McDonald’s restaurants that slow down DoorDash delivery workers by making them wait for orders that aren’t ready on time are about to face stiff financial penalties, according to a report.
DoorDash will start dinging eateries by raising its commission rates — which will jump as high as 20% of an order — that McD’s restaurants have to pay. The higher rates will kick in when drivers have to wait more than four minutes after arriving to pick up an order, according to a Wall Street Journal report, which cites corporate documents.
The higher fees won’t kick in until next year, giving McDonald’s and its franchisees time to iron out the kinks in a delivery operation that has seen customers waiting for delayed orders — and has cost DoorDash money in refunded items when a restaurant forgets to pack the fries or a Coke, according to the report.
As part of the agreement, McDonald’s restaurants that reach a certain threshold of customer refunds — by forgetting the Coke, for instance — also will have to pay for those refunds themselves, according to the report. It didn’t detail the threshold.
Meanwhile, the commissions the McDonald’s restaurants will pay will rise in 2023 to as much as 17.6% and 20% for the outlets that are taking too long with orders, according to the report. For restaurants that are in compliance with delivery time rules, DoorDash will charge 11.6% and 14.1%, respectively, depending on whether a customer is a member of the DashPash loyalty program.
Restaurants pay a higher commission on the orders of DashPash members because, according to the delivery company, their best customers order more often and spend more when they do. DoorDash told The Post it wouldn’t comment on the confidential client contracts.
McDonald’s has been working with DoorDash since 2019 and recently inked the new agreement in November 2021 to expand the partnership, in part by aiming to increase the speed of the delivery. Terms of the deal were not disclosed at the time.
But according to the report, McDonald’s got a sweetheart deal on DoorDash commission rates – which can charge restaurants up to 30% per order – because of the chain’s high volume.
DoorDash lowered the base rate McDonald’s pays on orders from non-DashPass subscribers to 11.6% and to 14.1% for DashPass subscribers. The previous rate for both had been 15.5%, according to the report.
Delivery services became a lifeline for the restaurant industry during the pandemic and many consumers who have become accustomed to the convenience have continued to use delivery services even after restaurants reopened.
But the commissions charged by DoorDash and others — including Uber Eats and GrubHub — have long been a point of contention for restaurants.
Legislators have stepped in, adding temporary and permanent caps on the commissions the delivery companies can charge. Some of these measures, including in New York City, have resulted in litigation.
McDonald’s did not comment directly on Doordash penalizing franchisees who are not fast enough, but it said in a statement that delivery is “one of the largest growth engines of the McDonald’s business globally.”
“As we continue to focus on long-term, mutually beneficial partnerships, we have engaged in global agreement with leading delivery providers,” the statement said. “Commission rates are just one component we consider when establishing these strategic agreements.”
Restaurant operators say they are struggling to hire enough workers and they worry about being penalized for not operating fast enough, according to the report.
DoorDash said in a statement to The Post that its “quality-based incentives help reduce Dasher wait times in order to maximize their earnings and boost customer retention and revenue for our merchant partners.”
A DoorDash company spokesman wouldn’t comment specifically on the McDonald’s fees, saying a “summary figure” on commissions could be misleading.
“The fee structures for our merchant partnerships can vary by store or franchisee location and, in practice, can be determined by a variety of factors, including volume, average delivery distance, and value-added services, as well as operational performance and quality,” the statement said.