Food delivery companies are testing new ways of working to improve gig economics

By on April 2, 2022 0

Maxine Carey-Gorey is part of the ever-growing army of food delivery people who cruise the streets of Melbourne on e-bikes.

“That’s lovely,” she said.

“I like cycling as it is. I like to go out and take those shifts whenever I can.

“I’m a host working mostly for TV. But when I can’t take gigs that way, it’s a nice way to earn some extra cash.”

It’s unusual to hear someone so happy in an industry known for underpaying and exploiting its delivery people in a job that can also be dangerous.

So-called “gig economy” companies like UberEats, Deliveroo and Menulog generally pay their workers by the task.

Maxine says she likes being a delivery person and doesn’t mind working as a contractor.(ABC News: Kate Ashton)

But Maxine is one of the few riders to work for a guaranteed hourly rate, earning $29.50 an hour for her four-hour shift whether she’s busy or not.

She’s still an independent contractor — meaning there’s no superannuation, penalty rates or workers’ compensation.

But Maxine says it’s much better than sitting around waiting for a job that pays nothing at all.

The company Maxine works for is a startup, founded by former delivery driver Vishal Plato – who hated the stress of never knowing if he would make money from the evenings he spent on his bike.

Vishal Plato smiles as he stands on a street in South Yarra on a cloudy day.
Former delivery courier Vishal Plato says he still sometimes delivers for other companies to see what wages they pay. (ABC News: Kate Ashton)

“I used to wait a long time on the streets and I never got paid for it,” he said.

He said that even when a call came in, it was hardly worth it.

“Maybe you get five bucks, or you get six,” he said.

“It’s not a good enough payment. That’s why we’re changing the system.”

wait for free

The question is – will it work? Especially in an industry where the gig model has been firmly entrenched for years.

Vishal Plato says yes. His company Fuel It Up partners with restaurants, which pay a volume-based monthly subscription fee, plus a flat fee per delivery — $6.99 — which Plato says has created enough margin to pay employees on time.

Mr Plato said it was a win-win situation for restaurants, as customers also ended up paying less for food.

“My business helps restaurants run more efficiently, drivers earn more, and customers pay in-store prices,” he said.

Mr Plato’s 18-month-old business, backed by a $110,000 investment from him and a few friends, has mostly operated at a loss, but turned a profit for the first time in January.

Three pizzas and the blurred hands of someone preparing them in a restaurant
This Italian restaurant in South Yarra opened during the pandemic and therefore relied on delivery services. (ABC News: Kate Ashton)

At present the company mainly operates in Melbourne’s inner southeast, including South Yarra, St Kilda and Richmond, and with over 100 riders on the books.

Customers can still order at participating restaurants through UberEats, but delivery couriers are paid an hourly wage — and because they operate within set boundaries, they don’t have to wait long or travel far for delivery jobs.

High delivery charges worry restaurants

Luca Sommella is the co-owner of MIS Pizza, an Italian restaurant in South Yarra who said delivery companies were a crucial but expensive part of hospitality during the pandemic.

“Using Fuel It Up really reduced the amount of money we were leaving with UberEats,” he said.

His company still pays 16% to have his food appear on the UberEats ordering platform.

But Mr Sommella said Fuel it Up’s fee was lower than the 30% fee charged by UberEats to use its own delivery people.

Menulog is pushing for a new labor agreement to cover its workers

Menulog is another Australian food delivery company exploring different ways of doing business.

Currently, about 20 of its workers are hired as trial employees, though the rest of its delivery workforce remains contractors.

A food delivery man wearing a black helmet and a teal jacket stands in front of a fast food restaurant window.
Menulog says it works well that workers’ flexibility needs can be met through industry allocation agreements. (Provided: @Abuzar/Instagram)

Menulog’s group of employees can access penalty rates, minimum wage, superannuation and workers’ compensation like conventional employees.

But Menulog wants a new industry reward deal to cover them, which was rejected by the Fair Work Commission in January.

“Unfortunately, under the [Road Transport and Distribution] price, which was not designed for an on-demand workforce, there are limits to the ability to accommodate the flexibility our workers seek,” a Menulog spokeswoman said in a statement.

He said as an example that he was unable to offer split shifts as part of the allocation agreement – which is not a problem for his drivers who are hired as entrepreneurs.

Minimum standards must apply to everyone, union says

Jim Stanford is an economist and director of the Center for Future Work who said that while Fuel It Up and some Menulog workers were paid an hourly wage, that wasn’t exactly “progress.”

“We’ve been talking about a minimum wage for, you know, over 100 years,” he said.

“This principle can and absolutely must apply to concert work as it does to any other work we do.”

Jim Stanford, dressed in a suit in an office, smiles at the camera
Economist Jim Stanford says food delivery companies that try to pay minimum wage will struggle to compete.(ABC News: Kate Ashton)

Mr Stanford said it is not the allocation agreement that is at issue either.

He said the real problem was that while companies like Menulog and Fuel it Up were trying to do better with workers, they were competing against others who weren’t.

“Watering down our reward provisions, which are already at a minimum level of safety net, is not the answer here,” he said.

Mr. Stanford and the Transport Workers Union (TWU) are calling for federal government intervention to level the playing field, especially with legislation clearly defining who is and who is not an employee.

“Refuel and Menulog and others trying to do the right thing should be supported,” said TWU National Secretary Michael Kaine.

a phone screen displaying a map
The federal government has previously rejected calls to introduce laws that would define gig economy workers as employees. (ABC News: Mridula Amin)

“But to support them, we need governments, and the federal government in particular, to put in place laws that ensure workers are safe and that they receive a living wage for the work they do.

“I think there’s an element here, to get consumers to vote with their feet, but they have to have somewhere to go.”

In a recent Labor-majority Senate job security inquiry, government senators did not support recommendations to strengthen protections for gig workers through legislative reform. .

A dissenting report by Liberal and National senators noted the “benefits of flexibility and freedom that such arrangements provide to tens of thousands of Australians”.

Delivery driver Maxine Carey-Gorey said being a contractor or an employee isn’t really a big deal for her.

“Flexibility is an incredible point of attraction,” she said.

“There’s enough work, so if you want to be there every day, you can, but you don’t have to be there every day.”