Some restaurant owners in Portland have a bitter taste in their mouths about being listed on third-party food delivery services without their permission.

That’s prompting two city councilors to call for regulation of delivery services such as Grubhub.

City Councilors Andrew Zarro and Pious Ali are drafting a proposal that would likely require third-party food delivery services to have formal agreements with local businesses before offering delivery of their food and may limit the service fees they can charge.

Zarro said it’s unethical for delivery services such as DoorDash, Grubhub and Uber Eats to make money off local businesses without their consent, while also posting incorrect information about an establishment’s menu, hours and contact information.

In a foodie city like Portland, quality, experience and branding is everything. And, he said, local businesses need more control.

“They’re claiming to have a partnership with local business and these businesses have no idea their brand is being misrepresented,” Zarro said, adding that restaurants are vulnerable to negative reviews for poor delivery services. “It’s all because of a predatory company that has seen this market from a pandemic and they’re trying to siphon money out of it. It’s predatory – I can’t think of a better word.”

Zarro owns a local coffee shop and said he recently had a problem with a Grubhub ad that was similar to complaints he has heard from other Portland business owners.

Portland’s interest in crafting regulations comes amid a nationwide push to rein in a loosely regulated industry that has taken off during the pandemic as restaurant dining has been limited and people were encouraged, and sometimes ordered, to stay home as much as possible.

A coalition of 35 restaurants and economic justice groups launched a national Protect Our Restaurants campaign last summer that’s “aimed at exposing the unfair and uncompetitive practices used by dominant delivery apps to exploit small businesses, workers and consumers.”

The group says corporations like DoorDash, Grubhub, Postmates and Uber Eats control 98 percent of all food delivery sales in the United States and use a variety of “unsavory tactics, including charging exorbitant fees, usurping tips, creating impostor websites and faking restaurant phone numbers to extract wealth from the already low-margin food-service industry.”

“State and city lawmakers are rightly stepping in to protect local, independent businesses from abusive middlemen who use a host of ugly tactics to insert themselves between restaurants and their customers,” Pat Garofalo, the campaign’s director of state and local policy, said in a written statement. “There’s a growing recognition that delivery apps are using the pandemic to entrench their power and ensure that more local dollars flow to them, instead of supporting local business owners and workers. Capping fees and preventing delivery apps from posting menus without permission should just be the first steps in regulating these corporations.”

A spokesperson for Grubhub highlighted how the service is helping restaurants by expanding their customer base.

“Grubhub helps connect restaurants with local diners,” the company said in a written statement. “Since late 2019, as a way for restaurants to generate more orders and to give local diners more variety, we’ll list restaurants on our platform at no cost to the restaurant so they can receive takeout business through Grubhub. If a restaurant prefers not to be listed, we make it easy for restaurants to request removal by emailing restaurants@grubhub.com.”

A media contact for DoorDash did not respond to written questions on Tuesday.

Since March 2020, four states and 62 counties, cities and local jurisdictions have enacted caps, ranging from 5 percent to 20 percent, on the service fees charged by the app, according to the Protect Our Restaurants campaign. A campaign spokesperson said some cities also are requiring permission before advertising delivery services, including Washington, D.C., which approved the requirement in February. Similar bills have been proposed in New York and California.

“It’s a huge issue we’re facing along with other municipalities,” Zarro said. “Portland being a destination for restaurants, we have to do something about this.”

Restaurant owners are concerned because customers who don’t get what they order, wait a long time or receive mishandled food can take out their anger online by posting negative reviews of the restaurants rather than the delivery service. 

Mark Barnett said his Wharf Street coffee shop, Higher Grounds, has been listed twice on DoorDash without permission and it has been challenging to get it delisted. Barnett said his staffing and inventory is based on a business model that does not include delivery and any sudden influx of orders could be difficult to manage.    

