I've worked as pizza delivery. The tipping and per-delivery payments to drivers is why it works.
Roughly speaking, a delivery driver in my area nearly a decade ago earned roughly $20/hr after gas and car expenses, half in hourly wages @ state minimum and the other half in tips + $1/delivery payment. They also took about 3 deliveries an hour when fully utilized, which wasn't for 100% of their shift. The wait time got used productively, combination of answering phones, making pizzas, or at worst folding boxes.
This combination means that you're employing people at a significnatly-above-minimum-wage level, but their excess time waiting for deliveries gets paid at minimum wage and used to do customer service. And in the worst case when things are so absolutely slammed that there is no downtime, well, that's when you have to let phones ring (or answer briefly with "thank you for calling, our wait time is currently two hours, would you like to place an order?"). Plus these drivers know the store and the area well and from that alone should be significantly more competent at resolving issues - often enough someone calling in about their order will end up talking to the person who just tried and failed to make the delivery.
With Postmates and the like, though, the time spent waiting for a delivery has no useful work to fill the time. It's also not paid, but the gig has to justify itself economically, which means that drivers have to make up for it through increased per-delivery payments.
Basically, the difference is that store-employed drivers can do useful work while waiting to engage in deliveries, while app drivers can't. This is a very significant efficiency gain.
Corona changed tipping completely. Tips are now done through the platform if at all and no longer in cash to the delivery person reducing the chance that the money actually ends up where it is supposed to go.
I never had any problem getting my credit card tips as a store-employed driver. The apps have done some of that kind of bullshit, but at the end of my shift at the store I'd get paid my credit card tips in cash. Only difference is that credit card tips got added to total pay for payroll tax withholding, while cash tips relied on your own record-keeping for tax reporting purposes.
What about in countries where tipping is not normal? I live in the UK and lots of small family-run fish and chip shops and takeaways offer delivery, along with the bigger chains like Dominos.
Like the person you responded to said, employees working for those stores can do useful work when they aren’t delivering. Here the Domino’s are delivered by bicyclists and those people are doing work for the store when they’re waiting for deliveries. That work justifies them being paid a wage. For Postmates et al., those drivers aren’t doing anything useful during their downtime. They have nothing to sweep or dishes to clean etc. Postmates et al need to pay them enough to make it worthwhile for them, which gets passed onto the customers.
Personally, I’ve ordered a ton of food delivery lately from places I’ve wanted to try but never found time to go. But, I don’t order from them more than once, so those businesses aren’t making a customer out of me.
Yes but they said 50% of their income comes from tips and a $1 delivery fee.
I assume tips are generally more than $1 (I may be wrong).
Maybe it’s just not productive to compare different countries’ eating habits in the end, but it seems to me GP is saying that tips make up a meaningful proportion of delivery drivers’ income.
My bad, I misunderstood, but I’m not sure how tips are relevant.
It seems like the GP(?, the first poster in this chain) was saying that delivery works for places like Domino’s which hires and pays their own couriers a standard wage. That wage is already accounted for in Domino’s pricing, and since that employee has to show up to work even when there aren’t deliveries they can be put to work. Thus, there are no additional costs to Domino’s as everything is presumably priced taking this into account.
When you outsource your delivery, the company being hired takes a cut. That company (Postmates etc) need to use this cut to pay their couriers. Postmates can only ask for so much before the store just says no, it’s not worth it. Those couriers need to be paid enough that it’s worth it for them to keep delivering. So, Postmates scales up to make up for it in bulk by taking losses by offering deals. Those deals don’t last forever, and customers like me only order because of the deals will just go away.
Yes, tips will be higher then $1. But thats only germane as a way of the deliverer receiving an average income thats higher than the minimum wage. In locales without prevalent tipping Im going to guess thats made up for with a higher wage or work piece pricing. From the competitive business side the real difference is in higher worker productivity & efficiency for the vertically integrated shop.
Tips averaged between $3 and $4 per run, and I got 3 runs an hour at peak. That's more than half if you add all that up, but not all time is peak time, so it averaged closer to 50/50. Plus I subtracted out fuel and car costs from the delivery side of things to net stuff out.
