clock menu more-arrow no yes

Filed under:

Attention Restaurants: DoorDash Will Eat Your Profits and Loan You Money

DoorDash Capital is actually a cash advance and a fee, okay?

A sticker on a restaurant front door says “We deliver with DoorDash.” Shutterstock

As part of the company’s ongoing push for growth and expansion, DoorDash announced that it’s getting into the financial services business with plans to offer cash advances to restaurants that will be automatically repaid via deductions from every DoorDash order the establishment fulfills. DoorDash Capital will offer what the company describes as “fair, fast and convenient financing” which they say can help restaurant owners cover payroll and rent if revenue comes up short, to establishments that use DoorDash to handle delivery and pick-up orders.

In a FAQ on the company website, DoorDash is very clear that its new financing product is a cash advance, not a traditional loan. Instead of the typical interest structure, DoorDash will charge a one-time fixed fee (as much as 10 percent of the total advance,per Restaurant Business) that can be paid back in installments alongside the cash advance. The company says that the amount a restaurant is eligible to borrow is based on its sales history with DoorDash, and that repayments for the cash advance will be deducted from the restaurant’s sales on a regular basis.

The move comes as no surprise for anyone who’s been watching DoorDash over the last year.The pandemic has been hugely profitable for the company, and it’s using all that new revenue to build an infrastructure that will make DoorDash almost impossible for many restaurants to avoid.As Bloomberg points out, DoorDash isn’t the first digital restaurant platform to implement this kind of program. In 2019, Toast Inc., which operates the ToastTab platform many restaurants use for online ordering, began offering loans, along with Block Inc., the company behind point-of-service platform Square.

Back in November, DoorDash aimed directly at the neck of online ordering platform Goldbellywith a new nationwide shipping program,它允许餐馆打包和发货ir wares all over the country. DoorDash already controls a majority — 58 percent — of the food delivery market, and its recent moves indicate that DoorDash clearly wants to function as a one-stop-shop for restaurants and all their business needs, sometimes by adopting services its competitors offered first.

In October 2021, DoorDashlaunched an advertising programthat enabled restaurants to create paid “Sponsored Listings” to promote their businesses, just likePostmates and its parent company, Uber. Now that DoorDash can lend money to restaurants, these establishments could soon be beholden to DoorDash for handling their deliveries, managing online marketing and advertising,andtheir finances.

It’s too soon to tell how restaurants will respond to DoorDash’s new cash advances, but many establishments may have to take the money just to keep the doors open — even as COVID-19 case counts are declining, many restaurants are still financially faltering. Despite some appetite in Congress for a replenishment of the Restaurant Revitalization Fund, governments have largely left restaurants to their own devices for survival. And so it’s perhaps not surprising that a profit-hungry tech company would swoop in with a Band-Aid-style solution that could help struggling restaurants make ends meet.

Still, it’s likely that plenty of restaurant owners will avoid the program based on their individual experiences with DoorDash. If they’ve already been charged outrageous fees by the app for the privilege of facilitating delivery orders orfought with the companyover advertising their restaurant on the platform without permission, will they really trust DoorDash to manage the financial health of their business?

\r\n\r\n\t\r\n\r\n\r\n","class":"c-newsletter_signup_box--breaker","analytics_placement":null,"dismiss_interval":30,"scroll_depth":150,"use_visited_limit":false,"visited_limit":3}">

Sign up for theSign up for the Eater newsletter

The freshest news from the food world every day