In today’s world, where fast delivery service is on the rise, DoorDash has become a popular contender among food delivery companies.
With online and mobile app food ordering and delivery services a click away, DoorDash has earned the spot as the largest delivery service in the U.S.
With such a positive track record in food delivery services, you may be wondering why DoorDash is so expensive.
Why Is DoorDash So Expensive? (Top 10 Reasons)
1. Cost Increases Of Restaurant Food
Whenever events occur that affect prices, such as the Covid-19 outbreak that began at the beginning of 2020, it can affect businesses across the board.
With companies that rely on other businesses for their goods and products, such as restaurants and their need for food, when factors affect operating expenses for the company, the increase must be offset.
In the case of restaurants, the increased costs of food products are passed along to customers by raising the prices on the menu.
The operating costs for restaurants are a major factor in their pricing structure.
Restaurants may be in a building with a monthly rental fee.
There’s upkeep to the building’s interior and exterior, plus replacement costs for new appliances when needed.
Food suppliers must be paid.
These suppliers may have raised their prices due to a lack of goods and are passing the increase on to the restaurants.
When the pandemic took hold of the country, it created a domino effect where goods from farmers, manufacturers, and suppliers were not being delivered in a timely manner.
Many times, items are held up at ports of call.
Some restaurants use only organic, high-quality, or not easily attainable food products.
If the supply is diminished, prices for that particular restaurant may increase to offset the loss of customers.
What this means for DoorDash is an increase in their commission fee, which can vary based on the restaurant selected.
The increase in cost is then passed on to the customer.
2. Things That Affect Food Prices
Below are a few additional reasons food prices are being increased at restaurants and how the increases can affect DoorDash.
A. In-House Process
While delivery orders for DoorDash are being prepped, the restaurant staff is also busy taking care of customers who are dining in or who have placed an order to pick up.
Prep time is costly, especially for orders being picked up by delivery drivers.
When the driver arrives at the restaurant, orders are or should be close to being ready to go.
If there is a significant lag time between the food being picked up and delivered, this can mean an additional charge is added to the service.
While this fee is paid by the restaurant, if this is a recurring issue, the food prices will be increased to offset the fee.
It isn’t the customer’s fault the delivery is late, but they may pay for it simply because the restaurant needs to recoup the extra fees.
B. Fresh Food Availability
Many restaurants use fresh produce sourced from local farmers.
When those harvests don’t provide enough product or they aren’t producing at all, restaurant managers must find alternatives to providing a tasty menu that keeps customers ordering.
This can mean using other sources that provide the food products but at a much higher price.
Again, the restaurant may need to change its entire menu and replace it with products that are readily available or change some items and replace them with others.
Either way, if the change increases operating costs, those costs will be reflected in higher prices for the customers who dine in-house, as well as even higher prices for customers who order using the DoorDash app.
C. Transportation Costs
Also included in the operating costs are transportation costs.
Restaurants must have the food products and ingredients transported to their location.
Depending on where the products are being transported from, it can affect the operating budget of the restaurant.
Things such as rising fuel costs, distance to travel, number of stops along the way, the number of drivers that may be involved in the transport of goods, and higher wages for truck drivers all affect a company’s operating budget.
These costs are then reflected in increased prices for the restaurant’s customers for food and delivery charges.
3. In-House Menu Prices Versus Delivery Food Prices
It is no secret that the prices for food listed on a restaurant’s menu in-house are lower than the prices when ordering from the delivery menu.
Whether the restaurant is attempting to cover inflated fees charged by the delivery service, cover the costs of goods, or because people are willing to pay for convenience, this makes food delivery more expensive.
Consumers who enjoy the convenience of using an in-app menu to order should be aware that the prices will be higher and charges for services will be included, resulting in a more expensive meal.
As the popularity of home food delivery services continues to rise, consumers should also expect the delivery company to raise its prices.
This is simply business 101 taking advantage of the hike in customer traffic to turn a profit.
DoorDash offers a monthly subscription option that currently costs $9.99 per month for customers who order frequently.
This is a way to save money by having a flat monthly fee versus paying an individual fee each time the delivery service is used.
Considering how much one delivery can cost, frequent ordering will easily surpass the flat-rate subscription fee.
Customers who do not have a monthly subscription can save money by placing their order for pickup versus having a driver deliver it.
This may take away one level of convenience, but it reduces the customer’s cost, which is an important factor for many going forward.
4. DoorDash Services Plus Customer Location Fees
Customers of all ages use the services of DoorDash for a variety of reasons, and while it is a convenience, it is one that customers can do without.
This means that having food delivered is what some would consider “a special treat.”
Regardless of whether the DoorDash delivery service is being requested as a convenience to single customers or a family or party, it is still a service that comes with a fee like any other company providing delivery of goods.
Customers are provided with one-on-one service which, at the end of the day, is more expensive than going to a restaurant for a meal.
Another factor that can cause an increase in DoorDash fees is customer location.
While customers like the service provided by DoorDash to order delivery from nearby restaurants, they can expect a delivery and service fee.
Customers living a significant distance away from the restaurant will incur a higher fee.
When using the delivery service, customers should understand that there is not just one set fee to cover all deliveries regardless of the customer’s location.
DoorDash must factor in the additional drive time for those customers who require significant drive time and charge accordingly.
5. Pricing Regulations
Because the economy is ever-changing and the cost of goods and services remains on the rise, some states have put into play a regulatory cap that limits the amount DoorDash can charge.
To absorb the loss the company would take from the individual restaurant, it has raised some fees and added additional fees.
According to an article from Restaurant Business on April 8, 2021, 73 jurisdictions had fee caps in place.
