Menulog starts trial but gig economy workers’ security remains precarious

A federal Select Committee on Job Security looking into how rife insecure work is across the country is currently taking submissions from insecure workers in New South Wales.

Chaired by Labor Senator Tony Sheldon, it was set up last year after five food delivery drivers were killed at work. It is expected to report by November.

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The committee has already received 77 submissions from diverse groups including the Transport Workers Union (TWU), Trades Hall Councils, lawyers’ advocacy groups, nursing and hospitality unions, the Australian Medical Association, university casual academics networks, aged and disability care providers and the National Association for the Visual Arts. The diversity of submissions reveals how widespread casual, fixed-term and precarious work is.

The big gig corporations — Menulog, Uber, UberEats, Ola and Deliveroo — have also made submissions.

In its submission, the TWU said government needs to regulate the gig economy. TWU national secretary Michael Kaine said on April 12 that workers in the industry face economic hardship at the “whim of an app notification”.

“Each day workers are stripped of their livelihoods at the whim of an app notification, with no redress. Those who are not are subjected to dangerous toil with the despair of vainly trying to subsist on less than half the national minimum wage. And that is, of course, only if that subsistence is not ended abruptly by death or serious injury wrought by these dangerous work pressures.”

Kaine said that if the federal government regulates the industry “all gig workers could have basic working rights”. Menulog, Deliveroo and Uber’s business model actively promotes a withering away of workers’ rights and wages.

The Senate committee learned that Uber pays its workers just $21 an hour. This is lower than the minimum wage, which is currently $24.80. Uber’s response was typically evasive. It claimed the “figure includes time between trips, meaning average earnings are actually higher”.

Uber, Menulog and Deliveroo rejected the idea that the workers are super exploited, claiming that workers like the “flexibility” they offer.

Menulog CEO Morten Belling claimed that “modern awards … are not suitable for the industry we’re working in”.

Deliveroo and Uber Eats rejected calls for their drivers to be classified as “employees”, claiming that minimum conditions and pay rates for riders would undercut flexibility by forcing fixed shifts. This is despite the fact that in Britain, Uber announced it will classify tens of thousands of its drivers as “workers”. This followed a British court ruling in February 19 that Uber drivers there are workers, not contractors.

Deliveroo argued that it would have to cut back its workforce in Australia if it was forced to do the same. Further, it claimed that scrutiny of its work conditions is unfair given that it had, supposedly, propped up the hospitality industry during the COVID-19 pandemic.

Deliveroo and Uber Eats said they would support “sick leave” and “personal leave” as long as the workers remain classified as independent contractors.

Menulog was the only corporation to concede that it “needed to do more” for its couriers. Belling told the Senate committee that it would start a pilot employment program for couriers around Sydney’s CBD. At the same time, Menulog will trial minimum wages and benefits for its couriers.

Unions and the corporate media have reported this trial as a significant win. However, there are caveats. Menulog’s trial for its Sydney CBD couriers is not the same as a commitment to a long-term employment plan. Menulog intends to establish a new award with the input of the Fair Work Commission and the TWU, but Belling said this would depend on the success of the trial.

He said he “hoped” that “in a few year’s time” all Menulog workers will be employed. However, this would mean that couriers have to work exclusively for Menulog, and have fixed shifts at lengths determined by industry awards.

In its submission, the New South Wales Society of Labor Lawyers said amendments to the Fair Work Act 2009 or special gig worker laws are needed to give workers the “minimum entitlements commensurate to other workers in the Australian economy”.

Meanwhile, the TWU and riders have formally withdrawn from the NSW Food Delivery Rider Taskforce (set up after the deaths of riders last year) over “its sustained refusal to discuss regulation or tackle the root causes of high rider deaths and injuries, such as economic pressures that force riders to work dangerously and fatigued”.

The TWU concluded that the taskforce was a politically-motivated diversion from the obvious need for regulation of this super-exploitative industry.

