DoorDash Announces New Pricing Structure For Restaurants

DoorDash Inc DASH has introduced three new tiers of commission for the restaurants for different service levels based on profitability or growth requirement, the Financial Times reports.
U.S. legislators levied temporary caps on the fees last year to help the ailing restaurant industry retain a larger chunk of their profits during the pandemic, Bloomberg reports
DoorDash’s basic plan charged a 15% commission and included delivery and pickup services. This plan shifted a higher portion of the delivery cost to the customer and reduced the delivery area for profitability.
The next plus tier commission of 25% included an extended delivery area and access to customers on DashPass, a subscription-based loyalty program offering reduced service fees from participating restaurants. Restaurants projected growth from higher order volume.
The premier plan charged a 30% commission for the lowest customer fees and the largest delivery area along with DashPass benefits. It focuses on customer acquisition and order volume growth.
DoorDash refunded restaurant commissions for less than twenty pickup and delivery orders. Pickup order commission was reduced from 15% to 6%. The company has eliminated the fees for setup, software, and merchant delivery for its online ordering product, Storefront.
DoorDash had reported a loss of $312 million on revenue of $970 million in Q4FY20.
DoorDash expects more restaurants to avail the 30% tier with the widest delivery radius, additional marketing, and app visibility.
The new pricing structure has been tested over the last six months and is expected to have an insignificant impact on the company’s profitability and Dasher earnings.
DoorDash will appoint a Chief Restaurant Adviser to work as a liaison between DoorDash and restaurants.
Price action: DASH shares traded higher by 2.92% at $158.29 on the last check Tuesday.