DOOR DASH

Door Dash is an online food delivery service, which partners up with local restaurants to deliver
meals to customers nearby. Deliveries are executed by contractual drivers (so-called Dashers)
that operate on an on-demand basis.
Door Dash makes money via commissions, delivery and service fees, a white-label logistics
service, premium subscription plans, as well as by providing a catering service for businesses
customers.
Founded in 2013 by four Stanford graduates, Door Dash became an instant success with
customers due to its flexible workforce of drivers. The company went public in December 2020,
making it one of the largest IPO’s in the food delivery industry.

How Does Door Dash Work?

Door Dash is an on-demand food delivery platform that allows customers to order food and
beverages from restaurants nearby. People can order through the company’s website or their
Android and iOS apps respectively.

Door Dash does not prepare the food themselves. Instead, the company partners up with local
restaurants and big food chains across the US to serve people in metropolitan areas.
In some instances, Door Dash will provide kitchen space for the restaurant to focus solely on
preparing delivery food (a concept referred to as cloud or ghost kitchens).
The process of food delivery is then executed by so-called Dashers, the company’s riders that it
hires on a contractual basis. As contract workers, Dashers are not employees of the company.
Instead, they only get paid whenever actively delivering.
Compensation is based on a multitude of factors, including:

 base pay, which is determined by time worked, distance traveled, and desirability of the
order

 promotions, being higher compensation in peak times and rewards for challenges
hosted by Door Dash (for instance delivering a certain amount of orders in a given time
frame)

 tips, which Dashers can fully keep

As the operator of the marketplace, Door Dash also takes care of the payment process. When
placing an order, customers pay Door Dash directly. Afterward, the restaurants can claim the
money they earned on the platform minus fees (more on that later).
One of the company’s success formulas is based on the fact that every full-time employee (not
to be mistaken with the contract workers) has to work as a Dasher at least once every month.
This creates a constant feedback loop and allows the company to tweak the product experience
wherever necessary.
Today, Door Dash is available in more than 4,000 cities across the United States, Canada, and
Australia. Additionally, more than 200,000 drivers are delivering food for the company on an
on-demand basis.
How Does Door Dash Make Money?
Door Dash makes money via commissions, delivery and service fees, a white-label logistics
service (called Drive), a premium subscription plan (called Dash Pass), and a catering service for
other businesses.
Let’s take a closer look into how Door Dash manages to monetize its user base and how the
company effectively became America’s go-to app for all things food delivery.
Commissions
Door Dash charges restaurants a variable percentage fee for every order that is made through
its platform. This variable amount is subtracted automatically whenever an order is made.
In April 2021, Door Dash introduced a tiered commission structure. Under the new scheme,
restaurants either pay 15 (Basic), 25 (Plus), or 30 (Premier) percent commission.
Different benefits are available depending on what plan a restaurant opts into. For instance,
Plus grants restaurants a greater visibility on the app and access to Dash Pass users. A detailed
overview of the fee structure can be found here.
Similarly, Door Dash also charges commissions when users order convenience products. In
August 2020, it launched Dash Mart, which allows customers to order almost any product,
ranging from toilet paper to shampoo.
Delivery & Service Fees
On top of the restaurant commission, Door Dash earns money by charging customers for
delivery as well as various service efforts (including marketing, app maintenance, and so forth).
 DoorDash App
Delivery fees often range between $6-8, depending on the distance and current demand.
Delivery fees are used to compensate drivers, but the company does not publicly disclose how
much of that money lands in the driver’s pockets.
Service fees are calculated as a percentage of the order subtotal. The service fees allow them to
cover a variety of costs, including technology development, marketing, and payment
processing.

Dash Pass
Dash Pass by Door Dash is a subscription service that gives customers the ability to save money
on delivery and service fees.
By paying a flat $9.99 every month, customers will not have to pay delivery fees for orders
above $12. Furthermore, service fees are charged at a reduced rate.
Notably, not every restaurant is part of the Dash Pass offer. Similar to other subscription
services like Netflix, customers have the ability to cancel at any time.
Door Dash claims that customers will be able to save an average of $4-5 per order when being
subscribed to Dash Pass.
The subscription service is tailored to customers who repeatedly use the Door Dash app for
their meal deliveries.
Drive
Drive is a white-label logistics service that allows other restaurants to tap into Door Dash’s fleet
of drivers.
It is aimed at merchant that already generate demand through their own platform but cannot
always fulfil the demand. These include customers like Denny’s or Wing Stop.  
Pricing is available upon request. In all likeliness, these businesses pay Door Dash a fee for
every order that the company fulfils.