By: Michelle Zou
Editor | Financial Markets
In the 18th century, American hotels had a bold vision: “families may every day be provided with plates of any dish, that may happen to be cooked that day, by sending their servants for the same.” More than a century went by without this vision being realized. Dine-in alternatives generally remained confined to food carried out by the customer, rather than delivery. There was a stark difference between the socioeconomic status of those who could and could not afford to have food brought directly to them — delivery was for the wealthy, and takeout was for the working class.
However, the year 1945 marked a turning point. After World War II, consumers who had scrimped for years suddenly found themselves in an economic boom referred to as the Golden Age of Capitalism. With high spirits and an unfamiliarly large disposable income, Americans were ready to spend. Prosperity abounded for the next three decades, and with it, the luxury of paying for convenience. Restaurants scrambled to offer delivery to the growing middle class.
By the beginning of 1997, the New York Times printed a piece on ordering meals through the Internet. It announced a remarkable young site with over 500 visitors, noting “the ordering [to be] seemingly as much fun as the eating would be…a feast of 14 dishes was ordered by computer. Twenty minutes later, it was delivered to the door.”
The rise of the Internet dramatically accelerated the transformation of food delivery. Restaurants outsourced delivery, and orders exploded. Consulting firm Frost & Sullivan valued the online food delivery industry at $82 billion in 2018, predicting rapid growth to $200 billion by 2025.
The Food Delivery Industry Today
However, are workers genuinely benefiting from the value being created? Looking at the experiences of food delivery drivers across the world, the current structure of these services is dangerous and degrading. Derek Thompson, journalist for The Atlantic, describes it as “a revolution in convenience, which is undercut by shoddy labour practices.” Perhaps the 18th century’s hopes for the meal service of the future were fulfilled, but its characterization of this offering as servitude would also carry an uncomfortable ring of truth.
Customer is King
With little to no say in dispute resolution, drivers face punitive measures for failing to meet customer expectations. Delivering a meal seconds too late can result in losing half their payment, cutting into compensation that is already barely enough to make ends meet. Drivers for Chinese company Meituan Dianping make about $1 per order. However, they are automatically fined $10 for a late delivery. Furthermore, if a customer decides to file a complaint against them, the driver can be “fined their entire days’ earnings or booted off the platform altogether.”
Fear of letting customers down does not stem solely from the consequential monetary fees. Meituan utilizes a points-based system where drivers are constantly at risk of slipping in the rankings. Falling comes with the loss of associated privileges, such as the ability to screen out unprofitable orders. Elsewhere in Asia, “food delivery companies play a guessing game on what makes their ratings go up — sometimes ratings are even tied to how quickly customers review services after delivery.”
Chinese delivery titans Meituan and Ele.me battle it out for every customer. In the struggle for power, each company’s promised wait times drop continuously, and delivery fees plummet alongside them. The back-and-forth places a considerable burden on the drivers to meet lofty expectations, and the consequences are becoming apparent. Ele.me driver Lu Zhiyin remarks, “when generals fight, it is the soldiers who suffer.”
Last year, 63-year-old Ernesto Floridia was delivering pizza for one of Argentina’s biggest courier apps, Glovo, when he was hit by a car. After he texted the company about the accident, Glovo’s support staff responded by asking about the condition of the food, requesting photographic evidence before the order could be cancelled. A justifiable focus on customer satisfaction has warped into a gross indifference for the health of the drivers.
Weaving Through a Concrete Jungle
Under heavy pressure to deliver on time, drivers resort to speeding and breaking other traffic violations in a desperate bid to fulfill as many orders as possible. The time constraints and uncertainty are draining. Meituan driver Zhang Pei says his previous jobs involved manual labour, but that kind of exertion was only physical: “delivery exhausts your mental energy. There is nothing quite as stressful.”
Many drivers take on multiple orders at once to bolster their income. In South Korea, drivers make up to 11 deliveries in an hour. Former driver Shin Sung-sub commented, “it was protocol for me to ignore turn signals, drive between cars and speed unnecessarily fast in narrow alleyways.” Juggling multiple orders is no easy feat, but drivers are considered contractors rather than employees. As such, they are rewarded for dangerous practices, but ineligible for insurance coverage or employment protection.
