Comment by SimonPStevens

6 years ago

I don't understand how this works.

If your order to doordash cost $5000, why did they pay the restaurant $20,000? That would suggest their prices are 4 times cheaper to the customer. But I thought everyone complained they were more expensive.

Surely DD are still keeping their commission from your order?

What have I misunderstood?

6 comments

SimonPStevens

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distances  6 years ago

Did you read the article? This was covered there, though as a less extreme price difference.

patmcc  6 years ago

Doordash seems to provide two different services.

1) Doordash has some deal with the restaurant, gets a commission on sales, fees, whatever.

2) Doordash has no deal with the restaurant, charges customer $x+y, buys food from restaurant at $x.

In the second case, Doordash may be charging much more than the menu price, if it things it can find customers who will pay it.

  • TeMPOraL  6 years ago

    I think the trick here is that Doordash isn't charging the customer $x + $y, but $x - $y. X minus Y. That is, they're subsidizing the delivery - in order to generate demand, and then come to the restaurant with the data to convince them to sign up for 1). This was actually mentioned at the bottom of the article.

    So in this story, 'JumpCrisscross paid $x-$y = 5k for an order to a homeless shelter, but the real, restaurant price for that order $x=20k, which means DoorDash has just subsidized the transaction for $y=15k. The restaurant got an extra $20k of business that day, and 'JumpCrisscross bought $20k worth of food for a shelter at 1/4 the price.

    And the best part, they could probably do it again :).

    EDIT: Reading the article again, it seems to me Doordash is supposed to be charging the customer $x in the lead generation phase; so perhaps the -$y part is a scrapper error.

    • shagie  6 years ago

      Or the -$y is marketing costs.

      DD says to Pasta House, see? Look, with DD we facilitated an additional $20k of revenue for you on this day. You should enter into an agreement with us so that we can make this a more seamless process.

      In most cases, Pasta House isn’t aware that those orders were drastically under cost and don’t represent actual demand.