Portland approves 10% cap on fees that food delivery apps can charge restaurants

Authored by oregonlive.com and submitted by ShadyMcGregor
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The Portland City Council voted unanimously Wednesday to make it illegal for third-party food delivery services like DoorDash and Grubhub to collect more than 10% in commission fees from city restaurants amid the coronavirus pandemic.

Portland joins other cities, including Seattle, Los Angeles and Philadelphia, that have instituted similar caps in recent months. Those cities have limits at 15%. New Jersey last week put a 10% service fee cap that applies to all restaurants in the state.

Food delivery company fees can be as high as 30%.

The new rule also makes it illegal for DoorDash, Uber Eats and other companies to decrease payments to delivery workers in order to make up lost money from restaurant fees, the ordinance said. The city council approved an amendment to the order Wednesday to also include a 5% limit if the delivery service allows a restaurant to transport their own food or if a customer orders through the app and picks up their items at the business.

The restrictions would end 90 days after Portland’s state of emergency order lifts. No date has been set to lift the order, which has been in place since March 12.

Delivery app companies would be liable for up to $500 in civil penalties if the order is violated and the fine would accrue every day and for every restaurant overcharged. The restaurant would have to sue the company involved if they aren’t given refunds.

The order was developed by Commissioner Chloe Eudaly’s office, the Portland Independent Restaurant Alliance and the Asian Pacific American Network of Oregon. Mayor Ted Wheeler’s office co-sponsored the ordinance.

Jenny Lee, advocacy director with the Asian Pacific American Network of Oregon, told the council before their vote that fee cap would be a “lifeline” for small business owners around the city.

Businesses in Southeast Portland’s Jade District, where much of the city’s Chinese and Vietnamese immigrant communities live, have been struggling to keep up with their rent, food costs and worker wages in addition to the delivery app commission fees and the ongoing impacts of the pandemic, Lee said. Portland food businesses owned by Black, Indigenous and other people of color around the city have been among the most impacted by the commission fees and if they were to close, it would represent deep losses for those communities, she said.

“They have the least bargaining power with these platforms because they often serve meals that are affordable to many Portlanders,” Lee said. “And these are the same businesses already facing systemic inequity as they are the most shut out of white-dominant systems of banking, access to capital and government assistance programs.”

Katy Connors, a member of the Portland Independent Restaurant Alliance, said many restaurants in the city have opted out of working through delivery apps because they can’t afford the commission fees. She also noted that while local restaurant sales are down amid the pandemic, food delivery companies are thriving. She mentioned that when Uber announced buying Postmates for $2.65 billion in stock Monday, the company reported Uber Eats’ bookings in the second quarter of the year have increased by more than 100% from this time last year.

“We understand that delivery services are essential at this time and want to be able to offer it to our guests, but not at the expense of the sustainability of our businesses,” said Connors, who also works as operations director for Portland Thai restaurant Hat Yai. “Right now, every sale counts. Every dollar counts.”

Representatives from DoorDash, Grubhub and Uber Eats sent written testimony to the city opposing the ordinance, saying higher fees may be passed onto customers, fewer delivery orders may result, leading to less income for drivers and restaurants through the service. Some said they’d already made concessions for struggling businesses, DoorDash for example said they temporarily reduced commission fees collected from some businesses and charged no fees for pickup orders.

Rebecca Cordia, a Portland delivery worker for DoorDash, told the City Council that she was concerned the new rule could lead to lower wages for her and others. She said she recently moved to Portland from St. Louis, and that DoorDash was the only job she could get amid the pandemic. She said she is making enough money through the app that she plans to continue working as a driver after she gains full-time employment.

“The fees you’re trying to cap go directly to paying delivery workers and I can’t afford to lose out on much needed income because of a law that would do more harm than good. Especially during times like these,” Cordia said.

Eudaly noted that the city rule has a provision that drivers’ pay can’t be reduced because of the fee caps.

“As much as I’m concerned about these drivers and all people who are relying on the gig economy to earn a living, we can’t allow these companies to run unchecked and price gouge and exploit during the crisis and that’s what we’re responding to,” Eudaly said.

-- Everton Bailey Jr; [email protected] | 503-221-8343 | @EvertonBailey

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HarbingerGunner on July 9th, 2020 at 06:08 UTC »

Love the idea of food delivery. But the fees completely turned me off it. So I don't use it.

Meanwhile I can have groceries deliver to me and the fees for that are equal or less while getting hundreds of dollars more in food.

Have_A_Jelly_Baby on July 9th, 2020 at 05:20 UTC »

What, you don’t like paying $53 for a Chili’s 2 for $20 to be delivered?

FeistyEntrepreneur on July 9th, 2020 at 04:35 UTC »

“Now introducing a monthly subscription fee billed to the restaurant just to offer the tablet & service”. Technically not a fee on the actual order. Over time they will find other creative ways to make up for price controls