Our office is next to a managed kitchen,which cooks for 6-10 different restaurants,who mainly operate online only,via Deliveroo and etc.The service is very popular,so the road is always packed with scooter riders. However, the downtime seems to be substantial for the riders. These are the ones things I'd be going out and observing if I was someone with tons of money to invest in those companies.
I'm making two points here, and it's worth separating out.
First is pure utilization. App drivers get paid while on the road and while idle, store drivers get paid hourly while on the clock and usually have some useful work to do. The average pay of road & idle time has to be worth the driver's while, and the store driver has more valuable work they can do, so the economics make more sense.
Second is the largely tip-driven pay differential while on the road vs in the store. 3 deliveries an hour at my store, more at places that trade off service times for throughput. Average of $3-4 per run, with a tendency for higher tips for customers further from the store. (Funny example: there was this one house at the exact furthest corner of the store's delivery area. They were extremely nice and tipped like $7. These facts are not coincidental.) But this basically becomes a cross subsidy of in-store work by tips, and there was a decent chunk of tension between drivers and management over this. Usually it took the form of "do your assigned side work and then you can go home", and since doing dishes was the "bad" pay of the shift, this disincentivized malingering too.
As far as I can tell for non-tipping countries, drivers tend to use employer-provided vehicles and fuel, so it turns into a more straightforward hourly job and loses a good chunk of the piece-work and quality incentives.
The difference between delivery people that work for the restaurant and those that don't are VAST. The first is invested (for a number of reasons) in getting the food to you quickly and in good condition. The latter group simply doesn't, and the restaurant gets blamed for it.
You raise an interesting point. Maybe with uber the goal is to integrate delivery work force with ride work force to improve utilization of drivers/deliverers. Horizontal, but complimentary.
In many markets they are different vehicles, scooters/(e)bikes for food delivery, cars for passenger transport.
Even in markets where cars are used a lot for food delivery; I can't see it really working very well. It's hard enough trying to schedule food delivery drivers being in the right place at the right time (often waiting a while for food to be ready if the order got delayed in the kitchen). Trying to then piece together humans going places in between seems virtually impossible.
However, if you allow yourself to simplify the problem, it seems there is really no physical difference from a food delivery and a ride. Pick up at one location, drop off at another--maybe with extra time required to get out of the car. In both cases, there is a limited allowable waiting threshold.
So if you can merge those work forces, you could attain higher utilization. The main problem I see though is that both sectors surge at roughly the same times, so it isn't quite as complimentary as you might initially hope.
Also, in the vertical model, the profit is shared with two parties -- the restaurant and delivery agent. In the horizontal model, there is an extra party which needs to be paid -- Postmate/Uber/DoorDash/etc. Presumably, the app experience makes it worth to pay more for the delivery, to pay this third party, but that has not yet been the case.
Also, once one party owns the relationship (e.g., the app), they can try and take more and more from the other parties while putting more burden/risk on the other parties.
Roughly speaking, a delivery driver in my area nearly a decade ago earned roughly $20/hr after gas and car expenses, half in hourly wages @ state minimum and the other half in tips + $1/delivery payment. They also took about 3 deliveries an hour when fully utilized, which wasn't for 100% of their shift. The wait time got used productively, combination of answering phones, making pizzas, or at worst folding boxes.
This combination means that you're employing people at a significnatly-above-minimum-wage level, but their excess time waiting for deliveries gets paid at minimum wage and used to do customer service. And in the worst case when things are so absolutely slammed that there is no downtime, well, that's when you have to let phones ring (or answer briefly with "thank you for calling, our wait time is currently two hours, would you like to place an order?"). Plus these drivers know the store and the area well and from that alone should be significantly more competent at resolving issues - often enough someone calling in about their order will end up talking to the person who just tried and failed to make the delivery.
With Postmates and the like, though, the time spent waiting for a delivery has no useful work to fill the time. It's also not paid, but the gig has to justify itself economically, which means that drivers have to make up for it through increased per-delivery payments.
Basically, the difference is that store-employed drivers can do useful work while waiting to engage in deliveries, while app drivers can't. This is a very significant efficiency gain.