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Vroom Delivery Offers First Convenience-Focused Third-Party Delivery Program

Lou Perrine’s Gas and Grocery, FavTrip, Stop and Go Mini Mart, The Growler Guys and H&S Power Market will be the first to offer delivery through Vroom Delivery’s new convenience-focused third-party fulfillment program, serviced by the DoorDash network. Several additional retailers on the Vroom Platform are expected to roll out the program within the next month.

While some stores such as Lou Perrine’s Gas and Grocery will move entirely to 3rd party fulfillment, others will utilize a mix of third-party fulfillment provided by DoorDash, as well as by store employees.

This “hybrid” model allows those stores to quickly scale their existing in-house delivery programs by using DoorDash’s robust driver network, while also servicing areas outside of DoorDash’s coverage area, as well as providing additional fulfillment support to first-party fulfillment sites at times of high customer demand. Delivery with DoorDash will be powered by DoorDash Drive, its white-label fulfillment service that powers direct delivery.

Because the orders are processed through Vroom and not a third-party marketplace, retailers can market their own proprietary e-commerce programs and retain access to their customers’ information and order data. Furthermore, by partnering with Vroom to manage the ordering and payment processes, the cost to retailers of the third-party fulfillment is dramatically reduced compared to normal marketplace rates.

This allows retailers to profitably sell broader categories of products online for delivery without large price markups, and products can be price competitive with e-commerce only competitors such as GoPuff. Alcohol and tobacco delivery is available with this program in select States as well.

“We are excited to launch this service,” said John Nelson, CEO of Vroom Delivery. “We believe that this hybrid of both first- and third-party delivery will be a cost effective and flexible delivery model that other convenience retailers using the Vroom platform will quickly benefit from.”

FavTrip, which conducted its first Vroom order fulfilled by DoorDash last week, chose the hybrid model with a preference towards employee-based delivery. The company will be utilizing third party to extend hours and smooth out peak delivery times.

“Having a service like Vroom has been great added value for our customers, particularly during the pandemic,” said the company’s CEO, Babir Sultan. “However, at times it’s been challenging to staff drivers, particularly during certain times of the day. The Vroom partnership with DoorDash helps us meet these challenges, extend hours, and continue to provide a great service to our community.”

Lou Perrine’s Gas and Grocery, on the other hand, has been delivering using store employees for years yet is opting to transition all of their logistics to 3rd party delivery in the coming weeks.

“The ability to have cost effective third-party fulfillment lowers my overhead and reduces my liability, especially in the wintertime here in Wisconsin, without sacrificing the quality of my proprietary e-commerce program,” said Owner Anthony Perrine. “It also will increase the overall reliability of my delivery operation as I do not need to have staff on standby to deliver. We are really excited by this addition to the Vroom platform.”

Vroom Delivery is a full-stack e-commerce solution for convenience stores, providing every technical aspect required for chains of convenience stores to operate and manage their own e-commerce and delivery services. Vroom can set up an entire network of stores for e-commerce and delivery within a matter of days.

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Vroom Delivery Announces First Round of C-store Retailer Partners for New Third-Party Delivery Program

CHICAGO — Vroom Delivery is adding Lou Perrine’s Gas and Grocery, FavTrip, Stop and Go Mini Mart & The Growler Guys, and H&S Power Market to its new convenience-focused third-party fulfillment program, serviced by the DoorDash network.

Through the platform, orders are processed via Vroom and not a third-party marketplace, giving retailers the ability to market their own proprietary e-commerce programs and retain access to customers’ information and order data.

Additionally, by partnering with Vroom to manage the ordering and payment processes, the cost to retailers of the third-party fulfillment is dramatically reduced compared to normal marketplace rates. This allows retailers to profitably sell broader categories of products online for delivery without large price markups, and products can be price competitive with e-commerce only competitors such as goPuff, according to Vroom Delivery.

Alcohol and tobacco delivery is available with this program in select States as well.

“We are excited to launch this service. We believe that this hybrid of both first- and third-party delivery will be a cost effective and flexible delivery model that other convenience retailers using the Vroom platform will quickly benefit from,” said Vroom Delivery CEO John Nelson.

