The Financial Trap of DoorDash DashPass for Restaurants

DoorDash’s DashPass program is marketed as a way for restaurants to increase sales by attracting more loyal customers. DashPass subscribers pay a monthly fee to get free or reduced delivery fees, and restaurants that opt in must offer discounted pricing on DashPass orders.

While this sounds great in theory, many restaurant owners don’t realize that DashPass can actually become a financial trap—one that eats away at already razor-thin profit margins. Here’s how.

How DashPass Works Against Restaurants

1.Forced Discounts on Already Low Margins

•To participate in DashPass, restaurants must offer at least a 10-15% discount on orders over $12.

•If a restaurant is already making only 6-9% (8-9% if you're lucky) profit per order, giving an extra discount means they lose money on every DashPass sale.

2.Stacked with 20-30% DoorDash Commissions

•DashPass discounts don’t replace the 20-30% commission fee that DoorDash already charges on each order.

•This means that on top of the commission, the restaurant also absorbs the cost of the DashPass discount.

•The result? Restaurants pay even more per order while making less.

3.Incentivizing Loss-Making Orders

•DashPass encourages customers to order small meals just above the discount threshold (e.g., a $13 order to get free delivery).

•Since low-ticket orders already have smaller profit margins, the costs of food, labor, and commission fees often exceed the revenue from the sale.

•Restaurants end up subsidizing the cost of customer convenience.

4.Competing Against Yourself

•DoorDash prioritizes DashPass restaurants in search results, forcing non-participating restaurants to either join or lose visibility.

•This creates a pay-to-play system where restaurants feel they must participate—even if it means losing money on every sale.

5.Customer Shift Away from Direct Orders

•Customers who might have ordered directly from a restaurant’s website (where profits are higher) now default to DashPass because of free delivery and discounts.

•This reduces direct revenue, increases reliance on DoorDash, and locks restaurants into an unsustainable cycle of low-profit delivery sales.

Financial Breakdown: DashPass vs. Direct Orders

Let’s say a customer places a $20 order through DoorDash DashPass.

Scenario 1: Direct Order (No DashPass)

•Order Value: $20

•Profit Margin (8%): $1.60

•Profit Earned: $1.60

Scenario 2: DashPass Order (25% Commission + 15% Discount)

•Order Value: $20

•DashPass Discount (15%): -$3.00 → New order total: $17

•DoorDash Commission (25% of $17): -$4.25

•Profit Margin (8% of $17): $1.36

•Final Profit Calculation: $1.36 - $4.25 = -$2.89 (LOSS)

🔴 Result: The restaurant LOSES $2.89 on this order!

How Restaurants Can Escape the DashPass Trap

1.Limit or Avoid DashPass Participation

•If possible, opt out of DashPass or negotiate a custom agreement to reduce fees.

•If you must participate, set higher order minimums (e.g., $30+) to make sure margins are sustainable.

2.Encourage Direct Orders with Incentives

•Offer better deals for direct orders (e.g., 10% off or free dessert on orders placed through your own website).

•Promote direct ordering with SMS marketing, social media, email marketing.

3.Use a Self-Delivery Solution

•Partner with 1st Foodie 2 Go self-delivery service that charges lower fees than DoorDash and the utilization of a Strategic Coach to navigate targeted marketing towards your customers that you now have data access.

•Offer direct ordering with in-house delivery, reducing reliance on third-party platforms.

4.Raise Prices on DashPass Orders

•Some restaurants increase menu prices on DoorDash to offset commission and discount losses.

•Example: If a burger is $12 in-store, charge $15-16 on DoorDash to protect profit margins.

5.Track DashPass Order Profitability

•Run reports on DashPass vs. non-DashPass orders to see if participation is hurting your bottom line.

•If losses are significant, adjust pricing or leave the program.

Final Thoughts: Is DashPass Worth It?

For most small and independent restaurants, DashPass is a financial trap that leads to lower profits, higher reliance on third-party platforms, and loss-making orders.

✅ If your restaurant has high-margin items and high order values, DashPass might work.

❌ If your margins are thin and orders are small, DashPass can cost you money on every sale.

The key is taking control of your delivery strategy—whether that means adjusting pricing, steering customers toward direct orders, or switching to a self-delivery model that protects your profits.

Restaurant owners: Have you experienced losses with DashPass? Hit that Contact us icon at the bottom! 🚀