Price Controls

Why price controls don't work

Consumers, restaurants, and delivery drivers alike should be able to choose what’s best for them.

Restaurants who partner with DoorDash have options

No matter what, partnership agreements between DoorDash and restaurants are entirely optional. Restaurants have the choice to enter and exit agreements that work best for their business.

Restaurants who choose to partner with DoorDash can select which products and services are right for them -- they can even choose options that don’t have a commission at all.

Flat-fee per delivery


With DoorDash, restaurants can pay a flat-fee per delivery for orders that they receive through their own channels, like phone orders. Restaurants can even work with DoorDash to build an online ordering website in minutes.

Full-service


Hundreds of thousands of restaurants also choose DoorDash’s full-service option, with the fee calculated as a percentage of the order subtotal (called a “commission”). Many restaurant owners want the option to pay more to lower customer fees, or to choose options that allow them to market themselves to customers, which help restaurants generate more revenue.

Self-delivery


Today, many restaurants offer their own delivery or takeout services. Those restaurants can also reach new customers by listing themselves on a third-party delivery app while still completing their own deliveries.

Partnership plan

Through the DoorDash platform, local restaurants in the U.S. can choose between three different delivery commission price points, starting as low as 15%. Inspired by feedback from restaurants, these actions are intended to create more choices and solutions across a portfolio of restaurants’ needs and put more profits into the pockets of local businesses.

Price controls could limit choice for restaurants

Price controls not only limit the options available to restaurants, they can actually reduce the amount of sales restaurants are able to generate — exactly the opposite of the intended effect.

For example, if governments make it illegal for a restaurant to pay more to market themselves on DoorDash or to reduce delivery fees for customers, restaurants may see fewer orders and therefore less revenue. That means restaurant owners will have a harder time growing their business.

Price controls would limit our ability to provide scaled tools to smaller restaurants that allow them to compete in an omni-channel world. These independently-owned restaurants — the very lifeblood of local communities — could find themselves at a considerable disadvantage when trying to compete with larger businesses and chain restaurants that not only have the financial means to absorb the costs of delivery and other fees, but also the infrastructure to execute their own delivery operations.

Fewer choices for customers

By artificially limiting what platforms like DoorDash can charge restaurants, price controls disincentivize investments in the platform that would benefit consumers, restaurants, and delivery drivers, and could potentially lead platforms to reduce service in or completely pull out of markets with price controls.

For restaurants, a reduction or elimination of service would result in fewer ways to reach customers and generate revenue in ways that work best for them. For customers, this would mean fewer options to access and discover restaurants, longer delivery times, and less customer support.

Fewer earning opportunities for Dashers, less tax revenue for state & local governments

For delivery drivers, a reduction or elimination of service means fewer income-earning opportunities in their community. Price controls have led to lower volume, which means less revenue for restaurants and fewer opportunities for Dashers overall.

In locations where price controls have been imposed, and customer prices have been increased, restaurants have seen a drop in order volume of approximately 5-10%. Each lost order results in one fewer income-earning opportunity for a Dasher and lost tax revenue for state and local government. Consider the enormous impact this could have over the course of a year.

We examined the impact this could have in five key markets across the United States. The data is based on March 2021 volume and price increases and is projected over the full year.

Projected lost Dasher earnings for 2021 in select U.S. markets

19.5M

Santa Clara County, CA

16.9M

New York, NY

6.6M

San Diego, CA

5.4M

Philadelphia, PA

4.6M

Indianapolis, IN

Projected lost tax revenue for state and local governments for 2021 in select U.S. markets

4.3M

Santa Clara County, CA

4.4M

New York, NY

1.2M

San Diego, CA

1.4M

Philadelphia, PA

1.4M

Indianapolis, IN

Looking ahead

DoorDash is proud to stand with restaurants, especially during this difficult time. While restaurants need help, price controls are not the answer. Instead, all stakeholders must work together to develop and execute solutions that serve restaurants, Dashers, and customers alike.

To learn more about price controls, click on the video below.