The extra cost of about $ 1 to $ 2 was marked by the city. Some people received a “Denver” fee, others a “Chicago” fee.
Across the country, people who ordered delivery through the service are being paid more, apparently just because they lived in those places.
The real reason for the new fees? In those cities, local governments have enforced temporary restrictions restricting third-party delivery platforms that restaurants can charge to help struggling businesses. To try to recover the losses, DoorDash has introduced new customer fees in cities that have introduced caps, including Chicago, Cleveland, Denver, Oakland, Philadelphia, Portland, Seattle, St. Louis. Louis and a handful of others. (Customers can find the layout by clicking on the fee line before placing their orders).
DoorDash is not the only one that adds fees. Uber Eats has had a similar customer rate since the summer in Portland, where the limit is 10% per order.
And over the next few weeks, Uber Eats plans to add fees in more than a dozen markets, including Chicago, Minneapolis, Boston, Washington and Oregon. The fees average $ 2.
Offsetting high commission fees
Prior to the pandemic, many restaurants shunned third-party delivery services such as DoorDash, Uber Eats or Grubhub. These platforms can charge commission fees as high as 30% per order, which can leave restaurants in the red.
But now, with dining rooms completely closed or open with limited capacity, many restaurant operators feel they have to offer delivery or go out of business. If less money comes in, the pain of the high commission money is even greater.
In an effort to help restaurants, a number of municipalities have introduced commission levies. The temporary limits, usually around 15%, will eventually expire – in some cases after the interior or dining room has been restored within two or three months, in other cases on a specific date. Some cities that have limited temporary fees have already extended it.
Delivery services used different approaches to the hood
DoorDash claims that the fees that restaurants receive cover its own costs. If they can not get it at restaurants, they should rather charge customers, according to the company.
“We have managed our platform, paid and insured Dashers and provided high quality service, which is why we have started charging a small extra fee in many markets, where local governments have complied with pricing,” a DoorDash spokesman said CNN Business in an email statement.
Uber echoes a similar sentiment.
“To maintain a reliable delivery market, we are introducing various local fees in certain U.S. markets,” a Uber Eats spokesman said. “The fees charged by Uber Eats to both retailers and consumers on transactions fund our services, including app maintenance, consumer support, security and, most importantly, payment for deliveries.”
Unlike its competitors, Grubhub, which merged with Seamless in 2013, does not add explicit fees to cities that have imposed commission restrictions, according to a company spokesman. Instead, he uses his competitors’ opponents to lure people to his monthly subscription service, Grubhub +, which costs $ 9.99 a month. In December, it said it would offer three months for free to people joining the service in Chicago and New York City.
The cost of higher fees
Some advocates for restaurant are afraid that the higher rates will drive customers away. “We were opposed to additional fees that could potentially deter visitors from paying in,” said Sam Toia, president and CEO of the Illinois Restaurant Association.
There is good reason to be afraid.
“Consumers are really reluctant to incur additional fees and costs on delivery,” said Jill Failla, senior food analyst at Mintel. “Third-party businesses need to be really aware of this hurdle around consumer fees, and need to be really careful about what they are trying to pass on to the consumer.”
That does not mean they will no longer charge for delivery, she said.
Some restaurant operators say for now that they have not seen any delay in orders due to the new fees.
“I have not seen any significant change in our percentage sales of third parties,” said Ruth Jones, chief financial officer of Maria Empanada, a small empanada chain in Colorado.
Jones said the commission restrictions were helpful. But once they are gone, restaurants will again face the higher commission fees. If this happens, they may have to charge customer fees themselves. “You see, many restaurants add delivery costs for third-party use,” she said. “We have to keep trying to make money as a business, and therefore we have to make choices that make sense to the third party.”
This is especially the case in an environment where restaurants are struggling to survive.
“Restoring restaurants will have to increase above-average revenue and margins for some time, and that will unfortunately mean higher prices for consumers,” said David Henkes, senior head of Technomic. “Ordering delivery is becoming and will become more expensive.”
CNN Business’ Sara O’Brien contributed to this report.