Food delivery fees are rising, and everyone’s feeling the pinch

Food
from
the
restaurant
of
your
choosing,
delivered
right
to
your
door
—
at
what
cost?

Third-party
food
delivery
is
becoming
the
norm
for
American
consumers,
as
delivery
apps
like
Grubhub,


DoorDash
and


Uber
Eats
take
hold
in
day-to-day
dining.
It’s
also
presenting
customers
and
restaurants
with
an
increasingly
complicated
equation
of
service
fees,
delivery
costs
and
worker
tips.

Frustrations
from
both
sides
of
the
table
have
fallen
on
the
services,
which
have
worked
to
protect
(or
achieve)
profits
and
prop
up
orders
while
cash-strapped
Americans
scrutinize
the
checkout
screen
—
and
order
totals
that
often
add
up
to
more
than
expected.

Compared
to
orders
made
directly
through
restaurant
sites,
consumers
reported
higher
yearly
increases
in
their
total
checks
on
third-party
apps
between
2022
and
2024,
according
to

Technomic.
Though
Uber
Eats,
DoorDash
and
Grubhub
each
promote
paid
memberships
to
reduce
fees,
consumers
still
claim
to
pay
more
on
average
for
third-party
orders,
according
to
the
food
service
industry
research
firm.

The
rising
costs
come
as
more
Americans
watch
their
wallets
during
a
period
of
persistent
inflation.

San
Francisco
resident
Zainab
Batool,
who
said
she
orders
delivery
from
either
Uber
Eats
or
DoorDash
weekly,
called
the
added
fees
“insane.”

“I
feel
like
I
remember
a
time
when
they
used
to
not
be
as
high,
maybe
four
years
ago,
but
it
just
seems
like
it
keeps
increasing,”
Batool
said.

The
share
of
consumers
choosing
third-party
delivery
services
over
direct
restaurant
delivery
is
rising,
up
from
15%
in
2020
to
21%
in
2024,
according
to

Technomic’s
2024
Delivery
&
Takeout
Consumer
Trend
Report.
The
research
firm
found
that
superior
order
tracking,
access
to
deals
and
promotions,
and
the
ability
to
discover
new
restaurants
has
kept
app
customers
coming
back.

But
the
cost
of
added
fees
could
be
driving
some
of
them
away.

Among
consumers
who
report
ordering
less
delivery,
41%
said
it
was
because
of
high
delivery
fees,
while
48%
point
to
inflated
menu
prices,
according
to
the
report.
The
premium
that
restaurants
were
charging
for
third-party
delivery
service
menus
increased
between
2022
and
2023
—
and
has
nearly
doubled
since
2020,
according
to
a
study
by

Gordon
Haskett
Research
Advisors.

Companies
facilitating
the
delivery
say
they
aim
to
keep
fees
down.

Grubhub
said
in
a
statement
it
aims
to
keep
fees
as
low
as
possible,
while
maintaining
its
business:
“As
the
costs
associated
with
handling
deliveries
—
including
managing
logistics
and
paying
delivery
partners
—
have
risen,
we’ve
adjusted
our
fees
accordingly,”
a
Grubhub
spokesperson
said.

The
company
is
owned
by
Just
Eat
Takeaway,
an
online
food
ordering
and
delivery
company
based
in
Amsterdam,

which
has
said
it’s
actively
looking
to
sell
some
or
all
of
Grubhub.

DoorDash
said
it’s
lowered
fees
for
consumers
over
the
last
two
years
of
historic
inflation,
at
the
same
time
seeing
an
all-time
high
of
active
users
and
an
increase
in
order
frequency
last
year.

That
company,
which
went
public
in
2020,
has
yet
to
post
an
annual
profit.
The
delivery
service
reported
a
single
quarter
of
profit
—

net
income
of
$23
million
—
for
the
three
months
ended
June
30,
2020,
at
the
very
beginning
of
Covid
lockdowns
in
the
U.S.
Last
quarter
the
company
reported
adjusted
EBITDA
of
$371
million.

Mobility
giant
Uber,
on
the
other
hand,

earned
nearly
$1.9
billion
last
year,
driven
in
part
by
major
gains
in
its
delivery
business.
Uber’s
delivery
segment,
which
includes
Uber
Eats
and
Uber
Direct,
reported
adjusted
EBITDA
of
$1.51
billion
for
2023,
an
improvement
of
more
than
$955
million
from
2022.

