UberEATS Just Changed How It Pays Couriers And It Could Impact How You Get Your Food
"There will probably be a lot of people who decide not to deliver with UberEATS anymore."
UberEATS has pretty quickly become a common lifestyle expense for hungry and time-poor millennials. The food delivery app charges customers a flat $5 fee to courier meals from a huge range of restaurants across Australia’s capital cities, making it easier than ever to get burgers, fried chicken and even gelato delivered straight to your door.
But a recent change to the way Uber pays its couriers, the people who brave the elements and terrible traffic to bring you your freshly cooked meals, could lead to a reduction in pay and consequently fewer riders on the road. The end result for customers could be longer wait times and fewer restaurant options as couriers ditch Uber for more lucrative work.
How UberEATS Works
UberEATS couriers aren’t technically employees of the company. They’re private contractors who, rather than earning a salary, are paid a contract fee depending how many deliveries they’ve made. Uber refers to them as “delivery partners”.
Up until today, couriers were paid a rate of $11 per delivery plus $2 per kilometre travelled (the per kilometre fee varies city by city), with a minimum total “gross” fee of $13.50. The gross bit is important because Uber charges a 35 percent service fee on what bicycle couriers earn (the fee is less for couriers using a scooter or car), so that minimum $13.50 rate actually translates to a payment of $8.78.
On top of that courier fee, Uber charges restaurants around 30 percent of the meal price. Plenty of restaurants are happy to pay the charge because it means they don’t have to worry about the overhead costs of having their own fleet of couriers, and it opens up their business to a huge customer base.
The payment structure is designed to encourage as many riders onto the road as possible, to reduce delivery times. That’s how it’s possible to get a Double Fantasy burger with extra cheese from Dean’s Diners in Newtown to Alexandria in 15 minutes. But changes to the way Uber pays couriers could change all that.
From today, instead of receiving an $11 delivery fee plus $2 per kilometre, couriers will receive $5.50 per pickup, $3.50 per dropoff and $2.20 for each kilometre travelled.
To put it more simply, the minimum fee for couriers will go from $13.50 to $11.20, and that’s before Uber takes its cut. That’s a 17 percent reduction in the minimum delivery fee for couriers.
You might be wondering why Uber decided to split up the delivery fee into separate pickup and dropoff components. Under the old system if a driver picked up two orders from the same restaurant they were able to charge two $11 delivery fees. But under the new system they’ll only get one new pickup fee and two dropoff fees. That’s a reduction from $22 to $12.50.
The company is also introducing something called “Promotion Boost” which works a bit like surge pricing for Uber cars. Depending on time and location, couriers will receive extra pay, as a way of encouraging additional riders onto the roads.
According to the company, the changes are about making the fee structure less confusing for couriers and ensuring Uber “continues to be the best way to earn good money on your own schedule”.
“We’ve come a long way since the first day we launched UberEATS in Melbourne, and as the product evolves we’ve heard feedback from delivery partners that every step of a delivery has its unique challenges that are different from the ride sharing business,” a company spokesperson told Junkee. “That’s why we’re updating the way delivery fares are calculated in order to better reflect the door-to-door service delivery partners provide.”
What Do Couriers Think?
Some UberEATS couriers have been discussing the changes on an online forum and most aren’t too happy.
“I think it [the fees] will be better in surge time only. Otherwise, it will be less,” one said. “Sounds like a 10 percent cut,” said another.
“This is disastrous for me and other UberEATS deliverers. I remember back before the service fee was increased that basically every second or third delivery ended up with $10 in the pocket of the deliverer. However, now the lowest amount you can make is like $6 for rates for a driver. The pay keeps dropping, so it’s making it difficult for deliverers to stay in the game,” one courier wrote.
Junkee spoke to an UberEATS courier, Nelson, who said that “There will probably be a lot of people who decide not to deliver with UberEATS anymore because of this huge pay cut.”
“This is especially true outside of peak periods when they typically offer an incentive,” he said.
The introduction of a “Promotions Boost” seems to suggest Uber is aware the changes could act as an disincentive for couriers. The boost would likely be used to encourage more couriers to use the service during busy periods so customers aren’t impacted.
Nelson told Junkee that his average hourly rate was around $10, but under these changes it would like go down by 15 percent. “I’m definitely thinking about quitting,” he said.
Customers Could Face Longer Wait Times
Despite the reduction in payments to couriers, there are no plans to reduce the $5 delivery fee paid for by customers. In fact, the change could make things even worse for customers. If couriers decide to ditch UberEATS for competing services like Deliveroo and Foodora, or leave the industry altogether, delivery times could start getting longer.
Uber could use the new boost service to encourage riders to work during peak times, but couriers Junkee spoke too said that the new fee model would make it difficult to justify working off-peak.
Unlike UberEATS, Deliveroo uses a roster to allocate couriers to certain geographic zones at particular times. While it limits the amount of money couriers can theoretically earn, it does help guarantee a certain rate of pay and help regulate delivery times.
Under Uber’s model, couriers compete with each other for each delivery, which traditionally has benefited the customer by ensuring there’s plenty of people working, keeping delivery times down. But now there’s a risk that laissez-faire approach could backfire, impacting the service’s reliability, particularly during off-peak periods.
While Uber has a virtual monopoly in Australia when it comes to ride-sharing, the food delivery sector is more competitive. It will be interesting to see if the company’s decision to change its fee structure provides an opportunity for Deliveroo and Foodora to claw back some ground.
Feature image via Uber.