Kenosha, Wis.-based Lou Perrine’s, which has offered delivery through store employees for years, will transition all of their logistics to third-party delivery in the coming weeks.

“The ability to have cost effective third-party fulfillment lowers my overhead and reduces my liability, especially in the wintertime here in Wisconsin, without sacrificing the quality of my proprietary e-commerce program,” commented Lou Perrine owner Anthony Perrine. “It also will increase the overall reliability of my delivery operation as I do not need to have staff on standby to deliver. We are really excited by this addition to the Vroom platform.”

While the single-store operator will move entirely to third-party fulfillment, other retailers will utilize a mix of third-party fulfillment provided by DoorDash, as well as by store employees.

This hybrid model allows operators to quickly scale their existing in-house delivery programs by using DoorDash’s robust driver network while servicing areas outside of its coverage area, as well as providing additional fulfillment support to first-party fulfillment sites at times of high customer demand.

Delivery with DoorDash will be powered by DoorDash Drive, its white-label fulfillment service that powers direct delivery.

FavTrip, which conducted its first Vroom order fulfilled by DoorDash last week, chose the hybrid model with a preference towards employee-based delivery. The company will be utilizing third party to extend hours and smooth out peak delivery times.

“Having a service like Vroom has been great added value for our customers, particularly during the pandemic. However, at times it’s been challenging to staff drivers, particularly during certain times of the day. The Vroom partnership with DoorDash helps us meet these challenges, extend hours, and continue to provide a great service to our community,” said FavTrip CEO Babir Sultan.

Several additional retailers on the Vroom Platform are expected to roll out the program within the next month.

Based in Chicago, Vroom Delivery is a full-stack e-commerce solution for convenience stores, providing every technical aspect required for chains to operate and manage their own e-commerce and delivery services.

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UberEats launches pay-at-table and ordering feature for restaurants

UberEats has launched a feature allowing users to order and pay for meals while eating at restaurants through its app.

The Dine-In tool is now available in the UK ahead of outdoor hospitality in England reopening on 12 April.

It means customers visiting a restaurant can scan a QR code to browse the menu, order and pay via the UberEats app or website.

The feature initially comes at no extra cost to restaurants or customers as Uber is waiving commissions and payment processing fees for Dine-in orders until 31 December 2021.

The technology has been available in certain US cities since 2019 but Uber has widened its use during the pandemic to reduce the need for shared menus and minimise contact between staff and customers.

It has been trialled at UK locations including Baltic Market in Liverpool and is available to all restaurants currently listed on UberEats.

Toussaint Wattinne, general manager for UberEats in the UK and Ireland, said: “The best way to support restaurants is by getting back out there to support your local, and our new Dine-In feature will enable restaurants to open their doors safely, process orders efficiently, and at no extra cost.”

The food delivery app is active in more than 100 towns and cities across the UK and Ireland and claims 25,000 new restaurants have joined its platform since the pandemic began.

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TECH ROUNDUP: NOT ENOUGH DELIVERY DRIVERS

As restaurants struggle to find enough workers, food delivery companies are having hiring issues of their own.

Growing demand for delivery over the past year combined with renewed hiring in other sectors is putting pressure on companies such as Uber Eats to keep enough people driving.

“As more people are vaccinated, demand from customers has increased. We’re working to bring more drivers and delivery people onto the road, and for anyone interested, now is a great chance to earn money flexibly on your own schedule,” said Meghan Casserly, Uber Eats’ head of communications, in an email.

Uber last week unveiled a $250 million recruiting push aimed at ride-share drivers, which could take driver share from its delivery business.

Meanwhile, both DoorDash and Uber Eats are ramping up service to other segments such as grocery, convenience and pharmaceuticals, which could be another factor stretching networks thin.

A DoorDash spokeswoman said it had added 2 million drivers since September 2020, but did not comment on shortages. A Grubhub spokesperson declined to share specifics about the company’s driver levels, but said it is always keeping an eye on operations in each market to make sure it has the right number of drivers.

Restaurants, however, have seen driver deficits reflected in longer wait times and spotty service, according to participants in Restaurant Business’ ongoing Restaurant Community event last week.

