DoorDash’s ‘50% off’ deal being assessed by Commerce Commission
Discounts by a new meal delivery service in Auckland are being examined for a potential breach of the Fair Trading Act.
A “50% off” promotional campaign by Auckland’s newest meal delivery service sounds too good to be true – and it might be. After queries by Consumer NZ, the Commerce Commission is assessing the company’s offer for a potential breach of the Fair Trading Act.
The deal, an introductory offer for Auckland users of the San Francisco tech giant DoorDash, has appeared on websites, its app and in flyers posted in residents’ mailboxes. It appears to offer two half-price meals and free delivery for a month, for anyone who signs up and orders through DoorDash’s website or app.
But the fine print tells a different story. Anyone who reads through the terms and conditions will find that the minimum order requirement is $15, and the maximum discount available is just $20. That means the size of the discount would be less than 50% for anyone ordering a meal that cost more than $40.
Businesses shouldn't conceal prices in the fine print
Following a query by Consumer, the Commerce Commission says it is assessing DoorDash’s campaign as it may breach the Fair Trading Act. “Any representations made about price must be clear, accurate and unambiguous,” says Kirsten Mannix, general manager, fair trading. “Businesses need to ensure the main message conveyed in any advertisement … is accurate, rather than relying on the fine print to correct a misleading impression.”
In response, DoorDash provided a short statement to Consumer: “We take our obligations under New Zealand consumer law seriously, which is why we aim to inform our customers of any conditions related to promotions.”
Promotions often eat into suppliers' profits
DoorDash is America’s dominant food delivery service. Its arrival in Auckland comes one year after its launch in other parts of the country at a highly competitive time for the industry. Uber Eats, MenuLog and DeliverEasy are just some of the rivals already operational.
To help entice new customers, DoorDash has offered extreme discounts, including a weekend of $1 meals – including burgers, dumplings and loaded fries -– in Wellington and Christchurch. The 50% off deal was also offered to Wellington residents when it launched there in May 2022.
Restaurant Association of NZ general manager Marisa Bidois welcomed DoorDash’s arrival in Auckland, but warned it was often suppliers’ profits that got squeezed in promotions. “These costs can eat into a restaurant’s profit margin and with margins typically between 4-7% … there is often not much left over,” Bidois said. “Whilst we welcome services like DoorDash it is important that the costs are fair and sustainable for the industry.”
When Consumer signed up to use the app, it found prices for meals were often higher through DoorDash than if customers purchased the dishes directly from the branch. A serving of chicken tikka masala is $22 from popular Sandringham takeaway joint Paradise, but this rises to $28 through DoorDash. Likewise, a McDonald’s Big Mac burger instore costs $9-$9.50, but is $10 through DoorDash. While prices are set by retailers and are often higher to offset the cost of being listed on the app, customers may want to compare the cost of ordering through a third party with the restaurant’s own prices before making a purchase.
Fair Trading Act breaches: examples and your rights
The Commission frequently takes legal action against companies for breaches of the Fair Trading Act. Earlier this year, energy company Mercury was fined $279,500 for misleading customers about early termination fees, while online retailer 1-Day was hit with a record fee of $840,000 for pressuring consumers into decisions.
The Commission says businesses shouldn’t use fine print to conceal important information. In this case, we believe that’s exactly what’s happened. Anyone who believes they’ve been misled can request a refund and complain directly to the Commerce Commission.