Portland ordinance takes a bite out of food delivery fees

Civic Affairs

Proposal on July 8 agenda limits amount DoorDash, Grubhub, Postmates and others could charge local restaurants for their services

PORTLAND, Ore. (PORTLAND TRIBUNE) — Portland’s City Council may join a growing list of cities limiting charges by third-party food delivery services.

City commissioners consider Wednesday morning an ordinance to temporarily limit services like DoorDash, Grubhub, Caviar, Postmates and Uber Eats to a 10% charge for food deliveries. It also caps the platforms that work only off customer pickups to 5%. Dozens of local restaurants and business groups asked the city to make the change because sometimes high delivery charges were eating into their profits.

Andres Oswill, the policy advisor to Commissioner Chloe Eudaly, wrote the proposed ordinance. He said they wanted to take this action now because restaurants don’t have a choice.

“They can’t open dining rooms to full capacity, which means if they are going to stay in business they have to rely on delivery or pickup orders,” Oswill told KOIN 6 News. “It’s a way we can continue to make sure they can keep operating even while they are reliant on other companies to help them place those orders and deliver them.”

“This is a huge issue for Portland restaurants,” said Katy Connors, spokeswoman for the Portland Independent Restaurant Alliance. “Many have stopped using delivery services altogether because of the high commission rates, which are most commonly between 25% and 30%.”

More than 100 members of the alliance have signed an online petition asking the council to approve the limit. According to the petition, Portland-area restaurants are “dependent on delivery apps for both sales and visibility, yet they have no power in setting or negotiating commission rates.” Restaurants hardest hit by the charges are often “those owned by people of color and immigrants, disproportionately impacting these entrepreneurs and their workers.”

“This ordinance would help ensure that local restaurants stay open, keep people employed and continue contributing to Portland’s economy,” according to the petition.

Restaurants across the state have been closed to in-person dining since mid-March because of Gov. Kate Brown’s COVID-19 pandemic emergency order. Many have started to slowly reopen under strict social-distancing guidelines. Some of the restaurants survived during the shutdown by providing curbside pickup or food deliveries.

Portland’s proposed ordinance was drafted in late June by Commissioner Chloe Eudaly. She and Mayor Ted Wheeler will introduce the ordinance during the Wednesday, July 8, council meeting. The council meets at 9:30 a.m. online at www.portlandoregon.gov/video, on the city’s YouTube channel, on eGov PDX and on cable access Channel 30. The ordinance is the first item on the council’s regular agenda.

The proposed ordinance would take effect immediately and limit delivery fees for at least 90 days after the pandemic emergency declaration ends. Companies could be fined $500 for violating the rules.

Oswill said he’s aware companies may challenge this in court if it passes.

“It’s something we’ve worked closely with the city attorney on and in other cities that have done this we have not seen them take legal action,” he said.

‘A dramatic and arbitrary cap’

Food delivery services like DoorDash, Grubhub, Postmates and Uber Eats account for about 80% of the local delivery market. DoorDash of San Francisco works with about 300,000 restaurants in 4,000 cities. The company delivers food for national fast-food chains like McDonalds and Wendy’s. Grubhub, a Chicago company, is used by about 155,000 restaurants in 3,200 cities. Uber Eats, also a San Francisco company, delivers for about 100,000 restaurants in 6,000 cities. Postmates of San Francisco, is used by 75,000 restaurants in 4,200 cities.

Most of the major food delivery services operate in Portland and surrounding cities.

Some of the food delivery services have struck back at the idea they are hurting local restaurants. DoorDash said Portland’s proposed ordinance would reduce food sales and “earning opportunities for delivery workers.”

DoorDash spokeswoman Liz Jarvis-Shean said the company created “a robust package of an estimated $120 million in commission relief and marketing investments nationwide during the height of the economic shutdown — including cutting commissions in half for more than 150,000 restaurants throughout the United States, Canada and Australia and nearly 1,200 right here in Portland — to help give local restaurants the additional revenue they need to survive.” The company also launched in May a Main Street Strong program to help restaurants reopen during the COVID-19 pandemic by cutting the commissions and fees charged on deliveries.

Toney Anaya, DoorDash’s head of government relations, urged Portland officials in a statement to drop the proposed limitation. “We’re disappointed that, in the midst of this crisis and when food delivery is more essential than ever, Portland is considering a dramatic and arbitrary cap that will have the unintended consequence of reducing sales for local restaurants and earning opportunities for delivery workers,” Anaya said.

She said DoorDash has offered restaurants a “choice to pay a percent of each order or a flat fee per delivery, depending on the service they choose.”

“We are committed to continuing to support restaurants and couriers, while keeping our services affordable for the entire Portland community,” Anaya said. “We urge the council to take the time to hear from all those who would be impacted so that, together, we can arrive at a policy that works for everyone.”

Other cities limit charges

Nationally, Portland would join Seattle, San Francisco, Washington, D.C., and New York City with similar limitations. Most of the cities limited food delivery fees to 15%. New York limits it to 20%. Chicago is considering a 5% limit.

A mid-April federal lawsuit filed in the Southern District of New York claimed food delivery service customers and restaurants were being hurt by high fees and the services’ monopoly and price-fixing. The lawsuit is seeking class-action status. No action has been taken on the case since late May.

KOIN 6 News reporter Wayne Havrelly contributed to this report

The Portland Tribune is a KOIN 6 News media partner

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