DoorDash Says It's Very Sorry You Noticed Its Tip-Skimming Scheme

[sl8]

From https://gizmodo.com/doordash-says-it-s-very-sorry-you-noticed-its-tip-skimm-1836652047

DoorDash Says It’s Very Sorry You Noticed Its Tip-Skimming Scheme

Tom McKay
[ 8:13 AM, July 24, 2019 ]

Food delivery app DoorDash has, for months, doubled down on its policy of systematically skimming customer tips meant for its fleet of contract delivery workers. That resolve cracked on Tuesday night when CEO Tony Xu took to Twitter to announce some unspecified changes to its compensation model.

Here’s how it worked. DoorDash offers its delivery drivers a guaranteed payout for each order, upfront—a flat $1 per order plus additional compensation calculated by some kind of malign algorithm. So if a driver is told they’ll make $8 upfront for an order, they’ll always receive at least $8. But if the customer receiving that order gave the driver a $4 tip, DoorDash would treat it as a credit towards the originally guaranteed $8, meaning the driver would still only get $8. The only circumstance in which a customer’s tip would actually go to the driver is if it was very generous.

In other words, DoorDash customers were essentially conned into tipping DoorDash, not the driver. This is vaguely similar to the tipped model for many restaurant employees across the country who have tips applied towards a portion of their minimum wage standard, except abstracted through an app and imposed on a contract workforce with few labor protections. Most restaurants also didn’t have an estimated valuation of $7.1 billion in February 2019.

While DoorDash has previously stood by this policy even under withering criticism, it would appear that the company has finally had it up to here with the proles whining. Sort of, kinda, maybe. On Tuesday night, Xu tweeted that DoorDash “missed” that their policy of tip-shaving would make some customers feel like tipping “did not matter”—which could be generously described as a non-apology—and that after a year of ambiguous “research,” the company will now implement a “new model [that] will ensure that Dashers’ earnings will increase by the exact amount a customer tips on every order.”

[...]

[Demovictory9]

1. thieving bastards

[Sneederbunk]

29. F Xu.

[Lochloosa]

2. Tip in cash. I will look for my service person and put it in there hand.

[Luciferous]

3. I always tip with cash as well.

[NewJeffCT]

6. I've never used Door Dash

but, when I go to restaurants or get food delivery, I usually tip in cash. Especially for delivery. Sometimes, if I'm at a restaurant, I may not have enough cash for a tip because I try to avoid carrying a lot of cash.

[tblue37]

7. I do that unless I am 100% sure an employee gets the tip. nt

[dalton99a]

13. +1

[Sherman A1]

4. It is wage theft

pure and simple. The management should be arrested for theft and prosecuted just as any common criminal which is exactly what they happen to be.

[cbdo2007]

5. We need to do away with tipping in this country. It is ridiculous.

[Celerity]

15. What would you replace it with? The US is not the EU where restos are going to pay a 30K USD plus

or so per year base salary for servers, let alone for delivery drivers.

I tip completely different in the US than I do in the UK and EU.

You don't want to tip, then do not whinge when your US dinner for two lowish bill goes from 60, 70 USD total to 130 or more USD to cover the extra salary pay.

[cbdo2007]

19. I absolutely won't whine about it. The rules for who and how much to tip are absurd and inconsistent

The reason US restaurants don't pay more is because of tipping, not vice versa. Tipping started as a way of saying thank you for good service, it has only more recently been used as a way to even out wages, and still most people I know do it to reward good service NOT to even out wages.

[Celerity]

21. you may not complain, but 90% of restos would go under

Being a good server or delivery driver is a hard, hard job, and to equal the income they now (the good ones) make would crush the economic model used by most US dining establishments.

[gratuitous]

20. Paying their employees a living wage would double the cost of a meal?

How much of the price of a meal do you think is directly attributable to labor costs?

[Celerity]

22. Equalling tips earned by good servers would deffo double the price at a full service mid to upscale

resto. The servers I know make 150 to 200 USD plus shift in tips in the US.

[gratuitous]

23. No, it wouldn't

But you keep peddling the restaurateur talking points if it makes you feel better.

[Celerity]

25. sorry, I am peddling nothing but the economic model that American restos operate under

Your 'living wage' (lets call it 15/hr) for a full time wait staff at a medium sized semi upscale full service establishment would bankrupt it in a couple months or two unless they massively increased prices, which would have the same effect in terms of closure. The average failure rate for start-ups is already extremely high (in some places it is above 80% within the first 24 months.)

Plus, good luck getting a good server who is used to walking out with 200 USD cash a night in tips to walk away with nothing but around 500 USD per week after tax in the form of a cheque for 40 hours of grinding work. That IS what we are talking about because this entire colloquy was started over the positing of removing tips and replacing them with wages to make up the difference. To replace the take home rate for the top half of the server staff would take even more, far more, than 15/hour USD.

