Tech mistake |The on-demand food delivery market is steadily growing and innovating, much like its rideshare cousin.
While the jury is still out as to who will be the dominant rideshare giant, but freelancers, students, side-hustlers and others have turned to these nontraditional job opportunities to support themselves.
In a similar way, on-demand food delivery service jobs allow individuals to set their own hours, work at their own pace and make a living as an independent contractor.
But what does this mean for more traditional industries? Restaurants owners are still expected to deliver food. Tech companies are still designing products for purchase that must run efficiently, while balancing the growing, ever-evolving needs of their clients. And at the end of the day, everybody still has to gather their W2s and pay taxes.
I set out to create a fact-based analysis of Postmates, Doordash, Grubhub, and UberEATS, four of the most popular food ordering apps for restaurants. This analysis is meant to serve as a guide for members of the foodservice, freelance and app design communities, as well as anyone else interested in the human element to the many segments of the on-demand economy.
This is not a contest — merely an unbiased comparison to help interested parties choose the right service, part-time employer, or management tool that suits them the best.
From restaurant to dinner table, how does it work?
Regardless of name or business model, all food deliveries strive for one common goal: Get food from point A to point B with the same quality you’d expect if it were ordered and eaten on-site. Of course, the logistics behind getting food from A to B varies, depending on the service used. Anyone contemplating food delivery business should consider budget and scope before choosing one of these services.
Drivers are given a corporate debit card to pay for meals on customers’ behalf. For most drivers, the card is Postmates-branded and given a unique alphanumeric number. Drivers who are most active are assigned cards with their own name. These cards are used for larger nonfood deliveries, such as a pick-up and delivery from the Apple Store.
The Postmates debit card is preloaded with a sum slightly higher than the total cost of a customer’s order. For example, according to an online Postmates resource, if a customer’s order comes to $27.99, the Postmates card is loaded with $40.
The corporate card gives drivers a sense of flexibility and allows them to place orders before arriving at a restaurant. Additionally, if the prices at a restaurant are vastly different than those shown in the app, or if the customer requests that more items be added to an order, the driver can request additional funds through the Postmates app. These additional funds will be loaded onto the card, and drivers can continue to make requests for more funds, as needed.
At one point, Postmates restricted debit card use based on the GPS location of the driver, as a way to control abuse and fraud. These restrictions were rolled back when it was found that GPS locations were sometimes slow to update or inaccurate, creating more problems than they solved.
Customers might also place their own orders, which are sent via tablet to partner restaurants and assigned to drivers. Previously, the system gave drivers an ETA for food preparation, which allowed them to do some ridesharing runs in between food deliveries. That feature has also been removed.
Restaurants owners can also use a third-party API incorporating Postmates. In this format, customers aren’t always aware that drivers are independent contractors and not employees of the restaurant they’re ordering from. Drivers have reported that some customers are frustrated when they realize that their tip is going to the restaurant and not the driver.
UberEATS uses a fairly simple format. Orders are prepaid and premade well before a driver arrives — in theory, at least.
In actuality, UberEATS lets customers place an order through the app to be picked up by a driver. Although the order is supposed to be ready to go upon the driver’s arrival at a restaurant, that’s often not the case. Instead, a driver might be forced to wait while a meal is prepared — the restaurant’s attempt to guarantee that customers receive freshly prepared food at the appropriate temperature.
UberEATS also uses a “closed-bag” model. Orders are not opened or inspected by drivers; meals are handed from the restaurant to the driver, then from the driver to the customer. This absolves drivers of the responsibility for checking to see that orders are correct and nothing has been missed.
Doordash works by pinging drivers with the location of a restaurant and destination and calculating the distance between each point (including the driver’s current location). At the restaurant, the DoorDash driver is presented with one of three situations:
- Pick up the food and go.
- Pay for the order using the Doordash company card.
- Place the order and wait until it’s ready.
Grubhub isn’t strictly a delivery service, per se, though it has merged with and absorbed services such as Seamless and Yelp’s Eat24. The Grubhub app launched in 2004 as an alternative to paper menus, which allowed the company to establish partnerships and build relationships with restaurants.
If a restaurant does not have delivery drivers, it might make use of independent Grubhub contractors, similarly to Doordash, Postmates and UberEATS.
The idea is for the driver to arrive at a restaurant as food preparation is completed. The food is then placed in a branded, insulated bag and sent on its way. Grubhub’s proprietary technology allows restaurants and customers to track the estimated delivery time for a meal.
Drivers can elect to schedule themselves in “blocks” of time. This is essentially a guarantee that of the driver’s availability to pick up and deliver orders. Drivers may pick up and drop blocks as they see fit, based on their program level.
Drivers can also deliver outside of a block, but Grubhub prioritizes scheduled drivers and qualifies them for more work and higher earnings potential. Any deliveries not assigned to a “block” driver are up for grabs by drivers not working a block.
Postmates, Doordash, Grubhub, and UberEATS: Earnings and Costs
In all cases, drivers are paid via direct deposit. No problems there — direct deposit is fairly standard across industries. Problems arise, however, in the timeliness of payments.
