Portland weighing 10% of the cap on fee delivery apps may charge restaurants

Portland commissioners plan to vote Wednesday on a new city rule that would limit the amount of food delivery apps like DoorDash and Uber Eats can charge restaurants on commission.

If adopted, the proposal would prohibit third-party delivery services from charging restaurants service fees in excess of 10% of the purchase price during the coronavirus pandemic.

The proposal would also make it illegal for DoorDash, Uber Eats and other companies to reduce payments to delivery people in order to make up for money lost from restaurant expenses, the order said.

The restriction would end 90 days after the Portlands emergency order is lifted. The state of emergency is currently scheduled to end on July 16, but city officials have extended it in two-week increments since Mayor Ted Wheeler’s first declaration on March 12.

Seattle, Angels, cream philadelphia and New York are among other cities that have instituted food delivery cost caps. A group of restaurateurs filed a federal lawsuit in New York in April against Grubhub, DoorDash, Postmates and Uber Eats, claiming that companies have a monopoly on the meal delivery market and use this status to impose fees of 13.5% to 40% of revenue to process delivery orders. The lawsuit argues that the high fees are ultimately passed on to customers through higher menu prices.

the Portland Independent Restaurant Alliance and the AOregon Pacific American Network were among local groups to press for the cap proposal, which was later taken up by the office of Commissioner Chloe Eudalys and later co-sponsored by the Wheelers office, said Andrs Oswill, senior policy director at the office. Eudalys who helped prepare the prescription.

He said that if the order were passed, delivery enforcement companies would be liable to up to $ 500 in civil penalties for a violation. The fine would increase daily and for each overcharged restaurant, he said. The restaurant should sue the company if it does not receive a refund.

Oswill said he did not know how many Portland restaurants are registered for food delivery service applications.

The Restaurant Alliance, a community group made up of local restaurateurs, said in a letter to Portland City Council that local businesses had no say in setting or negotiating commission rates.

The affordable restaurants for many Portlandians are among the hardest hit, the letter said. These same restaurants are often those owned by people of color and immigrants, which has a disproportionate impact on these entrepreneurs and their workers.

Duncan Hwang, associate director of the non-profit Asian Pacific American Network of Oregon, said that some companies in the Southeast Portlands Jade District had not found it sustainable to sell food via apps due to high fees or other factors, such as language barriers. Some have started delivering their own food, he said.

But many believe that delivery apps have become a necessity due to their popularity and the loss of food service during several months of the pandemic, he said.

Hwang cited Pure Spice in southeast Portland, which said it charges between 25% and 30% commission on orders through the three delivery apps they use.

The business model has been difficult as business owners get paid via GrubHub and other apps, not the client, said Hwang. Then there are some who are turned off by paying for food, plus shipping and tips, and application fees can also really determine whether a business can pay rent, wages and food costs.

Not all restaurants are in favor of the city’s proposal.

Susannah Blumenstock, director of business operations for The Star, a Pearl District pizzeria, expressed concern in a letter to city commissioners that a fee cap would have a significant impact on pizza sales and the survival of their partners Delivery.

In order for these companies to continue to support our local brand, they must remain viable, wrote Blumenstock. We are concerned that this aggressive action, if it is aimed at benefiting small businesses, may actually backfire if it is not looked at from several angles.

Blumenstock acknowledged that some delivery companies were charging as much as they could and appeared to do as little as possible in return, but said DoorDash had reduced commission costs during the pandemic.

Toney Anaya, head of government relations for DoorDash, told city officials that the company cut commissions for mom-and-pop restaurants in half in April and May and charged 0% for orders. pickup and no fees for new app restaurants. Anaya said the company is considering giving companies options to offer delivery without paying a commission.

Anaya said the city ceiling would jeopardize food delivery to Portland.

The proposal refers to other cities that have instituted commission ceilings, but not a single jurisdiction in the country has price controls as low as 10%, Anaya wrote to city council.

Amy Healy, head of public affairs for Grubhubs, described the 10% cap as an overshoot that would not stand up to a court challenge and could ultimately drive up costs for Portland small business owners and customers and decrease the wages of the company’s delivery drivers due to lower volume orders.

Oswill said city officials had found no evidence that the cap would hurt local businesses or national delivery companies, citing Uber on Monday announcing that the company had agreed to buy Postmates for $ 2.65 billion in stock.

There may be a reduction in orders placed through apps, but that doesn’t mean people don’t order directly from restaurants, he said. What we’ve heard from many restaurants is that since they operate on such low margins, they prefer to have fewer orders via apps while making a profit, keeping their doors open and keeping employees, rather than to receive more orders that they see little or not. profit on.

The ordinance needs a unanimous vote from the four elected leaders of the city council to be adopted.

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

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