Drivers are often on exposed motorcycles or mopeds, and the pressure to maximize efficiency dramatically increases the likelihood of severe accidents. In Buenos Aires, which saw 13 to 40 road accidents involving food delivery per month in 2019, workers’ union ASIMM stated that apps create “incentives to cut corners with road safety.” In 2018, City University of New York lecturer Do Jun lee published a dissertation showing that food delivery drivers in New York City “miss work due to injury as much as 44 times the national annual average.” In the first six months of 2017, a total of 2,473 deaths were reported in Nanjing due to traffic accidents involving delivery drivers. “If I keep doing it,” 19-year-old He Shun states, “I will one day die on the road.”
Criminal Charges and COVID-19
Restaurants may be struggling to stay afloat during the pandemic, but food delivery companies have enjoyed notable success. Despite Uber’s ridesharing revenue taking a nosedive, Uber Eats revenue grew by more than 50%, carrying the company to second quarter results that exceeded Wall Street expectations.
Rather than reaping any benefits of this added business, drivers are saddled with a new list of concerns. NYC Mayor Bill de Blasio issued an order for a weeklong 8 p.m. curfew in June. Explicitly defined as essential workers, food delivery drivers should have been exempt. Just two days later, a cycling courier was arrested, handcuffed, and searched by the New York Police Department despite incredulously informing the officers that he was authorized to be outside.
Each delivery to a stranger’s home is made with the fear of exposure to COVID-19. All too often, drivers “face the impossible choice between destitution and infection. As summed up by an anonymous worker, “either I’m starving or I’m dying of coronavirus.”
Adolfo Garcia and Alexis Dabire are both New Yorkers who have continued to deliver during the pandemic. Garcia says that the need to disinfect his hands after each delivery has made his skin dry and cracked. Dabire says the delivery companies “have never given us anything for protection except for words [of caution].” In fact, Bolt, one of Uber’s newer European rivals, posted a statement on its website deeming masks “ineffective, so it makes no sense to distribute them,” before taking it down a week later.
Change is a Tall Order
The greatest appeal of being a contract worker: the tantalizing promise of personal agency. Companies lure in drivers by offering flexible working hours and the ability to accept orders at will. However, the competition pits drivers against each other and endangers everyone on the road. Economics writer Marshall Auerback points out, “what makes this trend particularly galling is that the main economic drivers of this transition to serfdom fancy themselves as enlightened, socially ‘woke’ corporations, be they Uber, Lyft, DoorDash, or Amazon, but in fact all embrace employment practices more evocative of the 19th-century robber barons.” It is undeniable that these practices are neither acceptable legally nor morally. But how can we reform a business model that is so beloved that every major food delivery company in the world uses it?
Earlier this month, Superior Court Judge Ethan P. Schulman ruled that Uber had failed to comply with Assembly Bill 5, ordering that the companies “stop referring to drivers as independent contractors and comply with unemployment and wage floor provisions for the workers.” While Uber has threatened to temporarily shut down statewide operations in response, the fact remains that food delivery is simply “not characteristic of self-employment because it’s most couriers’ sole source of income, they receive direct orders, and can be disciplined.”
We need not look far to see examples of delivery companies that have successfully changed their business model: while not specializing in food, prominent start-up Deliv reclassified drivers as employees with benefits, health coverage, and paid sick leave last year. CEO Daphne Carmeli stated that the change was “the best approach for all our stakeholders.” A key to Deliv’s success? The company focuses on scheduled deliveries, not on-demand orders: “the insight that we had is predictability trumps speed,” Carmeli says. This method takes the pressure off drivers who otherwise always need to be ready to go, offering a measure of calm in a hectic, dangerous job. Is this approach of ordering further in advance, akin to making a reservation before going to a restaurant, so alien? As Argentinian framework officer Gonzalo Ottaviano puts it, “if the most important thing is how quickly the pizza gets there, more guys are going to die.”
Looking at today’s food delivery giants, it is a curious thought to imagine whether the 18th-century hotels would recognize the kind of service they dreamt about. Possibly, but as Bloomberg columnist Lionel Laurent says, “armor-plated couriers putting their lives at risk to deliver pizza should remain firmly within the realms of fiction.” If delivery companies can't pay for proper treatment of their workers, we need to think twice before ordering our next meal.