Tips are no longer tips when ordering from DoorDash, GrubHub, UberEats, et al
By: Op-Ed Daily
Tags: Wages, Food, DoorDash, Delivery, Capitalism

Tips are no longer tips when ordering from DoorDash, GrubHub, UberEats, et al

If we lived in a perfect world, you’d order food, it would be delivered to you, the driver would turn a profit (delivery pay minus the cost of the vehicle, insurance, tires, oil changes, maintenance, etc), and you could tip after if your service was awesome, or not tip if it was terrible.

Sadly, we don’t live in a perfect world and when these apps ask you if you’d like to tip the driver, it’s no longer about tipping for great service, but instead, it’s a payment for services to be rendered.

What do I mean? Well, take DoorDash (DD) for example — they pay a base rate of $3, almost no matter what, in most markets. I’ve seen orders paying $3 for 17 miles one way (drivers have to drive back to their market too).

After every driver in the market rejects that order, DD may bump it up to $3.25, then to 3.50, so on and so forth. All the while, your food may have already been prepared and is sitting there, waiting for a driver to pick it up. As a result of not tipping in advance, you may be waiting a long time for your order to be picked up and delivered, if it ever gets delivered at all.

Sometimes DoorDash has promotional pay (usually +$1), but ~90% of all orders pay the driver a base rate of $3, and if you don’t tip yet live 15 miles from the restaurant, DoorDash will pay the driver — in most cases — three dollars for that 30-mile round trip, plus whatever your tip was.

Some new drivers take them all out of ignorance, not knowing that it costs between $0.32 and $0.63 cents per mile, depending on the vehicle (the high-end includes vehicle depreciation, the low-end assumes the driver buys cash clunkers). Some drivers take them to maintain — or achieve — a “Top Dasher” standing, which confers very little benefit. Other drivers gamble the value of their vehicle, hoping that a cash tip awaits them at the drop-off. Whatever a Dasher’s reason for taking a $3 order, they all share one thing in common: the driver loses money when there is no cash tip. They rely on other people’s “tips” to make up the difference and hope they earn more tips than they expended with wear-and-tear, etc.

Because of this, if you want to ensure that your delivery is timely, and your local driver is earning a fair rate for his time, expense, and his/her own cost of living, you should certainly add a fair amount based on distance — not volume or total cost — as a payment to your driver.

I bring up distance and not volume or price because whether a driver is picking up from a restaurant that sells $40 large pizzas, or Little Caesar’s which sells $6 pizzas, the effort and cost to the driver is the same. Granted, massive orders are a different story — if the order gets up over $100, it’s probably a safe bet that the driver will require more time to check the order for accuracy, and more thermal bags to maintain freshness.

GrubHub & UberEats pay a much fairer rate based on time & mileage, though still not enough to be profitable by themselves ( meaning with no added tip), so the needed “tip” is less on those platforms than on DoorDash to make orders profitable.

There are probably a lot of customers that tip in cash but imagine running a business where every time you serve a customer, you aren’t sure if you’ll make a profit or a total loss and you roll the dice with each and every order.

Gambling is only profitable for the casino. DoorDash, GrubHub, and UberEats are the casino.

Please also keep in mind that drivers are not employees, have no benefits, and pay business taxes as a business. As a result, a driver has two options when confronted with a $3 order that had no included tip: they can reject the order and make the customer wait longer for a driver, or they can take it and lose money. There is no real mechanism for negotiation with these delivery apps, so the driver’s ability to negotiate is limited.

Below are some examples of typical orders, even with small tips:

Thank you for taking the time to read all of this and I hope that with this new information, we can all help each other out during these rough times. If you cannot afford to add a tip based on your distance, then it’s probably a good idea for you to incur the cost of driving to the restaurant yourself instead of asking a local driver to do it!