A
spokesperson
for
Uber
said
Uber
Eats
users
are
paying
for
a
service
that
allows
them
to
browse
merchants
and
order
efficiently
with
on-demand
delivery.

“The
fees
for
orders
on
Uber
Eats
help
pay
delivery
people
and
cover
platform
costs
—
like
safety
programs,
24/7
support,
background
checks,
product
development,
and
more
—
so
that
orders
can
arrive
reliably,”
the
spokesperson
said
in
a
statement.

For
diners,
doing
the
math
across
platforms
is
getting
trickier.

On
both

Uber
and

DoorDash,
order
totals
can
vary
by
region
because
of
additional
fees
applied
to
offset
local
laws
and
regulations,
according
to
their
respective
websites.
In
California,
for
example,
customers
on
Uber
Eats
pay
a
CA
Driver
Benefits
fee,
introduced
to
fund
mandatory
benefits
for
drivers
following

Prop
22,
according
to
Uber.

Even
before
local
variances,
the
add-ons
can
be
daunting.

Uber
collects
a
delivery
fee,
which
varies
depending
on
demand,
location
and
driver
availability,
according
to
its
website.
DoorDash
applies
a
similar
delivery
fee
that
it
said
is
dependent
on
multiple
factors.
Both
apps
say
this
fee
is
paid
directly
to
them
to
cover
delivery
costs,
rather
than
the
drivers
or
restaurants.
Grubhub
also
includes
a
delivery
fee
on
orders
that
increases
with
distance,
up
to
a
maximum
price.

All
three
apps
also
charge
a
separate
service
fee,
which
isn’t
much
simpler
to
calculate.

Grubhub
and
DoorDash
say
the
fee
covers
the
cost
of
operating
their
platforms,
Uber
says
all
but
10
cents
of
its
service
fee
goes
directly
to
the
delivery
driver,
though
the
driver
is
then
expected
to
pay
Uber
an
undisclosed
amount
for
various
support
services.

Both
DoorDash
and
Uber
say
the
fee
can
change
based
on
the
order
subtotal.

After
all
of
those
variations,
and
factoring
in
possible
discounts
or
promotions,
many
customers
won’t
know
the
total
cost
of
their
order
until
they’ve
selected
their
items
and
made
it
all
the
way
through
to
checkout.

“You
see
something
listed
as
15
bucks
and
then
you
go
to
checkout
and
it
adds
up
to,
like,
25,
but
you’ve
already
kind
of
in
your
head
committed
to
getting
that
thing
or
you’re
looking
forward
to
it,”
app
user
Batool
said.
“It
adds
an
extra
friction
between
backing
out
of
ordering.”

Both
Uber
and
Grubhub
said
their
fees
are
clearly
disclosed
before
checkout,
while
DoorDash
said
that
the
total
applicable
fees
are
consistently
available
to
view
in
the
cart.

For
restaurants,
part
of
the
value
proposition
of
third-party
delivery
services
is
the
potential
for
more
exposure
and
customers,
according
to
Bentley
University
assistant
professor
of
marketing
Shelle
Santana.

More
than
1
million
merchants
partner
with
Uber
Eats,
and
over
375,000
work
with
Grubhub,
according
to
the
companies.
DoorDash
said
in
2023
it
had
over
100,000
new
merchants
join
its
marketplace,
generating
nearly
$50
billion
in
sales
for
the
businesses.
Uber
Eats
merchants
in
the
U.S.
and
Canada
brought
in
more
than
$15
billion
in
sales
last
year
through
the
app,
according
to
Uber.

For
restaurants
to
be
listed
on
their
respective
marketplaces,
Uber
Eats
and
DoorDash
each
offer
a
tiered
pricing
structure
with
commission
charges
ranging
from
15%
to
30%
of
the
order
total,
according
to
their
websites.
Restaurants
joining
Grubhub
Marketplace
pay
a
“marketing
commission”
between
5%
and
10%
of
each
order,
as
well
as
an
order
processing
fee
and
10%
delivery
fee,
according
to
its
website.

All
three
platforms
say
restaurants
can
choose
from
a
variety
of
pricing
plans,
based
on
the
rate
and
level
of
marketing
support
they
want,
including
commission-free
online
ordering
services.

Tony
Scardino,
the
owner
of
Illinois-based
Professor
Pizza,
said
he
uses
multiple
third-party
delivery
services
at
his
two
Chicago
locations,
including
Grubhub,
DoorDash
and
Uber
Eats.
He’s
used
the
services
for
almost
four
years
and
said
the
apps’
pricing
is
“predatory”
and
“way
too
much.”

