DoorDash is an on-demand food delivery service that uses technology to facilitate door-to-door delivery. Is it a good idea for your restaurant?
Founded in 2013 by Stanford students, DoorDash has grown to be in over 800 cities and boasts over 200,000 local drivers. With a reach like that, it has the potential to significantly help your business by handling deliveries so you don’t have to.
- How Your Restaurant Would Use It
- Is DoorDash in Your Area?
- Delivery Management
- Merchant Growth Options
- DoorDash Costs
- Is DoorDash Actually Beneficial?
How Your Restaurant Would Use It
While many delivery apps function similarly, it’s important to understand how DoorDash works and how you would use it at your restaurant. DoorDash functions much like delivery app Grubhub, so if you’re familiar with that, you already have the basics down. Essentially, DoorDash allows you to provide delivery without having to hire the staff for it or handle the actual order taking yourself.
Is DoorDash in Your Area?
The first step would be to make sure that DoorDash is available in your area. While DoorDash does have presence in a lot of cities, it’s not everywhere.
You can check to see if DoorDash is available near you through a full list of areas available on the company’s website.
Once you’ve confirmed that the app operates in your business location, you’ll need to complete the signup process.
DoorDash claims that the signup process in only 7 steps long and takes just 10 minutes.
You’ll need to:
- Input basic information like your name, email, and phone number.
- Tell DoorDash about your restaurant: name, phone, address, and hours.
- Share your menu by providing a link to an online version, or by uploading your menu as a PDF, photo, etc.
- Make a choice about how you want to receive orders from DoorDash to your restaurant. DoorDash recommends using a tablet, but email and fax are available as well.
- Add photos to your DoorDash menu by sending in your own photos or scheduling a free photoshoot with a DoorDash photographer.
- Provide bank account information to make sure you’re paid through a weekly direct deposit.
- Agree to DoorDash’s Terms & Conditions.
Once you go through the signup process, you’ll receive an email from the DoorDash Team on how to activate your store. Your restaurant will go live on DoorDash within a week. In the meantime, look out for 2 more emails with instructions on how to review your menu to make sure that it is accurate and how to log in to your tablet (if this is the option that you chose).
You will receive an email when your restaurant goes live on DoorDash. You can now also go to your “Merchant Portal” to edit your menu and business hours. There will be some helpful links included in this email about where to go if you have questions or need help.
Now that you’ve signed up, what kind of features does DoorDash offer your business? There are at least three major offerings: The Merchant Portal, Delivery Management, and Merchant Growth Options.
The Merchant Portal
After you sign up, DoorDash creates a “Merchant Portal” that gives you the ability to manage deliveries, payments, bank account information, operating hours, and menus.
Merchant Portal Dashboard
DoorDash tracks all your orders through its system and helpfully shares that information with you. The Dashboard shows you data such as:
- An aggregated view of your total orders with DoorDash
- Average DoorDash order amount
- Number of unique customers
- Popular menu items
- Your net sales with DoorDash
For each of the sections above, DoorDash displays a color-coded percentage underneath. A percentage in blue reports how far up your orders and sales are compared to the previous week. A percentage in red reports how far down your orders and sales are compared to the previous week. This feature offers the opportunity to notice trends and track performance, week to week, month to month, quarter to quarter.
Exporting Data and Reports
If you scroll to the bottom of the navigation menu on the left side of the screen and select “Export Data” under Business Tools, you will be able to download transaction history for a range of dates.
The Merchant Portal is accessible to as many employees as you choose. There are 3 different roles available to grant to different employees: Administrators, Managers, and Store Operators. A chart with the different permissions is shown below:
As shown, Administrators are able to use all functions for all store locations. Managers can use all functions at specific locations, and Store Operators can only request a delivery at specific locations.
DoorDash offers 3 options for receiving orders:
- The Order Manager App on Android tablets
Download the “Order Manager” app onto your Android tablet. Alternately, DoorDash will send you an Android tablet with the Order Manager App installed and ready for use.
You can receive orders by tablet and email/fax. However, you will not be able to receive orders from phone + tablet or email + fax.
DoorDash recommends choosing the tablet as a way to receive orders. Most of their delivery management features are tablet-specific:
- Sections for each order stage life cycle
- Scheduled order timing
- Tags for scheduled orders, large orders, canceled orders, modified orders, customer pickup
- Item count per order
- Large/clearer map and “Dasher” location information
- Editing prices on a live order
- Canceling a live order
- Contacting a customer
- Getting a refund for a cancelled order
- Delaying orders
These options are not possible (or significantly more cumbersome) when dealing with a fax or email order.
Merchant Growth Options
DoorDash also offers several ways to grow your sales through their platform via their “Merchant Growth Options.”
The programs include marketing tools, catering options, and free trials for customers. Some programs incur additional fees.
DoorDash does not publicly list their fees on their website. According to a 2018 post on Quora.com, there are no setup fees. DoorDash makes their money on individual orders by charging delivery fees to the customer and partner percentages to the business. That percentage varies, but is reported to be about 20%. This is in line with the 20%-30% typically reported for other delivery services, such as Uber Eats.
In addition, to get noticed on DoorDash, businesses may choose to pay a fee in order to be promoted on the platform, which may increase orders due to increased visibility. Costs for this are not listed. And it should be noted that this kind of promotion is completely optional.
Is DoorDash Actually Beneficial?
In an undated blog post DoorDash claims that in a single year, increases in minimum wage, healthcare employer mandates, and increasing customer demand are cutting into restaurants’ profitability. They say 90% of millennials order from restaurants at least once a week.
They claim that profits from dine-in orders are typically about 10% after:
- Labor costs: 30%
- Real Estate costs: 30%
- Food costs: 30%
They also claim that profits from delivery orders can be 40% as most costs do not increase with the incremental orders.
- Additional Labor costs: 0% – If your restaurant gets an additional 10 delivery orders per day, they claim you will not need to hire additional chefs, waiters, hosts or bussers.
- Additional Real Estate costs: 0% – DoorDash claims you will not need to rent or buy more space to make these additional orders.
- Food costs: 30% – The costs of the ingredients needed to make the additional food.
- Delivery costs: 30%
On the flip side, a 2019 article by The Financial Post cited a report by Restaurants Canada about the effect of food delivery apps/websites like DoorDash on Canadian restaurants:
- 37% of restaurant operators told Restaurants Canada that third-party apps/websites hurt their on-premise dinner sales
- 27% said third-party apps/websites were denting their on-premise lunch sales
- 79% of the operators who use these apps/websites said there is profit to be made but the vast majority said the services were only ‘slightly profitable’
- 21% said that they were ‘not at all profitable.’
So, should you use DoorDash for your restaurant? Maybe.
Talk to the company and get a sense of what typical fees and profitability would be for businesses similar to yours. Consider talking to other restaurants in your area to see which delivery services (if any) they find helpful. DoorDash offers a great deal of opportunity, and with careful management, could be an effective way to expand your business.