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DoorDash eyes post-COVID era with new fee structure for restaurants

·Associate Producer
·3 min read
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DoorDash (DASH) on Tuesday announced new pricing plans for pickup and deliveries, as local restaurants and customers plan for life after COVID-19 lockdowns.

As rising vaccination rates lead more people to dine indoors, the delivery app moved to address criticisms that its prices are too high for some merchants, unveiling three options for participating restaurants on its platform. 

A 'Basic' plan comes a 15% commission rate on deliveries designed to shift "a higher portion of the delivery cost to the consumer, and allows for a selected delivery are.

A 'Plus' plan includes a commission rate of 25%, along with "an expanded delivery area" that curbs delivery fees for customers. It also comes with an option to participate in DashPass, the delivery platform's loyalty program. Finally, a 'Premier' option features a 30% commission rate "to maximize the number of new customers and the total volume they receive from DoorDash," along with the lowest customer fees and largest delivery area. 

DoorDash also plans to cut its pickup commission to 6% across all restaurant partners and plans, "so they can leverage the reach of the DoorDash Marketplace and connect directly with customers in their neighborhood," the company stated.

“There is a massive, increasingly digital opportunity for small restaurants, and we believe that when we work together, we can help them capture more of that market in a post-pandemic world––in-store, online, through a third-party partner, or any combination of these three," DoorDash COO Christopher Payne said in a statement. 

"We are hopeful that as they reopen for indoor dining, we can be a partner that helps restaurants accelerate into the future and continue growing," he added.

Delivery apps, which surged in popularity during the pandemic lockdowns, also took heat for sky-high service fees. Last year, platforms like DoorDash, UberEats, Postmates were slapped with a class action lawsuit for "shocking" service charges that left restaurants and even users with sticker shock. Stung by the criticism, DoorDash responded by releasing a lengthy explainer on its fees, and defended its role in helping restaurants stay afloat.

“The odds of staying in business are 8x better for restaurants on DoorDash, compared to all U.S. restaurants," a spokesperson told Yahoo Finance recently.

Back in February, CFO of DoorDash, Prabir Adarkar told Yahoo Finance "We provide restaurants with a variety of products and services because the needs and the challenges faced by restaurants are unique and differ from restaurant to restaurant... it's this varied approach or this merchant first focus that has led to restaurants having a greater likelihood of staying in business on our platform."

NEW YORK, USA - FEBRUARY 18: A food delivery guy with bicycle is seen as snowfall blankets the Times Square in New York City, United States as massive snow storm hits the east coast on February 18, 2021. (Photo by Tayfun Coskun/Anadolu Agency via Getty Images)
NEW YORK, USA - FEBRUARY 18: A food delivery guy with bicycle is seen as snowfall blankets the Times Square in New York City, United States as massive snow storm hits the east coast on February 18, 2021. (Photo by Tayfun Coskun/Anadolu Agency via Getty Images)

The company, which acquired Caviar at the end of 2019 and currently boasts over 20 million consumers on the platform, fielded 273 million total orders in 2020 — up a staggering 233% compared to a year prior as takeout skyrocketed during lockdowns. 

The company booked over $8 billion in marketplace gross order volume — a 227% surge from a year earlier. It also remains the top food delivery app as of February 22, capturing 53% of U.S. market share, up 16% from the start of 2020, according to Edison Trends.

DoorDash will release first-quarter 2021 financial results after market close on Thursday, May 13, 2021. Shares of the stock are up nearly 6% in midday trading on Tuesday.

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.