Uber has added a $3 customer surcharge on all food delivery orders from Portland businesses in response to the city’s new 10% limit on how much third-party food delivery apps can charge restaurants in commission during the coronavirus pandemic.
The new fee on Uber Eats, labeled the “City of Portland Ordinance,” began appearing on the receipt of orders last week after the city council passed the new rule.
“A recent City of Portland Ordinance temporarily limits what Uber Eats charges restaurants to fulfill orders,” an explanation of the charge reads. “To help keep delivery drivers on the road, a new charge is applied to orders from restaurants in the city of Portland.”
Uber also announced last week that the company bought Postmates, another third-party delivery app, for $2.65 billion in stock.
The city rule includes 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 ordinance also makes it illegal for Uber Eats, DoorDash, and similar companies to decrease payments to delivery workers in order to make up lost money from restaurant fees.
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 being overcharged would have to inform the city, which could then sue the third party delivery company.
Harry Hartfield, a spokesperson for Uber, said although cities like Seattle, Los Angeles and Philadelphia are among several others who also have commission caps, Portland’s limits are the strictest. He said the surcharge is necessary for the company to provide a “fair pay” to it’s delivery workers.
“This was a tough decision, and we know it will impact customers and restaurants,” Hartfield said. “The fee will only apply to Portland restaurants, so customers in Portland can still order from surrounding areas to avoid the additional cost.”
Portland is currently the only city where Uber Eats operates that has the $3 customer fee.
The company previously imposed the extra $3 in Jersey City, New Jersey, where there also was a 10% cap that had been in place from March. That limit went away after a new state law passed earlier this month capping third-party food delivery fees at 20% if a restaurant uses the app to transport its items and 10% if the order is delivered by a restaurant employee.
Portland Commissioner Chloe Eudaly’s office described the commission limits Tuesday as “price-gouging protections for restaurants” and that it was “unfortunate” Uber Eats added fees for customers of local businesses.
“However, the delivery costs imposed on restaurants — as much as 30% — were untenable for businesses struggling to stay open and keep their staff employed during this emergency,” a spokesperson for Eudaly’s office said.
Her staff along with members of the Portland Independent Restaurant Alliance and the Asian Pacific American Network of Oregon crafted the city ordinance. Portland restaurants owned by people of color were especially struggling to make third-party deliveries work due to uncapped commission fees, they said.
Opponents of the rule, which included the third-party food delivery companies, argued that they already made some concessions for businesses, that fees may be passed on to customers and that could lead to fewer delivery orders through the apps and less profit for drivers and restaurants.
It’s unclear if other third party food delivery apps also have instituted higher customer fees due to the new city rule.
DoorDash, for example, charges customers a service fee ranging from 11% to 20% in addition to a delivery fee, as of Tuesday morning.
That company sent emails to their Portland-based drivers before the city council vote urging their workers send boilerplate emails to commissioners saying the 10% commission limit would have a “direct and detrimental impact” on their ability to earn money on city food deliveries through the app.