California Fish Grill, for instance, has noticed too many delivery orders stretching to the 40-minute mark, said Paul Potvin, CFO of the 40-unit chain. And Firehouse Subs has had delivery services temporarily stop accepting orders due to driver shortages in some areas, said Risa Rappaport, the chain’s director of off-premise operations.

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Panera, a self-delivery pioneer, shutters its channel

Dive Brief:

  • Panera has ended its pioneering self-delivery program that it launched in 2016, Restaurant Business reports. The fast casual chain told the publication it began phasing out its channel during the pandemic even as delivery sales grew materially. Panera did not respond to requests for comment by press time. 
  • Chris Correnti, SVP of off-premise channels, said the pivot away from self-delivery “enables Panera to offer a broader delivery range to serve increased demand for delivery, in response to an off-premise market that has grown and shifted dramatically over the past year.” 
  • In 2019, Panera partnered with DoorDash, Grubhub and Uber Eats to expand its off-premise footprint, but continued to leverage its own fleet in most markets. At the time, the restaurant said sticking to its own delivery solution made sense economically, but that these channels offered more points of access, particularly to residential diners and evening daypart orders. 

Dive Insight:

When Panera first introduced in-house delivery in 2016, it offered the channel at about 15% of its 2,000 locations at the end of that year. In 2017, it hired 10,000 delivery drivers and cafe employees to bolster the program, which helped the chain manage its delivery costs.

During the past year, Panera’s delivery business has grown by more than 100%, the company told Restaurant Business. Its sales mix also reached mid-double digits, and over half of the chain’s sales now come through off-premise channels, which also include pickup, drive-thru and curbside. Comparatively, in 2018, digital sales made up 29% of the company’s business.

Chains of Panera’s size are typically able to negotiate lower delivery commission fees because of the sales volumes they generate. Panera was the 10th largest U.S. chain in 2019 with 2,160 units and sales estimated to be about $5.9 billion, according to Technomic. That’s not to say that major restaurants don’t feel the impact of third-party delivery fees, however, which can be as high as 30%.

In fact, Panera is one chain that has raised menu prices specifically for delivery orders, averaging 12% higher checks. If Panera’s customers have proven they’re willing to pay these higher prices for delivery, that gives Panera good case for shifting entirely to third-party delivery, especially since the labor market is currently a challenge for restaurants and wages are increasing across many markets.

Those two pressures could deter delivery hybrid models across the industry, as chains may be enticed by delivery platforms’ nationwide penetration and as consumers continue to habituate toward third-party apps. The pandemic, for example, more than doubled third-party delivery app revenue between April and September 2020, even as consumers became more mindful of ordering directly from restaurants.  

Even with the benefits third-delivery partnerships can bring, Panera’s operations change comes as a surprise. The restaurant has served as a model for its profitable, in-house delivery for five years and leveraged its own infrastructure even as it added aggregate partnerships. In 2019, Panera’s chief growth and strategy officer Dan Wegiel told Forbes that the partnerships were “only possible because we have our own network of drivers. It was critical that we retained our own drivers — for both the service experience, as well as the economic benefits.”

It’s also interesting that Panera didn’t take the same approach as Jimmy John’s in using DoorDash’s self-delivery product, which enables restaurants to generate demand on DoorDash’s market-leading marketplace while using their own drivers.

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Menulog announces pivot towards ‘employment model’ for all couriers within coming years

Menulog says it is moving away from the controversial independent contractor model favoured by its gig economy rivals and wants to have all its couriers employed by the company within a “few years’ time”.

In a move designed to differentiate itself from rivals such as Uber Eats and Deliveroo, Menulog’s managing director, Morten Belling, said on Monday the company would move towards an “employment model” beginning with a trial among its Sydney couriers.

At the same time, the company will also look at its existing contracts with its current pool of couriers and examine ways to “bridge the gap”, compared to those working under an employee model, Belling told a Senate select committee inquiry on Monday.

This would include increasing current insurance cover and examining portable leave entitlements and superannuation.

