue. A 75-cent tax would impact orders by tens of thousands, and a $2 tax by half a million, causing tens of millions in lost revenue.
Grubhub is prepared to work with lawmakers to convey the potential impacts on local businesses and seeks collaborative solutions to maintain affordable delivery options. The company states: “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.”
