Uber Eats, DoorDash raise fees in California to cover driver benefits

New charges for diners went into effect this week to pay for perks mandated by Proposition 22.
Photograph courtesy of Uber Eats

DoorDash and Uber Eats are raising fees for customers in California to help pay for new benefits for drivers. 

DoorDash said “slight percentage increases” to customer service fees will go into effect Wednesday, and Uber Eats’ hikes began Monday. DoorDash was also considering changing promotion pricing that could affect things like DashPass, its monthly membership program. The company did not provide specific numbers.

New Uber Eats charges will vary from city to city, according to a report by Bloomberg that was confirmed by a company spokesperson. Order totals will increase by 99 cents in Los Angeles and $2 in San Francisco, for instance. Those changes do not apply to the newly acquired Postmates.

The charges are intended to help cover new benefits for drivers under Proposition 22, a ballot measure approved by California voters in November that classified app-based drivers as independent contractors rather than employees. Prop 22 requires gig companies to offer driver perks such as health subsidies and guaranteed earnings before tips. 

DoorDash, Uber and other app-based delivery companies spent millions to support the measure. They warned that if it failed, the cost of food delivery could increase from 35% to 100% in some markets, depressing demand and hurting restaurants. If it passed, restaurants could expect something “similar to business as usual,” Geoff Vetter, a spokesperson for the Yes on 22 campaign, told Restaurant Business in October.

Uber Eats’ San Francisco fee adds a 6% cost to a $30 order. That’s not nearly as drastic as the companies’ warnings, but arguably not “business as usual,” either. 

“Delivery prices are so difficult and challenging for the restaurants, and I think the consumers are kind of in the same place,” said Pam Waitt, president of the Orange County Restaurant Association. “I think what could happen is it could create more incentives for people to just pick up their food from the restaurant.”

Some Orange County restaurants have been offering free desserts or appetizers to incentivize people to pick up and avoid delivery fees, she said.

The new charges in California are the latest example of delivery companies raising customer fees in response to government regulations. In the past month, DoorDash added customer fees in Denver ($2) and Chicago ($1.50) to help offset delivery fee caps in those cities.

The moves underscore the challenges of on-demand delivery, a service for which restaurants and customers already pay a premium. Delivery providers say the various commissions and fees are necessary to survive in the so-called “three-sided marketplace” of drivers, restaurants and consumers. However, those companies have yet to turn a consistent profit, even while delivery has boomed amid the pandemic. And as prices begin to creep up, it remains to be seen whether consumers will continue to pay for an already expensive service. 

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