Postmates pays drivers four days after a transaction. If a customer tips sometime after paying the initial fee, the driver might receive the tip long after being paid for the original transaction. This might not be so bad if it weren’t for the 15 cent fee charged to drivers for each direct deposit transaction.
(It’s important to note that the direct deposit fee doesn’t originate from Postmates, but from its payment processor, as it is illegal for an employer to charge for direct deposit.)
Almost every Postmates delivery driver I spoke to complained about the so-called “stripe fee,” which soured the introduction of a daily payment feature. One driver in particular told me that he frequently is tipped weeks after the initial delivery, only to be hit by a 15 cent fee on a tip of a buck or two.
Grubhub pays its drivers weekly on Thursday, Doordash on Sunday night, and UberEATS on Thursday. UberEATS allows drivers to cash out up to five times per day, though each transaction is accompanied by a $1 fee. Doordash has an optional daily payment system, as well.
Customers must pay for Doordash, Postmates, Grubhub, and UberEATS through the respective app. Grubhub also accepts PayPal, Apple Pay, Android Pay, eGift cards and cash.
Of the services that pay drivers for mileage, distance is calculated “as the bird flies.” Often, this does not accurately reflect actual mileage driven.
On-demand delivery drivers: How to tip, how much to tip and payment method
Tips are a whole differnet ballgame. Tipping has long been a source of consternation for delivery drivers and customers, but tipping etiquette has largely remained the same — even if the method of delivery has evolved.
In general, it’s recommended that delivery drivers be tipped the $5 or 20 percent, whichever is greater, if a customer receives good service. Many of the drivers I spoke with said that the majority of their take-home pay was tips earned. UberEATS customers can tip drivers up to 30 days after a meal has been delivered, and drivers receive the full amount of the tip. One driver I spoke with estimated he received a tip roughly 5 percent of the time.
Postmates uses a totally cashless system and asks that drivers be tipped via the app. Customers are can choose to tip 10 percent, 15 percent, or 20 percent, or enter a custom tip amount. However, some customers ignore the official tipping policy and tip drivers in cash.
Postmates drivers independently cited an estimated tip rate of 60 percent to 75 percent. However, one frequent Postmate driver mentioned a trend of declining tips — and claimed to have been stiffed when delivering to a Postmates customer service center.
Tipping on Grubhub is through the app, and includes a “tip in cash” option. However, drivers said that some customers choose this option only to stiff the driver upon delivery.
Doordash asks customers to tip before their food has arrived. The app then presents drivers with a “guaranteed amount” of earnings that includes mileage, base pay, and “some” tips. Doordashers who check the app after a delivery might discover find they’ve received an amount exceeding the guarantee. Asked why this might be, one Doordasher speculated that it might prevent drivers from accepting only lucrative deliveries.
While Postmates itemizes tips received, Doordash tips earned are a bit of a “mystery,” according to one driver I spoke with. He believes that tips function similarly to those for front-of-house waitstaff earn tips. If you’re stiffed, he said, Doordash makes up the difference to maintain a minimum pay level. On the flip side, if you receive a large tip, Doordash use that amount to cover the bulk of your payment for a delivery.
What to consider when making a choice for your business
Drivers seem to consider Postmates the most highly differentiated service of the four. They cited its corporate debit card as the biggest difference and said that Postmates uses it as leverage against its competitors.
From a driver’s perspective, Doordash seems to intend that no delivery “[should] ever be truly bad,” as one driver told me. It’s assumed that Doordash is adamant about drivers earning a respectable minimum fee per delivery so that each delivery is worth the driver’s time and they’re not reliant on customer tips.
UberEATS is largely synchronized with the company’s larger-scale ridesharing aspect. This makes it easy for Uber drivers to break up a day of dealing with passengers while continuing to earn money through another kind of delivery.
Grubhub was still king of market share as of summer 2017, but other services aren’t far behind. Still, Grubhub can use its market share to leverage partnerships with additional services and brands, as it did with Yelp’s Eat24 and Groupon.
For smaller restaurant companies, DoorDash might be a better choice, as they provide a high quality of service for both customers and drivers, which can create awareness and a positive association with your food or products.
For larger companies, the corporate card might not be such a heavy burden.
The nitty-gritty: Is on-demand delivery legit?
Each service is more than capable of delivering food from a restaurant to your door. What’s often most important to drivers and customers, though, are the features and innovations that make one service stand out from the others.
Independent contractor benefits
Grubhub recently won a lawsuit defining its drivers as contractors, which could have an impact on similar litigation at Uber. As contractors, drivers aren’t entitled to benefits or perks that often come with traditional employment, such as health insurance or a 401K. However, this doesn’t always mean that the delivery services leave drivers high and dry.
UberEATS rewards drivers with fuel and phone plan discounts, assistance in finding health insurance [through Stride Health Inc., a health care insurance brokerage], and help with financial management. There are also specialized perks in some markets.
As with the rideshare side of the company, UberEATS drivers are covered by the company’s insurance policy (although they may be responsible for purchasing their own commercial insurance policy, as well, on top of required personal vehicle insurance).
