Today is the day DoorDash planned to up its commission fees for District restaurants that participate in a premium program called DashPass. The move would have skirted local emergency legislation that caps the commission fees third-party apps like DoorDash, Grubhub, and Uber Eats can charge a restaurant at 15 percent for the duration of the public health emergency. They typically charge closer to 30 percent.
D.C.’s Office of the Attorney General wasn’t about to let the company get away with that move. They sent DoorDash a cease and desist letter this week informing the company that if they moved forward with the commission increase, they would violate a D.C. law that took effect in May. OAG staff asked DoorDash to reverse course, and they did.
“We recognize that there has been confusion as a result of our response to the unintended consequences of the pricing regulations in Washington, DC,” a DoorDash representative tells City Paper in a written statement this morning. “While DashPass is a premium marketing offering and provides benefits to many restaurants, we have decided to not charge DC restaurants their contractual DashPass rate at this time. We look forward to engaging with local policymakers to increase understanding of the impact pricing regulations have, and solutions that better serve customers, [drivers], and restaurants.”
DashPass is a good deal for diners who order frequently. They pay $9.99 a month in exchange for unlimited deliveries with zero fees on orders totaling $15 or more. Once enrolled, they can cruise DoorDash looking for restaurants with check marks, indicating that a restaurant has opted into DashPass. Restaurants pay extra to participate in DashPass because it gives them greater visibility to these committed customers.
On Dec. 3, Ward 3 Councilmember Mary Cheh told City Paper that if there’s a loophole regarding premium services in the fee cap emergency legislation she helped draft, she would move swiftly to close it. Neither she nor the OAG found one.
There’s no language in the legislation that exempts programs such as DashPass and one could argue DashPass still functions as a “third-party food delivery platform,” as defined in the bill: “Any website, mobile application, or other internet service that offers or arranges for the sale of food and beverages prepared by, and the same-day delivery or same-day pickup of food and beverages from, restaurants.”
“I’m delighted that the attorney general acted so swiftly to reign in DoorDash’s greedy overcharging of our restaurants that was scheduled to begin today,” Cheh says this morning. “DoorDash’s attempt to further line their own pockets at the further expense of our local restaurant industry—in the middle of the pandemic, no less—has failed.”
Today is also the day DoorDash went public. They priced their stock at $102 per share, valuing the company at $39 billion. CNN reports that the pricing was far above the delivery app’s original proposed price range of between $75 to $85 a share, signaling strong demand from investors. “Now, the country’s biggest food delivery app is riding the wave of pandemic-fueled demand to Wall Street,” the CNN story reads.
The goal of commission fee caps is to keep more money in the pockets of restaurants at a time when their on-site operations are curtailed to slow the transmission of COVID-19. D.C. was one of the first jurisdictions to pass such legislation. Now the District is leading the charge on making sure restaurants that pay to participate in DashPass are also privy to reduced commission fees where local laws exist. As of late September, there were five million DashPass diners nationwide.