DoorDash Tries Tiered Commission Structure to Handle Restaurant Complaints – RetailWire

May 03, 2021

DoorDash spear a new tiered commission plan for restaurants following outrage over its high fees as delivery took off during the pandemic. The service’s lower commission rates, however, will provide less marketing support and pass higher costs on to consumers.

The three regimes are:

  • Basic (15% commission): The most cost-effective option allows restaurants to remain listed in the app, but reduces the delivery radius and charges customers the highest delivery costs ($ 4.99 on average);
  • Plus (25% commission): Reduces delivery costs, expands delivery area and provides access to DashPass, DoorDash Loyalty program;
  • First (30% commission): Offers lowest customer fees (average $ 1.99), largest delivery area, and DashPass access. The plan offers a “Growth guarantee, ”Or a refund of charges if monthly orders are less than 20.

Restaurants have the option of changing their package as needed.

Previously, standardized pricing was not offered. Some larger restaurants were able to negotiate fees as low as 15%, while other smaller ones were charged up to 30% per order. Lawmakers in dozens of cities and states have temporarily capped delivery commission fees as restaurants have increasingly relied on delivery during the pandemic, and some are considering making the caps permanent.

Doordash, which would control nearly half of the U.S. food delivery market, said the new setup gives restaurants more options to choose a plan that matches their needs and cost structure. For example, an established restaurant or one in a high traffic area may need less Doordash Marketing.

The varied plans also increase transparency regarding the underlying costs of delivery to restaurants, customers and contract drivers.

Restaurants seemed happy with the more flexible options, but concerned about the potential limitations of placement and promotion within the app, as well as the smaller delivery radius under the 15% plan.

DoorDash COO Christopher Payne also told a virtual event that increasing shipping costs to customers under the lowest commission plan would impact order volume. The Wall Street Journal reports that he said: “Delivery is a very expensive service, so we have to combine the economy on the consumer side and the merchant side in order to make the overall economy of the system work.”

DISCUSSION QUESTIONS: Do you think DoorDashthe tiered commission plan offers a viable solution for restaurants, his contract staff and himself? What challenges do you see potentially emerging that might require changes or cause potential execution issues?


“The winner of this multi-level approach is DoorDash.”


Aurora J. William

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