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Is Uber Eats a Good Delivery Option for Independent Contractors?

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Is Uber EATS a good delivery option for you as an indpendent contractor? As part of the Deliver on Your Business Podcast, we are looking at the four delivery companies and examining some of the pros and cons of each. I drug my feet a bit with this one because I wanted to wait to see what their new pay structure would be. Not having seen any sign they'd be changing it here in Denver, I committed last week to going ahead with this episode this week. So of course, I get the announcement they'll change my market. NEXT week.

But that's okay. There are some changes, some may even be fundamental, but there's a lot that remains the same, so we can look at what it is now, and maybe after the new structure has been in place I can get more into how that's different.

Is Uber Eats a good delivery option for independent contractors?
Is Uber Eats a good delivery option for independent contractors?

I do think that for a lot of people when it comes to name recognition, UberEATS is what comes to mind for food delivery. They recently passed Grubhub as the number two in market share, trailing only Doordash. Uber Eats is where I got my gig delivery start. Are they a good option? Let's take a look. Understand that of course, this is my perception through the lens of my own philosophy. You may likely have a very different outlook, and I'd love your thoughts in the comments below.

Looking at Uber Eats, Doordash, Grubhub and Postmates

This is the fourth of what I would call a five part series. Okay, it hasn't been exactly “serial” in that the episodes have been staggered. In episode 33, we examined Postmates, episode 35 was about Grubhub, and episode 39 took a look at Doordash. Now it's time for Uber Eats. Like I did with the other three, I'll ask the following questions:

  • How well do they pay?
  • How does their app work?
  • What are the deliveries like?
  • Do they respect the Independent Contractor relationship?
  • What is their support like?

I'll wrap the series up with a final episode that briefly looks at each of the companies and makes a fuller comparison of the four.

How is the pay for UberEATS?

Base pay with Uber Eats

I see more people complain about Uber Eats base pay than anyone out there except maybe Postmates. But when you look at what they pay for similar trips, at least under the old pay structure, Uber Eats pays far more for the same distances and times than anyone else. Their pay for time and mileage mean that longer deliveries are better compensated than by Grubhub and Doordash. Even though Postmates has a similar model, they don't pay for time on the route to the customer. So when it comes to base pay, under the old model, I think UE was far better than anyone else.

That is changing of course. The new structure will be a base pay plus trip supplement. They do not appear to be making the formula for the base pay available, so they are losing a lot of transparency there. They did admit they are dropping base pay, and who knows what the supplement will look like.

Elijah Bilel of the App Lifestyle, who joined us on episode 41 to talk about finances for contractors, put out some good information on comparing the old and new pay structures. In fact, as someone whose primary delivery option is Uber Eats, I would call him the authority on Uber Eats, and if you want to really know the ins and outs of doing delivery with Uber Eats, you should check out his channel. In the comparisons he showed, it looked like the delivery fees were coming down to the Doordash and Grubhub level.

Tipping with Uber Eats

Tipping is probably their biggest pay problem. And it is a REAL problem for them. Tips are so bad that they have to pay more out in base and incentives to be competitive for driver pay, and I think this is hurting their ability to be profitable.

Early this year they introduced the option to choose your tip while ordering, and I wrote that tipping while ordering would be a game changer. I thought that since people are used to tipping when they pay, being able to tip when ordering would dramatically increase tips. I believe I was wrong. I haven't noticed much change since they did that. Honestly, I think a lot of the issue goes back to their start as a rideshare company that used to discourage tipping because ‘we pay drivers enough that you don't have to.' It wasn't that long ago that you couldn't even tip through the app. I really believe that's a culture they established that they have a hard time turning around.

Incentives with Uber Eats

From my experience, UberEats has been the king of incentives. I think they've had to, just to get drivers out to offset the low tipping. They have had a history of offering the incentives based on location. Some time back they had a great hourly minimum guarantee program they offered here but didn't offer in many other places (where it was once as high as $24 per hour minimum – and tips were NOT included in the minimum).

Their go-to incentives have been quests and blitzes. A blitz is where they would give a fare multiplier such as 1.5, and deliveries in a set time and region would be multiplied by that. The quest is that you complete so many deliveries and receive a bonus. Both can be good when being offered, depending on how they compare to other companies at the time. I've had times where quests came out to $2 or $3 per delivery, and that can add $6 to $8 per hour to your earnings, that is significant. My most recent quest is adding 60 cents per delivery, which doesn't quite make it worth doing.

