DoorDash DASH services were considered by many to be invaluable during the covid pandemic, where the services helped keep some restaurants in business, drivers received paychecks and customers got convenient food delivery. The service was good and made the best out of a bad situation for all involved.
Delivery convenience is something many people are comfortable paying extra for. However, while DoorDash has experience great growth, it also endured scrutiny, as the company wasn’t transparent in how tipping was being processed for its drivers.
Customers thought that if they left a tip, the entire amount would go to the drivers, but this was not the case. The tip only went to the driver if the order amount met a minimum to cover the cost of the transaction. DoorDash was skimming the tips to cover its own costs. DoorDash has since stated that it changed its tipping policy.
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DoorDash Pushes Back
DoorDash holds a majority of the food delivery service market, and it is experiencing more pain points. The pain is coming from both sides, its customers and restaurant partners. Customers are complaining about the increased cost in using the delivery services, while the restaurant partners are the cause of the increased cost in the transactions.
ACredit Suisse study in 2022 showed restaurant partners had raised prices on average of 20% when customers were using the delivery apps. This increase ate right into the profit margins of the food delivery companies themselves and decreased deliveries.
Customers are simply playing into the basic supply and demand curve. The most customers will choose the lowest pricing in fees if the restaurant prices are the same as if the customer were to have picked up the food themselves or dined in the restaurant.
DoorDash sees the glitch in the system coming from the restaurant partners increasing menu pricing. Restaurant partners are better off keeping food prices low or equal to the dine in menu, as DoorDash is going to push those restaurant partners to the top of the DoorDash website to reward those businesses for helping keep services and food more affordable.
DoorDash Upfront About Fees
DoorDash wants customers to know that the increase in the cost of the entire food delivery isn’t coming from them. It is coming from the increase in pricing for menu items that are being ordered through the delivery app itself.
“We understand that there may be many reasons why restaurants choose to raise their prices,” said a spokesperson for DoorDash. “But in our mission to improve the customer and merchant experience, we encourage restaurants to set DoorDash prices that more closely reflect in-store menu prices.”
In a pushback from DoorDash to restaurant partners, DoorDash is testing the use of a badge on its website that states, “Menu Matches In-Store Prices: Get the same prices you would in-store on DoorDash.”
The test should show results on whether or not more DoorDash customers choose to order from the restaurant partners with the ‘badge’ over those who do not have the badge. The data will help restaurants make a decision on whether or not raising prices on delivery service apps is helpful or hurtful to their businesses.
