Food delivery startup Deliveroo has just faced one of the toughest weeks of its history.
Several hundred of its couriers have been protesting outside the company’s office in Central London over proposed changes to their pay that would see them paid £3.75 per delivery instead of £7 an hour, plus £1 for each delivery.
Some couriers, including those that are striking, claim that they will earn less than the UK minimum wage (£7.20 an hour) if they’re moved onto the new payment scheme.
Business Insider visited Deliveroo’s head office on Tuesday to talk to UK managing director Dan Warne about the protests and the new payment system.
Here’s what he had to say.
This interview has been lighted edited for length and clarity.
Sam Shead: Are the proposed changes in pay about cutting costs for Deliveroo or are they about improving driver flexibility?
Dan Warne: The first thing I should stress is that we’re pretty upset about this because we communicated really badly to the drivers on exactly what this means for them. Had we communicated better to them, they would see that they would be earning more on this new scheme and that it offers flexibility.
Before we make any change to any existing payment method, or anything else, we engage riders, we listen to what they want, and then we try and shape the model to reflect that. So in this particular case, we chatted to a number of riders across the fleet and we learned that 80% of the riders use Deliveroo as a supplementary income stream and that flexibility was super important to them.
We’ve got guys that in the daytime work as street stand vendors, they work as DJs, they will be students, they will have family commitments. The beauty of the model that we’re ultimately moving to in these trial areas is that you can plug in and work when you like, so a huge amount of flexibility there.
Shead: How much disruption has the protest caused for you? Have you had to tell restaurants to turn their tablets [which inform them of food orders] off?
Warne: The real world implication is minimal. It’s made a noise in the press and everything else, and obviously it’s been really important for us to talk to riders individually, but in terms of actual physical disruption it’s been very limited.
Shead: If you do move towards this pay per delivery model, could some riders potentially earn £0 an hour?
Warne: So the interesting facts behind where we’ve trialled this previously in areas, and there are a number of those, is that drivers on average are earning £2 per hour more. That averages out at £10.60 per hour, so significantly more than what they were earning previously. And that’s an average across all of the fleet. So substantially higher earning potential, alongside flexibility.
Not only are they per hour making more, but they’re netting more on average per week. So crucially, looking at all the hours, looking at the entire week, they end up making more money. The problem is — and I’ll go back to it again — that we haven’t communicated it as well as we might have done.
Over the last week or so, we’ve been speaking to drivers where we’re looking to roll out this trial to really understand where the concerns are. I think the concerns are often around the safety net that they currently have with the 7 + 1 model.
We’ve realised that we don’t want to rush them to a decision so we’re giving them the option to either move to the fee per delivery model, which would be offset by a guarantee we’re putting in place. We guarantee two deliveries per hour during lunch throughout the week, and 2.5 at dinner throughout the wee,k and then three at dinner on the weekends. For those who are still not comfortable and still concerned they will make less money, we are giving them the option to stay on the £7 + £1.
Shead: The protestors want to see the new payment model as an opt-in thing rather than opt out. Are you aware of this?
Warne: That’s exactly what we’re doing. We’re making it opt in. They don’t need to move to the new scheme.
Shead: But aren’t you automatically transferring certain couriers in certain areas onto the new model?
Warne: London is made up of about 50 different zones: very small areas that we operate the fleet in. Within one of those zones, you can’t operate two models. It just doesn’t work from a technical stand point.
So what we’re doing for those that wish to stay on the 7+1 is we’re asking them to move to an adjacent zone. When I say adjacent zone, I’m talking about moving from Camden to Islington. We’re never going to ask them to move further than two miles away from where they currently operate. If they’re concerned that by moving to a new zone they will have to relearn the area, and thus earn less, for the first two weeks we’ll guaranty that they will make at least £7 + £1 in the new zone.
We’re very confident that because they use our technology anyway — which clearly maps the fastest, safest routes — they will get up to speed immediately when they enter that new area.
Shead: So you’re transferring some riders automatically. It’s not a choice?
Warne: It absolutely is a choice. We will have a conversation with everyone where we will say would you rather stay where you’re currently operating and move to this per delivery model with the guarantee, or would you prefer to move to an adjacent area or anywhere else in London where you want to work … and stay on the existing scheme.
Shead: How concerned are you about the wider impact of the strikes and this “drivers versus the company” thing?
Warne: I’ve got to stress that this is a very small and very vocal minority. The majority of the fleet are exceptionally happy with Deliveroo and the fee schemes that we have in place. If you speak to the fleet who’ve been on these trials in other areas, these are not the guys that are here protesting. The individuals that are protesting here are individuals not on the new scheme yet who are concerned because we haven’t done a good enough job of communicating to them.
So of course, it doesn’t look good as a company to have this happen and of course we’re upset when we value our drivers to the extent that we do.
Shead: A student pointed out that if he was to have an accident or was sick, he would be on his own. Do you think Deliveroo should do more or can do more to support riders in those areas?
Warne: We are very careful to ensure that any cyclist or rider that comes into the fleet is given strong training to ensure that they can uphold certain safety standards. We ensure that any motorcyclist has the right insurance, has the right licence, has the right to work in the UK. We believe we give them a very good opportunity to earn good money but in the right way.
Shead: Have any of your staff had any issues with the protestors outside?
Warne: The staff are all very supportive of the driver fleet. We all believe they should have a voice and we should listen to that. That’s why we’ve developed it and put these guarantees in place and allowed this choice for the riders.
Shead: How do you think your pay compares to other people in the market?
Warne: I can’t comment on others in the market but what I can say is in the areas where we’re trying this, and have been for a while, the earnings are very high comparative to certain other areas where we’re operating the old scheme. So as I say, £10.60 per hour. That’s before petrol and tips. So up to you to assess whether you think that’s competitive or not.
Shead: The $275 million (£211 million) that Deliveroo recently raised, what’s that going towards?
Warne: A few things. One will be improvements in technology within the restaurant space and for our driver space. One will be further physical integration into the food delivery landscape, so things like RooBox. And then of course further expansion across the UK and internationally.
Shead: Anything else you’d like to add?
Warne: For those guys that do want to stay on the £7 plus £1, and are willing to move to a new area, we will ensure that they’re making the same money per hour that they did in their old zone for a two week period to give them the confidence to make that move.