The latest would the the new trip supplement. I'm not sure you could call it an incentive. Ultimately I think that's something that will be a lot like Doordash's ‘desirability' factor in their base pay, something they can raise or lower as needed to get people to take a delivery.

I think under the new pay model, they will rely more on incentives to make up for hte lower fares. It looks like they're getting closer to everyone else on the base, but if tips aren't keeping up with their competition's customers, they have to make up the difference here.

Overall observations on pay

Uber pays far more out of pocket than any of the others. Honestly, I think that is part of why they are losing so much money as a company. Other companies, especially Doordash, have figured out if customers tip well they don't have to pay as much out of their own pockets. I think Uber has finally started to see the light but they've established such a non-tipping culture they have to scramble to make up ground.

One crazy issue with Uber that creates confusion is how they pay you and then take some of it back as a commission. I know it's all about things like AB5 where they want to present the idea that they are just connecting drivers with customers and acting more like a middleman than a delivery provider. That would work better if the delivery fees actually lined up with what customers pay.

Here's the bottom line for me. I track all my deliveries. On a delivery by delivery basis, I find that my PROFIT – what's left over after car expense, is more than $5 per hour less than ANY of the other three we've talked about. That's huge. When I see this and see the tipping issues, I start to conclude that the pay model is nearly irrelevant if tipping isn't good.

What about the Ubereats app?

Information provided

This is one area that will change dramatically with the new structure.

Currently here, information provided is horrible. Far, far worse than ANYONE. You don't know who you're picking up from, you don't know where you're dropping off, you don't know what you could earn. You don't know deadlines, you don't know customer notes, none of it. It's not even close to anyone else. And that makes it impossible to make good business decisions on delivery options.

It was funny, they made a big deal about coming out with a new app. They even did a reveal presentation similar to an Apple product launch. Essentially, it's the same app with a new look. They didn't add any information.

Under the new structure, they will be adding a map that shows the dropoff location, they will now display the restaurant name, and even a minimum of what you can earn. It really looks a lot like the old Doordash pay model to be honest. This is better information, but because of another issue I'll get to in a moment, it's not always going to be available.

The function of the app

As a whole, the app works. I think I've had less issue with glitches and outages than any of them. It's easy to use, it's fairly intuitive. I ragged on them about the rollout of the new app a year ago, but I do think there was abit more functionality in pulling up information while in a delivery than there was. My experience is, it works like it's supposed to. That's a good thing.

But I have one huge beef with the app. This is probably an Android thing just because I'm not sure Apple allows this functionality. The Uber app requires a setting that allows it to be “always on top.” That way, if an offer comes in, details will pop up on the screen where you can accept or decline without having to switch to the app itself. Which is great, except in that mode, the map that shows where you're picking up (or where you're dropping off in the new structure) doesn't show up. The problem with that is, you can't switch TO the uber app while the offer is active to get the missing info. This is a problem.

I've found a workaround where you can disable the permission once logged in. The problem is you can't go unavailable and then go online again without re-enabling the permission. This will keep them pretty low in priority for me.

What are deliveries like with Uber Eats?

One thing I like about Uber Eats, is I can just go available and go unavailable. There's no messing with scheduling and blocks. You can log in on the fly. This can be great for pure flexibility. That can be good and bad, because that means there's no mechanism for them to regulate how many drivers are logged in, and I find a lot of times the market with UberEATS is saturated.

Order efficiency

The biggest issue here is because of the lack of information, you can't manage your own efficiency. You don't know where you are going when you take an order, so you can't avoid time-sucking orders.

I will say that when things are busy, Uber Eats does seem to do better than anyone in my experience at finding orders that are close to you. You can get in a groove where you drop off and there's an order right by you. At the same time, they can also get crazy about how many offers pick up 20 minutes or more away. It's kind of a crapshoot.

Wait times at a restaurant can be an issue. The problem is, you have no idea when an order is expected to be delivered (and yet customers and restaurants can give you a thumbs down for being late). I think what makes this challenging is that with other apps, if you get into a long wait situation, you know it pays well or doesn't pay well and you can make an informed decision on whether to wait. Now the good news is that at least currently, you are paid for the wait time, which is better than Grubhub or Doordash, but the pay isn't enough to make the wait worthwhile.

