DoorDash is raising its prices in Seattle again after the city added new regulations for third-party delivery companies.
Starting this month, DoorDash customers in Seattle will see higher service fees, the company said in a blog post on Tuesday. Customers have already been paying a separate $4.99 regulatory response fee since last January.
The fees are in response to strict delivery regulations in the city, including an approximately $30 minimum hourly wage for couriers and, more recently, new rules about how delivery companies handle courier deactivations.
Under the latest law, which went into effect on Jan. 1, delivery companies are required to investigate alleged violations prior to deactivation and must give couriers two weeks’ notice before they are kicked off the platform, unless their conduct is considered egregious.
It’s designed to protect couriers from being unfairly deactivated. But it will make it more costly for delivery companies to operate in the city, where the wage rate also ticked up this year. Those rising costs prompted the service fee hike, DoorDash said.
The company said Seattle is now the most expensive delivery market in the U.S., and that it operated at a loss there last year, despite raising prices. It hopes that raising them again will allow it to “right the ship” and continue doing business in the city, a spokesperson said.
Uber Eats also has a $4.99 “local operating fee” in Seattle. Asked whether it planned to raise fees, a spokesperson said the company had nothing specific to share right now. Grubhub said it does not have a stand-alone regulatory response fee.
Seattle’s courier wage law, known as PayUp, went into effect last January. It requires delivery companies to pay couriers the city’s regular minimum hourly wage, plus expenses. It is tied to Seattle’s minimum wage, which at $20.76 is the highest in the U.S.
DoorDash has argued that PayUp has hurt restaurants and delivery people in the city because of its impact on pricing. One year after the law took effect, average monthly revenue per restaurant on DoorDash is down 2% in Seattle, compared to an increase of more than 10% in similar cities during that time.
It also said that some couriers are taking advantage of the law by stalling during deliveries to make more money. In the 12 months ended in December, the average delivery delay increased by 35%, according to DoorDash.
And it said that drivers are receiving half as many daily delivery offers and are waiting three times longer for potential deliveries due to a decrease in demand.
Seattle is one of the few places in the country to guarantee delivery people an hourly minimum wage. In most markets, courier pay fluctuates on a per-order basis depending on things like time and distance.
Last March, the city was set to reconsider the wage hike, but that never came to fruition.
The aggressive policy has given rise to some unusual new business models, such as Tony Delivers, a one-man delivery service that offers significantly lower prices than the big apps, but only within a limited delivery radius.
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