Food delivery fees add up. Who keeps the money from all those surcharges?
(NEXSTAR) – We’ve all been there. There’s nothing in the fridge and you don’t have time to run out, so you open up a delivery app to order lunch. But by the time you go to check out, pay all the fees, and tip your driver, your $11 burrito has turned into a $19 splurge.
The jump in price is thanks to lots of little fees – a couple of bucks here, a few percentage points there – that add up by the time the food arrives at your doorstep.
Where does all that extra money go? Uber Eats and DoorDash break down the line item charges on their websites. Grubhub also charges similar fees but doesn’t list them in detail.
The first two charges you’ll see listed frequently on all three apps are “delivery fee” and “service fee.” The delivery fee, to state the obvious, goes toward helping cover the cost of the delivery, the companies told Nexstar. The delivery fee can fluctuate based on demand, your location, how many delivery drivers are available, and other factors.
The delivery fee is one that goes toward delivery drivers’ earnings, at least in part, an Uber spokesperson confirmed.
The service fee, on the other hand, goes toward operational costs, the three companies said. Operating expenses include keeping the apps up and running, customer service, credit card processing fees, and more, an Uber Eats spokesperson said. A service fee can start at less than a dollar, but increases based on the size of your order.
Next come a few less common fees you may see tacked on.
Uber Eats and DoorDash both have a “small order fee,” for example, which is pretty much what it sounds like. If you’re only ordering a coffee or a smoothie for delivery, the app may tack on an extra few dollars to make delivering it worth the driver’s time and the company’s resources.
On DoorDash, you may also see an “expanded range fee” if you’re ordering from a business that’s further away.
In some places, the apps levy a “regulatory response fee” to offset the effects of local regulations. For example, after an outcry from struggling restaurants during the pandemic, dozens of cities passed limits on the amount apps could charge restaurants to deliver the food. Now, in some cases, the apps are tacking on an extra fee for users in response. On DoorDash, these fees are between $0.10 to $3.40, depending on the region.
Californians also get another fee the apps started charging after Prop 22. They say it’s needed to ensure drivers get minimum wage and health insurance.
You may also need to pay a fee if you change your address after you place your order, which “helps to pay your delivery person for extra time and effort,” according to Uber Eats.
The price of the food you order may also have hidden fees baked in. Grubhub’s terms of service, for example, say the company “reserves the right to consolidate or otherwise incorporate fees and/or surcharges into the prices listed for Merchant food and beverage items.”
Restaurants may set menu prices higher on delivery apps to help cover the cost of doing business on the platforms. In addition to fees that users pay, the delivery apps take a cut from the restaurants’ sales.
We spot-checked a lunchtime delivery option on Uber Eats in San Rafael, California. The restaurant listed a salad’s price as $15.95 if you picked it up in-store, but the same menu item was marked up to $19.30 on the Uber Eats app – and that’s before taxes, delivery cost, and other fees.
The total ended up being $31.85 without leaving a tip for the driver.
Seeing all those little fees broken out on your bill may be frustrating, but DoorDash said the line items are part of the company’s policy of transparency. The app shows you fees multiple times, not just at checkout, so you know what’s coming and know where the money is going, a spokesperson said.
In its recent Merchant Impact Report, Uber also touts that its services – while they come at a cost – facilitate billions of deliveries globally to many small and medium-sized businesses that might not be able to deliver food without services from a third party.
If you order a lot of food for delivery, it may be worth it to subscribe to things like DashPass, Grubhub+, or Eats Pass. For $10 a month, the delivery fee is usually waived and service fees may be lowered.
Source: The Hill
