Grubhub has fired their latest shot in their battle against order rejection. Drivers are posting that they have received emails notifying them they were suspended for 30 days for accepting too few orders.
Is this legal? Is it justified? Should we be concerned about this? Should we change how we do our work with Grubhub?
What is Happening? Are Drivers being suspended?
Drivers have recently been reporting receiving an email ntoifying them that they have been restricted from scheduling blocks for 30 days. The body of the email has read:
“We noticed you are delivering less than other drivers in your market while being scheduled for a block. There’s a high demand for blocks by other drivers in your makret, so we’re temporarily restricting your access to scheduling new blocks until (30 days from date of email). Don’t worry, you can continue partnering with Grubhub and are able to complete deliveries by toggling to Taking offers on the Grubhub for Drivers app without a scheduled block.”
Grubhub’s reason for this
Grubhub uses schedule blocks as a means to ensure there are enough drivers available at different times. The use of blocks also ensures that they are not too saturated with drivers when demand is lighter. Drivers who are scheduled do receive priority on delivery offers, and my experience has been that there’s a dramatic difference in the quality of offers when on a schedule block and when off.
Their thinking in this is, if you’re going to use up one of those schedule blocks, then you should at least be delivering. They would argue that it’s not fair to keep other drivers from scheduling a block if you aren’t going to complete deliveries.
Grubhub has a real crisis. Too many orders are not being delivered. This is a crisis that is costing them customers AND restaurants. Customers get fed up with cancelled orders, restaurants get fed up with making food that never gets picked up. I truly believe this is behind why they have been taking in market share. They’re great at getting customers in the front door but they’re losing them out the back door.
Is it a legitimate argument?
I can’t deny that this is a real problem for Grubhub. But the question is, whose fault is this?
Here’s the bottom line: If Grubhub wants to control the process, they have to pay for it. If they want to control how many orders are picked up, they have to pay the taxes and insurance and proper wages. That’s part of the deal. If you want to control the work done for you, hire employees.
You cannot bring on contractors and tell them they have to take so many orders. You cannot punish contractors for not accepting enough orders. There are so many laws out there defining when you can use independent contractors. However, the one constant in all those laws is the element of control. You cannot control the work of independent contractors. Punishing contractors for not accepting orders crosses that line.
The block system creates an artificial crisis.
I understand the point that someone else could take that spot in a schedule block that WILL accept orders. The problem is, it is Grubhub who creates the limitations, not drivers who choose not to accept ridiculous offers. Grubhub can do a better job of identifying the conditions and making more blocks available.
The block system makes sense when it is used to protect against over-saturation of drivers during certain time periods. However, Grubhub uses it to manipulate drivers and acceptance rates.
They will argue that the block system is an incentive that just rewards drivers for doing more work for them. That would be true if the quality of offers available off block were not so low. However, you cannot get acceptable offers very easily if you are not working a scheduled block.
Should I accept more offers because of this?
That has to be a business decision you make for yourself.
I don’t even know if this is a widespread issue. I don’t know the circumstances behind any of these notifications. Is this something that will be common, or is it something they do to make an example out of a few people and scare other drivers into compliance? Grubhub seems to specialize in that kind of behavior.
Honestly, my acceptance rate is low by most standards. However, I don’t think I’m taking fewer orders than anyone else. I may actually be above average. Because of all that, I have no idea whether or not I’m at risk.
But I’m not changing how and when I accept orders. Grubhub’s dispatching is so horrible and inefficient that if I took a high percentage of orders with them, my profitability with them would be lower than with ANY of the other platforms.
It’s not worth it.
You have to decide if it’s worth it to you. You are probably fine in some markets, however others maybe not so well. If you prefer working strictly with Grubhub, then you might find it makes sense to accept more.
Some strategies to deal with this tactic
I won’t tell you whether to accept more or not. I won’t tell you to ignore this. In the end, you have to make your decisions about how to run your business. The things that work for me don’t work for you.
Here is how I’m approaching it: If I accept a higher percentage of orders, my profitability goes down to the point that it’s no longer worth delivering for Grubhub. The difference is that dramatic (and I’ve measured it). However, there are some things that I do that make me think I’m not as much at risk. I could be wrong, because Grubhub doesn’t let you know the threshholds. I’m not sure they HAVE a threshhold. Who knows if this is an arbitrary thing or what? From a business perspective, if it happens, I see it as my customer is no longer willing to pay me what I’m worth. I’m not lowering my price for them.
But here are some things I would suggest that you think about.
1. Use the 40 cent rule
My suspicion is that drivers who received this notification tended to only accept the very highest paying orders. If you base your decision only on criteria like $10 or higher (and some set the bar much higher than that) you won’t deliver very many orders.
I recommend taking a different approach. Not because of this policy, but because I actually think it’s more profitable. What I recommend people do is evaluate an offer on its profitability rate, not on the bottom line.
