Grubhub slowly shrinking payouts on higher tip orders
I posted my first impressions on the new Grubhub Pay Model here, and at the time, it appeared that they were paying slightly more per trip than they would have if they used the old straight line mileage model. I mentioned at the time that I was curious if that would slowly change.
At first it was hard to really catch any real trends. Over three weeks, I’ve begun to notice a few trends, in particular I’m noticing a week to week change.
I tracked as many orders as I could. Google maps is great because you can measure the straightline distance between points, which is how Grubhub calculated the old model – in my market it was $3.50 plus 50 cents per mile. It has been interesting to see the trends.
Week 1: Fares were looking better.
There were 33 trips in the first week of the model where I accepted and had screenshots or data where I could measure what the pay would be on the old model. In the first week, the average fare I received (not including tip) was $4.51. Under the old model, the average fare would have been $4.27. So it was basically a 6% increase in the part that Grubhub was paying out. Now of course after you add in tips that’s more like a 3% increase, but still, an increase is a good thing, right?
Week 2: Fares are better still… but not by as much.
The second week of the new model was the one where I had the most trips recorded, with 47 trips that I had the data where I could measure. I averaged $4.53 in fares, where those same trips would have paid out only $4.33 on average. That’s still an increase, but slightly lower compared to week 1.
Week 3: Things, they are a changing.
Now to be fair, I didn’t have as many deliveries. I was out of town Wednesday through Sunday, so the 17 deliveries I did have may not be all that conclusive. However, it was interesting. The average fare per delivery was down to $4.27. Under the old pay model it would have been $4.41. For the first time, I was making less than under the old model. This may be an anomoly because it wasn’t as many deliveries, but looking at some of the patterns, I don’t think so.
What about any other patterns?
All three weeks (and even so far this week) I have noticed that there were trips where the old model would have paid better, and others where the new model would have paid better. Other than that, it was hard to really nail down any patterns. I wasn’t seeing any difference when it was clear I’d have to wait, so what they are saying about compensating for the time the trip takes is, in my humble opinion, a farce. In fact, I’ve noticed some trips where, due to traffic conditions and wait time etc, the payout was significantly lower.
Then one thing caught my eye. In the past couple of weeks I had some Taco Bell orders where the tip was low but the payout was significantly higher (about $2.25 higher than I normally would have received). So I started wondering about whether tips would make a difference. There is a very definite trend going on here, and again the trend is a decline in pay as the weeks pass.
I sorted the trips by tip amount. Here’s where it gets interesting.
- In week 1, when the tip was $5 or higher, the average fare was $4.55, compared to $4.45 if it had been under the old model. So I was making 2% more on these trips.
- In week 1, when the tip was less than $5, the average fare was $4.46, compared to $4.07 under the old model. So on lower paying orders, I was getting a 10% increase under the new model.
- In week 2, when the tip was $5 or higher, the average fare was $4.58 compared to $4.52 under the old model – so I was still getting an increase but only 1%.
- In week 2, when the tip was less than $5, the average fare was $4.47, compared to $4.14 under the old model – about an 8% increase.
- In week 3, when the tip was $5 or higher, the average fare was $4.04, it would have been 4.38 under the old model. In other words, on higher paying trips, I was now seeing an 8% DROP in my earnings on higher paying tips.
- In week 3, when the tip was less than $5, the average payout was $4.45. It would have been $4.42 under the old model, so only a very very slight increase.
So far this week, 100% of my higher tip orders have been paying out less than they would have under the old model, and the decrease has been a whopping 18%. On lower tip orders, it’s been about a 4% increase.
Grubhub is following Doordash’s lead by using large tips as an excuse to pay less
Under the old model, $3.50 was the bare minimum. So far this week, my average fare for orders with a $5 tip or higher is $3.37 – 13 cents LESS than the minimum, and some of those were 2 mile drives. So it’s pretty clear they are using higher tips as an excuse to pay less out of their own pockets.
Now it’s not as bad as Doordash, at least not yet. You can read more about their pay model here, but Grubhub is getting as low as $3 per delivery when the tips are good (still $2 better than Doordash’s $1 payouts, but the difference is shrinking fast). The funny thing is that in some ways it’s like Grubhub is at least a bit more up front that they are doing this.
I’ll keep tracking, and looking for patterns.
If you are one of the markets that has had the new model (where the mileage breakout is taken away) – have you seen any patterns yet in the new pay model?