Doordash offers commercial insurance to its delivery drivers, but also requires drivers to maintain a personal policy. Like UberEATS, Doordash has partnered with Stride to help drivers find health insurance. The company has also partnered with Everlance [provider of an automatic mileage and expense tracker] to help drivers organize their expenses in preparation for tax season — which is especially useful, since drivers are classified as independent contractors.
Postmates rewards drivers with discounts on orders from merchants on the Postmates delivery platform after the driver has completed 10 deliveries in a month. After 25 deliveries in a month, the drive receives a subscription to Postmates Unlimited, which provides free delivery on orders of more than $20 from Postmates merchants. The company also provides supplemental insurance for drivers.
Coupon codes, discounts and customer rewards
For new customers, UberEATS rewards are generally in the form of a dollar discount on the first order. Promotions might also include the offer of a free product from participating partners. Drivers who refer their friends as drivers earn bonuses after the referred driver has completed a designated number of trips.
Online community-run forums and subreddits are often the best places to find Postmates promo codes, which are most often offered during large events that people stay at home to watch, such as the Super Bowl and annual awards shows. Postmates also offers a free trial period for Postmates Unlimited.
Doordash has a referral program similar to UberEATS, that offers bonuses for both the Dasher and the referred friend.
Can customers order alcohol through Postmates, Doordash, Grubhub, or UberEATS?
Some meals are best enjoyed with wine or beer, but not all services will deliver alcohol. Grubhub, Postmates and Doordash deliver alcohol in selected U.S. markets. UberEATS allows alcohol orders in a handful of international locations.
Doordash has an alcohol and delivery process in place that requires the driver to verify a customer’s ID and to refuse delivery of alcohol to certain locations. Drivers are prohibited from delivering alcohol to clearly intoxicated customers or customers who seem likely to provide the alcohol to minors.
Postmates operates similarly when it comes to delivering alcohol to a customer. Since Postmates delivers more than food, the company maintains a list of items that customers cannot order for delivery. The list includes drugs and live animals, as well as gift cards [which are often used in money laundering operations.]
Form and functionality of apps and APIs
Customers and drivers I spoke to had mixed opinions about app design and functionality. Though all of the pre-built apps work (obviously, they have to), their user interfaces and functionalities were panned for being unintuitive. All four services also allow customers to order food directly on responsive websites.
Drivers I spoke with complained of three main issues with all apps: a gradual pruning of useful features with each new update; glitches and bugs; and a general lack of effective support. Most drivers seemed to agree that on-demand food delivery apps should have simple interfaces that aren’t constantly changing.
Postmates has a seemingly simple interface, but drivers complained about crashing and bugs. Drivers said they had to restart their smartphone several times before the app would, and complained that it was prone to crashing on busy days — most notably, during the Super Bowl.
The most frequent complaint among Postmates drivers concerned support issues. These drivers said that often when they experienced an issue with an order, the only solution was to cancel the order — which prevented them booking the delivery and earning money.
Postmates support is largely nonexistent, according to drivers, who said that they’re left to fend for themselves and come up with solutions on their own. Customers said they appreciated the aesthetics of the app but thought it was difficult to navigate.
Drivers also lamented the lack of information in the Postmates app. Reasons for delivery cancellations have been eliminated (for instance, because the order is place after hours) as has the ability to call a customers prior to accepting an order (to keep drivers from declining to deliver to certain parts of town).
This has created a situation in which Postmates drivers must “take orders blindly” which can be a concern for couriers delivering by bike or scooter, or on foot.
UberEATS drivers use the Uber Partner app for ridesharing, which works as expected (a testament to the tried-and-true Uber platform). The downside is restrictions in the app that can create problems for drivers.
For instance, the app doesn’t show the destination for a meal delivery prior to the driver arriving at the restaurant to pick up food. However, this could be intended to prevent drivers from accepting only the most desirable delivery jobs.
UberEATS customers use a different app than the one used for rides, but payments are made through the same Uber account. Customers can track their order in real time — a feature that can be helpful in maintaining consumer satisfaction.
Change could soon be coming to the UberEATS app in the wake of Uber’s acquisition of Ando, a tech startup that uses 24 variables to calculate delivery time — a capability that could be a great boon for UberEATS.
Drivers found the Doordash app easy to use and understand, but not without bugs. Occasionally, a delivery has to be designated as “delivered” several times before the app updates to reflect the change. While Doordash has an overseas support team in place to assist drivers, I’m told they’re of little help.
Drivers claimed that this is largely due to the fact that support team members provide “scripted” answers, which can be of little assistance when the app malfunctions or the driver encounters an issue.
Some drivers attributed Doordash app issues to the company “growing very quickly — perhaps too quickly for its own good.”
The result: No clear winner
In my research and writing, I sought to be careful not to favor one service over the others, or to pit services against one another.
In the end, it didn’t matter. For customers and drivers alike, the choice of any one service ultimately is based on experimentation and user experience, not on advertised features and benefits.
I’ll be curious to see how each service continues to improve, innovate, and differentiate itself. Over time, I have a feeling one or two will eventually come out on top or gobble up competitors — or both.