LIers make ends meet doing GrubHub, DoorDash deliveries

July 18, 2019

By Tory N. Parrish | Newsday

Brian Krauss needed a new route to help his family make ends meet in 2017.

The Bethpage resident began delivering food for restaurant delivery services DoorDash and GrubHub, and driving passengers for Uber and Lyft, after he lost his full-time sales job.

The flexible schedule allowed Krauss and his wife, Erica, to eliminate child care expenses for their two kids.

“Fundamentally, it just allows one of us to raise our kids,” said Krauss, 36.

He is among a growing number of Long Islanders working in the so-called “gig economy” as drivers for restaurant delivery apps  including GrubHub, DoorDash, Uber Eats and Postmates, and grocery delivery apps such as Instacart and Amazon.

They work as independent contractors who drive their own cars to pick up food from participating restaurants, or groceries and other items from stores, and deliver them to customers. Customers order and pay for their purchases — along with added fees —  through the apps. Some of the companies also allow customers to order through their websites.

Long Islanders’  high median income and willingness to spend more for convenience are factors driving demand for these services, despite the area’s high cost of living, experts said.

“A lot of it has to do with the choking traffic density, especially in Nassau County and in western Suffolk County,” said retail expert Burt Flickinger III, who founded Manhattan-based consulting firm Strategic Resource Group and has studied Long Island retailing.   “People tend to value their [own] time at $8 to $10 an hour,” so they are willing to pay others to do errands that save them a trip to the grocery store or discount store, he said. 

Suffolk County’s median household income from 2013 to 2017 was $92,838, while Nassau County’s was $105,744, according to the latest U.S. Census Bureau estimates.

By comparison, New York State’s median household income was $62,765, while the nation’s was $57,652.

Nationwide, sales at restaurant delivery app companies,  including GrubHub, DoorDash, Uber Eats and Postmates, grew from $7.2 billion in 2017 to $10.2 billion in 2018, an increase of roughly 42 percent, said David Henkes, senior principal at Technomic Inc., a restaurant industry research firm in Chicago.

E-commerce grocery sales, including Instacart and Amazon, grew 21.7 percent between 2017 and 2018 — from $46 billion, or 3.7 percent of all grocery sales, to $58 billion, or 4.6 percent of all grocery sales, according to Jon Hauptman, senior director of Inmar, a retail industry analytics company in Winston-Salem, North Carolina.

Official local numbers on the growth of these delivery workers is hard to come by, as the app companies won’t disclose the data, and the federal government hasn’t collected data beyond limited national numbers. But restaurants and retailers say the number of people who do pickups and deliveries at their sites is growing rapidly.

Instacart says it has 70,000 “shoppers” — the term it uses for the workers who pick, pack and/or deliver groceries — nationwide, and more than 50 percent are women, but it declined to give local worker numbers.

“Shoppers choose Instacart for the flexibility it offers them, helping them earn a little extra money on the side while fitting Instacart into their busy lives,” the San Francisco-based company said.

On Long Island, Instacart delivers from more than 20 retailers, including Aldi, Best Market, Costco, CVS, Fairway Market, Key Food and PetcoNow.

DoorDash and Postmates declined to comment.

GrubHub would not provide worker numbers.   

There are 300,000 Uber Eats couriers globally, according to San Francisco-based Uber Technologies Inc. Uber Eats is available in 47 countries, according to its website.

Uber said it has thousands of Uber Eats couriers on Long Island, but would not provide more specific numbers.

“We are seeing enthusiasm from eaters who can order from their local favorites, as well as couriers who can use the app to earn extra money,” the company said.

Nationwide in May 2017, there were 1.6 million “electronically mediated workers,”  defined as those doing short-term jobs or tasks found through mobile apps or websites that connect workers to customers and arrange for payment, according to a one-time survey conducted by the U.S. Bureau of Labor Statistics.

Of those workers, 990,000 did in-person tasks, such as app-based food delivery and ride-share services through Uber and Lyft, according to the survey results, which the BLS released in September 2018.  These workers represented 1 percent of the 153.3 million workers in the nation.

App-based jobs aren’t meant to sustain households, but they can be a supplement to other income, said Shelly Steward, research manager for the Aspen Institute’s Future of Work Initiative, which is studying the gig economy with Cornell University’s School of Industrial and Labor Relations.

“It can really help families and households out when they are in a time of need, when they need extra income,” she said.

In the online gig economy, the transportation sector, including app-based jobs transporting food or people, has grown to be the largest segment, according to a report released in September by the JPMorgan Chase & Co. Institute based in Washington, D.C.

