How Much Does DoorDash Charge Restaurants? The Trust Costs of DoorDash Fees for Restaurants & How to Drive Restaurant Growth with Better Alternatives

About Tarro

At Tarro, we empower 3,000 family owned restaurants by relieving them of the operational burdens of running their business. Our multi-product ecosystem includes human+AI phone order taking, delivery enablement, and marketing solutions – creating a seamless connection between restaurants and their customers. By combining cutting-edge technology with a dedicated team, we tackle the real-world challenges faced by small business owners.

About The Author

Hi, I’m Max Miceli – Director of Brand & Product Marketing at Tarro. I’ve worked in the restaurant industry for years (mostly pizza restaurants) and have had the pleasure of speaking with hundreds of restaurant owners during, and prior to, my tenure at Tarro.

How Much Does DoorDash Charge Restaurants? The Trust Costs of DoorDash Fees for Restaurants & How to Drive Restaurant Growth with Better Alternatives

The 2020 COVID-19 pandemic shook the restaurant industry to its core. With indoor dining off the table, many restaurant owners had no choice but to turn to third-party delivery services like DoorDash just to stay afloat.

How much does DoorDash charge restaurants? At the time this question didn’t really matter, because apps like DoorDash felt like a lifeline when the stakes were highest—keeping cash coming in until customers could return. But even after dining rooms reopened, people stuck with the convenience of delivery apps, making them their new go-to for quick, easy meals at home.

For restaurant owners, this brought a new challenge. You found yourself locked in, despite sky high DoorDash fees for restaurants, with little room to push back. What many don’t realize is just how much DoorDash charges restaurants—and how partnerships with popular food delivery services can make it even harder to grow your restaurant business over time.

So, How Much Does DoorDash Charge Restaurants?

As you probably know, popular food delivery services charge restaurants a ~30% commission to be on their platforms. For many restaurant owners, this seems like a fair deal. These services help you reach more customers and handle all the delivery logistics, so you don't have to manage drivers yourself. You might think that by simply raising your menu prices on the app to cover the DoorDash commission percentage, it won't cost you anything. But over time, you realize it’s becoming more difficult to drive restaurant growth. How could this be? 

Just like anything else, the answer isn’t straightforward. It’s worth noting that the promise to “increase restaurant sales” from delivery services is typically overblown (more on this later). Even so, there’s one simple (yet, perhaps not obvious) reason why you might be having trouble growing your restaurant business – hidden DoorDash fees for restaurants. I’ll use an example from a fictional restaurant called Golden City Chinese to illustrate my point.

• Golden City Chinese sells Hot & Sour Soup for $10 in their restaurant.
• When they list Hot & Sour Soup on a delivery app, they need to cover the 30% commission. So, they raise the price to $13 on the app.
• A customer who might not know Golden City Chinese—or doesn't recall the in-store price—sees the Hot & Sour Soup for $13 on the app and decides to buy it.

In this example, Golden City Chinese has pushed the DoorDash commission percentage through to the customer, so they should be making $10 (the same as before)…right? 

Well, no actually.

I can see all the math people now, “Max, we got it. Thanks.” Do carry on. I apologize for belaboring the point. As for the rest of us…

The DoorDash commission percentage of 30% is applied to the order total of $13. So, in this example, Golden City Chinese is making $9.10 – a full 9% less than they would have made if the customer had ordered in store. And, the delivery service keeps the remaining $3.90. Considering their slim margins, a 9% drop in revenue makes all the difference. So, how much does DoorDash charge restaurants? The truth is, more than first meets the eye.

‍Industry experts I’ve talked to estimate that 9 out of 10 restaurant owners aren’t aware of the full extent of DoorDash fees for restaurants. In fact, I’ve personally spoken with several owners who had no idea just how much these DoorDash fees were eating into their profits.

Hidden Fees: The Real Killer in the Quest to Increase Restaurant Sales

But wait, there’s more! Remember when I said the promise to “increase restaurant sales” from delivery services is often overblown? Here’s why: beyond the DoorDash commission percentage of 30%, these platforms also charge customers a 15% service fee.

