The cost of food delivery
-
DoorDash charges a commission rate of 25–30 % of the total order value and the orders are delivered by dashers most commonly called word for delivery guys when you order from door dash.
There are no other monthly or setup fees you have to pay, but in case you want to promote your restaurant to the top of the list then you might have to pay them an advertising fee.
It might take around a week or two to get onboard on the platform and start getting orders.
Restaurants don't mind paying the commission as they get a free order and door dash like food delivery platform acts like a marketing platform for them which also takes care of their order delivery, So restaurants do save on resources and salary of a delivery guy.
For you, the delivery fees and commission might seem more but door dash on an average order of say 25 USD with 25% commission earns revenue of 6.25 USD (25%) of which every driver earns a minimum of 3–4 USD as the delivery fee, all the tip normally goes to the delivery driver . So DoorDash earns a profit of 6.25 USD - 4USD = 2.25 USD on every order.
From what I see, Uber Eats is about the same. I'm sure Grubhub is no different.
-
Many of the delivery sites act as platform and discovery hubs for these restaurants.
So for example, for many people if they feel like thai delivery they'll open uber eats or grubhub first - rather than directly searching for local thai restaurants. It's a marketing cost for the restaurants (similar to open table reservations).
It's a tough business for everyone involved. None of these food delivery companies have taken off from a financial perspective.
Apple was the trend setter here. They take 30% of the proceeds for apps on iOS. Just for running the platform and discovery.
-
Besides the "platform" aspect, the restaurant has to assess its costs: waitstaff, bus staff, delivery staff in the light of a 30% fee for Doordash etc. I know that they all operate on exceptionally thin margins, but is 30% really sustainable? Judging from the success of these outfits, it probably is, particularly in these days.
-
Some up their prices on Doordash accordingly, but yeah, 25% r so is the going rate. I use a company called Market Wagon that is doing remarkably well delivering local foods. They charge that much, which is tough on teh farmer. However, through then I have been introduced to a lot of producers I really like and now have much better sources for local meats, baked goods, premade meals and dairy. SOme I am close to and have signed up directly for CSAs.
-
Requiring transparency on receipts
New rules announced by Mayor Lori Lightfoot on Tuesday ensure diners who order delivery in Chicago will know exactly how much of their bill is going to the restaurant and how much is covering fees imposed by a third-party delivery company.
With dining rooms currently closed because of the coronavirus pandemic, restaurants are relying heavily on delivery and pickup orders for business. Many are now using third-party delivery services like Grubhub and Uber Eats to handle the logistics of the ordering and delivery process. But some restaurateurs have complained about high fees and other issues related to those companies.
The new “first-in-the-nation rules,” from the mayor and Chicago’s Business Affairs and Consumer Protection office will “increase transparency and fair competition,” according to a press release.
There are no new fees, but third-party delivery companies will now have to provide an itemized receipt that includes all of the charges. That includes the cost of the food, any taxes, delivery charge, tips and “any commission or service fee paid by the restaurant to the third-party delivery company.” According to the city, right now “customers may believe that the restaurant is receiving the full menu price of the food,” even though that’s not the case."Now look here, you Baltic gas passer... " - Mik, 6/14/08
The saying, "Lite is just one damn thing after another," is a gross understatement. The damn things overlap.
-
I'm glad I don't own a restaurant during the virus pandemic.
Owning my own business is probably not for me anyway, including owning my own restaurant. Too much stress. No thanks.
I've always liked dining in at restaurants. But it's been a long time since I've used carry-out services.
-
@George-K said in The cost of food delivery:
Requiring transparency on receipts
New rules announced by Mayor Lori Lightfoot on Tuesday ensure diners who order delivery in Chicago will know exactly how much of their bill is going to the restaurant and how much is covering fees imposed by a third-party delivery company.
With dining rooms currently closed because of the coronavirus pandemic, restaurants are relying heavily on delivery and pickup orders for business. Many are now using third-party delivery services like Grubhub and Uber Eats to handle the logistics of the ordering and delivery process. But some restaurateurs have complained about high fees and other issues related to those companies.
