Key Takeaways:
DoorDash Fees Cut Into Restaurant Profits: DoorDash charges restaurants commission fees as high as 30%, making it difficult for businesses to stay profitable on delivery orders.
There Are Ways To Reduce These Costs: Restaurants can lower their reliance on third-party apps by encouraging direct orders, negotiating lower fees, and using commission-free online ordering systems.
A Commission-Free Solution Puts Restaurants In Control: With Sauce, restaurants can accept online orders directly, keep 100% of their revenue, and build stronger customer relationships without paying high platform fees.
It’s necessary.
Food delivery apps like DoorDash have changed the way restaurants reach customers. With a few taps, diners can browse menus, place orders, and deliver meals straight to their doors. This opens new revenue streams and expands a restaurant’s customer base beyond its physical location. However, partnering with DoorDash comes with costs.
At Sauce, we’ve helped restaurants take control of their online ordering with a commission-free system that eliminates the need for costly third-party fees. We believe restaurants should keep more of what they earn, so we provide direct-to-restaurant ordering solutions that put control back in owners' hands.
In this article, we’ll break down DoorDash’s pricing structure, compare it to other platforms, and explore ways to lower costs.
Understanding DoorDash Commission Fees
DoorDash charges restaurants a commission on every order placed through their platform. These fees vary based on a restaurant's chosen plan, but they typically range from 15% to 30% per order. Here’s how their pricing structure works:
Basic Plan (15%): This plan comes with the lowest commission fee but offers the least visibility in the DoorDash app. Restaurants on this plan are less likely to appear in prominent search results, and their orders do not qualify for DashPass, a subscription service that gives customers free delivery on select restaurants.
Plus Plan (25%): This option provides increased visibility in the app, which can help drive more orders. It also includes DashPass.
Premier Plan (30%): This is the most expensive option but offers the highest level of exposure on the platform. Restaurants on this plan receive additional marketing benefits and lower delivery fees for customers.
How DoorDash Fees Compare To Other Food Delivery Platforms
DoorDash isn’t the only third-party delivery service charging restaurants commission fees. Other major platforms, like Uber Eats and Grubhub, follow a similar pricing model. Here’s a general comparison:
Uber Eats
Uber Eats charges 15% to 30% per order, depending on the restaurant's plan. Lower commission plans give restaurants less visibility on the app, while higher tiers offer better placement and access to Uber Eats’ most frequent customers. In addition to commission fees, Uber Eats applies processing fees and optional marketing costs.
Grubhub
Grubhub offers commission rates ranging from 5% to 30% per order, with lower rates providing little exposure on the app. Restaurants that want to appear higher in search results often have to pay additional marketing fees, driving up costs. Grubhub charges credit card processing fees and can deduct delivery fees from the restaurant’s cut.
Hidden Costs And Additional Fees To Consider
Beyond the standard commission rates, restaurants using DoorDash often encounter additional fees that further reduce their earnings. Here are some of the standard additional fees:
Credit Card Processing Fees
Every order through DoorDash comes with a payment processing fee, typically around 2.9% + $0.30 per transaction. While this may seem small on a single order, it adds up over time, especially for high-volume restaurants. Unlike direct online ordering systems, third-party apps leave no room for cost-saving adjustments.
Marketing And Promotions
To stand out on the DoorDash app, restaurants often feel pressured to pay for sponsored listings or promotions. These campaigns increase visibility, but they come at an additional cost. Smaller restaurants may struggle to compete against larger chains with bigger marketing budgets without paying for promotions.
Delivery Fees
Restaurants sometimes absorb part of the delivery cost when offering free or discounted delivery. DoorDash may also adjust delivery fees based on location, order volume, and promotions. Restaurants may sometimes cover part of the driver’s fee without realizing it.
Order Error And Refund Fees
If a customer complains about an incorrect or missing item, DoorDash will often issue a refund or credit at the restaurant’s expense. The business is still charged for the loss even if the mistake wasn’t the restaurant’s fault (such as a driver delivering the wrong bag).
How To Reduce DoorDash Fees For Your Restaurant
For restaurants that rely on third-party delivery platforms but want to keep costs down, there are several ways to lower DoorDash fees without losing customers.
Leverage Your Own Online Ordering System
One of the most effective ways to avoid high commissions is to accept direct online orders instead of relying solely on DoorDash. With our online order management system, Sauce, restaurants can take orders without paying commission fees and keep more of their revenue. Customers still enjoy the convenience of ordering online, but instead of using a third-party app, they place their orders directly through the restaurant’s website or link.
Encourage Direct Orders From Customers
A simple way to reduce reliance on DoorDash is to promote direct ordering through restaurant signage, takeout packaging, social media, and email campaigns. Offering small discounts or perks for direct orders can also incentivize customers to bypass third-party apps.
