Delivery

How COVID-19 is pushing, pulling delivery driver income

It seems counterintuitive that restaurant delivery driver income has fallen since April amidst a pandemic that makes their services more critical than ever, but that's the case. Here are some reasons restaurateurs should take heed of the trend and where it's headed.

Photo: iStock

November 5, 2020 by S.A. Whitehead — Food Editor, Net World Media Group

Few QSR operators would argue that gig economy delivery drivers constitute a big part of the proverbial "oil" that's keeping the restaurant industry's gears turning during the pandemic. It would stand to reason then, that those workers' pay rates might be increasing or at the very least holding at pre-pandemic levels.

But from April through September this year, the opposite was true, according to data collected by Atlanta-based Steady, which has 2.2 million members using its app to find jobs in the delivery realm and other sectors. It reported that the average weekly income for restaurant delivery workers dropped to $184 in September — the sixth straight month of income decreases.

Just by way of explanation, restaurant delivery workers as defined here mean those who typically serve at the behest of third-party delivery providers, including GrubHub, UberEats and Postmates. And the somewhat astonishing thing is, that as Steady relayed in an email to QSRweb, these behind-the-wheel workers are bringing in less income than those who drive in the rideshare or grocery delivery categories.

Steady's membership has a median household income of $50,000 with more than half being women, and 69% are in their mid-thirties. Since the onset of the pandemic, Steady data found that one in four in this group have lost all income directly as a result of Covid-19.

To gain insights into restaurant delivery worker income, Steady drew its findings from a subset of 16,000 members nationally who earned income from a " large gig economy platform" for the week that ended Sept. 19. The same group of people also allowed Steady to track all their financial transactions, the company said.

"I would expect to see an uptick in gig delivery (with winter temperatures). This effect will be magnified further if COVID-19 cases remain on their current trajectory or worsen, which seems likely at this point."
-Steady's Winn Martin

The average weekly income earned by restaurant delivery workers has ranged from $184 to $198 since May 25 this year, and although other types of drivers' income across the app have been slowly falling since the middle of April, the drop is not nearly as steep as it is for restaurant delivery workers, according to Steady Chief Data Officer Winn Martin.

Martin said restaurant delivery income spiked early on in the pandemic, and four factors then caused that pay to fall, including:

• A gradual return to dine-in in many areas.
• Improved remote ordering and curbside pickup, especially at larger QSRs.
• A delivery service hiring binge at the height of demand.
• Warmer weather and more in-restaurant outdoor dining.

"Given that restaurants in many cities are primarily using outdoor seating to serve in-person guests, we may see an uptick in deliveries as the weather turns cooler … and outdoor dining becomes less feasible," Martin told QSRweb. "I would expect to see an uptick in gig delivery (with winter temperatures). This effect will be magnified further if COVID-19 cases remain on their current trajectory or worsen, which seems likely at this point."

Up to this point, however, drivers in grocery delivery and ridesharing platforms also lost income but not nearly as much between April and September. Steady reported that the average weekly grocery delivery worker income dropped from $362 in mid-April to $270 for the week ending Sept. 19. The rideshare driver sector average was $321. Those numbers compare with the aforementioned $184 that restaurant delivery workers reported at that time.

We checked with some limited-service brands for some restaurant-level insights on delivery trends and found some evidence that this kind of warm-weather/eased-restriction drop-off in deliveries was taking place.

"We absolutely expect that to bounce back as we hit the colder and darker winter months, especially since DiBella's is launching an improved online ordering system this month."

-DiBella's Subs Jennifer Jackson

In the U.S. at the burger-and-root-beer QSR, A&W, only about one-third of the chain's stores offer delivery, due to the overall dearth of delivery in rural areas, which are home to many of the brand's locations. CEO Kevin Bazner told QSRweb, however, that the delivery trend at the company's stores in Singapore provided some interesting insights into how things are now and could be in the future here in the U.S.

Delivery sales there peaked at almost 60% during the March and April lockdown period in that nation, but when restrictions eased, delivery dropped to about 22% of sales.

"Consumers were desperate to get out of lockdown, but they also wanted to save on delivery charges and enjoy a fresher product," Bazner said in an email to this website.

Similarly, Rochester, New York-based DiBella's Subs saw a substantial increase in April and May delivery sales, but the 44-unit company recorded a 20% drop over the summer.

"We absolutely expect that to bounce back as we hit the colder and darker winter months, especially since DiBella's is launching an improved online ordering system this month," Jennifer Jackson, vice president of Brand & People, said in an email to this website.

In fact, in its most recent weekly report on restaurant trends, on Oct. 30, Black Box Intelligence reported in its guest trends evaluation that "guest sentiment for delivery remains lower than for 'to-go' and much lower than for dine-in," the company said in an email. "Despite the pandemic and the incremental reliance on delivery guests still tend to perceive it as the least positive experience."

Still, it should also be noted that overall, total income and the number of workers receiving income via restaurant delivery has still risen this year. Steady said the sector's income overall grew 60% from where it was at the very beginning of the year when the pandemic had not yet shuttered American businesses. Many restaurants have since added curbside pickup and carry-out services.

"With the aforementioned improvements in curbside pickup options, as well as some restaurants, maintaining their own delivery services, third-party delivery will remain one of a number of options for consumers," Martin said.

To-go and its associated services will obviously be key to restaurants' survival for the duration of COVID,

"The question is, what will happen as COVID subsides and consumers revert toward pre-COVID habits," Martin said. "Similar to how working from home will remain a larger part of people's work lives than before COVID, the improved customer experience due to remote ordering and delivery/pickup options, as well as order correctness and food quality will lead to takeout occurring at higher levels than it did pre-COVID.

"The challenge for restaurant owners will be to maintain that same level of customer experience once attention and resources shift back to in-person dining, and to do so in an operationally efficient manner. Use of third-party delivery services should play a significant role in this effort since maintaining restaurant-specific delivery capabilities is expensive and inefficient in aggregate.

Likewise, the delivery services will need to ensure that quality, ease of use, and cost approximate or near what restaurants can provide themselves."

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.