DoorDash to hike subtotal minimums for US subscribers

Food and grocery delivery company DoorDash is raising the bar for orders through its subscription service DashPass.

According to an email update, starting August 12, "DashPass subtotal minimums may increase and vary by store, city and time of day..." DashPass subscribers pay $9.99 per month for free delivery and decreased service fees. Currently, subscribers need to order at least $12 of food or $35 worth of groceries to get the discounts.

DoorDash wouldn't share which markets would be affected, nor what the new minimums would be, but the changes will only affect U.S. markets and only on convenience, drugstore and liquor store orders, as well as DashMart orders, which is DoorDash's branded local convenience stores, according to a DoorDash spokesperson.

The spokesperson said that things like alcohol and groceries are already hitting a larger minimum subtotal anyways, so DoorDash is matching what it's seeing to "make sure we're thinking about all sides of the business."

In its email announcement, DoorDash hinted that labor, and potentially increased wages, are the reason it raised the subtotal minimums.

"Delivering the essentials you need requires a few more steps than you might think: a real human hand picks items to make sure you get exactly what you asked for," DoorDash wrote.

Multiple states in the country hiked up their minimum wages at the start of 2022. At the same time, the U.S. is experiencing a labor shortage that predated, but was exacerbated by, the pandemic. A recent U.S. Chamber of Commerce survey indicated workers are still concerned about COVID-19 at work, think pay is too low and are more focused on acquiring new skills and education before re-entering the job market.

A company spokesperson explained that DoorDash wants to ensure Dashers are being fairly compensated for the extra labor of going into the stores and doing the shopping, picking and packing of orders, rather than just rocking up to a restaurant and picking up a ready meal.

It's not clear how DoorDash will make decisions on increased subtotal minimums in the markets where it's testing. It may rely on dynamic pricing algorithms, but the company refused to confirm with TechCrunch.

DashPass has become an increasingly popular service over the past couple of years as customers have grown accustomed to relying on delivery during the pandemic. DoorDash's total orders grew 23% year over year to 404 million, with order growth driven by an increase in monthly active users and increased average order frequency, due in part to increased penetration of DashPass, according to the company's first-quarter earnings.

Earlier this week, DoorDash also shut down Chowbotics, the salad-making robotics startup it acquired only last year.