DoorDash has a tipping option in its app. Those tips don't always make it to your delivery driver and now some customers are livid.
- DoorDash is being slammed by critics over tipping practices they say are misleading.
- As a New York Times reporter found out while delivering for the startup, sometimes customer tips don't always make it to the worker.
- The company has a guaranteed minimum payment for each delivery, and tips sometimes makeup part of that.
- A spokesperson said DoorDash is always perfecting its payment structures, and in most cases contributes more to a Dasher's guaranteed minimum than customers, many of whom do not tip.
- Visit Business Insider's homepage for more stories.
A New York Times reporter recently hit to the streets to deliver food for DoorDash, and was startled to realize something professional couriers have pointed out for months: the company's in-app tipping option wasn't as transparent as it portends.
On his first delivery, Andy Newman was guaranteed a minimum of $6.85. The company has an assured payout for its Dashers on every order, it explains online, but tips aren't always added on top of that total.
"A woman in Boerum Hill who answered the door in a colorful bathrobe, tipped $3 via the app," Newman said. "But I still received only $6.85."
That's because some tips don't always make it to the courier, despite common notions of how tipping, a common practice since the 17th century, works in service industries.
"If the woman in the bathrobe had tipped zero," Newman explained, noting that he made more from DoorDash than the other companies he worked for during his stint. "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 explains its policy in a help article that's available for Dashers. That article is not visible to customers from the order screen.
If an order's total plus tip doesn't meet the minimum, Doordash kicks in more pay to hit that threshold. But if the total is less than that minimum, the tip covers the gap, instead of being tacked on top of the minimum like consumers have been conditioned to expect.
Notably, the explanation says unequivocally that "you will always receive at least $1 in DoorDash base pay plus 100% of customer tips."
A DoorDash spokesperson told Business Insider that its new payment model, adopted in 2017 and most recently amended in June, costs the company more than the previous model, and is based on a dynamic algorithm that takes into account things like restaurant distance, customer distance, and delivery times for each order.
"We guarantee Dashers will earn a minimum amount, including tips, for completing each delivery. This "guaranteed minimum"-which Dashers see before accepting any delivery-is based on the estimated time and effort required to complete that delivery," the spokesperson said. "Dashers tell us they value knowing the minimum they'll earn upfront, and our model is designed to make the guaranteed minimum fair for every delivery-including the vast majority of orders where DoorDash provides a pay boost to ensure the Dasher receives at least the guaranteed amount."
The spokesperson added that on 65% of orders, the company contributes more to the guaranteed minimum than customer tips do.
Still, customers online said they felt misled by the practice, and urged fellow diners to tip in cash to guarantee their tip makes it to the worker.
In a blog post last month, as pointed out by Quartz in its previous coverage of DoorDash's questionable tipping policies, CEO and cofounder Tony Xu defended the practice.
"Providing this guarantee upfront means that Dashers are more likely to accept all kinds of deliveries because they know what their earnings will be even if the customer provides little or no tip," he said. "As a result, customers receive their orders faster and more reliably, which in turn generates more opportunities for Dashers."
Politicians officials also criticized the practice, with at least one local New York lawmaker drafting legislation to prohibit similar actions.
DoorDash, one of multiple delivery startups competing in a crowded space alongside big names like Uber Eats, is valued at more than $12 billion by its venture capital backers, according to PitchBook data. In May, the company announced a $600 million funding round to continue to grow beyond its current slate of 1,000 cities.
Like Uber and Lyft, which recently went public, DoorDash is likely facing intense pressure from shareholders to reach profitability. The smaller a company's expenses, of which paying delivery workers is a big fraction, the easier it is to become cash flow positive.
"As we grow, we will stay true to our values and our mission of connecting people with possibility," the company said in a press release at the time, "and, trust us, we're just getting started."