190898

The City of Portland ordains:

Section 1. The Council finds:

1. Restaurants are vital to the culture and economy of the City of Portland (“City”). They reflect and nurture the cultural diversity of the City, while offering access to food, an essential foundation of human health and basis for social connection.
    
2. Portland’s culinary scene is an important part of the social and economic fabric across all the City’s business districts and neighborhoods. Portland’s restaurants are also integral to Portland’s reputation and tourism. Portland is consistently ranked as one of the country’s best cities for dining due to its numerous, eclectic, and exceptional restaurants.
    
3. Most Portland restaurants are small businesses, and many are owned or operated by people of color, LQBTQ+, and recent immigrant community members. Supporting these small, diverse businesses strengthens both the economy and the social health of the City.
    
4. The COVID-19 emergency worsened the economic picture for City restaurants. Due to the extended ban and other restrictions on dine-in restaurant service to prevent the spread of COVID-19, the loss of restaurant workers during the pandemic, the prevalence of remote work, and the general decline of dining out, many restaurants have been severely economically impacted. Hundreds of restaurants have closed and many restaurants continue to struggle to recover. Similarly, many commercial districts in Portland also continue to struggle due to these restaurant closures despite the ending of the City’s state of emergency.
    
5. In March 2022, the level of employment in leisure and hospitality in the Portland metro area remained more than 10% lower than its pre-pandemic level. Job losses in leisure and hospitality in Multnomah County were more pronounced than neighboring counties. These labor shortages contribute to further delays in Restaurants returning to in-person dining at pre-pandemic levels. Open Table reservation data for in-person dining shows that Portland’s restaurant activity was nearly 40% lower in May 2022 compared to pre-pandemic levels, which significantly lags the recovery of other peer cities.
    
6. COVID-19 case rates in Multnomah County remain higher than they have been during most of the previous two years. And the Multnomah County Public Health officials recommended that individuals resume voluntary indoor masking in May 2022 to help stem rising case levels. While the City’s declared COVID-19 emergency has ended, COVID-19 continues to impact the activities of Portland residents and visitors.
    
7. Related to the decline of in-person dining, sixty percent of American consumers order takeout or delivery at least once per week. This percentage is even higher in urban markets such as Portland. In April 2022, over half of U.S. consumers had ordered food using a meal delivery service; up five percentage points from a year ago. As a result of the changes in customer behavior, many Portland restaurants remain dependent on delivery and takeout orders. This dependency makes them increasingly vulnerable to unfair contract terms demanded by third-party food platforms.
    
8. Third-party food platforms, which arrange for delivery or takeout of food prepared by restaurants, have become a global market worth more than $150 billion, having more than tripled in size since 2017. In the United States, the market has more than doubled during the Covid-19 pandemic, following a historical growth rate of 8 percent. During this time, DoorDash, one of the largest third-party food platforms made its public market debut with one of the biggest initial public offerings of 2020.
    
9. This booming market is highly concentrated in just a handful of businesses. As of November 2019, just four third-party food platform services controlled approximately 98% of the entire market. Since that time, Uber has acquired Postmates, further consolidating this market.
    
10. The increasing market dominance of a small number of third-party food platforms coupled with the continuation of difficult economic conditions for City restaurants, means restaurants often must contract with these companies if they wish to access the growing share of customers who rely on third-party food platforms to obtain meals. About 77% of U.S. restaurants offer service through third party food platforms.
     
11. Market dominance also gives these companies disproportionate leverage in contract negotiations with restaurants. These companies may use this leverage to extract high fees from restaurants – totaling in some instances, as much as 30%, or more, of an order total – and thereby diminishing restaurants’ already-narrow profit margins.
     
12. On June 29, 2020, the Portland City Council passed Ordinance 190032 (“Temporary Cap”), which capped fees that a third-party food platform could charge a restaurant at 10% of the purchase price for delivery orders and 5% of the purchase price for orders that do not include deliveries.
     
13. The Temporary Cap has remained in place in the City throughout the pandemic, but is set to expire on June 29, 2022. The City has received minimal formal complaints from either third-party food platforms or restaurants regarding compliance with the Temporary Caps during this time period.
     
14. Given the current operations of third-party food platforms and the local economic conditions in the City of Portland, a temporary extension of the current commission cap on delivery and takeout service fees charged to restaurants is a reasonable step to protect restaurants from financial collapse without unduly constraining third-party food platforms’ businesses.
     
15. This temporary extension will provide necessary relief to local restaurants while allowing all stakeholders to continue discussing a sustainable, long-term policy.

NOW, THEREFORE, the Council directs:

1. Exhibit A is by this reference incorporated as if set out verbatim and is hereby enacted.
    
2. This Ordinance takes effect on June 29, 2022, upon expiration of Ordinance No. 190032 and expires on February 28, 2023.
    
3. If any section, subsection, sentence, clause of phrase of this Ordinance is for any reason held to be invalid or unconstitutional, that shall not affect the validity of any of the remaining portions of this Ordinance. Council expressly declares that it would have passed this Ordinance, and each section, subsection, sentence, clause, and phrase thereof , regardless of the fact that any one or more sections, subsections, sentences, clauses, or phrases of this Ordinance may be found to be invalid or unconstitutional.

Section 2. The Council declares that an emergency exists because of the imminent expiration of the Temporary Cap related to the COVID-19 emergency, which is set to expire on June 29, 2022; therefore, this Ordinance shall be in full force and effect on June 29, 2022.