Food Delivery App Prepares for Post-Pandemic Patterns
DoorDash Reworks Restaurant Delivery Pricing
DoorDash (DASH), a leading food delivery company, is changing the rates it charges restaurants as it positions itself for a post-pandemic world.
Customers and restaurants flocked to DoorDash at the height of the pandemic. Now that many people have received COVID-19 vaccines, both restaurants and consumers have more options. In response to these changing market conditions, DoorDash is offering more pricing flexibility to restaurants.
The changes are also a result of pushback from restaurants. During the pandemic it was common for small restaurants to pay delivery apps a 30% cut of orders. This hurt restaurants’ bottom lines, though often they had no choice because they could not serve customers in person. Regulators in New York, San Francisco, and Seattle even stepped in to cap the amount delivery apps could charge restaurants.
DoorDash Passes Costs to Consumers
DoorDash’s new pricing system began yesterday. Restaurants can now choose between paying a 15%, 25%, or 30% commission per order. The higher the rate the more marketing and product support restaurants will receive from DoorDash. The delivery app also lowered its commission on food picked up at restaurants from 15% to 6%.
To cover its losses from the pricing changes, DoorDash is passing costs to consumers. If a restaurant chooses the lowest commission rate, consumers will pay more for delivery than if it opts for the higher rate. Consumers will pay an average fee of $4.99 per delivery from restaurants which choose a 15% commission, and will pay an average of $1.99 per delivery from restaurants paying DoorDash’s 30% fee.
Pandemic Relief Coming to Restaurants
Many restaurant owners cheered DoorDash’s decision to change its pricing. Restaurants also received another piece of good news yesterday: The Small Business Administration will start accepting applications on May 3 for a $29 billion grant program aimed at helping the industry get back on its feet.
The Restaurant Revitalization Fund enables restaurant and bar owners to receive grants that are equal to their pandemic revenue losses up to $10 million. It is the first pandemic relief focused specifically on the restaurant industry, which has struggled during the pandemic. Last year sales at restaurants and bars plummeted by nearly a quarter and more than 110,000 restaurants and bars were forced to close temporarily. Now, thanks to vaccines, new delivery systems, and government assistance, restaurants are beginning to see a light at the end of the tunnel.
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