The new “first-in-the-nation rules,” from the mayor and Chicago’s Business Affairs and Consumer Protection office will “increase transparency and fair competition,” according to a press release.
There are no new fees, but third-party delivery companies will now have to provide an itemized receipt that includes all of the charges. That includes the cost of the food, any taxes, delivery charge, tips and “any commission or service fee paid by the restaurant to the third-party delivery company.” According to the city, right now “customers may believe that the restaurant is receiving the full menu price of the food,” even though that’s not the case.Good rule, good regulation.
Let's hope it gains national adoption. -
I would see this as a ripe opportunity to explore a competitive service to Door Dash or Grubhub.
I would think a flat fee charged to the consumer. As noted in another thread, it’s not costing the driver any more time or energy to deliver a $100 order to one house than it is to deliver a $12 order to their neighbor from the same restaurant.
-
-
Overreach, IMO.
Everybody wants to be fair to the restaurants, but remember that Doordash and Grubhub were around and successful well before COVID-19. Many restaurants built their business models around this overhead successfully. The model was built for small square footage restaurants that were primarily used for carry-out with little or no dine-in options. Rather than have their overhead going into real estate, the overhead is going into delivery.
Now you have the large sit-down restaurants having to go this route. These restaurants have enormous overhead in table-space. That's the majority of their costs of doing business. When you pick-up your food at these restaurants, 40% of the revenue is going to pay for empty air right now. It's their business model and it doesn't work in the new reality. So these restaurants are being hurt because they have double the overhead, between having to pay for the empty and useless space and having to pay the DoorDash fees as well. That is not the fault of DoorDash.
Their model is built around delivering $12 worth of burritos from Chipotle, not $75 worth of Chicken Piccata from that quaint Italian Place down in Old Town... Doordash's Chipotle and Five Guys business model tries to go the route of picking up 4-5 orders then delivering. The customers buying the two burritos are understanding of that. The expensive sit-down restaurants need you the drivers to pick the food up as soon as the food is available and deliver it straight to the customer as fresh as possible. That $75 customer has higher expectations. The problem for the Doordash driver is that the number of deliveries he can make is reduced, limiting his tip potential. So they need the 40% from the sit-down restaurants as much or moreso than they do from the Chipotles of the world.
By limiting the amount these services can charge, you will see them have to make cuts in service hurting both types of restaurants.
-
Yep. Let the market set the rate. I have no issue with paying for it, it is a service to me. I should be the one paying.
I guess you could also say it is a service to the restaurant too, they just have to make sure they are charging enough to offset their costs.
"My pronouns are FA/FO." - Mik, 2024
-
@Mik Ultimately, it comes down to the consumer paying for everything anyway. Whether it's to the restaurant in unseen overhead or whether it's a fee to the delivery company. Unfortunately, consumers are very dumb, and these restaurants and services have to work within those limits.
I have seen employees in the past ordering lunch having this debate...
"Deli A's sandwiches are $7 and they charge $5 for delivery. "
"Deli B's sandwiches are $12 and they offer free delivery! I don't want to pay extra for delivery."
"And if their sandwiches cost that much more, they're probably better! Works for me!"And these are people that I consider to be relatively intelligent.
-
From a restaurant in my area:
"Despite what you see advertised, CXXXXX CXX & SXXXXXXXX are not partnered with GRUBHUB. They are using us to generate commissions. We have no access to their website & the info listed is way out-of-date. During service, we spend valuable time & energy fixing all their mistakes. Avoid GRUBHUB please.
For efficient & honest “carryout”, call us direct. Our staff is trained on menu availability, daily specials & promotions. Plus, there are no fees when you call. If you prefer “online ordering with touchless curbside”, use our SWIPEBY app. We were the first in Illinois to implement this technology & we continue to improve the experience. If you want stay-at-home “delivery” use DOORDASH. We pay a fee for this service, but we are happy to compensate the drivers we are partnered with."
