San Francisco, CA

Doordash announces new pricing tiers, delivery distribution system

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By Huey Bergstrom

(SAN FRANCISCO) San Francisco-based delivery giant Doordash announced a new tiered pricing system for restaurant delivery Tuesday. Under the new prices, restaurants can choose one of three tiers, 15%, 25% or 30% commission fees.

The company says it's adjusting its model in response to feedback from restaurants but the lowest tier, which Doordash calls the "basic" plan, coincides with the delivery fee cap put in place in a number of metropolitan areas like San Francisco, LA, New York City and Chicago.

This came in response to a number of restaurants noting that Doordash delivery fees were too high for them to make a profit, essentially pushes them out of business at a time when dine-in was no longer viable due to the COVID-19 pandemic.

An emergency order in San Francisco has kept the delivery cap at 15% throughout the pandemic but that order is only a temporary fix as it will be null in void 60 days after restaurants open for in-person dining. This new pricing system could be a way for Doordash to recoup some of their percieved losses from delivery fee caps without garnering as much public ire for exploiting restaurants.

If California fully reopens June 15, the price cap on delivery fees would be waived sometime in August, which would put this new price tier into place around then as well.

Over the pandemic, Doordash has seen incredible profits and consolidation of the deivery industry, the company now owns the high-end delivery app Caviar as well. Additionally, Doordash spent over $200 million in the most recent election fighting against additional benefits for their drivers just months before they took the company public, making billions for their executives.

San Francisco Supervisor Aaron Peskin has floated the idea of making the delivery cap permanent but was met by strong resistance from the company's public relations arm. A similar discussion was had at the state level but nothing has been confirmed.

The Doordash release notes that the "basic" plan would have the highest delivery fees for the customer and restrict the delivery area. The 25% or "plus" plan would reduce delivery costs, expand the delivery area and put restaurants into the loyalty program. The 30% or "premier" plan has the lowest delivery fees the largest delivery area, the loyalty program, and also “guarantees growth." This last component is somewhat murky on details but the implication is that the higher the commission the higher prominence said restaurant gets on the app.

Despite a flurry of pandemic related business closures, Doordash nearly tripled its revenue during the COVID-19 shutdown. As restaurants continue to struggle to stay afloat, tech giants like Doordash are able to capitalize on a weakened market. Restaurants looking to expand their business are essentially forced into working with the tech giant if they want to recoup pandemic related losses. It has yet to be seen if the "basic" plan is truly viable for restaurants around the city.

Throughout 2020, Doordash was embroiled in a series of controversies from the aforementioned hundreds of millions spent fighting against driver protections, to adding restaurants to their platform without consent, to paying driver's a meager 78 cents a day in hazard pay and raising delivery fees for customers despite getting Prop 22 to pass.

In the latter example, Doordash repeatedly pointed to raising delivery fees for customers as a corporate response to Prop 22, which would have qualified drivers as employees rather than contractors and forced the tech giant to offer their workers increased protections like benefits or collective bargaining. They used fear-mongering tactics about the adverse cost of providing benefits to drivers as a way to garner public sentiment for, what amounted to anti-labor law. Their law passed, they are abel to continue qualifying drivers as contractors and offer few if any protections, and they still increased their prices.

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