DoorDash offers local U.S. restaurants choice with new tiered commission fees

Under the spotlight that has been placed on delivery companies, DoorDash has overhauled its model.

By Tom Nightingale

Third-party delivery has been a topic of intense debate in recent months. Now, DoorDash has shifted its system to reflect that.

With local restaurants struggling desperately across North America due to the COVID-19 pandemic, the ethics of third-party services charging up to 30 per cent in commission to restaurants for local delivery has been questioned.

RELATED: The dichotomy of third-party delivery services

Now, DoorDash has unveiled a new three-tier pricing structure that offers its U.S. local restaurant partners more choice and flexibility in the package they choose — and the fees they pay.

Three-tiered structure

Restaurants can now choose between three options, each coming with a different commission fee and a varying set of benefits, according to a DoorDash release:

DoorDash Basic (15 per cent fee): 

  • Basic is the most cost-effective way for restaurants to offer delivery and pickup to customers on DoorDash.
  • Restaurants can continue to opt into additional in-app marketing programs as desired to reach even more customers.
  • This plan shifts a higher portion of the delivery cost to the customer and adjusts the delivery area for restaurants in order to ensure that Dashers continue to make meaningful earnings.

DoorDash Plus (25 per cent fee): 

  • Plus helps restaurants grow through access to DoorDash’s most loyal customers as part of DoorDash’s DashPass loyalty program, increased visibility in the DoorDash app, an expanded delivery area, and reduced delivery fees for customers.

DoorDash Premier (30 per cent fee): 

  • Premier helps restaurants maximize the number of new customers and the total volume they receive from DoorDash. It offers the lowest customer fees and the largest delivery area, in addition to the benefits of DashPass.
  • Additionally, DoorDash Premier comes with a Growth Guarantee. For all restaurants on the Premier plan that accept fewer than 20 total orders per month across Pickup, Delivery, and Caviar, DoorDash will refund their full commission for that month.

DoorDash said local restaurants and chains with fewer than 75 locations are eligible for the new rates.

In addition, DoorDash announced it will cut its pickup commission to 6 per cent across all restaurant partners and plans, “so they can leverage the reach of the DoorDash Marketplace and connect directly with customers in their neighbourhood.” Pickup commission fees had previously been set at 15 per cent.

RELATED: Consumers use low delivery fees, promos as deciding factors

“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,” DoorDash COO Christopher Payne said in a statement. “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,” he added.

Delivery apps surged in popularity during the pandemic lockdowns but have taken heat for high service fees.

In Canada, numerous provinces have enacted temporary caps on those third-party commission fees. Canadian firm SkipTheDishes was criticized for adding a B.C. surcharge of $0.99, seemingly in response to B.C.’s cap.

Meanwhile, in Quebec, Montreal restaurant Deli Boyz spearheaded a class-action lawsuit against third-party delivery services for “abusive” fees.

RELATED: Governments must work with restaurants on no-fee delivery app

Payne denied that the company changed its pricing to appease lawmakers in direct response to the criticism.

“This is not designed in response to legislation,” Payne said. “It’s designed in response to listening to restauranteurs and learning what they need.”

DoorDash executives will host a town hall event for its restaurant partners on May 4 where operators can ask questions about the new pricing plans.

The company has already introduced some measures to ease the burden on local restaurants, including grants of $3,000 to small businesses as part of an initiative to provide $1,125,000 to help eligible restaurants in Montreal, Toronto, and Vancouver. 

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