A DoorDash delivery person. | Photo: DoorDash
Its tipping model funneled delivery people’s tips to the company to offset costs
On-demand food delivery app DoorDash is changing its tipping model following a New York Times report that revealed delivery people’s tips were being funneled to DoorDash to offset the company’s costs.
In the New York Times article, reporter Andy Newman recounts what it was like to work as a deliveryman for food apps like Uber Eats and Postmates. Readers on social media seized on the article’s DoorDash detail in particular:
DoorDash offers a guaranteed minimum for each job. For my first order, the guarantee was $6.85 and the customer, a woman in Boerum Hill who answered the door in a colorful bathrobe, tipped $3 via the app. But I still received only $6.85.
Here’s how it works: If the woman in the bathrobe had tipped zero, DoorDash would have paid me the whole $6.85. Because she tipped $3, DoorDash kicked in only $3.85. She was saving DoorDash $3, not tipping me.
DoorDash, a company valued at $12.6 billion after its latest round of financing, had used that tipping structure since 2017 and has — along with grocery delivery service Instacart — previously faced blowback for the policy. Following criticism in February, Instacart dropped its tipping model, but DoorDash CEO Tony Xu refused to follow suit at the time, telling the New York Times that DoorDash’s pay model had led to an increase in the number of orders being fulfilled by its workers, as well as higher job satisfaction.
On Tuesday night following backlash sparked by Newman’s report, Xu tweeted that the tipping policy would finally be changed, but continued to defend the pay model as a way to “prioritize transparency, consistency of earnings, and to ensure all customers get their food as fast as possible.”
He conceded, however, that “it’s clear from recent feedback that we didn’t strike the right balance … Going forward, we’re changing our model - the new model will ensure that Dashers’ earnings will increase by the exact amount a customer tips on every order.”
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