Food delivery service DoorDash has today announced a major change to the way it charges commissions to Canadian restaurants with a new, tiered model (via BNN Bloomberg).
The company says its new tiered commission system will offer restaurants more “flexibility” and help them take advantage of digital growth opportunities.
“Part of the thinking … was to give them that transparency of the available value proposition that we have to offer,” said DoorDash Canada’s general manager Shilpa Arora.
DoorDash Canada’s new model, which made its debut last year in the U.S., has 3 tiers starting with the DoorDash Basic plan, which charges a 20% commission on deliveries and 10% on orders picked up by diners. It, however, comes with the smallest delivery radius.
The next tier is DoorDash Plus, which involves a 25% commission on deliveries and 8% on pickups. This plan also gives access to members of Dash Pass, a paid monthly subscription service offering no delivery fees, but at a 27% commission. The service covers a larger delivery area than the basic plan.
The final tier is DoorDash Premium, which comes with a 29% delivery commission and 8% for pickups. The delivery area for these users is the largest, they get a $50 rebate for spending $100 or more on marketing every month and access to Dash Pass customers but at no difference in commission.
Brian Kaufmann, DoorDash’s head of Canada policy and government relations, defended the rates, saying they are the product of conversations with a restaurant advisory council, merchants on the platform and other business associations.
“We’re hearing what pricing makes sense and this is what the market looks like now, and we’re pretty proud of what we’ve come up with,” he said.
At the end of November, DoorDash announced 1,250 workers, roughly 6% of the company’s workforce, were being laid off.
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20-29% is pretty steep
I just wanted to say that. They are ripping off the restaurants because they can. I understand they are business as well and have to earn some money but restaurants have pretty narrow margins, especially on food, so that leaves them with a choice between slowly bleeding any profits to food delivery services or quickly closing for business if they refuse to use their services and rely only on take out and customers returning. I have a feeling that those lucky ones who saw customers returning in decent numbers, so they are profitable, are probably subsidizing the food delivery part of their business because they don’t want to turn away customers.