Some states have set permanent caps while others are set to expire soon.
What the caps have meant, and still do, for restaurants is to create a positive situation for owners struggling to stay afloat during the pandemic.
For a restaurant using DoorDash delivery services, caps have meant more profit.
An example of how the fees work is as follows: An order is placed using the DoorDash app.
The cost of the food item is $14.
DoorDash adds a service fee of $2.10 and a location fee of $2.00.
There’s also a sales tax of $1.30, making the total of the order $19.40.
Of that $19,40, the restaurant receives an estimated $11.90 and DoorDash an estimated $6.20 in fees.
Without caps in place, commissions to restaurants can range from a 20 to 30 percent increase per order plus increased delivery fees for customers.
The downside to removing caps completely or not having any regulations in place to prevent DoorDash or other food delivery services from continually increasing their prices will lead to the service becoming too pricey for many consumers.
While the trend for food delivery has maintained a healthy growth pattern throughout the pandemic crisis, as more restaurants return to pre-Covid-19 conditions, the need for delivery service may see a decline in customer traffic.
This, too, can lead to the service becoming more expensive as the company will attempt to offset the loss in profits by increasing the commission charged to each restaurant and including other types of charges to the customer.
For restaurants using DoorDash delivery services, it is a win-win for both companies.
The ease and convenience of ordering freshly prepared food without having to drive to get it keeps customers coming back for more.
This means more business for both companies, but it is a fine line to maintain a profit, based on the many factors involved, especially if the cost of the service for customers becomes too expensive.
6. Minimum Orders And Peak Time Deliveries
Restaurants using the services of DoorDash will have a minimum order amount in place that customers must meet or exceed.
If the order does not reach the minimum, the customer must order more items which, in turn, affects the fees charged by DoorDash and the total amount of the bill.
Like most situations for companies looking to make a profit, if the demand for those companies’ goods and services is on the rise, so are the prices.
In the restaurant business, there are certain days and times of the day when the request for deliveries is higher than usual.
These are considered peak times and food delivery companies, such as DoorDash will raise the fees to take advantage of the increased traffic.
7. Slow Moving Orders
The point for many consumers of ordering food for delivery is not only for convenience but also because the food will arrive at a reasonable time.
With the increase in the number of people across the country taking advantage of home delivery options, getting orders ready for pick-up has slowed down.
This can have a domino effect since delivery drivers must wait longer than usual.
This means customers are waiting for orders longer, and delivery drivers get behind schedule, which means a loss in picking up other orders.
In 2023, it is anticipated that DoorDash will tack on additional commission fees to restaurants that fail to have orders ready for pickup with a set time limit in place.
The increase in the commission fee will be higher for customers using the DoorDash subscription since they are paying for quality and fast service.
Orders placed by non-subscribers will also have increased fees if the DoorDash driver must wait past the allowed time for pickup.
While it is the restaurant that pays the commission fees, with the anticipated growth of more customers relying on food delivery services, chances are the additional fees will result in higher menu prices and a higher charge from DoorDash.
8. Tax Information And Delivery Driver Pay
The amount of tax added to your DoorDash bill is regulated by the state and local taxes where you live.
If there is a change in the tax rate where you live, it will make your food delivery order more expensive.
Drivers must have a competitive wage structure to make it profitable for them to work as a driver.
Regardless of whatever issues a restaurant is experiencing, customers still expect to receive their money’s worth when ordering.
This means that raising prices and lowering the food standards or portion size is not feasible because it could lead to the loss of customers.
When a DoorDash driver picks up a delivery order, it comes with a base pay amount.
This amount is determined by several factors, which include the distance the driver must drive, the estimated time the order is to be delivered, and how popular the order is with the driver (too large, too bulky, too far away, too late in the day, etc.).
According to DoorDash, the base pay for a food delivery driver can range from $2.00 to $10.00.
The longer the distance and extended time the driver must travel and, if the order is not popular, they will pay more, making the delivery more expensive.
9. Driver Competition
Among drivers, competition to pick up delivery orders that are beneficial is the standard operating procedure.
This means high-dollar orders that come with a healthy tip.
Since drivers can accept or decline a delivery order in their area, this means the order is shifted to the next driver on the list.
If the base pay for that order is beneficial and they accept, the customer receives their order promptly.
If, for example, the order is too many miles away and the driver just doesn’t want to be tied up with travel time, regardless of the added fee, a customer’s order may not be delivered as quickly as it should be.
Delivery drivers do the job as the main income, as a supplemental side income, or just for fun money.
Whatever the reason, the company wants to ensure there are enough qualified drivers available to supply quick and efficient services to its customers.
This may mean increasing service fees to ensure there is adequate driver coverage to maintain the areas where delivery service is available.
Customers may be wondering why DoorDash is so expensive when all the driver has to do is pick up the order and deliver it to their home or business.
This seems easy enough and the cost should reflect that.
Of course, a driver’s pay is to cover their time and to reimburse the driver for their expenses, such as fuel for their vehicle and any maintenance or repairs the vehicle needs, which are the owner’s responsibility.
However, customers may not be taking into consideration the issues that affect the individual restaurants that affect supply and demand which affects food prices.
Food delivery services are in business to make a profit, and DoorDash is no exception.
With other companies such as Uber Eats and GrubHub providing customers with the convenience of delivery, each must give customers top-of-the-line attention.
This includes the ease of ordering, availability of drivers, and prompt delivery.
Because of the growing need and desire for delivery service, and customers willing to pay high prices, the company can take advantage of this by inflating its prices, adding additional service fees, or increasing those already in place.
By doing so, the company increases its profit margin while customers wonder why DoorDash is so expensive.