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To insure prompt service, tip (on DoorDash)
The grammar kills me and the alleged “TIPS” acronym isn’t a thing. A new test from DoorDash ties consumer tips to faster deliveries.
“Did you know that ‘tips’ is actually an acronym? It means to insure prompt service.”
We’ve all heard it. Except it actually isn’t an acronym. That cringeworthy sentiment that somehow finds its way into most discussions about tipping in America is an urban legend that has long been debunked. Worse, the true origins of tipping culture in America have roots in slavery and racism. But here we are, still tipping in all sorts of service settings, and especially in food service settings.
Now, DoorDash is experimenting with a new tip prompt in its mobile app. To ensure prompt service, it reminds users, you might want to leave a tip.
If app users indicate a $0 tip for their delivery, a prompt tells them, “Orders with no tip might take longer to get delivered — are you sure you want to continue?” If the diner still declines to enter a tip, the app reminds them again: “Dashers can pick and choose which orders they want to do,” it displays.
In some ways, DoorDash is fixing a problem of its own creation. The U.S. delivery leader and its competitors rewrote the rules of restaurant delivery, and, by extension, delivery etiquette. It’s old news that gobs of venture capital dollars helped subsidize the earliest days of modern third-party delivery platforms. Somehow, it’s novel for customers to expect to pay a premium for an extremely convenient service.
Tips on DoorDash don’t have the greatest history.
When DoorDash introduced tips in 2017, it used them to offset the amount it paid couriers. This way, the company reasoned, its drivers would get the same amount of money for a delivery whether or not the customer left a tip. DoorDash didn’t change the policy until the summer of 2019, after months of critical feedback and the pervasive narrative that it was stealing tips that belonged to its contracted couriers.
In November 2019, the Washington, D.C. Attorney General filed a lawsuit against the delivery company, alleging that it misled consumers as to how tips were distributed. DoorDash later settled the lawsuit for $2.5 million without admitting wrongdoing.
Today, in any and all conversations and announcements involving tipping, DoorDash spokespeople make sure to add that 100 percent of customer tips are given to the driver.
Do people even like tipping?
Restaurant website service BentoBox posed that question in a few different ways as part of a recent consumer survey. According to the findings, 83 percent of respondents said meal deliveries at least sometimes deserve a tip. And eight out of ten survey respondents said that they enjoy tipping because it rewards good service.
But delivery services like DoorDash prompt for tips before deliveries are completed, and they share that information with drivers. It’s become an important way to transparently share potential earnings with couriers, but some customers find it backward. The New York Times reported on an informal consumer survey in Los Angeles in which people complained about being prompted to tip on orders before they’ve received them.
DoorDash’s tip-prompting announcement pulls back the curtain, just a little bit, on the way the app operates. While people who rely on DoorDash for income surely understand its intricacies, plenty of consumers do not. In a Washington Post story about the confusing costs of restaurant delivery earlier this year, Lindsey Cameron, a management professor at the Wharton School at the University of Pennsylvania, said “The opacity is a feature and not a bug of these systems.”
Later, Cameron elaborated further on a podcast for the business school. “Honestly, I don’t see most consumers really thinking about the breakdown of the money and who is getting what. They’re just looking for how they can get the cheapest option for food delivery,” she said.
It’s possible that DoorDash’s app tweaks could continue to change this. The company said that its seen a “meaningful decrease” in no-tip orders thanks to the prompt, and will roll out the feature more broadly if — or when — it proves successful.
What’s up at Sweetgreen?
As quarterly earnings calls go, I am always fascinated by Sweetgreen’s. The chain is young, growing, and, in the words of its CEO, “willing to blow the whole thing up” when it comes to adding automation to its operations. It’s impossible to look away!
Sweetgreen announced its third-quarter earnings this week, and it’s still losing money, though not as much as it was last year. It’s also still betting that automation will continue to help its bottom line. The company is on track to open its second robotic restaurant before the end of the year, where a robot will dispense salad ingredients into bowls. Next year, it’ll open up to nine new robotic restaurants and retrofit a handful of existing locations.
Journalists like me have been giving the Sweetgreen robots outsized attention; right now there are 220 Sweetgreen stores and just one of them has a functioning bot. But the company’s leaders have made it very clear that the technology is a huge part of Sweetgreen’s growth strategy, and an important part of its ability to eventually turn a profit. It’s a fascinating modern restaurant growth story, and I’m here for it.
Niche delivery apps meet the needs of a growing Chinese population in the US
When searching for a specific and regional Chinese cuisine, Uber Eats' singular “Chinese food” section isn’t always sufficient — nor are its menu translations. Apps like Hungry Panda, Fantuan and Chowbus fill that void, allowing users to read and order in Chinese, using app interfaces that are similar to popular apps in mainland China.
“A lot of apps categorize food on the national level, which is almost useless for a Chinese person,” food content creator Jane Liu told the New York Times, adding that she finds the reviews of restaurants on these platforms better reflect her community’s preferences.
There are nearly 2.4 million Chinese immigrants living in the U.S. as of 2021, up from 1.8 million in 2010, and the apps that serve them are similarly growing; London-based Hungry Panda has raised $220 million over the last five years and Vancouver-based Fantuan raised a $35 million Series B investment in 2021 led by the Chinese private equity group Orchid Asia. Like the dominant apps in the U.S. — DoorDash, Uber Eats and Grubhub — their Chinese-centric counterparts also face criticism over their commissions; Hungry Panda, for example, charges restaurants between 15 and 25 percent.
Uber turned a profit again. The company released its third-quarter numbers on Tuesday morning, and while it missed analyst expectations, it posted a net profit of $221 million. In the third quarter last year, Uber lost over $1 billion. — WSJ
DoorDash did not, but it’s getting closer. The company lost $75 million in Q3, but reported its “best quarter ever” — since its IPO almost three years ago. — Fast Company
In its quarterly shareholder letter, DoorDash again laid out its challenges. “An investor we were speaking with recently described our business as 3-D chess. We think of it more like learning to be a great jazz band,” executives wrote. “Our technical skills must be exceptional, and we are constantly working to improve them so that we’re not constrained by our own lack of ability. At the same time, we must master the art of listening while we play.” The letters have provided some humanized insight into the tech company, so I’m bummed to learn they’ll switch to annual missives in 2024. — DoorDash
DoorDash will offer its couriers driving tips. The app will recognize rapid changes in acceleration and braking in ten markets. — TechCrunch
An AI-powered smoothie shop in San Francisco closed after just a few weeks. I reached out to the owners twice to talk and never got a response; guess I know why? — OttOmate