Financing

DoorDash says it will raise fees for NYC restaurants to cover a big pay hike for drivers

The delivery service is making several policy changes after giving drivers in New York City a raise to $29.93 per hour.
DoorDash NYC
Dashers in New York City got a big raise Monday. | Photo: Shutterstock

After giving all its drivers in New York City a pay hike Monday to $29.93 an hour, DoorDash said it intends to raise the fees restaurants and consumers are charged in the Big Apple for the delivery of a meal.   

The third-party service is also changing the process for tipping its drivers in the city. Instead of asking patrons to add a tip to their bills when they order delivery from a restaurant, the option will be extended to customers after the food arrives. The users will have up to 30 days to add a gratuity.

In addition, DoorDash said it is “pausing” its policy within the city of rewarding drivers with the highest customer ratings with a shot at making more deliveries. With all “dashers” now entitled to the same above-market minimum wage, the service incentive has lost its power, the company said.

The new wage set for drivers is nearly double the city’s standard minimum wage of $15 an hour.

DoorDash said it was forced to raise dasher’s pay by a state appellate court’s affirmation last week of lower courts’ rulings on a minimum wage the city set specifically for delivery drivers. That legislation requires that DoorDash, Uber, GrubHub and smaller services pay their delivery personnel at least $17.96 an hour starting immediately, and at least $19.96 in 2025.

“This minimum pay rate will guarantee our delivery workers and their families can earn a living and keep our city’s legendary restaurant industry going strong,” Mayor Eric Adams said in a statement released after the court decision was handed down.

DoorDash opted to pay $29.93, the alternate pay floor permitted under the wage mandate. The figure factors in dasher's wait time for an order to come through an app, with that "utilization rate" set at 60%. The higher pay level reflects that total time commitment. 

“As we have repeatedly make clear in recent months, the ill-conceived, extreme minimum pay rate for food delivery workers in New York City will have significant consequences for everyone who uses our platform,” the service said in alerting restaurants and consumers about a change in fees.

DoorDash did not reveal what those new charges are.

The heads-up about increased fees came as restaurants across the country are seeing consumers flinch at current pricing levels. Although inflation has tempered in recent months, menu prices are still at historic highs because of unprecedented food-away-from-home inflation last year and in early 2023. Menu prices are running about 8.5% on average above the levels of 2021.

The increased fees for restaurants that use DoorDash could sour already strained relations between the delivery service and the New York City restaurants whose meals it delivers. The foodservice business led a movement early in the pandemic to cap delivery commissions at 20% of a delivered meal’s price, tempering fees that had run as high as 45%.

Update: DoorDash's reasons for opting for $29.93 an hour were added to this story. 

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