But
using
their
delivery
services
instead
of
paying
for
in-house
delivery
is
worth
it
for
a
business
on
the
smaller
side,
he
said.
It
all
adds
up
to
what
he
called
a
“difficult
balance.”

“You
fight
with
whether
or
not
you
should
get
on
them
in
the
first
place,”
Scardino
said.
“But,
you
have
such
an
overwhelming
audience
of
people
on
them
that
it’s
hard
not
to.”

The
cost
can
in
turn
force
restaurants
to
raise
their
menu
prices.

In
a
study
of
the
menu
pricing
premiums
for
25
popular
restaurants
on
third-party
delivery
services,
the
average
cost
was
20%
higher
than
dining
in,
according
to

Gordon
Haskett
Research
Advisors.

“Restaurants
have
sort
of
said,
‘We’re
not
footing
the
bill
for
DoorDash
and
Uber
and
Grubhub.
The
consumer,
if
they
value
that
convenience
and
wants
to
use
that
service,
can
foot
that
bill,'”
said
Empower
Delivery
CEO
Meredith
Sandland.

Empower
Delivery
aims
to
rival
the
major
delivery
services,
connecting
restaurants
with
a
pool
of
delivery
workers
at
what
it
claims
is
a
lower
cost
for
business,
according
to
its

website.

Ann
Arbor,
Michigan,
restaurant
owner
Phillis
Engelbert
has
resisted
DoorDash
and
other
third-party
delivery
services
since
before
the
pandemic.
She
said
her
Detroit
Street
Filling
Station
relies
on
dine-in
orders
and
a
limited
delivery
option
with
a
flat
$7
fee.

Even
if
they
led
to
higher
sales,
Engelbert
said
she
is
not
convinced
third-party
delivery
apps
would
improve
her
bottom
line
or
benefit
her
employees.

“It
feels
like
another
way
that
corporations
can
come
in
and
take
a
chunk
out
of
the
fruits
of
our
labor,”
Engelbert
said.

As
more
restaurant
owners
pass
the
delivery
app
costs
over
to
consumers,
the
third-party
services
have
all
ramped
up
monthly
membership
options
to
help
alleviate
some
of
the
pressure.

All
three
major
services
offer
free
delivery
on
every
order
with
their
premium
memberships
—

Grubhub+,

DashPass
and

Uber
One
—
at
$9.99
a
month,
according
to
their
respective
websites.

In
May,

Grubhub
partnered
with


Amazon
to
include
Grubhub+
in
the
e-commerce
giant’s
Prime
subscription.
DoorDash
offers
a

free
yearlong
membership
for
users
with
a
DoorDash
Rewards


Mastercard,
and
Uber
offers

membership
benefits
for
certain


Capital
One
credit
cardholders
for
a
limited
time.

They
also
all
offer
incentives
for
students:

DashPass
and

Uber
One
are
half-priced,
and

Grubhub+
is
free
for
students
at
partner
universities,
according
to
their
respective
websites.

The
benefit
of
the
subscriptions
is
twofold:
With
the
promise
of
lower
all-in
order
costs,
more
customers
may
make
it
to
checkout,
and
more
often;
and
with
a
curated
list
of
power
users,
the
services
can
tailor
future
discounts
to
their
most
loyal
customers,
according
to
Steve
Tadelis,
a
professor
of
economics
at
UC
Berkeley.

Though
the
subscriptions
all
eliminate
delivery
charges,
the
service
fee
—
and
any
local
variations
—
still
applies.
The
service
fee
is
lowered
for
DashPass
members,
according
to
the
company.

And
if
you’ve
made
it
this
far,
that
leaves
just
one
cost
left:
a
tip
for
the
delivery
driver.

When
consumers
are
surprised
by
the
total
price
tag,
tipping
can
be
“the
only
lever
they
have
left”
to
manage
their
budget,
according
to
Empower’s
Sandland.

Batool
said
that
she
always
tips,
but
that
doesn’t
mean
she
feels
good
about
it
given
the
other
fees
applied.
She
said
that
because
she
can’t
be
sure
whether
the
service
fee
and
other
charges
are
actually
going
to
the
drivers,
tipping
is
necessary
to
be
sure
that
they’re
compensated.

“It
makes
me
mad,
because
I
feel
like
the
service
fees
should
be
going
towards
the
people
who
are
servicing
us,”
she
said.
“But
it
doesn’t
seem
like
it
is.”