Menulog said it would also work with the Fair Work Commission and consult with the Transport Workers Union with a view to creating a new modern award because it does not believe the current casual awards are suitable.

Belling said moving to an hourly rate of pay would “eliminate the need for couriers to be multi-apping to the extent we see today” – meaning he expected employees would be barred from working for other platforms.

“While we have been compliant for many years running this business, and we still are, we think we’ve got a moral obligation to do more,” Belling said.Advertisement

The managing director said he hoped “in a few years’ time” all workers using Menulog would be employed by the company.

Food delivery apps have spiked in popularity during the pandemic, with many visa holders relying on them for an income after they were excluded from the jobkeeper program and were unable to work in traditional industries such as travel and hospitality.

But the apps have also faced significant scrutiny in recent months following a spate of delivery rider deaths on the roads.

Belling said in part the decision to move to an employment model was driven by safety concerns.

The Menulog announcement came after rivals Uber Eats and Deliveroo baulked at calls for a minimum rate of pay for people who use its platforms when they fronted the inquiry.

Both said they would support moves to provide so-called portable benefits, such as sick leave and personal leave, but emphasised that drivers and riders must keep their status as independent contractors. Such benefits are usually provided by pooling contributions from independent contractors.

Deliveroo and Uber say they oppose minimum pay rates in part because it would require riders and drivers to work fixed shifts – a claim unions have disputed.

Asked by Labor senator Tony Sheldon what would stop a company merely taking new sick leave benefits out of a person’s existing pay without an enforced minimum rate, Deliveroo’s chief executive, Ed McManus, said: “One would need to work that out.”

But he acknowledged its riders wanted sick leave and said it was “something we want to do”.

Uber said it was open to a broad discussion about “earnings”, but emphasised this should be confined to the period when a person had accepted a trip to when it was completed, or what it calls “engaged time”. It should not include the time when drivers were waiting for a job.

Uber also backed portability benefits but did not have a specific proposal in mind.

“We don’t think flexibility should come as a trade-off for protection,” Uber’s general manager, Dominic Taylor, said. “There are many options on the table.”

The move from Menulog is likely to pile more pressure on gig economy apps – which also include disability service matching platforms such as Mable – to address claims that its contractors end up earning less than the casual minimum wage.

The inquiry heard research commissioned by Uber found its drivers and delivery riders earned, on average, about $21 an hour.

Sheldon said other research had found the figure was lower, and he noted that casual minimum wage was $24.80 an hour anyway. “So you’re paying below the minimum wage,” he said.

Uber argues that the $21 an hour figure includes time between trips, meaning average earnings are actually higher.

Matthew Denman, Uber Eats’ general manager, said the company was “eager to see national standards around safety”, including a minimum insurance standard.

The inquiry heard earlier that ride-share company Ola suspended its insurance scheme in June for financial reasons.

Under questioning from the Labor senator Jess Walsh, Ann Tan, Ola’s head of legal, confirmed drivers who were injured on the job would therefore not receive any income support or medical expenses from the company.

“We do advise our drivers to make sure that they are fully covered in relation to their insurance and any entitlements that they would require to enable them to operate safely on the platform,” Tan said.

The inquiry heard more than a third of ride-share app workers have been involved in a car accident at work, according to a Transport Workers Union survey.

Asked about this, Tan said she did not know the proportion of Ola drivers that had been in an accident at work.

Asked by Sheldon why other companies such as Uber and Deliveroo could not follow Menulog’s lead, Belling said: “I believe they can.”

Although it was early in the process it was likely those employed to work for Menulog would be barred from working for other apps.

“The reason why this multi-apping can happen at the moment is because couriers are trying to optimise the hourly rates of pay,” he said.

Belling said Menulog’s parent company had already operated in this way in Europe for many years.

Another disability services company that fronted the inquiry, HireUp, also contracts its workers as employees, meaning they get award pay and entitlements and full insurance.

