Why would it be illegal? If you think of it as Doordash buying the pizza and then reselling it to you, there'd be no reason not to expect a mark up. You're allowed to price discriminate between different market segments, so even if we pitch Doordash as merely a third party delivery offering, restaurants could still charge Doordash customers more than those that come into their storefront.

It should be illegal because these services market a subscription to you claiming the benefit of zero fees and free delivery, which is a lie. You are being secretly charged through a higher menu price, none of which is shown to you as a customer.

I can't count how many friends I have had to explain this to who don't understand they are paying 20-30% more even after getting "free delivery" than if they just ordered directly through the restaurant.

Also, Doordash does not have "zero fees" for orders when you pay for DashPass, they have "reduced" fees. I do absolutely hate the practice of "Taxes & Fees" being a line item and only when you click into it do you see that the taxes are minimal and most of that is the platform fees.

I'm not sure how UberEats/etc handle it but it's absolutely crazy how much of a markup there is to order through Doordash vs going to pick it up when you factor in Restaurant Upcharge + Doordash Fees + Tip. It's easy to have an $8 item suddenly cost $20 or more total out-of-pocket when all is said and done.

I don't know that it should be illegal. I think the argument would be that it's deceptive. DoorDash, for some customers, claims there is no service fee - it's "free." What they're really saying is: the service of our delivery may be free, but the overall service we will provide is hidden or obfuscated in menu items, and without doing some research at the restaurant, you'll likely not notice.

One could argue it's best for the consumer to very clearly understand how much more they're paying. If not a service fee, here is our aggregate food markup, in plain sight. Transparency, in other words. Let's not borrow any ideas from the healthcare system.

> If you think of it as Doordash buying the pizza and then reselling it to you

Isn't this basically impossible to do legally in the U.S.? Wouldn't you run into trouble both with IP law and food safety laws around reselling prepared foods?

This exact arbitrage, performed by Doordash, was exploited.

https://www.readmargins.com/p/doordash-and-pizza-arbitrage

IP law, no, for the same reason nothing stops me from reselling the Ralph Lauren shirt I bought as a Ralph Lauren shirt, so long as I make no pretenses of being Ralph Lauren, and I make no modifications to it. The good is the same, IP protected good. I'm just re-selling it.

Food safety? There might be some restrictions related to food handling, but to my understanding they're mostly pretty rote food handling safety training stuff that I'd hope delivery companies provide anyway.

It's the opposite — you're legally protected to resell anything you buy and the seller can't stop you. I'm not sure if food has any caveats, but in general, IP law cannot stop you from reselling an item.

It's called the First-Sale Doctrine: https://en.wikipedia.org/wiki/First-sale_doctrine

If you're in a jurisdiction that taxes prepare food, then the government is going to be unhappy about missing the tax on the second sale.

This has been happening for a good while. There are loads of instances of food delivery companies creating unauthorized websites for restaurants with a phone number and url owned by the delivery company. They are literally buying the food and reselling it to you at a markup.

If it's illegal nobody cares.

Why should it be illegal? Makes no sense to me. As long as the business is not discriminating based on class it should be ok.

What I personally dislike about this is that it hides the cost of Doordash. It's not intuitive that the prices of items is silently higher on Doordash: it's not like online retailers having different prices for the same SKU, it's the same restaurant. I'd prefer the overhead to show up as its own line item, rather than obscuring the actual cost of the service. I have a feeling less people would choose to Doordash as often if they realized just how much more things cost through it. (Not everyone, but, there are a lot people who really do just do it for convenience, and they could just drive and go pick up their own takeout.)

> it's not like online retailers having different prices for the same SKU, it's the same restaurant

But those online retailers are supplied by the same distributor who is supplied by the same manufacturer.

    - ManufacturerA -> (Amazon|Walmart) -> Customer
    - RestaurantA -> (Pickup|Doordash|Uber) -> Customer

Isn't it exactly the same? Online retailers add their cost and profit requirements in their pricing, Doordash does the same.

> I'd prefer the overhead to show up as its own line item, rather than obscuring the actual cost of the service.

Me too. Especially that they already ALSO add a service fee in many (most?) locales, in addition to the delivery fee and the tip.

    - Item priced 30% higher
    - Delivery fee
    - Service fee
    - Tip

The first three should be folded in a single line item so that customers realize how much price gouging Doordash is really doing.

You have a point, but I just think it's less intuitive for consumers. Manufacturers often don't even do direct sales, so the only "canonical" price is the MSRP, which is just that, a suggestion. Consumers go shopping at Walmart or Amazon, they don't go "shopping" at Doordash: the menu they're seeing on Doordash is the restaurant menu. In some cases, it is the only online menu that some restaurants even have. To me it is not terribly intuitive that these prices differ.

There is another analog for this, too, though: some retailers indeed would have more or less expensive prices for the same thing when ordering online versus in-store. I think the argument that it isn't unprecedented is pretty solid.

Despite not being entirely unprecedented, I'd still prefer to see this practice ended for food delivery services so it is easier to see the actual true overhead of food delivery services. It really does feel a bit manipulative the way it is right now.

Just because you don’t like it should not make it illegal.

Is their position simply that they don't like it and that's it?

Without regulation, "the market" wouldn't care about a lot of things. It's actually a good thing that a small minority of people hold the line for people who don't have time to care about issues like this kind of manipulation!

I don't think that's true, however doordash surely know that some users might think twice if they saw that number separated out.

> I’m pretty sure DoorDash is the one who increases the price on their end, not the business

That is not correct. Doordash takes a 20-30% commission on each sale, so businesses preemptively increase the prices to offset that. They're not forced to and doordash isn't doing it for them. But, you know, they're still effectively "forced" to if their in-store prices don't have great margins to begin with...

Correct it is advised by DD but eventually done by the merchant.

And they basically have no choice but to increase the price. Their margins are already razor thin.

Of course they do not. I still can’t believe that so called marketing that DD and Uber does commands a 30% rev share.

Most of that money goes towards the driver, last I checked in on unit economics. It costs quite a bit of money to pay a person to go to the restaurant, wait around, and then bring it to you — far more than the "delivery fee" that you see and that customers would pay.

Customers are cheap and they're (partly) to blame. My theory is that Amazon conditioned people to view delivery as a free commodity and pizza places who had delivery baked into their model cemented it.

So if Doordash listed a delivery fee that covered their true cost of delivery, customers would balk. So they instead have to find creative ways to get enough. Maybe it's changed and Doordash cracked the secret, but when I'd looked into it years ago these companies barely got by — many of them actually losing money.

With pizza delivery you typically (should) tip the driver $5+ ($10+ for larger orders) so idk if that really tracks specifically, but I do largely agree that part of is people being cheap for one reason or another.

I know people who drove for DD and they roughly earn minimum wage ~$15/hr. You can easily deliver 2 orders in an hour. So I don't really buy that either.

I’m not sure I’m understanding your comment exactly so if this response is off let me know: I’m talking about traditional calling pizza in, not app delivery. At least when I was growing up that’s what we typically tipped.

Ah my mistake then!

I think most reasonable would be to mandate that these food delivery services can not take cut from payment going to restaurants, but instead must charge it fully to customer. So restaurant has menu price of 10 and when someone orders delivery from payment 10 goes to restaurant. And delivery service is free to add their margin on top be it 30 or 50%.

Doordash and other companies like it take a good chunk of the margins of those stores for the privilege of delivering the items. 15% is not unheard of.

More like 25%+.

Instead of being illegal, we should just have price transparency. Require companies to show the markup directly in the app.