Rising Costs of Third-Party Food Delivery Apps Draw Consumer Scrutiny

As third-party food delivery apps like Grubhub, DoorDash, and Uber Eats become increasingly popular among American consumers, many are surprised by the final costs at checkout. The combination of service fees, delivery charges, and tips often results in a meal costing significantly more than anticipated. Despite promotional memberships aimed at reducing fees, research indicates that consumers generally pay more for orders placed through these platforms. DoorDash has reported a reduction in fees over the past two years amid rising inflation, while simultaneously achieving record user engagement and order frequency. Uber's delivery segment, which encompasses Uber Eats, has also seen substantial financial growth, with an adjusted EBITDA of $1.51 billion in 2023, a notable increase from the previous year. Both Grubhub and DoorDash justify their delivery fees as necessary for operational costs, while Uber claims that most of its service fee directly benefits delivery drivers. Consumers have expressed frustration over the hidden costs associated with these services. For instance, a meal priced at $15 can escalate to $25 by the time all fees are added. Research shows that menu prices on third-party delivery platforms can be, on average, 20% higher than dining in at restaurants. In response to the competitive landscape, new services like Empower Delivery are emerging, promising lower costs for restaurants by connecting them directly with delivery workers. To attract more customers, all three major delivery services offer premium memberships that include free delivery for a monthly fee. These subscriptions not only aim to lower overall costs for consumers but also allow the platforms to tailor discounts for their most loyal users, enhancing customer retention.