DoorDash CEO Promises to Change Controversial Tipping Policy
Earlier this year, DoorDash surpassed Grubhub as America’s largest restaurant delivery service, becoming the first one to reach all 50 states in the process. Though taking control of the top spot comes with bragging rights, it also comes with more scrutiny, and this week, DoorDash had to face an issue plenty of similar tech companies have already dealt with this year: its tipping policy.
Tipping online delivery service drivers became a big story back in February when an NBC News report exposed how many of these companies used a “tipped wage” policy where tips are taken into account when determining a driver’s minimum guaranteed wage. Though this system tends to be accepted in the restaurant world, enough negative consumer sentiment emerged around that fact that tips were sometimes being used to supplement income instead enhancing it, delivery services were forced to rethink their policies. At the time, Instacart promised to change their policy; DoorDash did not.
But on Sunday, a New York Times piece where a reporter actually spent time working as a “food app deliveryman” led to what appears to be DoorDash’s day of reckoning. Due to his first-person experience, writer Andy Newman was able to lay the impact of the policy out clear. “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,” the veteran reporter wrote. “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.”
That clear, bathrobe detail-accentuated kind of writing not only shows why Newman is good at his craft, it also left DoorDash CEO and co-founder Tony Xu needing to address his company’s policy — which he did on Twitter. “It’s clear from recent feedback that we didn’t strike the right balance,” Xu said in the second of five tweets. “We thought we were doing the right thing by making Dashers whole when a customer left no tip. What we missed was that some customers who *did* tip would feel like their tip did not matter.”
He then took a moment to defend the policy before saying that it would change. “We did not launch our current model to pay Dashers less. In fact, when we moved to it, our average contribution to Dashers stayed the same,” his thread continued. “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. We’ll have specific details in the coming days.”
Xu’s tweets arrived less than a day ago, so he still has plenty of time left to explain the new tipping policy before “the coming days” are over. When reached for further comment, a DoorDash representative did not provide additional information and directed me back to Xu's statements.
Regardless, we’ve apparently established the current public sentiment on tipping, at least for delivery drivers: A tip should always be added to a wage, not incorporated into it.