Record DoorDash Orders Leave Investors Hungry
Seattle policymakers speak, quick commerce crumbles, Deliveroo bounces back
There’s plenty more financial results to parse today, but the real must-read news is our interview with the crafters of Seattle’s influential PayUp and Fare Share gig work wage laws. Don’t miss it!
Today:
DoorDash Orders Surge 21%
Who’s Left in Quick Commerce?
Chart Time | Deliveroo Bounces Back
Interview — Understanding Seattle’s PayUp Laws
3PD | DoorDash Sees Orders Up, Stock Down
Q1 saw record orders, GOV and revenue for DoorDash, with total orders increasing 21% YoY to 620 million, Marketplace GOV up 21% $19.2 billion and rev up 23% to $2.5B. Grocery also performed strongly — guess all those new partnerships are paying off — with orders more than doubling over the previous year. But that wasn’t strong enough for stock-watchers, as a loss of 6 cents per share was pricier than expectations; Q2 expected pretax earnings of $325-425 million also came in a bit below the $394 million that analysts were looking for. As a result the stock tumbled 15% on the news, and it’s stayed flat since then.
The Big Picture: DoorDash painted a rosy picture of its year to come, with CFO Ravi Inukonda saying he expects Adjusted EBITDA to improve in the second half of the year; That tracks with analysts projections of profitability by Q3. The company’s high-marging advertising biz also keeps growing by leaps and bounds; on the earnings call, CEO Tony Xu noted that the run rate for ads was now “substantially larger” than $100 million. DD also continues to lament the pay legislation that’s gone into effect in Seattle and NYC, noting that wait times are up and Dasher count is down, but that all said it’s impacted Total Orders by less than 1%.
QUICK COMMERCE | Who’s Left Standing After Getir’s Collapse?
With Getir retrenching back to Turkey, what’s left of Europe’s once robust instant delivery sector? Back when Getir was growing like gangbusters, it spanned France, Italy, Spain, and Portugal (which it left last year,) had deep roots in Germany (thanks to its acquisition of Gorillas,) served the U.K. and Netherlands (where thousands are now losing work) and was in a handful of American cities (although it appears its FreshDirect operations will stay afloat.) So who’s left to bring a hungry European groceries in 15 minutes or less? Zapp, which raised a relatively modest $300M, is still serving London and its suburbs. America-based Gopuff also offers U.K. service. And on the continent you still have Flink serving Germany, the Netherlands and France, which recently raised another 100 million euros, but was hoping for a now-unlikely acquisition. But those companies still standing are tiny, compared to Getir’s globe-spanning scale at the height of its power, off the back of $1.8B in funding.
The Big Picture: The problem isn’t the groceries, it’s the speed. As you just saw with DoorDash’s big quarter, plenty of consumers want the supermarket in an app, it just doesn’t need to come in 15 minutes. Back in Europe, Crisp recently raised $37M to expand its grocery delivery ops across Belgium and the Netherlands. Just last week, Rohlik expanded to Germany, having already achieved profitability in its home market of Czechia. Instant delivery may in fact work in emerging economies, where labor costs are low and density is often high. Look to India, where food deliverer Zomato’s quick commerce arm Blinkit is now the most valuable part of the conglomerate.
CHART TIME | Deliveroo Returns to (Slow) Growth
London-based 3PD Deliveroo also recently dropped its Q1 results, showing modest improvements to revenue, GTV and orders. The company noted it was seeing the best GTV growth in France, UAE, Italy and Hong Kong.
INTERVIEW | Understanding Seattle’s Gig Labor Laws
Few cities have been at the forefront of regulating the gig work and app economy as much as Seattle. In 2020, the city passed “Fare Share,” setting up a new compensation system for rideshare drivers; two years later it followed up with PayUp, which regulates the food delivery ecosystem. While at first glance the two policies share fundamental aims, the laws were crafted by different teams responding to different stakeholders.
