DoorDash is also making fees more transparent. | Photo: Shutterstock
DoorDash is changing how it calculates delivery and service fees for consumers, which could lead to higher fees on some orders and lower fees on others.
The company said the change is intended to “better reflect what it takes to complete your delivery,” including distance and effort required for the courier.
Every DoorDash order comes with two fees, a delivery fee and a service fee. Under the new model, the delivery fee will be a fixed fee that varies by merchant. The service fee will vary based on factors like distance and order size. And in some cases, a long-distance fee will be added to orders, usually those over 10 miles.
The update is not a blanket fee increase. Orders with longer distances may have higher fees, a DoorDash spokesperson confirmed. However, “the shorter the distance and/or the larger the order, the more likely fees stay the same or decrease,” the person said.
According to DoorDash, more than 70% of recent orders would have had the same or lower fees under the new model.
The company is also taking steps to make its fees clearer, including in-app explainers about how fees work and a “Farther Away” label for restaurants that may have higher service fees due to distance. Customers will also be able to see a tally of fees in real time as they build their cart, and then again at checkout.
The update will not change how couriers, which the company calls Dashers, are paid. Dasher pay is based on time and effort, and longer distances typically come with a higher rate.
The new fee structure is currently rolling out across most of the U.S. However, a number of major markets will be excluded for now. They are: California, Chicago, Colorado, the District of Columbia, Massachusetts, Minnesota, New York City, Puerto Rico, and Seattle. These markets have different fee structures, but the company plans to bring them under the new model in the future, a spokesperson said.
DoorDash has continued to see strong demand for delivery, but its operating expenses have been on the rise. Over the past four quarters, the company’s total operating expenses have increased by an average of 7.5%.
It’s not the only delivery company to make changes to its fees recently. Earlier this year, Uber Eats raised the fees it charges some restaurants to use its services, while Grubhub has gone in the opposite direction, waiving consumer fees on orders of $50 or more.
It comes as delivery providers, including DoorDash, have generally been lowering their fees for consumers in recent years. A secret shopper study conducted by Intouch Insight last year found that average delivery and service fees for DoorDash, Uber Eats, and Grubhub were all lower than they were the year before. In that study of more than 300 consumers, DoorDash had the largest fee decrease at $1.82.
Meanwhile, the Federal Trade Commission is scrutinizing delivery apps over their fees, particularly “hidden fees” that aren’t disclosed until checkout.
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