That means a $10 Hot & Sour Soup from Golden City Chinese ends up costing your customer $14.95 on DoorDash (including the DoorDash commission percentage and service fee)—about 50% more than in-store. And that’s before the delivery fee and tip.

Yep, you read that right – commission percentage, service fee, and delivery fee are all different ways third-party delivery costs squeeze you and your customers.

Restaurant owners—if you haven’t already, place an order from your own restaurant on DoorDash and see how your prices look. It’s eye-opening.

Want to Drive Restaurant Growth? The Service Fee is The Problem.

Here’s one thing we know for certain: The higher the fees paid by customers, the fewer delivery orders they are going to make, and the more difficult it’s going to be to grow your restaurant business. Check out the chart below.

So, what are we seeing here? On the Y-axis, is the average monthly order volume and on the X-axis are the average fees paid by the end customer. As we move further to the right (i.e. when customers are paying more in fees), we see the average monthly order volume going down. Net-net: more fees paid by the customer equals fewer delivery orders for the restaurant.

Yikes.

Are There Better Alternatives to DoorDash for Restaurant Delivery?

You could elect to build an in-house delivery operation (if you haven’t already). And, depending on the size of your restaurant this could mean between 1 and 4+ additional staff. With minimum wage ranging from $7.25 to $20+ dollars per hour depending on your location, you may be looking at a $3,200 monthly payroll increase.

But, the payroll costs are just one issue. As we all know, the real challenge comes in hiring, managing, and retaining often unreliable drivers. What are you going to do when they call out sick? What are you going to do when they are late on a busy night? What are you going to do when they leave for another gig after just 4-months? 

Typically, the burden falls back on the restaurant owner – adding to the increasingly long list of responsibilities that keeps you from growing your business or spending time with your family. 

So, How Do You Grow Your Restaurant Business? And, How Can Tarro Delivery Help? 

In 2023, Tarro launched Tarro Delivery to help restaurants meet their customers’ growing delivery demands without extra work or hidden fees (often found with third-party platforms). Here’s how it works: when a customer calls, after just one ring, a professionally trained agent assisted by AI, warmly greets the caller. From there, they take the order, and confirm whether the customer wants pickup or delivery. The agent then sends the receipt straight to your restaurant. If the customer opts for delivery, our driver picks up the order and brings it to their door. No hidden fees and no additional work for you—just a better way to grow your restaurant business that’s cheaper for you and your customers.

Tarro Delivery was designed to increase restaurant sales without the headaches. 

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With Tarro Delivery:

• Your delivery operations will be stress free. With Tarro, you won’t need to hire or manage drivers. We handle everything – including safety and logistics – so you can offer delivery without the hassle or cold food.
• Your delivery operations will save you money. Because you won’t need to keep delivery drivers on staff, you’ll save on driver wages. Restaurants on Tarro’s platform typically save 5-10% in labor costs.
• Unlike popular delivery services like DoorDash, our delivery operations will help you drive restaurant growth. Clients on Tarro’s Delivery platform typically increase restaurant sales by 5-20%. How is this possible? DoorDash fees for restaurants won’t get in the way of growth. Customers ordering delivery directly from restaurants on Tarro’s Delivery platform pay ~50% less on fees, and 25-50% less on the total order. Assuming a typical order size, this translates to customers paying ~$10 less than they would if they had placed the same order via DoorDash and other popular delivery apps. Just make an extra 2-3 meals per day, and maximize restaurant earnings – it’s that simple.

Is it Worth Considering Popular Third Party Delivery Services Like DoorDash as Part of Your Strategy?

Probably, yes. Third party delivery services can be another way to get your restaurant in front of customers. However, it’s important to understand the tradeoffs. Higher DoorDash fees for restaurants and higher fees for customers (both new and existing) can make it more difficult to drive restaurant growth. At the end of the day, while popular delivery services likely should be part of your strategy, relying on them may not be the best move. To elevate your restaurant’s profits and growth, it’s best to choose a delivery partner (ahem Tarro) that keeps fees as low as possible, so you can make more, save more, and stress less.

Give us a call at [1-833-354-0686] or fill out the form below to book a meeting.

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