As we see cities like Minneapolis and NYC working on their own new rules to regulate gig work, we thought to reach out to the policy experts that crafted Seattle’s laws, so we can learn from their experiences. (Originally published at The Curbivore.)
Kerem, Tina, it’s great to chat with you both. Let’s start with some context; could you tell us about yourself, what you do, your path towards your current role?
Kerem Levitas: Thanks Jonah. I serve as the Policy Manager at the Office of Labor Standards (OLS) in Seattle, where I’ve worked for about 7 years. I started off working with different businesses and supporting them on compliance work with the different local labor laws in Seattle. About four years ago I transitioned into policy work, with a focus on the gig economy and non-standard work structures. I led the City’s policy efforts to develop minimum wage and deactivation protections for Uber and Lyft drivers, which culminated in what was called the “Fare Share” initiative. Since then I’ve focused on work protections for other sectors of the gig economy. Prior to that I was an attorney in private practice, representing both businesses and workers in employment issues.
Tina: I have been a policy analyst at OLS for a little over a year now. I work on Kerem’s team, helping to implement City labor laws and provide compliance assistance to employers. Before that, I have worked on public policy matters related to gig and other low-wage work, as well as environmental and consumer protection.
Seattle has been at the forefront of regulating the gig economy lately, with both the Pay UP and Fare Share ordinances. Can you explain to our readers what those two laws do?
Fare Share consists of two ordinances. One establishes minimum pay requirements based on a per minute and per mile minimum. These minimums guarantee drivers a living wage for all their working time (including waiting time, sometimes called P1) plus compensation for expenses. It recognizes that if the TNCs don’t pay drivers for waiting time or their expenses, ultimately they will make below minimum wage. The Deactivation Ordinance creates rules to guarantee fair deactivations and create a transparent process for drivers to challenge deactivations. It addresses complaints that drivers have sometimes been deactivated by algorithm for things that may not make sense, and that it was very difficult for workers to get a human to review the issue and correct mistakes. It also recognizes that there are many reasons deactivations are necessary, and provides the flexibility for the companies to deactivate in these situations.
Pay Up: Similar to the TNC minimum pay ordinance, the App-Based Worker Minimum Payment Ordinance requires workers to be paid a minimum wage for their time and compensated for expenses, including mileage—just like all employees under City law. The rates include a small markup for the app-based workers’ time which is not directly compensated but is inherent to the work—for example the time to return from a delivery in an outer neighborhood to a busier area.
The 2024 rates are $0.44 per minute, $0.74 per mile, or a $5 minimum per job. Delivery workers do not make $26.40 per hour as reported in some media outlets. That is the rate they could earn if they had no downtime between orders. In reality, most delivery workers experience significant downtime between orders.
There is also an App-Based Worker Paid Sick and Safe Time Ordinance, so that they can take time off when sick like other workers.
What was the city’s intention with creating the ordinances, who led the process for each, and went into crafting both laws?
Fare Share: The City began to hear from drivers and driver groups about two primary concerns—first, their pay was decreasing such that they had to work longer hours to make ends meet; second, the companies could deactivate them for reasons that didn’t make sense and they had no way to discuss the issue with anyone who could correct sometimes simple mistakes. The City took these concerns seriously and embarked on a very robust research and policy process. We conducted multiple roundtables with driver groups, including groups selected by Uber and Lyft, held randomly selected focus groups, and conducted a telephone town hall with over 8,900 participants. Further, we conducted a quantitative analysis working with two academic economists who analyzed driver pay based on some company-provided data, and data from a survey fielded to over 30,000 licenses drivers. Echoing the anecdotal concerns we initially heard, this research yielded two results: first, drivers earned an average of $9.73 per hour (after accounting for expenses)—far below Seattle’s minimum wage—and, second, deactivations were a major concern.
Pay Up: For years, network companies have paid gig workers, who are disproportionately immigrants and people of color, subminimum wages. Workers reported that on some delivery offers, they would net zero income after expenses. On many others, they would earn just a few dollars—far below Seattle’s minimum wage. Seattle’s policies for app-based workers recognize that app-based workers fuel our city’s economy and deserve fair wages like all other workers so they can live and succeed in Seattle.
