Dec. 6, 2022 "DoorDash Canada moves to tiered commission system, charging some restaurants 29%": Today I found this article by Tara Deschamps on the Financial Post:
TORONTO — DoorDash is changing the way it charges commission to Canadian restaurants with a new, tiered model.
The San Francisco-based food delivery service announced the switch Tuesday, saying it will offer restaurants more “flexibility” and help them take advantage of digital growth opportunities.
“Part of the thinking … was to give them that transparency of the available value proposition that we have to offer,” said Shilpa Arora, DoorDash Canada’s general manager.
The model resembles one launched in the U.S. last year and has three tiers starting with the basic plan, which charges
a 20 per cent commission on deliveries
and 10 per cent on orders picked up by diners and comes with the smallest delivery radius.
Beyond that, restaurants can choose plans with additional features.
One step above the basic plan is DoorDash Plus, which involves a 25 per cent commission on deliveries and eight per cent on pickups.
This plan also gives access to members of Dash Pass, a paid monthly subscription service offering no delivery fees, but at a heftier 27 per cent commission.
The service also offers courier services to a larger delivery area (DoorDash would not say what the specific radius is).
The final tier is DoorDash premium. It comes with a 29 per cent delivery commission and eight per cent for pickups.
The delivery area for these users is the largest, they get a $50 rebate for spending $100 or more on marketing every month and access to Dash Pass customers but at no difference in commission.
Every tier gets access to DoorDash Storefront, software for online ordering that allows restaurants offer digital sales through their websites.
Arora declined to say how different the tiers and their commission levels are from DoorDash’s current Canadian offerings, but food delivery apps have been known to charge as much as 30 per cent on couriered orders.
The commission levels used by apps like DoorDash, UberEats and SkipTheDishes have been a persistent complaint for restaurant owners, who say the platforms are eating up much of their profits.
These concerns have only been exacerbated by restaurants still working to recover from the COVID-19 pandemic,
which caused many of their dining rooms to close,
and from stubbornly high inflation rates that have pushed up costs.
However, Brian Kaufmann, DoorDash’s head of Canada policy and government relations, defended the rates, saying they are the product of conversations
with a restaurant advisory council,
merchants on the platform
and other business associations.
“We’re hearing what pricing makes sense and this is what the market looks like now, and we’re pretty proud of what we’ve come up with,” he said.
During the COVID-19 pandemic, restaurants wanting to escape such commissions frequently
called on to customers to avoid such delivery apps
and order directly through eateries.
For customers keen to stick with such apps, they recommended pickup because of its lower commissions.
Since then, health measures like temporary closures and masking mandates have largely been dropped, but many have stuck with apps like DoorDash.
Arora noticed demand for DoorDash in Canada is very season specific.
“We obviously see pickups pick up, for lack of a better word, in the summer months and then deliveries are obviously more appreciated as the weather starts to become a little bit harder to get out,” she said.
She and Kauffman say meeting those needs has not been difficult as people increasingly rethink their careers, pursue more stable earnings or hop to remote work in the wake of the health crisis.
“I don’t think we’ve been impacted at all by some of that change,” said Kauffman.
However, the company’s financial state was affected by the pandemic.
At the end of November, DoorDash co-founder and chief executive Tony Xu announced 1,250 workers — roughly six per cent of the company’s workforce — were being laid off.
The company has refused to say how many Canadians were impacted by the cut.
“This is the most difficult change to DoorDash that I’ve had to announce in our almost 10-year history,” Xu said in an open letter announcing the cuts.
Xu took the blame for the layoffs, saying the company had to carry out such a move because
DoorDash was “undersized” before the pandemic
and as opportunities swelled during the health crisis,
he sped up hiring to “catch up with our growth.”
But expenses grew and Xu knew he had to act.
“We were not as rigorous as we should have been in managing our team growth,” he wrote. “That’s on me.”
DoorDash Canada moves to tiered commission system | Financial Post
Just like businesses can now charge for credit cards, restaurants should be able to charge for delivery to avoid any perception or reality that in house diners and pick ups do not subsidize Door Dash.
Jan. 9, 2024 "One in five restaurants in Canada at risk as CEBA deadline looms, say advocates": Today I found this article by Shantae Campbell in the Financial Post. The comments are interesting to read:
The food service industry could be decimated by a wave of closures if the federal government does not extend the Jan. 18 deadline for the repayment of loans under the Canada Emergency Business Account program, two industry groups are warning.
Restaurants Canada, a not-for-profit association advocating for the food service industry, said Jan. 8 that the looming deadline could prove disastrous for the sector, which has been operating under the strain of debts incurred during the pandemic as well as other economic factors beyond its control.
“Immediate action is essential to prevent further closures and ensure the long-term survival of this critical sector, which contributes significantly to the nation’s economy,” the association said in a press release.
The call was echoed by the Canadian Federation of Independent Business (CFIB), which advocates on behalf of more than 97,000 small businesses.
According to a CFIB survey, nearly one-fourth of those who received loans through the Canada Emergency Business Account (CEBA) are likely to miss the repayment deadline.
If small businesses fail to repay the loan on time, or if they haven’t arranged a refinancing extension with their bank, they will forfeit the chance to have up to $20,000 of the loan forgiven.
Additionally, they will start incurring interest on the remaining principal amount.
The federal government has maintained the original CEBA loan repayment deadline of Jan. 18, 2024, despite persistent appeals by businesses for an extension.
Dan Kelly, chief executive of the CFIB, said the government’s hasty distribution of loans during the pandemic has led to ongoing confusion among small business owners.
“I think at the beginning of the process, these things were put together superfast because they were pandemic supports. The government wanted to get money out there to keep businesses afloat during the early days of the pandemic, so it’s not a surprise that they tightened some of the rules as they went,” Kelly said.
However, about 50,000 of the 900,000 loan holders were declared ineligible and Kelly said the government has been “terrible in providing information to businesses, making many decisions at the absolute last minute.”
“In December 2023, numerous businesses discovered through a bank letter that they were never eligible for the forgivable portion of their loan and now had to repay the loan in full within a shorter deadline,” he said.
“The sad part is that whether the business was eligible or not, they spent the money, what are they going to do?”
Even for the 40,000 CEBA loan holders who were eligible meeting the deadline remains a challenge.
“We’ve been calling for a year extension to the Jan. 18 deadline, but the government has unfortunately refused to do it,” Kelly said.
Four major tax hikes scheduled for early 2024 will add to the financial burden small businesses face.
Employment insurance (EI) and Canada Pension Plan (CPP) premiums increased on Jan. 1. Payroll taxes for workers will rise by about $348 and for employers by about $366 per employee in 2024. Employers could pay up to $5,524 per employee for the CPP and EI changes, not including other possible payroll taxes.
On April 1, the carbon tax will also go up to $80 from $65 per tonne, and the alcohol excise tax will adjust to inflation, about 3.5 per cent, unless the government decides otherwise.
The CFIB has advocated for the suspension of the tax hikes.
“Recovery in the food service industry has been painfully slow because of several factors beyond the control of restaurateurs, including
record high inflation,
the rising cost of food,
and labour shortages,”
Restaurants Canada said in its press release. “We are not asking for a handout; we are asking for more time.”
This number of 1 in 5 compares to what before 2020. I also question how much of this is the Mom & Pop corner place vs chain franchises
- My opinion: I agree.
My opinion: There are a lot of variables with all these restaurants closing down like people who can't afford to eat out and inflation.
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