DoorDash shows everyone how not to handle tipping
 
DoorDash shows everyone how not to handle tipping
26 JULY 2019 7:54 AM

It’s nice to know there’s still some sense of unity among all people when you see them come together to protest a business screwing over the little guy.

When is a tip not a tip? Well, a tip is always a tip, in sense, when it’s extra paid to someone for a service that’s beyond the original price. At least, that’s from the customer’s perspective. I would imagine it doesn’t feel much like a tip, however, when the person providing the service doesn’t receive it, at least not in full.

You might have read recent stories about how DoorDash handles tips for its drivers, such as this one from The Washington Post. Though it has revised its tipping and pay policy now, the previous model guaranteed that drivers for the service would receive a certain amount per delivery, and that turned out to be very true. If a customer didn’t tip, DoorDash would still pay the driver the guaranteed amount (that’s a good thing), but if the customer tipped, that tip would go toward the driver’s guaranteed paid amount, not on top of the guaranteed amount.

This sounds pretty similar to the restaurant model here in the U.S. Servers and bartenders are guaranteed a lower minimum wage than in other jobs with the understanding that if their tips don’t add up to the standard minimum wage, the employer would make up the difference. The argument here is that the lower wages for servers and bartenders means food and drink prices are lower for customers.

According to the DoorDash website, “The total cost of your order includes the price of the menu items and tax, an optional tip to the Dasher, and a delivery fee and service fee depending on the restaurant. In some cases, there may be an additional fee for orders below a minimum subtotal and for orders when demand is especially high.”

So there’s the breakdown of the cost for a DoorDash delivery. The customer pays for the food itself, pays delivery fee directly to DoorDash and then can offer a tip to the driver. There’s no mention the tip will help subsidize DoorDash paying its drivers. Other delivery services, as reported by The Washington Post story, such as Postmates and UberEats don’t use tips as part of their drivers’ guaranteed pay, so it’s not as if this is a widespread practice in this industry. I think it’s safe to argue most people who order through one of these delivery services expected drivers’ tips to be treated as extra pay for the driver.

As I said before, DoorDash has now changed its policy. DoorDash drivers’ pay will increase beyond the guaranteed amount by whatever tip amount customers give them.

The company only did this after public sentiment turned against it. Drivers, customers and advocacy groups did their best to publicly shame the company. I think you can understand their frustration. Drivers felt like they weren’t getting paid the correct amount (who wouldn’t be upset about that?). Customers felt they had paid for the delivery service (including pay for the driver) and wanted to provide the tip as an extra bonus, not as a way to help a multibillion-dollar company save on its labor costs.

Though it took months of protest and criticism, much of it online, the drivers and customers prevailed when DoorDash changed its policy.

What does this have to do with the hotel industry? For one, it should make you want to look into the operations of any third-party company you partner with, especially if it’s a customer-facing one. It might not sit well with guests if you have a partnership in place with a company that is being publicly criticized for how it pays its employees.

Secondly, this should serve as a reminder that while every company needs to manage its labor costs, the company should also make sure it’s paying its employees fairly because 1.) it’s the right thing to do, and 2.) the public can quickly jump onto a social cause like this when they feel a company is taking advantage of someone.

What do you think about the DoorDash issue? What lessons can the hotel industry take from this? Let me know in the comments below, or reach out to me at bwroten@hotelnewsnow.com or @HNN_Bryan.
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