If you are a Grubhub drivers in one of the markets where a new pay model rolled out this week, you will soon find that maybe the most significant change is in how Grubhub pays on multiple orders. It was a change that they buried deep in their email, and not a lot of people seem to have noticed yet.
In the past, you could sort of double dip on stacked orders. You were paid according to their pay model as though you had done the delivery efficiently. Stacked orders were a great way to maximize earnings because of this. However, with the new model, Grubhub is now only paying you for the additional time and distance involved AFTER dropping off the previous order, and this can be a significant reduction.
If you are still under the old model of a base pay plus mileage (such as $3.50 base plus $0.50 per mile), nothing has changed for you. Yet.
A Tale of Three Stacked Orders
I had three stacked deliveries yesterday, so I'll break them down as to what they paid, how they figured them, and how the pay differed. Please note that when I talk about the payment, I am not including tips in this analysis. The pay structure only impacts the portion of your payment that comes directly from Grubhub. When I list the mileages and distances, I used the estimates from Google maps, which gives you both an estimated distance and estimated drive time. Grubhub did not break out the number of minutes, which they promised they would. I measured everything with the assumption they're paying about 13 cents a minute based on some charts that were sent to some markets.
Order number 1 From Whiskey Tango Foxtrot
Yes, that's their real name – I thought it was clever enough to point it out. (And if you don't get the joke implied, just look at the initials)
- The restaurant was 3.4 miles, 8 minutes from me when I received it.
- Customer number one was 0.7 miles, 4 minutes from the restaurant (0.6 as the crow flies)
- Customer number two was 2.8 miles from the restaurant as the crow flies.
- Customer number two was 9 minutes and 4.8 miles from customer 1.
- I received $2.08 delivery fee (16 minutes) and $1.08 mileage (4.72 miles)
- I received $1.13 delivery fee (9 minutes) and $1.12 mileage (4.88 miles) for customer 2. They also added a $1 “bonus.”
- This was consistent with customer 1 paying for total time and distance from point of getting the order to dropping off the first order. It was also consistent with customer two paying only for time and distance from the first customer dropoff to the second customer.
- Old model would have paid $3.80 for customer 1, and $4.90 for customer 2, total $8.70. Under this model it was $6.41 – it paid $2.29 less – a 26% reduction.
Order Number 2 from a sub shop
- The restaurant was 14 minutes and 4.3 miles from my location
- Customer number 1 could have easily walked – 0.2 miles and 1 minute from the restaurant (also 0.2 as the crow flies).
- Customer number 2 was 3.65 miles from the restaurant as the crow flies.
- Customer number 2 was 11 minutes and 4.2 miles from customer 1.
- Payout for the customer 1 was $2.45 delivery fee (18 minutes) and $1.12 mileage (4.85 miles).
- Pay for customer 2 was $1.24 delivery fee (10 minutes) and $0.90 (3.92 miles). There was once again a $1 bonus.
- This also was consistent with the first order paying for time and miles from getting the order to dropping off first order, and the second order paying only for time and miles from the first dropoff.
- Total payout was $6.71. Old model would have paid out $3.60 and 5.32 for $9.02 – a reduction of $2.31, or 26%.
Order Number 3 – Double Order to Same Apartment Building
This one was a bit different. Both customers were in the same apartment building, however the second order came much later than the first one and I think that impacted how they figured the second payout.
- The restaurant was 10 minutes and 4.6 miles from me.
- Customer number 1 was 13 minutes, 5.3 miles from the restaurant (3.5 miles as the crow flies)
- Customer number 2 was right across the hall from Customer number 1. No drive time or miles from customer 1 and of course, also 3.5 straightline miles from the restaurant
- I received $2.93 (22 minutes) and $2.43 (10.54 miles) for customer 1.
- I received $1.00 (8 minutes) and $1.47 (6.37 miles) for customer 2 and the usual $1 bonus.
