DoorDash said it will add new delivery fees for orders in Seattle, blaming “inaction” from the City Council related to a minimum wage law for drivers implemented in January.
The food delivery giant will add a $1.99 fee for certain long distance orders and set a $1.99 minimum service fee for orders made by subscribers of its DashPass program.
DoorDash said in a blog post Monday that its new fees, which go into effect Aug. 1, are necessary to “remain operationally sustainable in Seattle.”
The fees are in addition to the $5/order fee set by DoorDash and Uber in January in what was described by the companies as a way to offset the new regulation.
The companies say demand has fallen since then, with drivers waiting longer for orders and restaurants losing revenue. They have lobbied lawmakers to lower the minimum wage standard for driver.
Seattle City Council President Sara Nelson in April introduced a bill that would have lowered the wage standard from $26.40 to $19.97 per hour.
The council was set to vote on CB 120775 in May, but it abruptly postponed the vote to consider amendments.
It remains unclear when or if Seattle lawmakers will vote on potential changes.
DoorDash said previously that it would remove its $5 fee if CB 120775 is passed.
In the blog post, DoorDash says it “continues to lose money in the market due to the minimum pay ordinance.”
“It was our sincere hope that these additional fees could be avoided, but the City Council’s inability to reach a compromise that would reduce costs, even marginally, has left us with few options,” it wrote in the post.
DoorDash reported revenue of $2.5 billion in the first quarter, up 23% year-over-year. The company is not profitable, reporting a GAAP net loss of $25 million.
The response from drivers to the new law mixed. Some want the city to keep the existing pay standard because they are earning more money. But others say they are making substantially less income and receiving fewer orders.
Restaurants owners also offer conflicting opinions — some support the current law, while others say the lack of demand is hurting their business.
The situation in Seattle is being watched as part of a broader battle between tech-fueled food delivery companies against lawmakers setting minimum wage regulations. Uber and Lyft spent the past two years fighting minimum wage laws in Minnesota. DoorDash said recently that a new minimum pay law in New York City has been “devastating.”
Food delivery drivers in New York City saw wages grow by more than $7 per hour following implementation of its minimum wage law, while the number of deliveries increased by 8%, according to report shared by city officials this month.
Seattle has become a testing ground for the impact of labor standards in a growing food delivery market facilitated by tech companies that tout the flexibility and independence offered by their platforms, but have come under scrutiny for their impact on workers and restaurants.
Previously: New data reveals impact of minimum wage law on food delivery drivers and orders in NYC
https://ift.tt/CG3EaMi July 30, 2024 at 01:51AM GeekWire
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