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DoorDash answers mayor Gloria with a “regulatory response fee”

The cost of delivery continues to be death by a million surcharges

A tri-tip taco and al pastor taco, on thick, handmade tortillas, from Crack Taco Shop in Mission Valley
A tri-tip taco and al pastor taco, on thick, handmade tortillas, from Crack Taco Shop in Mission Valley

A couple weeks ago, I got a headline wrong. After mayor Todd Gloria limited the fees delivery apps can charge restaurants, I wrote: “Delivery fees are capped, but don’t expect to pay less.”

Problem is, I wasn’t cynical enough. The headline should have read: “Delivery fees are capped, so expect to pay more.”

This week, DoorDash introduced a new fee to its collection. The “Regulatory response fee” attempts to recoup any losses resulting from Gloria’s 18 percent cap. As a pop-up bubble on the DoorDash site explains, the two-dollar fee is added to the subtotal because:

“A local regulation has capped the fees that we may charge local restaurants. To continue to offer you convenient delivery while ensuring that Dashers are active and earning, you will now see an additional fee that we are charging for local orders in the area.”

It’s a statement that does three things to convince the customer that a third fee, on top of delivery and service fees, isn’t merely justified, but justice in action.

First, it invokes the specter of “regulation,” a dog-whistle against government overreach. Second, it reinforces the notion DoorDash is only out to offer us convenience, the universal salve to our existential pain. Finally, it implies the added fee isn’t about maintaining profit, but creating jobs for its drivers. Never mind its drivers are independent contractors who rely on tips to get their take-home pay above minimum wage.

DoorDash provides this explanation for a regulatory response fee

On the last point, DoorDash does nominally advocate for its drivers. When I placed an order for delivery from Crack Taco Shop to witness the new fee in action, the DoorDash software autofilled a $7 tip for $30 worth of tri-tip tacos and burritos. I suppose if we customers aren’t willing to pay 24 percent tips on our deliveries, the low pay of delivery drivers is on us.

I’m not so naïve to think DoorDash is evil for trying to maintain profits, and I do believe they provide a valuable service to restaurants and customers. I even think online ordering and delivery have only become more valuable during the covid era. I just don’t think they are worth what DoorDash was already charging before the pandemic began.

When I reached out to DoorDash for further explanation of the new fee, it replied “We realize this isn’t ideal…” and then mostly included language similar to the “regulatory response fee” description above. It pointed out, “Operating our platform, paying and insuring Dashers, and ensuring high-quality service can be expensive,” but that doing so provides “valuable services that help drive orders for merchants.”

Fair points, all of them. However, DoorDash declined to answer how much commission caps impact its profitability, nor how the two-dollar charge replaces any losses. The problem seems to be that this business wants to convince restaurants and customers to absorb the costs of doing business, while hoping we ignore the idea its profit margins are sacrosanct.

With the commission cap in effect, my $29.35 taco delivery wound up costing me $45.01. Out of that, $9.39 went to DoorDash fees, while Crack Taco Shop presumably forked over an additional 18 percent to the app ($5.28). So far, I haven't seen either UberEats, GrubHub, or Postmates follow suit with a regulatory response fee, but I won't be surprised if it happens. A delivery app is always going to get its cut. It reminds me of casino gambling: the people making bets take all the risks, but the house always wins.

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A tri-tip taco and al pastor taco, on thick, handmade tortillas, from Crack Taco Shop in Mission Valley
A tri-tip taco and al pastor taco, on thick, handmade tortillas, from Crack Taco Shop in Mission Valley

A couple weeks ago, I got a headline wrong. After mayor Todd Gloria limited the fees delivery apps can charge restaurants, I wrote: “Delivery fees are capped, but don’t expect to pay less.”

Problem is, I wasn’t cynical enough. The headline should have read: “Delivery fees are capped, so expect to pay more.”

This week, DoorDash introduced a new fee to its collection. The “Regulatory response fee” attempts to recoup any losses resulting from Gloria’s 18 percent cap. As a pop-up bubble on the DoorDash site explains, the two-dollar fee is added to the subtotal because:

“A local regulation has capped the fees that we may charge local restaurants. To continue to offer you convenient delivery while ensuring that Dashers are active and earning, you will now see an additional fee that we are charging for local orders in the area.”

It’s a statement that does three things to convince the customer that a third fee, on top of delivery and service fees, isn’t merely justified, but justice in action.

First, it invokes the specter of “regulation,” a dog-whistle against government overreach. Second, it reinforces the notion DoorDash is only out to offer us convenience, the universal salve to our existential pain. Finally, it implies the added fee isn’t about maintaining profit, but creating jobs for its drivers. Never mind its drivers are independent contractors who rely on tips to get their take-home pay above minimum wage.

DoorDash provides this explanation for a regulatory response fee

On the last point, DoorDash does nominally advocate for its drivers. When I placed an order for delivery from Crack Taco Shop to witness the new fee in action, the DoorDash software autofilled a $7 tip for $30 worth of tri-tip tacos and burritos. I suppose if we customers aren’t willing to pay 24 percent tips on our deliveries, the low pay of delivery drivers is on us.

I’m not so naïve to think DoorDash is evil for trying to maintain profits, and I do believe they provide a valuable service to restaurants and customers. I even think online ordering and delivery have only become more valuable during the covid era. I just don’t think they are worth what DoorDash was already charging before the pandemic began.

When I reached out to DoorDash for further explanation of the new fee, it replied “We realize this isn’t ideal…” and then mostly included language similar to the “regulatory response fee” description above. It pointed out, “Operating our platform, paying and insuring Dashers, and ensuring high-quality service can be expensive,” but that doing so provides “valuable services that help drive orders for merchants.”

Fair points, all of them. However, DoorDash declined to answer how much commission caps impact its profitability, nor how the two-dollar charge replaces any losses. The problem seems to be that this business wants to convince restaurants and customers to absorb the costs of doing business, while hoping we ignore the idea its profit margins are sacrosanct.

With the commission cap in effect, my $29.35 taco delivery wound up costing me $45.01. Out of that, $9.39 went to DoorDash fees, while Crack Taco Shop presumably forked over an additional 18 percent to the app ($5.28). So far, I haven't seen either UberEats, GrubHub, or Postmates follow suit with a regulatory response fee, but I won't be surprised if it happens. A delivery app is always going to get its cut. It reminds me of casino gambling: the people making bets take all the risks, but the house always wins.

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