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Uber and Lyft throw cash at drivers as they ditch the apps for food delivery

Throughout most of 2020, Uber and Lyft drivers didn’t have much work due to a pandemic that kept most people at home. But as countries ramp up vaccination efforts and people start doing things outdoors again in 2021, those ride-hailing companies are optimistic about a return to business as almost usual.

Problem is, many of the drivers who power those on-demand rides aren’t active or even logged into the platforms anymore. So, in response, Lyft and Uber are spending big money to reverse the driver shortage. 

Uber recently announced a $250 million driver stimulus in the U.S. to “boost” pay with more incentives and wage guarantees. And according to the Rideshare Guy blog, its rival Lyft has also been offering bonuses in different American cities.

Uber even listed out current median hourly wages in different U.S. cities (e.g., over $31 per hour in Philadelphia) to show how driver demand is now making ride-sharing more lucrative. 

“There are more riders requesting trips than there are drivers available to give them — making it a great time to be a driver,” Uber wrote in a blog post this week.

But Uber and Lyft have to first get the drivers back. Many drivers have moved on to using Uber solely for food delivery, as well as other delivery apps like Instacart, DoorDash, or Grubhub. 

Data from app analytics firm Apptopia found the number of daily active users on the Lyft and Uber driver-only apps for the past three months dropped 42.3 percent and 37.5 percent, respectively, compared to the year before. 

Meanwhile, over on DoorDash’s driver app, the number of daily active users went from 397,910 in January 2020 (before COVID-19) to 916,184 this past January, representing a 130 percent increase in active drivers. There were also increases for other food delivery driver apps, while daily user rates for Lyft and Uber’s driver apps plummeted from January 2020 to January 2021.

Uber and Lyft are now hoping $200 bonuses and guaranteed wages will woo drivers back from work that doesn’t involve driving around potentially infected humans. 

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Rewards for users but not for Dashers as DoorDash issues credit card

Doordash’s new credit card could help it ride out the end of the pandemic slump as its riders increasingly attempt to trick the app to give them better fares.

The news comes after a year that saw Doordash become one of the big winners from the Covid-19 crisis. With lockdowns forcing people to stay at home instead of enjoying visits to restaurants, the San Francisco-headquartered company enjoyed a three-fold spike in demand for its services over the course of the epidemic.

However, with the end of the pandemic in sight through the rollout of vaccination programmes and more easing of social distancing restrictions, many of its customers are expected to opt for dine-in experiences over DoorDash’s services in the future. As a result, its share price has tumbled by about 40% to $127.50 since a February trade high of $215.16 per share.

Now Doordash is reportedly looking to secure its revenue by launching its own rewards credit card. Speaking with people familiar with the matter, the Wall Street Journal has revealed that the company has already received offers from more than 10 large banks and fintech companies to issue the card.

The same report also revealed that grocery delivery firm Instacart has teamed up with JPMorgan Chase & Co to issue its own rewards credit card for frequent users of its services.

Doordash’s credit card and any remaining demand from the coronavirus crisis could enable it to strengthen customer loyalty and to attract more users.

For the banks looking to partner with Instacard and DoorDash to launch the credit cards, the opportunity means that they can diversify their own offering after traditional travel rewards cards fell out of favour during the pandemic. Travel rewards cards had long been seen as a secure backbone of their financials.

Earlier this month, DoorDash inked a partnership with Mastercard. The deal saw World and World Elite cardholders new to DoorDash’s subscription programme DashPass enjoy a three-month free membership, as reported by Cards International. The membership includes benefits such as unlimited free delivery fees and reduced service fees for orders over $12. All DashPass members automatically get a $5 discount on their first two orders each month when paying with a World or World Elite card.

DoorDash’s new credit card push comes as it is dealing with a courier revolt of sorts. Riders, or Dashers as they are called, are increasingly trying to trick the app’s algorithms to give them better fares for their deliveries.

A Facebook group launched in October 2019 called #DeclineNow is at the centre of the controversy and has lately grabbed headlines by encouraging Dashers to reject any delivery that doesn’t pay at least $7, more than double the regular $3 floor.

The founders of the group, Dave Levy and Nikos Kanelopoulos, came up with the idea when they noticed that when one Dasher rejected a low-paying order, then the app would offer it to someone else at a slightly higher fare, Bloomberg reported.