I have family and friends who ran and/or owned restos in the past in both Los Angeles and NYC (as well as London, which is an entirely different paradigm fraught with its own issues.) The wage only model, put into play in the US, combined with rental rates, etc. would crush most all ventures.

[dawg day]

28. The servers I know don't make anything near that.

Not everyone works at an expensive steakhouse.

And in many places, the servers have to give 1/4 of their tips to a common fund that goes to other workers, like the busers and cooks.

[Celerity]

30. you may not know any but there are tens of thousands (hundreds probably) who do. You cannot

shoehorn every type of resto into the same model. If your examples come from a smaller, less expensive living area, then perhaps you could find a competent serving staff willing to work for a pure wage/no tip scheme, but also, the same economic laws come into play, as that establishment will also have to raise prices to cover the difference as well. For every resto that is raking in huge profits there are 10 or more who are barely scraping by on extremely small margins. Even modest increases in prices of the raw food can make or break many ventures, let alone increasing the cost of labour by a massive percentage to make up for the absence of tips.

It is basic economics. If your outlays/set costs explode, the only way to keep afloat is to increase revenues. The only way to do that is either to massively increase volume (which would also have the knock-on effect of increasing staffing and thus increasing outlays, so a viscous cycle begins) which is entirely speculative, or to increase the end price of the food, which also will, I assure you, have a most deleterious knock-on effect. We are not talking about self-service fast food here, we are talking about an even more labour-intensive model that oft-times involves a somewhat transient workforce (especially in terms of the servers.)

Every full-service resto has its core group of reliable servers, the type who will come in at the last minute to pick up shifts. That core group will quickly accrue hours that necessitate overtime pay (in the wage-only model), which further exacerbates the cost of labour and make the outlays even more untenable to the bottom line.

[sl8]

34. Why would making up for the loss of a 20% tip require increasing the price 100%?

Am I overlooking something?

At least as far as just the math goes, it seems like losing the 20% (or whatever percentage is appropriate) tip from the patron would be made up for by the owner giving the worker an additional 20%. Effectively, the "tip" would be paid by the restaurant instead of the customer.

[Celerity]

35. they are talking about paying the servers a straight 'living salary' not just tacking on 20% tip

the original post I replied to said do away with all tips

The wage costs would explode.

[shanti]

27. Do you tip?

[cbdo2007]

32. Yes, of course.

Always for good service. Usually for mediocre service. Rarely for bad service.

I just wish it wasn't an expected part of the experience, for me, the employee, or the establishment.

[dlk]

8. We Live in an Age of Unbridled Vulture Capitalism

This is one of the many reasons why strong union are so vital to protect workers. They provide a necessary counterbalance to employer abuses to the workers generating the profits. BTW, I will never use Door Dash despite their mea culpa. They are inherently dirty. That doesn’t change after a OR campaign.

[JudyM]

31. Well said. Unions wouldn't be necessary in the absence of vulture capitalism. Says a lot about us.

[woodsprite]

9. I believe GrubHub works similiarly.

At least some of the establishments contracted by them don't pass the tip along if you tip by adding the amount to the bill you pay by credit card. It was mentioned to me by one of their drivers, to tip in cash rather than online.

We've stopped using GrubHub, and have never used DoorDash.

Does anyone know if Good Uncle works that way? I've never tried them, but they just moved into our area.

[PatSeg]

10. That is really low

I always tip in cash. I know how easy it is for employers to rip off employees' tips.

[PoliticAverse]

11. "Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.". nt

[kimbutgar]

12. Whenever I order food and put on credit card I get delivery person cash

A friend told me years ago who did this they get screwed out of tip. So I give cash. If I am in a restaurant I also give a cash tip.

[keithbvadu2]

14. I ask the waiter/waitress if they get the tip if I put it on the credit card.

I ask the waiter/waitress if they get the tip if I put it on the credit card.

[elocs]

16. The problem with too many or even most apologies

is that it is not that they are sorry for the words or actions that prompted the apology, they are really sorry they got caught or called out and are trying to smooth it over.

[Celerity]

17. gangster techno-capitalism

[TeamPooka]

18. Door Dash and CEO Xu are scum. Plain and simple. Fuck them. nt

[JCMach1]

24. Pay back tips to workers

Or continue giving them the hose

[Brainstormy]

26. Despicable. n/t

[zackymilly]

33. I always give the tip to the server personally.

There are several restaurants here where the servers are supposed to put their tips in a universal tip jar and they are split up equally at the end of the night between the all the servers.
There are several lousy servers at these places and they shouldn't be able to take money from the hard-working servers.