DoorDash CEO Tony Xu was spotted taking to Twitter this week to reveal that the company would be reworking its policies surrounding tips to make sure that tips from customers actually go to delivery personnel — referred to as “Dashers” by the company. The comments and shift in direction for DoorDash come in response to the fact that the company had not been distributing tips as expected.
The specifics of the new business model haven’t been outlined just yet and there’s currently no timeline regarding when it will go into effect. The executive simply states that Dashers’ income will “increase by the exact amount a customer tips on every order” once it’s in place.
Misunderstanding of how tips work or just a weak attempt to explain this away?
For clarity, DoorDash is a food delivery service that’s available in some regions, allowing users to order food from participating restaurants and locations and then pay a premium to have it delivered. One of the benefits of that being that the establishments don’t need to have delivery services already in place. Many companies, including DoorDash, also offer the services via AI assistants among other benefits.
So customers can basically have the convenience of ordering whatever they like whether that’s pizza, a hamburger, takeout from the local vegan dive, or anywhere where else for delivery to almost any address in regions DoorDash is available. It competes directly with services such as Uber Eats, Grubhub, and Postmates and has an application just as those other services do.
Typically, at least in the U.S., tips are given to delivery drivers and stack on top of the standard wages that employee is already being paid. DoorDash had not, in fact, been following that relatively standard practice and in some cases, Dashers reportedly had their pay gouged.
Mr. Xu claims that misleading customers was not the intention when the policy was put in place and that the company hadn’t intended to pay employees less than they’d been earning — which was reportedly happening in some cases. According to the executive, the issue stems from the company failing to “strike the right balance” between customers, company, and workers. Despite the fact that “contributions” to Dashers on average went unchanged when tipping was added, the company also misunderstood that customers thought their tips would be going to the workers.
Under the new model, tips will apparently work according to expectations customers have had all along but no explanation has been provided to explain where exactly the tips were allocated when they weren’t being dealt with that way.
Based on the responses of a vocal subset of Twitter users following DoorDash, the furor about apparently misplaced tip wages, the response may not be quite enough. Many are now calling for DoorDash to pay back worker tips retroactively, requesting that the company effectively dole out money from tips that presumably would have been paid to food delivery workers if the upcoming policy had been in place all along.
Whether or not DoorDash responds to the new outcry remains to be seen. DoorDash will be providing more details about its policy changes over the “coming days.”