Grubhub is an online delivery platform, which is quite widespread in the gig economy world. Many gig delivery drivers chose to work for Grubhub because of its high tipping. Customers could tip the drivers with a default tip, often ranging from 10% to 25%.
However, near the end of 2020, the Chicago company rolled out a new fee model. The app now has a default zero default tip and adds the suggestion “leave an optional tip on top of driver benefits.”
Moreover, Grubhub also added a new “benefit” fee, of $1,50, in California. It is worth mentioning that this benefit tip goes into a specific pot, for which only specific drivers are qualified.
Props 22
November’s Proposition 22 may add some benefits for the gig workers. But these benefits fall far behind those of full-time/contract employees. The legislature also made it harder for the companies to support their gig employees. Companies like Grubhub, Uber, and Lyft need to hire their drivers to offer them a full slate of benefits. Many big gig companies supported that new ballot measure.
Gig delivery workers claim that the Proposition’s benefits are not high enough to compensate for encouraging no tipping. Grubhub drivers are disappointed with the new tip policy. Grubhubers also mentioned they make a 30% to 50% less daily because of the new tipping rule.
Smaller Tips
A study by Santa Cruz University proved that gig drivers could not make it without the tips. Tips account for 30 percent of their estimated earnings. According to the ”Financial Times” and a Grubhubber, Jeanine, 100% of her customers left a small or no tip at all after the new tip policy announcement.
Of course, there is not just one side of the coin. A Grubhub spokeswoman responded to the criticism. He mentioned that customers still have the option to leave a tip. This option, alongside the Props 22, provided the drivers with more stability.
Grubhub, like most of the gig companies, declares that they will raise their customer’s fees to cover the driver’s new benefits. However, by the end of 2020, the only brand that proceeded with changes was Grubhub.
Gig companies were struggling to make a profit during the pandemic. Grubhub may remain profitable in the last months, but yet it lost a massive amount of money. Lockdown restrictions led people to food delivery, and Grubhub took advantage of this change.
The tipping change is a move of the ”arms race of food delivery.” It is a move that will bring them more customers and share in the delivery world.
However, Grubhub drivers continue to prove and believe that the new tip policy makes them lose out on a large amount of money in tips. They keep wondering if the worth working at all.
Grubhub was one of the delivery companies that offered better pay among food delivery platforms. But what about now? It is a fact that the new tip policy leads to the absence of big tips for drivers.
In June, it was announced Grubhub would be acquired by the European food delivery group Just Eat Takeaway. The deal’s worth reached $7.3 billion. A review of the merger suggested that GrubHub is trying to become less dependent on the US market.
