Technology

As gas prices surge, delivery companies try to help drivers absorb the costs

Uber Eats is adding a surcharge for customers, Grubhub is raising drivers' pay and DoorDash is offering cash back on gas. The moves are a bid to maintain driver supply.
Grubhub sign
Photograph: Shutterstock

As gas prices rise nationwide, third-party food delivery companies are making changes to help offset the costs for drivers.

Uber Eats and Grubhub will pay drivers more, and DoorDash is giving them cash back on gas as the companies look to maintain driver supply amid the cost pressures. The average price of gas has surged more than 20% over the past two weeks, hitting an all-time high of $4.43 on Monday.

DoorDash, the largest U.S. food delivery provider, on Tuesday said it will launch a gas rewards program that will give drivers up to 10% cash back on gas if they use the company's DasherDirect prepaid Visa debit card. The perk applies regardless of whether the person is driving for DoorDash at the time.

Drivers can also get weekly bonuses based on how far they travel. If a driver completes 100 miles worth of orders, for instance, they'll get an extra $5.

The company said that taken together, the changes should help offset the increase in gas prices.

Uber Eats will help ease gas costs for drivers by charging customers more. Starting Wednesday, customers will pay an additional 35 cents or 45 cents for their delivery orders depending on where they’re located. That money will go directly to drivers, the company said. 

The surcharges are based on average trip distances and gas price increases in each state, according to Uber. They will be in place for at least 60 days.

Grubhub drivers nationwide started getting paid more per mile on March 9, according to an email to workers that was shared with Restaurant Business. The adjustment will match the average increase in per-mile gas costs in a driver’s area. They can also earn a bonus based on how many miles they drive each week, the email said.

Grubhub also offers drivers other ways to cut down costs, including gas discounts and timed “missions” that can boost pay. 

The pay hikes are a bid to keep more drivers on the road as delivery companies seek to build on their massive growth over the past two years. Driver supply is important to both delivery providers and restaurants because it impacts delivery times, food quality and the ability to meet demand. 

Third-party delivery drivers are independent contractors and are responsible for paying for gas and other vehicle costs. They’re typically paid a base rate determined by the time and distance of each order, plus tip. Local news reports from across the country last week detailed how drivers say they’re making less money, becoming more selective about which orders they accept or considering taking a break from delivery gigs altogether because of gas prices.

Consumers are facing rising prices on virtually all fronts, including at restaurants, where inflation is hitting 40-year highs. Delivery menu prices are even more expensive: Restaurants are marking up those prices by an average of 24% from their regular menus, according to a recent study by tech supplier Paytronix. That doesn't even include the additional fees charged by the providers themselves.

There is concern that adding sky-high gas prices to the mix could start to affect consumers’ discretionary spending, including at restaurants. 

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