- DoorDash updated its pricing structure for local U.S. restaurants Tuesday with new Partnership Plans, which offers three different delivery commission price points depending on how much marketing support a restaurant wants and the size of its delivery area. The plans are priced at 15%, 25% and 30% commissions for DoorDash and Caviar partners, and were tested for the past six months, the company said on a media call Monday.
- The delivery firm is also lowering pickup fees to 6% from 15% across all plans. DoorDash's Storefront offering is now free to all restaurants aside from payment processing fees. Previously, operators were charged a one-time setup fee, monthly software fees and pre-order merchant delivery fees.
- DoorDash said the new pricing is intended to give restaurants "the flexibility to scale up or down depending on their current needs." The move comes amid operator complaints of high commission fees during the pandemic, and as markets including San Francisco consider making temporary, pandemic-induced delivery commission caps permanent.
It seems DoorDash is aiming to get ahead of an evolving delivery marketplace as more municipalities consider or enact limits on what aggregators can charge restaurants.
In Q4 2020, DoorDash operated under commission caps in 73 markets — more than double from just Q3 — the company wrote in a letter to shareholders in February. The company estimated these price controls resulted in a net loss of $36 million in Q4 2020, and that the gross impact of commission controls would almost double in the next quarter.
Restaurant frustration with these steep costs, typically hovering around 30%, came to a head amid pandemic pressure. Diner sentiment around aggregators has also shifted as restaurant groups bemoan the toll these fees take on a restaurant's bottom line. Sixteen percent of diners believe platforms like DoorDash, Uber Eats, Postmates and Grubhub do more harm than good for restaurants, according to a recent SevenRooms report, and 37% are motivated to order directly from restaurants to support them.
DoorDash Basic (15%) doesn't include in-app marketing, puts a higher portion of the delivery cost burden on the diner and decreases the size of a restaurant's delivery footprint. DoorDash Plus (25%) and Premier (30%) each offer restaurants access to DashPass, the platform's loyalty program.
DoorDash's three-tiered pricing plan
|Delivery commission fee||15%||25%||30%|
|Pickup commission fee||6%||6%||6%|
|Bigger delivery radius||Bigger delivery radius|
Premier offers the lowest diner fees and the largest delivery radius, as well as a new "Growth Guarantee." This offering ensures restaurants that receive fewer than 20 orders per month for pickup, delivery and Caviar will be reimbursed their full commission for that month. Payne said on a media call Monday that commissions will be adjusted in markets where delivery fee commission caps are lower than the Basic level, and that the new pricing plans will have a "negligible impact" on Dasher earnings and DoorDash's bottom line.
DoorDash has implemented many initiatives over the past year, including Storefronts, to support its restaurant partners and try to deepen loyalty during the COVID-19 crisis. The company said its new pricing structure is based on restaurant feedback, and customers will be able to change pricing plans depending on their needs. DoorDash also will hire a chief restaurant adviser to serve as a liaison between restaurants and DoorDash, but didn't give a timeline on when this position will be filled.
"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," Christopher Payne, DoorDash's chief operating officer, said in a statement.
Restaurants can take a quiz about their business goals on DoorDash's website to select which tier works best for their needs. DoorDash executives will also host a town hall event for its restaurant partners on May 4 where they can ask questions about the new pricing plans.