DoorDash Combats Commission Caps With New Fees

Facing caps on commissions from nearly six dozen localities around the country, DoorDash has begun adding new surcharges to its deliveries.

The delivery service is tacking on a $1 to $2.50 surcharge, calling it a “Regulatory Response Fee,” in an attempt to recover what it sees as lost revenue from the 15 percent commission cap imposed by at least 68 cities, counties and states.

As NBC News reported Monday (March 29), DoorDash has added supplemental local fees in 57 of those places, much more than what has been reported in the past, including several major cities: Chicago, Cleveland, Philadelphia, St. Louis, Seattle, Denver and Tucson.

These fees go directly to DoorDash. “Only when customers click a tiny button does an explanation pop up saying the city has ‘temporarily capped the fees that we may charge local restaurants,’” NBC said.

DoorDash declined to make an executive available for an interview, but did respond to some questions via email, NBC said.

The COVID-19 pandemic has created something of a love-hate relationship between restaurant owners and DoorDash, which posted $1.9 billion in revenue last year.

At one hand, restaurateurs rely on delivery services to get food to customers who can’t or won’t dine out due to the virus. But that leaves them at the mercy of whatever fees DoorDash or its competitors want to charge.

NBC used the example of the Grand Lake Kitchen in Oakland, which lost 80 percent of its business last year and came to see delivery apps as both necessary and frustrating.

“That’s because the $14 avocado toast that customers have been ordering through DoorDash brings in only about $11.90 to the restaurant,” NBC explains. “DoorDash takes $2.10, and it adds a $2 ‘Oakland Fee’ and a $2.10 ‘Service Fee.’ With a 9.25 percent county sales tax of $1.30, the delivery order totals $19.40, not including a tip that would go to the DoorDash driver. Before the pandemic, the same $14 avocado toast eaten at the restaurant cost $14 plus sales tax and a tip, all of which went to Grand Lake Kitchen staff members.”

Dan Kalb, an Oakland City Council member who wrote the city’s fee cap legislation, said he was not aware of the “Oakland fee” until an NBC reporter brought it to his attention. He’s not sure what recourse Oakland has, but was concerned residents would misinterpret the fee as something the city was charging.