Food delivery fees are going up, and everyone is feeling the pinch.

Food from the restaurant of your choice, delivered to your door – at what cost?

Third-party food delivery has become the norm for American consumers, with delivery apps like Grubhub, Doordash And Uber Fast food has become a part of everyday life, and it imposes on customers and restaurants an increasingly complex equation of service fees, delivery costs and worker tips.

Frustration on both sides has taken a toll on services, which have worked to protect (or make) profits and support orders while cash-strapped Americans scan the exit screen — and order volumes that are often larger than expected.

Compared to orders placed directly through restaurant websites, consumers reported higher annual increases in their total checks on third-party apps between 2022 and 2024, according to Technomic. Although Uber Eats, DoorDash and Grubhub promote paid memberships to reduce fees, consumers still claim they pay more on average for orders from third parties, according to food service industry research firm Foodservice.

The rising costs come as more Americans watch their wallets during a period of persistent inflation.

Zainab Batoul, a San Francisco resident who said she orders delivery through Uber Eats or DoorDash weekly, called the extra fee “crazy.”

“I feel like I remember a time when disease rates weren’t as high as they were maybe four years ago, but it seems like they’re still going up,” Batoul said.

The share of consumers choosing third-party delivery services over direct restaurant delivery will rise from 15% in 2020 to 21% in 2024, according to Technomic Consumer Trends in Delivery and Takeaway 2024 Report. The research firm found that better order tracking, access to deals and promotions, and the ability to discover new restaurants helped keep app customers coming back.

But the cost of the extra fees may put some people off.

Of consumers who reported ordering less delivery, 41% said it was due to higher delivery fees, while 48% cited inflated menu prices, according to the report. The premium restaurants were charging for third-party delivery menus increased between 2022 and 2023 — and has nearly doubled since 2020, according to a study by International Enquirer. Gordon Haskett Research Consultants.

The companies that facilitate the delivery process say they aim to keep fees low — while trying to stay afloat.

GrabHub said in a statement that it aims to keep fees as low as possible, while maintaining its business: “Given the high costs associated with handling deliveries — including managing logistics and paying delivery partners — we have adjusted our fees accordingly,” a GrabHub spokesperson said.

The company is owned by Just Eat Takeaway, an Amsterdam-based online food ordering and delivery company, who said It is actively looking to sell some or all of Grubhub.

DoorDash said it has cut fees for consumers over the past two years from historical inflation, while also seeing an all-time high in active users and increased order frequency in the past year.

The company, which went public in 2020, has yet to report a full-year profit. The delivery service has reported one quarter of earnings — Net income $23 million – For the three months ended June 30, 2020, at the start of the COVID lockdowns in the United States

On the other hand, the transportation giant Uber, It made nearly $1.9 billion last year.Driven in part by strong gains in its delivery business, Uber’s delivery segment, which includes Uber Eats and Uber Direct, reported adjusted EBITDA of $1.51 billion for 2023, an improvement of more than $955 million from 2022.

Uber Eats users pay for a service that allows them to browse merchants and order food efficiently with on-demand delivery, an Uber spokesperson said.

“Uber Eats order fees help pay delivery workers and cover platform costs — like safety programs, 24/7 support, background checks, product development, and more — so orders can arrive reliably,” a company spokesperson said in a statement.

On both Uber And DoordashOrder totals may vary by region due to additional fees applied to offset local laws and regulations, according to their respective websites. In California, for example, customers on Uber Eats pay the California Driver Benefit Fee, which was introduced to fund mandatory driver benefits after Prop 22, according to Uber.

Even before local variations, add-ons can be a hassle.

Uber charges a delivery fee that varies based on the order, location and driver availability, according to its website. DoorDash charges a similar delivery fee that it says depends on a variety of factors. Both apps say the fee is paid directly to them to cover the cost of delivery, not to drivers or restaurants. Grubhub also includes a delivery fee on orders that increases with distance, up to a maximum price.

All three apps also charge separate service fees, which aren’t the easiest to calculate.

Grubhub and DoorDash say the fees cover the cost of operating their platforms, while Uber says all but 10 cents of its service fees go directly to the delivery driver, though the driver is then expected to pay Uber an undisclosed amount for various support services.

Both DoorDash and Uber say fees can change based on total demand.

After all these differences, and taking into account possible discounts or promotions, many customers will not know the total cost of their order until after they have selected the items and completed the purchase until checkout.

“You see something listed for $15 and then you go to checkout and it says $25, but you’ve already decided in your mind to get that thing or you’re looking forward to it,” said app user Batoul. “That adds extra friction between backing out of the order.”

Both Uber and Grubhub said their fees are clearly disclosed before checkout, while DoorDash said the total fees applied are always available to view in the shopping cart.

In a study of menu pricing premiums for 25 popular restaurants on third-party delivery services, the average cost was 20% higher than eating in, according to Gordon Haskett Research Consultants.

“Restaurants have said, ‘We’re not going to pay for DoorDash, Uber, GrabHub. If a consumer values ​​that convenience and wants to use that service, they can afford that,’” said Meredith Sandland, CEO of Empower Delivery.

Empower Delivery aims to take on major delivery services, by connecting restaurants with a pool of delivery workers for what it claims is a lower cost of business, according to its data. website.

Phyllis Engelbert, a restaurant owner in Ann Arbor, Michigan, has resisted DoorDash and other third-party delivery services since before the pandemic. Her Detroit Street gas station relies on dine-in orders and a limited delivery option for a flat fee of $7, she said.

Engelbert says she’s not convinced that third-party delivery apps will improve her bottom line or benefit her employees, even if they do increase sales.

“It seems like another way for companies to come in and take a piece of the fruits of our labor,” Engelbert said.

The three main services offer free delivery on every order with their premium memberships — Hub+ case, Dash Pass And Uber One – $9.99 per month, according to their websites.

In May, Grubhub partnered with Amazon To include Grubhub+ in the e-commerce giant’s Prime subscription. DoorDash offers Free 1 year membership For users with DoorDash Rewards Master Card Credit CardUber offers Membership Benefits Certain Capital One For credit card holders for a limited time.

They also all offer incentives to students: Dash Pass And Uber One Half price, and Hub+ case Available free of charge to students at partner universities, according to their own websites.

The benefit of subscriptions is twofold: With the promise of lower costs for all-inclusive orders, more customers may be able to complete a purchase, and more often; and with a select list of premium users, services can tailor future discounts to their most loyal customers, according to Steve Tadelis, an economics professor at the University of California, Berkeley.

While all subscriptions do not include delivery fees, service fees — and any local variations — still apply. According to the company, service fees are reduced for DashPass members.

And if you reach that limit, you’ll only have one cost left: a tip for the delivery driver.

When consumers are surprised by the total price, tips may be “the only tool they have left” to manage their budget, according to Empower’s Sandland.

Batoul said she always tips, but that doesn’t mean she feels comfortable doing so given the other fees involved. She said that since she can’t be sure that service fees and other charges actually go to drivers, tips are necessary to make sure they get compensated.

“It makes me angry, because I feel like the service fees should go to the people who provide services to us,” she said. “But it doesn’t seem like that.”