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DoorDash Adjusts Pricing Scheme, Lowering Some Costs For Restaurants

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DoorDash Adjusts Pricing Scheme, Lowering Some Costs For Restaurants

Following weeks of criticism over its pricing, DoorDash (NYSE: DASH) has announced a new fee structure for restaurants using the service.

The delivery service will roll out three price points in its Partnerships Plans, starting with a 15% commission option. Pickup commission costs will be lowered to 6% and its Storefront online ordering platform will become free for all restaurants, with fees charged for payment processing only.

"There is a massive, increasingly digital opportunity for small restaurants, and we believe that when we work together, we can help them capture more of that market in a post-pandemic world –– in-store, online, through a third-party partner or any combination of these three," said Christopher Payne, COO of DoorDash. "Over the past year, we've introduced offerings to help restaurants define their own futures. Today, we are changing how we do business to provide more choices, and better choices, for restaurants. We are hopeful that as they reopen for indoor dining, we can be a partner that helps restaurants accelerate into the future and continue growing. That's the most important service DoorDash can offer."

Approximately 70 communities in the country have enacted laws that cap the delivery service charge DoorDash can charge restaurants as local politicians respond to public outcry over the costs to establishments. According to an NBC News report, DoorDash responded by adding new fees in 57 of the communities where the laws were passed. The NBC News report accelerated a conversation that has been rumbling through the market since last year when municipalities sought ways to calm nervous restaurant owners who claimed they were receiving less revenue for orders filled through DoorDash.

Read: DoorDash: Added fees are necessary to ensure service, pay Dashers

Read: In first earnings as public company, DoorDash beats revenue forecasts


In a statement to Modern Shipper, a DoorDash spokesperson said the added fees were necessary to support local jobs.

"Operating our platform, paying and insuring Dashers and ensuring high-quality service can be expensive, which is why in many markets where local governments have passed pricing regulations we have begun charging customers a small additional fee," the spokesperson said. "We realize this isn't ideal, but with these regulations in place, these fees help us to continue providing convenient delivery for customers, meaningful earning opportunities for Dashers and valuable services that help drive orders for merchants."

Tuesday's announcement outlines the new tiers from which restaurants can choose. DoorDash has also created an interactive quiz designed to help the restaurants identify the proper tier. The tiers are (commissions in parentheses):

DoorDash Basic (15%): Includes delivery and pickup, opt-in for in-app marketing programs, shifts more of the delivery cost to the customer and adjusts the delivery area.

DoorDash Plus (25%): Provides restaurants access to DashPass loyalty customers and increased visibility within the app, an expanded delivery area and reduced delivery fees for customers.

DoorDash Premier (30%): Provides the largest delivery area possible, lowers customer fees and provides all the benefits of DashPass. In addition, DoorDash said Premier restaurants receive a "growth guarantee," which refunds full commissions for any month in which the restaurant accepts fewer than 20 total orders across Pickup, Delivery and Caviar.

New Pickup Pricing (6%): The Pickup commission will be 6% across all restaurants and plans. It includes payment processing.

Storefront fees are also disappearing, DoorDash said, including one-time setup fees, monthly software fees and per-order merchant delivery fees. Only payment processing fees will remain.

DoorDash also said it would be naming a chief restaurant adviser who will work in an advisory role as the "voice of the industry" and serve as a liaison between the restaurant industry and DoorDash.  

Click for more Modern Shipper articles by Brian Straight.

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Image by Alterio Felines from Pixabay

 

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