Oregon caps delivery app fees charged to restaurants

MILWAUKIE, Ore. — Gov. Kate Brown signed a bill on Wednesday that limits fees charged to Oregon restaurants by third-party apps like Uber Eats, GrubHub, PostMates and DoorDash.  

Senate Bill 1801 passed the state legislature on Monday, a win for restaurant owners across the state. 

Sean Sexton, co-owner of Ovation Bistro in Milwaukie, said fees from third-party apps were eating away at his restaurant’s profits. 

“So the delivery folks are charging one-third,” said Sexton. “The lowest one is about 22 1/2 [percent] for them to not help you with gaining customers. Up to the average is one-third or up to 33% of your ticket. So that’s 100% of a profit margin for a restaurant.”

To make up for the lost revenue, Sexton said the cost was passed on to the customer through the app’s menu.

For instance, the restaurant’s Ovation burger on Ovation’s menu is $12, but through Grubhub it’s $15.

“In order for us to sell anything on the to-go sites,” Sexton said, “we have to raise the menu prices on that site. Otherwise, there’s no point in even doing it at all.”

Senate Bill 1801 sets a 15% limit on fees charged to restaurants in cities that don’t already have a cap. This past summer, the city of Portland set capped fees at 10%. 

Sexton said being so close to Portland’s city limits has made it harder to compete with restaurants in nearby Sellwood. He said this bill will help his restaurant stay competitive.

“So to have everything on a statewide, it’s going to put everyone on a much more even playing field. I just see that as beneficial to everyone.” Sexton said.

At nearby Gramma’s Corner Kitchen, owner Tracy Roundy was excited to learn about the bill passing. She was one of many restaurant owners that provided public testimony in favor of the bill.

Roundy has been pushing the city of Milwaukie to enact a similar fee cap like Portland’s. She said the 30% fees add to the already long list of added expenses that restaurants are incurring during the state’s COVID-19 restrictions limiting in-person dining.

“There’s a lot of added expenses that come with a take-out only environment. To-go boxes and ramekins and Styrofoam containers and stuff like that, and we’re hurting. The whole industry is really hurting right now,” Roundy said.

Roundy said she’s never used delivery apps before the pandemic because of the size of her kitchen and the extra orders it would bring in. 

“For right now, I need them.” Roundy said.

Now, with almost half of her sales in deliveries, she relies on delivery apps to help bring in business.

“We’re just trying to stay in business, and they need us and we need them. Let’s just get through this shutdown and then things can go back to normal hopefully,” Roundy said.

Third-party app companies have seven days from Wednesday to comply with Senate Bill 1801. The bill is temporary and will expire 60 days after Oregon’s state of emergency expires.

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