Just What We Needed: Surge Pricing For Food Delivery

Dynamic pricing in action.

Dynamic pricing in action.

The ride-sharing app Uber is an immensely popular wherever alternative to taxis wherever it expands. It has one feature that is great for keeping up with demand during busy times, but less great if you’re cost-conscious: prices multiply according to demand for cars. Now a popular restaurant in San Francisco wants to try that idea…with delivery fees.

Sprig is a restaurant that’s delivery-only, and charges a flat fee per meal, plus a delivery charge. Sometimes that delivery charge goes down to zero during slow meal times. Now Sprig has announced that instead of shutting down orders when things are too busy, they’re going to experiment with “dynamic delivery fees.”

It makes sense: I know that I tend to tip delivery drivers more when it’s, say, Super Bowl Sunday, or the busiest pizza times on Friday nights. Sprig’s plan is to take that system and make it mandatory. If customers don’t want to pay the higher fees, they can just wait until the sustainable and organic feeding frenzy is over: one option within the mobile ordering app is to receive a notification when delivery fees fall again.

Part of the reason is the company’s ambition to expand outside of San Francisco. To do that, they’re also no longer covering the 8.75% sales tax on meals in addition to charging more according to demand for meals.

Growing Sprig [Medium]

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