When Seattle gig workers won a wage increase DoorDash The prices were increased.
The Wall Street Journal reported on Saturday (June 22) that these companies Get enraged client, Fewer restaurant ordersand a shortage of drivers.
New York City lawmakers, who reportedly also passed legislation to raise driver wages, To tell These changes helped workers.
But in Seattle, city officials plan to roll back the city’s wage increase because of protests from drivers and restaurants about the “devastating” impact, City Council Speaker Sarah Nelson told the Journal.
Delivery companies that rely on gig workers to stay in business say the wage hikes limit how much they can pay drivers. DoorDash and Instacart Both announced Increased fees Orders in Seattle began in January due to changes in the city of Seattle.
According to the report: Uber Eats Orders in Seattle fell 45% last quarter from a year ago after the companies implemented a $4.99 fee per order to meet the city’s new payment requirements. Both Uber and DoorDash say demand is similarly waning in New York City, where companies are required to pay drivers a minimum of $19.56 an hour before tips, up from an average of $5.39 an hour.
The Journal also quoted Seattle-based researcher Lo Xin, who said that before the wage hike took effect, he ordered delivery meals multiple times a week, and that the app’s prices “are based on the fact that… absolutely He said “nuts” and started picking up the food for himself.
“Now, if you order a $20 burrito, it’s going to cost you twice the takeout price,” he said. “That’s crazy.”
As PYMNTS wrote earlier this month: Shipping costs It can make or break small retailers. For example, Spectrum News reported in April that quesadilla restaurant Madadi Flats in Troy, New York, closed after 11 years, in part due to rising fees from delivery companies.
“Right now we’re only making cents on the dollar. Restaurants have a profit margin of about 3 to 5 percent, and we can’t afford it,” Melissa Fleischut, president and CEO of the New York State Restaurant Association, told the news outlet. “We can’t afford to cut prices by 20 to 30 percent. But on the other hand, can we afford to turn away that customer? Wish Are you planning on ordering delivery and don’t want to come into the restaurant that night?
And restaurants can’t afford to pass on these costs. Diners, or risk losing it. “Connected Dining: Rising Costs Drive Consumers to Takeout” Six out of 10 takeaway customers Rather You can pick up your meal and avoid paying delivery fees.
Additional insights from the Connected Dining series reveal that of those who don’t use aggregators, 50% avoid them because they believe the service is too expensive.