I find myself thinking that I would confuse the heck out of any Grubhub dispatchers if they were watching what I was taking and rejecting. I’ll turn down a $20 offer and then right away pick up a $6 delivery. How does that make sense? Because that $20 offer might only earn me $15 per hour while the $6 delivery can earn $30 per hour.
What is the 40 cent rule?
I use a 40 cent rule. A delivery has to have the potential to pay 40 cents a minute or better for me to accept. I estimate how many minutes I think a delivery will take. Then I divide the payout by those estimated minutes. A six dollar delivery that takes 15 minutes pays 40 cents a minute. That $20 delivery that takes an hour to complete? 33 cents a minute.
Why does it work better?
There are a lot of smaller delivery orders that pay a better rate than the larger orders. And the thing is, using this rule, I have a lot less downtime. There is a lot of unpaid time waiting for those larger orders. Waiting that long only makes financial sense if the per-minute rate is high enough to compensate for those dead minutes. I think after waiting a long enough time, someone is less likely to think about the time element when that $20 order DOES come across their phone. In the mean time, if I can knock out four $6-orders in an hour, I’ve earned more AND spent less (shorter drives).
And here’s how I think that strategy works better in light of this latest news from Grubhub. You are focusing more on efficiency. That equates to making as much or more per hour as the extreme cherry pickers, but also means you are likely completing more deliveries than the Premier drivers who accept everything.
Grubhub has incredibly inefficient dispatching, at least in my market. The distances you drive to pick up and longer distance deliveries reduce the amount of orders that can be fulfilled. When we insert our own standards of efficiency into the mix it’s possible to reject a lot of orders and still complete more than the average driver.
2. Define your standard
How much is enough? What is your goal? What makes it worth delivering?
Identify what you would earn if you accepted a higher percentage of orders. Measure your progress by profit per hour. Understand what your car costs you (more than just gas) and remove that cost from your earnings, and see how you are doing. Are you making enough?
Ultimately, you have to determine if the cost of complying with Grubhub’s wishes is too great. For me it is. I’ve found about a $7 per hour difference in profitability. At that dropoff, Grubhub is no longer worth doing. If the choice comes down to accepting everything or not being able to deliver, for me the decision is pretty easy. It doesn’t pay enough to be worth delivering, so it’s not worth complying with their desires.
3. Document, Document, Document!!!
If you are concerned about the ability to deliver profitably in light of this, start documenting the orders that you reject.
I find the best way to do this is by taking a screenshot. On my Samsung phone I can just tell the phone to take a screenshot, so it’s very easy and quick. When the orders are consistently long distance, when you know that you can’t make reasonable money with the offers they are sending, the best thing you can do is have proof.
The offer screen shows you the points on the map where the pickup and the delivery are, as well as what you will pay. If you have to drive 15 miles for $7, that’s pretty obvious that it’s a sub minimum wage delivery. If you have a lot of those, and you reject them all, AND you get suspended for rejecting orders, you have documentation that there was good reason for rejecting the orders.
Here’s the bottom line for me: If something happens along those lines, professionally I’m willing and able to move on to other income streams. At the same time, I’m ready to fight it. In the end, it’s a case for misclassification.
A quick editorial comment. I don’t like the legislation like AB5 in how it restricts the ability to work independently. I prefer being an independent contractor IF the nature of the work is in line with what a company is allowed to do with contractors. But when a company hires contractors and tries to bully them into acting like employees, something has to be done. I don’t think AB5 is the best answer but it’s this kind of garbage that paves the way for that kind of legislation.
4. Have a backup plan.
Get to know the other options that are out there. Get signed on with the others, even if you don’t like them as much. Understand what your earning potential is with these platforms.
The reality is, I can make more per hour on ANY of the other three major delivery platforms than I can make on Grubhub if I accepted the percentage of orders Grubhub wants me to accept. So I’m perfectly willing to take that chance that they’ll suspend my ability to deliver if I don’t comply. Compliance shouldn’t even be an issue with independent contractors.
I preach this over and over anyway: Have an exit plan. I’m not all that confident that this delivery thing will be available for a very long period of time. I don’t think this is a sustainable or profitable business model. You need to be ready if the whole house of cards collapses. The same thing is true when it comes to this kind of action. Whether any action like what Grubhub is doing is right or legal or moral is irrelevant when it comes to your reality. If something happens, you have to be ready to move on. You can still fight it, but don’t be left out in the cold.
Take control of the situation.
Start with you. Start with what you need to earn to make this worth doing. Go from there.
Do not be willing to just accept whatever they hand out. You decide first what you need.
If accepting more offers fits your philosophy and earns enough for you, go for it.
And remember that you are running a business. Grubhub is your customer. Businesses sometimes lose customers. Take control of the situation by looking at this like a business. What does a business do if they lose an important customer? They either find other customers or close up shop. I recommend that you determine now what you would do if this ever happens. Do you fight it? Do you pick up other customers? Or do you figure out it’s no longer profitable and you move on to other opportunities?
If you walk through the scenario now, you’re in a better place to respond if anything ever happens.