Doordash or Food Pickup: What is the Cheapest Option for Food, FAST?

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This article is meant to apply to all food delivery services (Grubhub, Uber Eats, Postmates, Instacart), but we have selected Doordash, the market leader, as the economics are likely similar to other services in order to remain competitive.

With gas prices rising, one question that might strike consumers is whether or not it is worth it to drive and pick up food, rather than ordering from a food delivery service. Purely intuitively, Doordash will factor gas prices into payment to the drivers, so it won’t be economical to order from a delivery service until new, more efficient solutions such as drones become widespread. This begs the question, just how much extra are you paying for convenience?

Doordash delivers up to 30 miles, but usually aims to deliver within 10 miles. Given the substantial fees Doordash charges, it is clear that driving the average 5-mile delivery yourself will be worth doing given fees, so we will be analyzing the edge case that your delivery spans 20 miles. Assuming slightly worse than average gas mileage (the average is 25.7 mpg), we can calculate the price of gas for a car with 20 mpg. This would currently cost $10 in gas, according to a US average of $5 per gallon.




Now, what fees does Doordash charge, and what is the best way to reduce them? Doordash charges an unavoidable service fee, which comes out to be about 25 percent of the meal cost. Furthermore, it is good to give a dasher tip of 10-15%, which includes the service fee, so it actually comes out to be a 12.5-18.75 percent tip. Therefore, with only unavoidable fees, you are paying 37.5-43.25 percent on top of your meal. The delivery fee Doordash charges varies by restaurant, distance, and order price, and can be completely eliminated by a Dashpass, a paid subscription. Although a Dashpass may be worth the price, it does not substantially change the math on Doordash’s pricing. It is also worthy of note that restaurants often charge higher prices on their food for delivery orders, but this varies by restaurant, so it will not be included in this analysis.

We also need to discus tipping.  Doordash asks that you tip their drivers. If you go pickup your food, you may still want to tip the staff.

In conclusion, regardless of the deal that is offered, ordering delivery from Doordash or a similar service will generally accrue a 40-50 percent markup. Therefore, only reason one should consider Doordash is the time saved, and each person’s time must be valued individually.

A more cost-effective alternative to ordering from delivery services is ordering from restaurants that offer their own delivery. They are able to better optimize costs, and generally only charge a few dollars for delivery, with no fees. Many pizza restaurants such as Dominos offer services like this. Dominos charges about $6.50 for delivery, Carryout is available, but its your gas.

 

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