“If I wanted to work with a company like that I would do so – it’s easy,” Barnett said. “It’s astonishing to me that you could argue that they shouldn’t have to get my approval to market my products for their commercial benefit.”

The proposed rules would require the national services to operate more like locally operated delivery businesses such as CarHop and 2DineIn. Both companies work only with restaurants that agree to accept their services.

2DineIn co-owner Mike Bolduc said his company has formal agreements with the more than 125 restaurants listed on its website. The locally owned food delivery company is entering its 14th year in the Portland area.

Those agreements make it easier for his business and the restaurants to address complaints and ensure that the delivery drivers, who are uniformed employees rather than independent contractors like the national services, are professional and appropriately represent the restaurant brand. Drivers are also given thermal bags to ensure the food stays warm, he said.

“To a degree we are an extension of that restaurant when we’re dropping off food for that customer,” Bolduc said. “It’s really important to make sure you have those agreements because I wouldn’t want to force someone into that if it wasn’t for them.”

Joe Fournier, the owner of A&C Grocery, is among the local business owners who would like to regulate third-party food delivery services. Brianna Soukup/Staff Photographe

Joe Fournier, the owner of A&C Grocery on Washington Avenue, has been struggling with third party services such as Grubhub for the last two to three years. He currently partners with another local company, CarHop, for delivery services.

The top hit in a Google search for A&C Grocery is a Grubhub ad, and a display of the business website on the search page directs customers to order through Postmates.

Fournier said the menu posted online at Grubhub is so outdated that only one menu item is correct. He knows when a Grubhub driver is ordering, because they often order an old item and then ask him what he has available. Often times, the caller will hang up and then call back later and order something else, he said.

Fournier said when people order through Grubhub they get charged a $6 service fee, making an Italian sandwich cost $20. At that price, he said people have high expectations, yet he has no control over that fee or the quality of the product once it leaves his shop. So if the product is damaged or delayed during delivery, he will likely lose future business.

“I’m kind of uncomfortable with people spending good money on potentially bad products,” Fournier said. “Those customers are never going to be repeat customers because they’re getting an expensive product that’s not good.”

Mary Alice Scott, director of Portland Buy Local, said her group is aware of the issue, which was a problem even before the pandemic. She said some services take a commission from the restaurant and charge fees to the customer. And while some restaurants may be able to absorb that cost when deliveries are a small portion of the overall business, it becomes unsustainable during the pandemic, when delivery makes up a greater percentage.

“It’s a common frustration,” she said. “I think it’s laudable that Councilors Zarro and Ali are working on it. It’s a good way for the city to show support for local restaurants that really make our city stand out.”

Zarro said that at a minimum he’d like to see the city enact an ordinance that would require these services to get a business’s permission before listing them on their app.

Zarro said his coffee shop, Little Woodfords, was listed listed on Grubhub last week. He was quickly alerted by a friend and discovered that the app was advertising menu items that he does not offer, including scrambled eggs and eggs over-easy and sunny-side up.

“That is not what I do,” Zarro said. 

Zarro said he reached out to other local businesses and heard similar complaints about incorrect menu items being listed, as well as incorrect hours of operations and contact information. 

Ali is working with Zarro on a draft set of rules. Ali began reaching out to local business last year, after receiving a Grubhub gift card and exhausting the $70 balance in two purchases. He learned about the service fees being charged and that such services are generating concerns in Portland and nationwide.

In addition to requiring formal agreements to operate, Ali said he would like to regulate the amount of fees they can charge.

“I think at a moment we know our local businesses are hurting anyway and to allow these types of practices to add additional burdens and hurt them more is not OK,” Ali said. “It’s not OK to use another business’s name without their consent.”

Mayor Kate Snyder said Monday she was aware of Zarro’s social media post over the weekend, but she has not discussed any specific proposals.

“I am interested in learning more about the issue(s),” Snyder said in an email. “But (I) have no ‘stand’ at this point since it’s new to my radar.”

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