Multiple orders

For the most part, UberEATS doesn't pay enough to make it worth accepting multiple orders, especially without knowing where the orders drop off and without knowing what you will be earning. I've had too many orders where the customers were in opposite directions. It's not as bad as I often get with Grubhub or Doordash, but at least with those two I can know ahead of time that will be the issue and refuse an addon.

Uber eats is a poor option for multi tasking because of the lack of information. Even with them adding new information soon, I don't see that changing due to the ‘always on' feature blocking access to important information. You need to have the UberEATS screen always on top and thaat's not practical when multi-apping.

Does UberEats respect the independent contractor relationship?

I think they do better than any of the others in at least recognizing the relationship. I'm not sure if it's as much that they respect the relationship as it is they are afraid of the courts ruling against them. I had a conversation with someone from their corporate office who mentioned they had considered a mentor driver program where a new driver could choose to do ride-alongs with an experienced driver. Their lawyers shot that down in a heartbeat because it would indicate a training role. This is also why they do not provide bags or shirts. They do not want to be seen as an employer in any way, shape or form.

I will say I feel the least bit of pressure from Uber Eats in that regard than anyone else. There's no real manipulation or anything to make you feel like you have to accept so many orders or follow any rules. The lack of scheduling and freedom to log in and out at will sets them apart.

I see two big issues here: One is you have to maintain a certain level of customer satisfaction. I understand that, however there are too many things out of your control. Without knowing when an order was placed or when it was due (an issue that I don't think they are fixing in the new structure) you can't know if you're running late and manage expecations with the restaurant or customer accordingly.

The other issue ties into the lack of information. Where I see this as a real problem is on bike deliveries, when I don't know where an order is going until I pick up. Uber's algorithm for bikes is horrible and they have often sent me deliveries that were 7 miles away. The problem is, I don't know that until I pick up, and once I pickup there's no way to get the order reassigned. If I cancel it they treat it as though I've picked it up and just didn't deliver. You can't have that happen many time without losing your ability to deliver. An independent contractor shouldn't be limited in that way.

How is Uber Eats's Support

There is one area where they stand out over the others, and that is with the Greenlight hub that is set up in at least the larger markets. Sometimes you need to go see a person, a real live person, about an issue. You can do that much more easily than with anyone else. (Yes, Grubhub has a driver specialist, but accessibility to that specialist is often an issue)

When it comes to on-delivery support, they're pretty much like everyone else: horrible. Like all the others, it's all farmed out to an overseas call center and there's usually a lack of knowledge, training or even authority to act that's involved (not to mention a language barrier). When I've had issues with the bike delivery that was too far away, I tried calling in to get them to reassigne it so it could be left with the restaurant for another driver. They had no option to do that. For the most part, delivery with Uber is pretty much like everyon else: You're on your own, and you need to figure it out on your own. Now, in their defense, I think I find the need for support to be less frequent than I find with others, so maybe that's a sign they have some other back end stuff figured out better than the others.

Overall Impressions on Uber Eats

The bottom line is that because of the poor tipping, poor payouts overall, and lack of information, they are dead last right now in my options for delivery.

The changes ahead have the potential to change that. The problem is that they are reducing the base pay as part of the deal. If they haven't fixed some of the app issues the improved information doesn't really help. It sounds like you'll know more about what you can earn pre-tip, which maybe can bring them up even to Postmates.

But here's the thing: Until Uber Eats fixes the tipping, they're going to struggle. Either they will have to pay out way too much in incentives to be competitive in getting people to deliver for them and that will get in the way of profitability, or they have to get their customers to tip better to offset that. Grubhub, Doordash and even Postmates, I make more in tips than I do in fees. If I make half in tips on Uber Eats in any given day what the fees and incentives are, that's a really good day. It's that big a difference.

Providing more information will make me more likely to consider them but that's only if I can GET to that information. At the same time, they are going downhill by being less transparent about their new pay model. It won't be a formula you can calculate, and they are throwing in something they call a trip supplement to make up for the reduced fee. You can bet the trip supplement is less than the reduction in most cases and on the whole. I can see them being a little more viable as an option but not much.

Could this help someone else? Please share it.

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