- Overall pay was $8.83. Under the old pay model both orders would have been $5.25, so total of $10.50. This was a cut of $1.67 or 16%.
- The payout on the 2nd delivery is what was unusual. On that one they seemed to calculate time based on how much extra time was involved to do this order (since the second order came in later, there were a few minutes of wait time for that one). HOWEVER they appeared to pay me mileage from the point where I received the order. I have a feeling that because the 2nd offer came in so much later it changed up how they calculated the pay.
Takeaways:
- Overall pay (before tips) for all three under the old model would have been $28.22. Under the new system that pay came out to $21.95. That's a 22% cut in payment from Grubhub.
- That 22% seems high but remember that it doesn't include tips. When you include the tips, it would have been $63.08 under the old model and $56.81 with the new system, so the overall cut is 10% after figuring those tips in. (Obviously it helps to have good tips).
- They did give a $1 bonus on all three orders. Seeing how they have used the bonus in the past, they have been kind of arbitrary in how they use it in our market, and throwing out fewer bonuses during really slow periods. I would not count on seeing a bonus on every order. If you take out the $3 in bonus money, the pre-tip difference jumps to a 33% cut.
- There were times under the old system where taking a lower tip order as part of a stack still made financial sense. If it only added five minutes to the overall delivery time the base pay could still make it worth while. Now if it is just time and distance from the first dropoff, there is no more advantage to taking that lower tip order.
- Longer drives to the restaurant do lead to higher payouts for the first delivery. However the increase is very minor – if the long drive to the restaurant meant it wasn't worth taking in the past, the increase now isn't enough to change that.
What do we do now that we know we'll be paid less?
My first answer is, it doesn't matter.
I mean, it does, it's frustrating, and it shows just how much we are valued by Grubhub.
But when it comes to deciding whether to take stacked orders, it doesn't matter what those orders used to pay. We have to evaluate offers as they are, what they pay now.
It may mean that the order is less likely to be worth taking.
In the past, taking a stacked order was a good way to still be profitable while delivering lower paying orders. Two orders that paid lower may not have been worthwhile on their own, but the efficiency of doing them together coupled with doubling up on the base pay changed that. Now that the second order is only paid strictly on time and mileage, if there is no tip or a low tip on top of it, the time and mileage aren't enough to justify the extra time.
In the end, you just have to estimate the time it's going to take, compare that to the amount you are going to be paid, and decide on a delivery by delivery basis if it works for you.
How can you evaluate if a stacked order is worthwhile?
First, forget about judging the order based on the price alone. Too many people do that and hurt themselves more than help themselves. It's not about the dollar amount. It's about maximizing how much you can earn in the time that you have to deliver. That means you need to focus on your RATE of earning, not the bottom line.
So set a target. Determine how much you need to earn per hour. Make it high enough to make up for slow times if you have them, to cover costs, taxes, all that. Figure out a target hourly rate.
Now break that down into a per minute rate. Divide by 60 – so a $24 per hour rate is 40 cents per minute.
Now calculate how much you think a delivery will pay per minute and compare. Estimate number of minutes you expect to take. Google Assistant or Siri can help you estimate drive times. Use your experience to estimate wait times at the restaurant or if you'll take more time just finding parking, things like that. Figure out how many minutes you think you will take.
Now divide what the order will pay by the minutes you think it will take and that's the per-minute rate you expect the order will pay.
Is that per minute better or worse than your target? If your target is 40 cents per minute, then the $5 delivery you think will take 10 minutes is actually worth it (it pays 50 cents per minute, better than your target) but that $12 delivery that takes an hour (20 cents a minute) doesn't meet your target. If it's close, use your gut – usually I'm going to go ahead and take something within 5 cents a minute of my target.
I know it's trickier to estimate with stacked orders but with practice you'll be surprised how good you get with predicting delivery times. Bottom line though, don't focus on what it USED to pay – focus on the order itself. If it meets your target rate, go for it. If not… let it go.