Negotiate With DoorDash
Some restaurant owners have successfully negotiated lower commission rates, especially if they generate a high order volume. If a restaurant is an established business with steady sales, DoorDash may be willing to reduce its commission to keep it on the platform. It’s worth asking.
Is DoorDash Worth It For Restaurants?
DoorDash can help restaurants reach new customers, but the high commission fees make it difficult to maintain strong profit margins. Whether or not it’s worth using depends on how much value a restaurant gets in return. Here are some factors to consider when deciding if DoorDash is a good fit:
Pros Of Using DoorDash
Access To More Customers: DoorDash has millions of active users, which means restaurants can reach a wider audience without spending extra on advertising. This can be especially helpful for new or smaller restaurants looking to increase their visibility in a competitive market.
Convenience: DoorDash handles the entire ordering and delivery process, reducing the need for in-house staff. Restaurants don’t have to worry about managing couriers, tracking orders, or handling payment disputes.
Marketing Exposure: A DoorDash listing gives restaurants a spot in the app’s marketplace, where users can discover them through searches and promotions. Some restaurants use DoorDash as a marketing tool to bring in first-time customers, hoping they’ll return for direct orders.
Cons Of Using DoorDash
High Commission Fees: DoorDash takes 15% to 30% of each order, making it difficult for restaurants to maintain profit margins, especially on lower-cost items. Over time, these commissions add up and can wipe out a significant portion of revenue that would otherwise stay with the business.
Limited Customer Relationships: When customers order through DoorDash, restaurants don’t get access to their contact information, making it harder to build loyalty or market to repeat customers. Instead of building long-term customer relationships, restaurants remain dependent on DoorDash’s platform to bring in sales.
Extra Fees: Besides commission fees, restaurants may have to pay credit card processing fees, promotional costs, and order refunds. These hidden costs make it difficult to predict profits, and many restaurants end up paying more than they initially expected.
Final Thoughts
Third-party delivery apps like DoorDash offer convenience and customer reach, but the high commission fees make it challenging for restaurants to maintain strong profit margins. While these platforms can help attract new customers, relying on them entirely can lead to significant revenue loss over time.
For many restaurants, the best approach is strategically using delivery apps while investing in commission-free online ordering solutions. By encouraging direct orders through our online order management system, Sauce, restaurants can reduce dependency on third-party apps and keep more of their earnings.
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Frequently Asked Questions About DoorDash Fees
Does DoorDash pay restaurants?
Yes, DoorDash pays restaurants for completed orders only after deducting its commission and any applicable fees. Payments are typically processed weekly, though restaurants can opt for faster payouts for an additional cost. The final payout depends on the total sales minus DoorDash's deductions.
How does DoorDash work for restaurants?
Restaurants list their menu on DoorDash, and customers can place orders through the app or website. Once an order is placed, the restaurant prepares the food, and a DoorDash driver (Dasher) picks it up for delivery. Restaurants pay commission fees for each sale, and DoorDash handles customer service, logistics, and payments.
How do I set up DoorDash for my restaurant?
To set up DoorDash, restaurant owners must sign up on the DoorDash Merchant Portal, provide business details, and upload their menus. After approval, restaurants can manage their availability, pricing, and promotions through the platform. DoorDash supplies restaurants with order notifications and integration options for a smoother process.
Who pays for delivery with DoorDash?
Customers usually pay a delivery fee based on distance, demand, and promotions. However, some restaurants choose to cover part of the delivery cost by offering free or discounted delivery promotions. DoorDash also charges restaurants a commission fee on each delivery order.
What is a $0.00 charge on DoorDash?
A $0.00 charge on a bank statement from DoorDash is often a temporary authorization hold. This happens when customers add a new payment method or update their card details. The hold is not an actual charge and typically disappears within a few days.
Why does DoorDash have so many fees?
DoorDash charges multiple fees for app maintenance, delivery logistics, marketing, and payment processing. Restaurants and customers pay different types of fees, such as service, delivery, and commission. These charges help sustain the platform but also significantly reduce restaurant earnings.
How does DoorDash calculate delivery fees?
DoorDash calculates delivery fees based on distance, order demand, and delivery time. Fees fluctuate during peak hours, promotions, and lousy weather to compensate drivers. Customers may also see additional service fees, which vary by location and restaurant participation.
Does DoorDash take a cut from the restaurant?
Yes, DoorDash takes a percentage of each sale through commission fees ranging from 15% to 30%. These fees apply to delivery and pickup orders, reducing the restaurant’s profit margin. Some restaurants negotiate lower rates, but the platform still takes a cut of every order.
Should my restaurant use DoorDash?
DoorDash can help restaurants gain visibility and reach new customers, but the high commission fees reduce profit margins. Many restaurant owners use it strategically, offering direct ordering through commission-free platforms like Sauce. A hybrid approach allows restaurants to increase online sales without losing much of their revenue to third-party fees.
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