Moreover, delivery workers put themselves at risk during the pandemic to ensure that others could shelter in place. The City thought it was important that they have a living wage and can take time off when sick for public health reasons.
The app-based worker ordinances were developed through a stakeholder process that was managed by members of City Council. Therefore, OLS (an office within the executive branch of the City) participated but did not lead the process like during development of Fare Share. It’s also worth noting that although restaurant delivery work has received the most public attention, the “Pay Up” policies cover a much broader group of workers than Fare Share. This also made the policy development process inherently different than processes for a more narrowly applied set of policies.
Seattle in general has very progressive laws around minimum wage, $19.97 an hour for large employers. Was the thought with these gig pay laws to essentially bring contract workers up to the same minimum standards received by employees?
The idea was to take laws that apply to employees around minimum wage, compensation for expenses, and paid sick and safe time and try to create complimentary standards for this workforce. Of course, some modifications were needed due some unique aspects of this sector. Put another way, employees in Seattle must receive minimum wage and compensation for expenses (like the use of a personal vehicle), so the “Pay Up” and Fare Share laws likewise require that workers are paid at least minimum wage and compensated for expenses like gas, insurance, and depreciation. Similarly, employees are allowed to take off paid time when they are sick or to care for a loved one, and Pay Up likewise includes a similar protection.
We’ve understandably seen a lot of pushback from the 3PDs about the new legislation, including a particular claim that the city was perhaps too conservative in its modeling of vehicle depreciation, as it assumed drivers use “vans, pickups, and panel trucks” as opposed to pre-existing sedans. What do you think of that claim, and of how the industry has responded in general?
Yes, we addressed this somewhat above. In Seattle, employees are entitled to Seattle Minimum Wage and reimbursement for expenses incurred by reason of employment (including driving a personal vehicle for work purposes) under our Wage Theft Ordinance, SMC 14.20. The idea in this policy arena is to take those rights and extend them to the gig sector, with some modifications for the unique nature of the work. As to the specific mileage reimbursement number, in “Pay Up” that is based on the IRS rate for vehicle deductions. The number is almost universally accepted across industries as the correct rate to reimburse workers for use of a personal vehicle for work purposes. Quite literally, it is the rate at which my current employer and all of my previous employers reimbursed me when I drove my own car for work, even though I own a sedan and not a “van, pickup, or panel truck.” The IRS does not disclose the fleet makeup they use to determine the rate, so it’s impossible to know how big a factor those vehicles are. But other models that do not include those vehicles—including Seattle’s own TNC rate study—have resulted in fairly similar per mile rates. (See Seattle TNC study; NYC TNC rates; Minnesota TNC rate study; AAA real costs of ownership)
Given that Fare Share happened in 2020, and Pay Up in 2022, what’s changed since at the local or state wide level?
A Few Good Links
More financial results: Shake Shack returns to profitability; BJ’s profit up 120%; Wendy’s global sales hit $3.44B; Wingstop sees 21.6% growth in same-store sales; El Pollo Loco net income up 20%; Mercado Libre sees strong results from investments in Brazil and Mexico; Publix Super Markets sales up 5%; trucker Schneider National revenue falls $100M. Grubhub hubbub: adds InTown Suites and Home2 Suites to Onsite hospitality biz, offers $1.2M in grants to AAPI-owned restos. Amazon Prime Air brings in Embention as new safety partner. Virtual brands help Denny’s achieve 21% off-premises sales mix, adds Gen Z diners. Resto job growth slows. UPS, FedEx add fuel surcharges. Fulfillment provider Airhouse in trouble. Albertsons wins Webby Award for shopping app. Walmart & Amazon add private labels. Hyundai pushes hydrogen, doubles down on Motional. Beryl and Enterprise team up for shared mobility. Bolt pushes e-motorcycles in Kenya. Craveworthy buys Sigri. Toast unveils digital storefront tools. British 3PDs add worker verification.
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