What DoorDash's new restaurant pricing reveals
DoorDash's new pricing tiers for restaurants reveal that there's no magical math that can keep customer fees and restaurant commissions low — one group will have to bear the cost.
Why it matters: During the pandemic, food delivery companies like DoorDash came under fire for charging high fees to restaurants, and faced tacit criticism that they didn't give up their own margins to help both drivers and eateries earn more.
- Companies within the delivery industry warned they'd very likely shift costs to customers when cities began to implement (mostly temporary) caps on restaurant fees during the pandemic.
Details: DoorDash's three tiers, made official today after the company experimented over the past year, come with different commission rates (between 15%-30%), delivery areas and marketing features.
- They also include different fees charged to customers, where restaurants opting for the lowest commission rate will see their customers charged higher fees than those who opt for the highest commission tier.
- DoorDash is also cutting its pickup fees to 6% (including card processing fees) for all restaurants.
- The company says that the tiers won't affect the earnings of its delivery drivers, which are calculated in a separate way.
Between the lines: While DoorDash is giving restaurants more options, the company is not giving up its own earnings, and in fact, doesn't expect this to affect revenue, COO Christopher Payne told journalists during a presentation.
What to watch: It wouldn't be surprising if the restrictions to the "cheapest" tier —and added perks in the most expensive — push a number of restaurants toward tiers with higher commissions if they find their online orders are decreasing.
The bottom line: There's no such thing as a free lunch delivery.