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DoorDash commission reduction revives tensions between delivery providers and operators

Some in the restaurant industry are calling for a government-mandated cap on third-party delivery commissions.
doordash
Photograph courtesy of Doordash

Third-party delivery provider DoorDash announced it would temporarily reduce its commission fees for local restaurants, a move that is once again bringing to light tensions between such companies and their restaurant customers.

DoorDash and its sister company, Caviar, will reduce commissions for 150,000 local restaurants in the U.S., Canada and Australia beginning Monday through the end of May for restaurants with five or fewer units, with eligibility subject to DoorDash’s discretion, according to a company statement.

“We believe that doing our part is critical during this unprecedented time and that government-imposed, one-size-fits-all solutions do not reflect the needs of the businesses they are intended to help,” the company said. “Restaurant fees are necessary to keep [worker] earnings high and support all of the services restaurants and consumers need. But that doesn’t mean we’re not prepared to do our part in this acute moment of need to truly come together.”

There was ongoing tension between restaurants and third-party delivery providers long before the coronavirus crisis made landfall in the U.S., with restaurants railing against commissions as high as 30% and delivery services tightly controlling access to consumer data. But the pandemic has put those tensions in a crucible, as restaurants fight to survive amid government-mandated shutdowns of dine-in operations.

“After charging high rates to restaurants that were forced to close or offer takeout or delivery only, it’s encouraging to see DoorDash modify their fees for some businesses, albeit a few weeks late into the crisis,” Andrew Rigie, executive director of the NYC Hospitality Alliance, said in a statement. “But as long as some delivery platforms like Grubhub are still preying on the economic desperation of restaurants and eateries in New York City for their own benefit, government urgently needs to intervene and cap third-party delivery fees at 10%.”

Grubhub generated outrage among some restaurant operators last month when it was forced to clarify that it was not suspending commission payments, but merely deferring them. And the delivery provider has since received complaints over its “Supper for Support” promotion that requires participating restaurants to eat the cost. Grubhub later decided to offer up to $250 to restaurants participating in the program.

The current crisis facing restaurants is also putting an end to some once-exclusive delivery partnerships. Earlier this month, struggling Shake Shack said it would expand its delivery relationships beyond Grubhub as sales fell between 50% and 90% systemwide.

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