Toronto Star reporter Ghada Alsharif spent six weeks working as an Uber Eats food courier and made a shockingly low wage. Uber says this experience was ‘atypical’ — but workers say differently.
Now see, I kinda had the idea for a syndicated delivery service (not online orders, but the internet would have been used to create the order data that would assign drivers) decades ago. I did some part time work delivering food back in the late 90s/early 2000s, and I always thought it was so inefficient. The place I was at, was very busy, he had a very large delivery area but even so. There would be times he was paying people to sit outside talking shit to eachother in their cars.
I thought it would make sense to have a larger pool of drivers that service multiple restaurants/take-aways. Adding the economies of scale to the problem to ensure that people were being utilised and lowering the cost to each place using the service. Of course also paying some money to the person running the business that brought it all together.
I don’t think I ever considered paying less than this guy did (which wasn’t a lot, but would likely translate to $5 or so an hour in the 90s/2000s).
One thing I find really interesting about uber eats/door dash (US)/Deliveroo (UK/EU). When you add up their fees, they take a delivery fee from the user, a service fee from the user, an even bigger service fee from the restaurant and pay the lowest possible fee that will keep drivers interested. Yet I always hear the services are losing money too. How is that even possible?
Take deliveroo in the UK. Looking now I can see (I don’t live in a city, so most places are some distance away). A place 4.5 miles away is charging £4.29 for delivery. Let’s make up an imaginary order:
Order total: £20 (including sales tax/VAT)
User’s service fee: £2.39 (it seems to be 11% including the VAT with a maximum set of which I am not sure how much)
User’s delivery fee: £4.29 (including VAT, since they need to charge VAT on a service)
Restaurant service fee: £6 (30% on the VAT included total). I am really unsure how this works entirely in terms of tax though…
Total for user: £26.68
Total deliveroo service revenue:
Net: £10.57
VAT: £2.11
Total: £12.68
Reading between the lines from what I can see delivery riders are paid between £3 and £6 per delivery. Now, in the cities this is probably great. I do wonder how they do it in the towns and villages. When I look at the list of places available to me most are 3 miles or more away, with some up to 6 miles away. I do wonder how £6 compensates someone doing a 10+ mile round trip at times.
But OK the price they pay drivers doesn’t include any tax. So it comes from the Net total. This means per delivery in revenue they are always making £4.50 or more per delivery.
Yes, they need to pay support staff, but they are in low cost geographies.
Yes, they need to keep development staff and the usual management overhead
And yes, they need servers/cloud time to host this stuff.
Looking this up (not sure how good the source is) their revenue in 2023 was £2.7billion, which I believe. However they lost £38million. Where all the costs come from, I am not sure.
I wonder how these numbers compare to US based operators?
Last Week Tonight has an episode on food delivery apps. They talk about how these apps don’t seem to help anyone. The customer pays more than before, the restaurant loses money, the delivery drivers lose money, and the app loses money.
The general idea seems to be that venture capitalists believe they can change the way the system works so that everyone eventually relies on an app to order food. Once ordering food without using an app becomes impossible, they can charge whatever they want and make a killing.
The thing is, they do already have lock-in in some ways at least. Otherwise I cannot imagine a restaurant wanting to give away 30% of each sale this way. Unless the other option is virtually no traffic.
The key between UberEATS and a much better service you describe is that the drivers need to stay on site, and the site needs to be geographically in the same place.
But yeah, I agree a better model would be tiny GrubHubs that service one, very small restaurant area. Basically the pizza delivery drivers also deliver for the 4-5 restaurants around the pizza place.
It’d be better service for the users, likely cheaper, and better for the restaurants who have 4-7 consistent drivers, and it’d be better for the drivers who actually get an hourly wage on top of their delivery fees.
Someone just has to build the infrastructure for this, have the capital to get started, sell the restaurants on it, and advertise the service.
The problem is that restaurants usually have similar load patterns. The orders for the Mexican place aren’t coming in while the pizza restaurant are slow, they’re all getting a decent surge at lunch time and a bigger surge at dinner timr
Yet I always hear the services are losing money too. How is that even possible?