They surmised that if enough riders banded together to decline low-paying jobs, they would be able raise the fares they were paid. This would make it easier for them to make a living. Today, the #DeclineNow group has over 31,000 members.

DoorDash has said that drivers are always free to reject orders but warned that constant and coordinated orders would slow down the delivery process. It encouraged couriers to accept at least 70% of the deliveries offered and that they would be given a Top Dasher status as a reward. The status means the riders will be prioritised over other couriers when deliveries are offered. Top Dashers also have more flexibility on when and where they want to work.

DoorDash has also discouraged rising rejections by obscuring the full amount any job will pay by not disclosing the tip. By doing so, drivers are motivated to be more open to accept deliveries.

The news comes as regulators, lawmakers and investors are progressively pressuring gig economy companies like DoorDash to change their models, as noted by a recent thematic research report from GlobalData.

Last month, Verdict reported that Uber had been pushed to reclassify its UK drivers as workers and not independent contractors after it lost a Supreme Court case in February. The ruling had closed a case from 2016 where drivers had sued Uber for categorising them as self-employed contractors as the conditions of using the app meant that they had little room to pick fares and reject rides. Uber’s decision to refer to drivers as workers did not extend to Uber Eats riders.

Investors have also become more concerned with environmental, social and governance issues, meaning that they are now vocally expressing their doubts about companies operating under a gig economy model. Several high-profile investors in the UK expressed such concerns ahead of Deliveroo’s highly anticipated float on the London Stock Exchange the other week. They said they would not invest in the company at its initial public listing because of its use of gig economy workers.

These comments contributed to Deliveroo’s embarrassing public listing last week when Deliveroo lost over 26% of its value on its first day of trading publicly.

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DOORDASH SAYS DELIVERY FEE CAPS ARE HURTING ORDER VOLUMES

DoorDash said Wednesday that limits on the fees it charges restaurants are hurting order volumes because it has forced the company to raise prices for consumers.

In a blog post, the delivery provider reported that order volumes in March fell 7% in Philadelphia, 4% in St. Louis and 4% in Westchester County, N.Y., as a result of local limits on what delivery companies can charge restaurants. DoorDash has responded with additional fees for customers in those markets. 

“We have seen a tangible impact of the basic economic rule: When prices go up, demand goes down,” DoorDash wrote.

The company said the declines are a direct result of price controls and not other factors like more people eating in restaurants.

DoorDash has been hampered by caps in at least 73 jurisdictions. Combined with the impact of added costs from Proposition 22 in California, they cost the company $36 million in Q4. 

Delivery fees, which can be as high as 30% or more, cover things like credit-card processing, marketing and driver pay. Fee caps mean DoorDash can’t pay for all of those things, so it has added fees ranging from $1 to $2 in some markets.

Customers in St. Louis and Westchester County, which each have a 20% fee cap, pay an extra $1 per DoorDash order. In Philly, the cap is 15%, and customers pay an additional $1.50.

The caps are temporary, designed to expire sometime after the pandemic emergency is over, and have received widespread support from restaurants. There have been calls in some places to make them permanent.

DoorDash warned that if the caps continue, more places will feel the impact.

Shari’s Cafe & Pies has seen a “major decline in DoorDash volume” in California, where DoorDash has raised prices to offset the costs of Prop 22, said Shari’s COO John Iannucci during a session this week in Restaurant Business‘ Restaurant Community

The pie chain, which has an exclusive partnership with DoorDash, has heard from guests that delivery has gotten too expensive.

The results add to concerns that delivery could become too pricy for consumers too bear. Restaurants have recently started raising prices for delivery to help their margins, adding to the cost of an already expensive service.

“Customers over time are going to start looking at the free delivery that cost them $15 to get $12 worth of food when they start digging in to look at service fees and service charges,” said Domino’s CEO Rich Allison on the chain’s fourth quarter earnings call, according to a transcript on The Motley Fool. “So we’re just not sure how all it plays out.”

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