DoorDash is refunding money to a handful of San Francisco restaurants that were mistakenly overcharged on commission fees, which the city recently temporarily capped at 15%
“We have corrected a separate error affecting fewer than 10 of more than a thousand of our partner restaurants in San Francisco and we will refund those restaurants,” the delivery company said in a statement sent to Nation’s Restaurant News.
The error was detected by DoorDash after a restaurant owner in San Francisco posted an image on Twitter showing his DoorDash bill. A line item on the third-party delivery invoice suggested that his restaurant still had to pay a 30% commission.
However, the restaurant representative later posted a retraction. Although the invoice showed 30% less than the commission rate, the actual rate charged was 15%.
During the investigation of the alleged error, DoorDash discovered errors in the fees charged to other restaurants.
The San Francisco-based delivery company is reviewing commission fees in other cities with fee caps to ensure no inadvertent accounting errors have occurred.
Third-party delivery fees, which hover around 30%, have been a controversial topic among delivery companies and the restaurants they serve. The coronavirus pandemic has compounded the problem, as delivery, drive-thru and delivery orders have become the only source of revenue for restaurants when dining rooms closed early in the crisis.
Restaurant industry advocacy groups have pressured third-party delivery companies such as Grubhub, DoorDash and Uber Eats to reduce profit-damaging commission fees during the COVID-19 crisis. This has led some cities to impose temporary caps on commission fees, including Los Angeles, New York, San Francisco, Washington DC and Seattle. Most caps hover around 15%.
In New York, the cap is split into two categories: a 5% cap on order transmission through the app, often referred to as the “marketplace” by delivery companies, and a 15% cap on last mile delivery.
DoorDash and other third-party delivery companies have previously said they will comply with the temporary commission caps.
However, these delivery players argue that the fee pays for a combination of fixed costs and bespoke marketing that helps increase order volume. Grubhub said that cAPS are particularly harmful to independent restaurants because they will not be able to market themselves as aggressively as national chains on delivery platforms.
The pandemic has led to an increase in delivery orders. Before the pandemic, delivery accounted for 3% of all restaurant orders. It has now risen to 7% of orders, according to the latest market research from the NPD Group.
For our most recent coverage, visit the coronavirus homepage
Contact Nancy Luna at [email protected]
Follow her on Twitter: @fastfoodmaven
