If you‘ve ordered delivery through DoorDash recently, you may have experienced a bit of sticker shock. A meal that might cost $12 at a restaurant could easily end up totaling $20 or more once all the fees, taxes, and optional tips are tacked on. So what gives? Why does it cost so much to have food brought to your doorstep? As it turns out, there are quite a few factors that go into DoorDash‘s pricing.
Let‘s break it down:
Restaurants Are Charging More In General
Before even getting into the fees specific to DoorDash, it‘s important to note that restaurants have been steadily raising their prices over the past few years. The cost of ingredients, rent, utilities, and labor have all gone up, and eateries are passing those increases on to diners. The National Restaurant Association found that average menu prices jumped 7.4% between November 2021 and November 2022, outpacing the 6.3% overall rate of inflation. So that pad thai or burger you‘re ordering starts off at a higher base price than it did a couple years ago.
Some restaurants also charge more for delivery and takeout compared to dine-in. They may have special "delivery menu" pricing or simply bump up the cost of each item by a certain percentage. This helps offset the commission fees, usually around 20-30%, that restaurants pay to DoorDash and other delivery apps. So already, your delivery meal often carries a markup compared to eating the same dish on-premise.
DoorDash Needs to Make Money
On top of elevated restaurant prices, DoorDash slaps on extra charges so that it can turn a profit as a business. The app is a middleman facilitating the ordering and delivery process, and it needs to pay for things like software development, customer service, marketing, and driver operations. While restaurants cover some of this through the commissions mentioned above, DoorDash also passes on various fees to you, the customer.
The main ones to be aware of are:
- Delivery fees: This covers DoorDash‘s payment to the driver and typically ranges from $2 to $8 depending on distance and order size. Delivery fees tend to be higher in areas with fewer available drivers.
- Service fees: A percentage-based charge, usually 10-11% of your subtotal, that helps pay for DoorDash‘s other business costs. Think of it as the price for using the platform.
- Small order fees: If your subtotal is below a certain minimum (typically around $10-12), DoorDash tacks on an extra $2-3 charge to make the delivery worth a driver‘s time.
- Taxes and fees: Sales tax and any local fees required by law, such as a "regulatory response fee" in some California cities.
So on a $15 food subtotal, you could easily see $5+ in extra fees, or 30% or more of your total cost. Ouch. Optional tipping, which we‘ll touch on more below, adds even more to the bill if you choose to reward your driver. Some small consolation: Delivery is often still cheaper than hailing a taxi or rideshare to a restaurant and back.
DoorDash Has to Keep Drivers Happy
Perhaps the biggest contributor to DoorDash‘s fee frenzy is the need to attract and retain delivery drivers. The "Dashers" are the lifeblood of the platform, and DoorDash is competing with the likes of Uber Eats, Grubhub, and traditional courier jobs for workers. That means offering competitive pay and incentives so that there are always enough drivers to quickly pick up and drop off orders.
According to DoorDash, Dasher earnings include:
- Base pay: Starts at $2-3 per delivery and increases based on distance, duration, and desirability of the order. Deliveries that are expected to take more time, such as those with many items or long distances, will have a higher base pay.
- Promotions: Challenges and bonus offers to earn extra pay for completing certain delivery milestones, like a set number of deliveries in a week or a certain number of deliveries in a row.
- Tips: Optional gratuity left by customers, which DoorDash passes on to drivers in full. More on the impact of this below.
Altogether, Dashers in the US earned over $25 per "active hour" on the platform in 2021, though this doesn‘t account for expenses like gas and vehicle wear & tear. The need to pay drivers promptly and fairly explains a big chunk of those service and delivery fees.
Interestingly, your tip amount can influence how attractive your order looks to Dashers. Orders with higher tips are more likely to be quickly accepted, while those with no or low tips often bounce around waiting for a driver. Some sneaky customers even "tip bait" by offering a big tip and then reducing it after delivery. But in general, tipping well can actually lead to faster service and fewer Dashers declining your order.
Surge Pricing and High-Demand Fees
Another way Doordash ensures speedy delivery is by using "dynamic pricing" that increases pay and charges during busy times. When lots of people are ordering food at once, such as during dinner rush or big sporting events, base pay goes up for drivers, and higher fees get passed on to customers.
You may see an extra $1-3 "high demand" fee tacked onto your total during peak periods. DoorDash says this allows them to offer drivers more money to work and helps orders get delivered promptly when things are hectic. But for customers, it‘s one more reason your bill seems to keep climbing.
Subscription Savings (For a Price)
To encourage customer loyalty and frequent ordering, DoorDash offers a subscription program called DashPass. For $9.99 per month, DashPass members get $0 delivery fees on orders over $12 and reduced service fees (usually 5% instead of 10-11%).
If you order regularly, DashPass can lead to some solid savings. Paying $120 per year to avoid potentially hundreds in delivery charges may be worth it for heavy users. But it‘s still an extra upfront cost, and you have to make sure you order enough to offset that subscription fee. DashPass also auto-renews, so you‘ll keep getting charged until you remember to cancel.
Premium Pricing for Premium Service
At the end of the day, DoorDash is a luxury compared to getting off the couch and picking up your own food. Having hot meals hand-delivered to your home in under an hour is the height of modern convenience. Most of us couldn‘t imagine that kind of service a decade or two ago! So we shouldn‘t be too shocked that it comes with premium pricing to match.
Think about the alternative of driving to pick up food yourself. By the time you factor in gas, parking, and the value of your time, the fees charged by DoorDash may not seem so unreasonable. You‘re paying not just for the food, but also for the privilege of not having to leave the house.
That said, DoorDash is still a for-profit company, not a charity. Its fees and pricing aim to maximize what customers are willing to pay while keeping the lights on as a business. As long as people prove willing to pay $25 for a burrito and milkshake that might cost $15 in-store, those costs are unlikely to come down. Food delivery remains an "inelastic good" that defies the usual laws of supply and demand.
The Bottom Line
So, is DoorDash expensive? In a word, yes. But it may still be worth the splurge for those who value convenience over cost. By understanding all the factors that go into your final bill, you can make a more informed decision about when and how often to tap that enticing "Delivery" button.
At the very least, don‘t be surprised when your $15 burger and fries order somehow becomes $25 at checkout. Those delivery and service fees, higher menu prices, and the expectation of a decent tip add up quickly. But then again, getting to enjoy restaurant-quality food from your couch just might be priceless.