Massive amounts of money spent on advertising to get that sweet sweet venture capital. Leeching as much money as they can out of the business into the pockets of investors and C suite parasites. Paying lawyers to fight lawsuits due to skirting laws.
Now see, I kinda had the idea for a syndicated delivery service (not online orders, but the internet would have been used to create the order data that would assign drivers) decades ago. I did some part time work delivering food back in the late 90s/early 2000s, and I always thought it was so inefficient. The place I was at, was very busy, he had a very large delivery area but even so. There would be times he was paying people to sit outside talking shit to eachother in their cars.
I thought it would make sense to have a larger pool of drivers that service multiple restaurants/take-aways. Adding the economies of scale to the problem to ensure that people were being utilised and lowering the cost to each place using the service. Of course also paying some money to the person running the business that brought it all together.
I don’t think I ever considered paying less than this guy did (which wasn’t a lot, but would likely translate to $5 or so an hour in the 90s/2000s).
One thing I find really interesting about uber eats/door dash (US)/Deliveroo (UK/EU). When you add up their fees, they take a delivery fee from the user, a service fee from the user, an even bigger service fee from the restaurant and pay the lowest possible fee that will keep drivers interested. Yet I always hear the services are losing money too. How is that even possible?
Take deliveroo in the UK. Looking now I can see (I don’t live in a city, so most places are some distance away). A place 4.5 miles away is charging £4.29 for delivery. Let’s make up an imaginary order:
Order total: £20 (including sales tax/VAT) User’s service fee: £2.39 (it seems to be 11% including the VAT with a maximum set of which I am not sure how much) User’s delivery fee: £4.29 (including VAT, since they need to charge VAT on a service) Restaurant service fee: £6 (30% on the VAT included total). I am really unsure how this works entirely in terms of tax though… Total for user: £26.68
Total deliveroo service revenue: Net: £10.57 VAT: £2.11 Total: £12.68
Reading between the lines from what I can see delivery riders are paid between £3 and £6 per delivery. Now, in the cities this is probably great. I do wonder how they do it in the towns and villages. When I look at the list of places available to me most are 3 miles or more away, with some up to 6 miles away. I do wonder how £6 compensates someone doing a 10+ mile round trip at times.
But OK the price they pay drivers doesn’t include any tax. So it comes from the Net total. This means per delivery in revenue they are always making £4.50 or more per delivery.
Yes, they need to pay support staff, but they are in low cost geographies. Yes, they need to keep development staff and the usual management overhead And yes, they need servers/cloud time to host this stuff.
Looking this up (not sure how good the source is) their revenue in 2023 was £2.7billion, which I believe. However they lost £38million. Where all the costs come from, I am not sure.
I wonder how these numbers compare to US based operators?
Last Week Tonight has an episode on food delivery apps. They talk about how these apps don’t seem to help anyone. The customer pays more than before, the restaurant loses money, the delivery drivers lose money, and the app loses money.
The general idea seems to be that venture capitalists believe they can change the way the system works so that everyone eventually relies on an app to order food. Once ordering food without using an app becomes impossible, they can charge whatever they want and make a killing.
The thing is, they do already have lock-in in some ways at least. Otherwise I cannot imagine a restaurant wanting to give away 30% of each sale this way. Unless the other option is virtually no traffic.
The key between UberEATS and a much better service you describe is that the drivers need to stay on site, and the site needs to be geographically in the same place.
But yeah, I agree a better model would be tiny GrubHubs that service one, very small restaurant area. Basically the pizza delivery drivers also deliver for the 4-5 restaurants around the pizza place.
It’d be better service for the users, likely cheaper, and better for the restaurants who have 4-7 consistent drivers, and it’d be better for the drivers who actually get an hourly wage on top of their delivery fees.
Someone just has to build the infrastructure for this, have the capital to get started, sell the restaurants on it, and advertise the service.
The problem is that restaurants usually have similar load patterns. The orders for the Mexican place aren’t coming in while the pizza restaurant are slow, they’re all getting a decent surge at lunch time and a bigger surge at dinner timr
Massive amounts of money spent on advertising to get that sweet sweet venture capital. Leeching as much money as they can out of the business into the pockets of investors and C suite parasites. Paying lawyers to fight lawsuits due to skirting laws.
Just capitalism things.