The transportation sector accounted for 55 percent of participation and revenue in March, up from 7.5 percent just six years earlier, the report found.

But earnings have fallen.

Earnings from transportation gig jobs averaged $783 per driver per month in 2017, down by more than half from 2013, according to the institute’s report, which analyzed payments directed through 128 online platforms to 2.3 million Chase checking accounts. 

The decline could be attributed to fewer hours worked, declining pay or both, according to the study.  

“There is a lot of kind of in and out in these platforms, so people drive for a while and then they stop and then they might come back after a couple of months. So there is a decent amount of turnover from any one month to the next month,” Steward said.

More competition in these jobs — they have a low barrier to entry, requiring only a car, a valid driver’s license, insurance and passing a background check — also could be a factor in the declining earnings, experts said.

Even so, among all electronically mediated workers at least 25 years old, 26 percent work in person and had a bachelor’s degree or higher; 16 percent had high school diplomas, according to Bureau of Labor Statistics data.

White in-person workers accounted for the largest share of electronically mediated workers, 43 percent, followed by African-Americans, 14 percent, and Hispanic or Latino workers, 11.4 percent.

Older workers,  who can face discrimination in hiring at traditional workplaces, might find that they are more welcome in app-based jobs, too, experts said.

In a survey of adults older than 45, 61 percent of respondents said they had seen or experienced age discrimination in the workplace, according to an AARP report published in July 2018. 

Of the 1.15 million people 25 to 54 years old with electronically mediated jobs, the largest group of in-person workers, 22.4 percent, was between the ages of 45 and 54, according to the Bureau of Labor Statistics study. The next largest group was those between 25 and 34, or 21 percent.

Bay Shore resident Idalys Torres, 21, works as a shopper for Instacart eight to 15 hours a week and works two other part-time jobs — as a graphic designer and car wash cashier — while she looks for a full-time job in industrial and systems engineering, for which she recently received a college degree.

At Instacart, she earns between $15 and $30 an order, and brings home about $150 weekly, including tips, she said.  

“So, it’s definitely like side money for me,” said Torres, who lives with her family. 

With the flexibility of app-based gig jobs comes a downside:  There is no health insurance, life insurance, retirement plan or stability, said Maria Figueroa, director of labor and policy research at Cornell’s ILR School.

“The reality is that being classified as an independent contractor leaves you unprotected and really benefits the companies,” she said.

But for Krauss, who receives health insurance through his wife’s full-time job, food delivery jobs have helped supplement his family’s household income, allowed him to spend more time with his children and given him more autonomy, he said.

Krauss’ wife is a full-time director at an advertising firm and the main breadwinner in the family, he said.

Driving passengers for Uber and Lyft and delivering food for DoorDash and GrubHub account for 20 percent of his family’s total household income. When he worked full time, he contributed about 35 percent to the household income, he said.

“My job is to try to fill in the gaps in the budget as best I can,” said Krauss, who said he earned $2,230 delivering for GrubHub and $7,692 delivering for DoorDash in the first half of 2019.

About 60 percent of his driving hours involve delivering food, with the rest spent driving passengers for Uber and Lyft, he said.

While he does miss interacting with co-workers in an office — he lost his full-time sales job for an alcohol beverage importer in 2017 — he appreciates the independence he has  now.

“I am not that good at dealing with a boss and their foibles, so … not having one is cool,” he said.

Driving demand for gig workers

It’s no secret that millennials are the driving force behind the growth of apps that make purchases easier, but shoppers overall are increasingly willing to pay a premium for convenience, restaurant and retail experts said.

For example, ordering groceries through Instacart can add 10 to 15 percent more to a grocery bill, since the company charges a fee and the grocery stores sometimes charge higher prices for products purchased through Instacart, said David Henkes, senior principal at Technomic Inc., a restaurant industry research firm in Chicago.

With Instacart Express membership, customers pay a fee of $9.99 monthly or $99 annually for unlimited, free delivery on all orders over $35. For non-Express customers, the delivery fee starts at $3.99 for orders over $35; there is also a 5 percent service fee for non-Express customers.

“There is great appeal for that really across wide swaths of demographics,” Henkes said.

At six-store grocery chain Stew Leonard’s, which has two Long Island supermarkets, in East Meadow and Farmingdale, 82 percent of Instacart users are female, 66 percent are between 25 and 44 years old, about half are married, and more than 60 percent work full-time, said Jake Tavello, vice president of the Norwalk, Connecticut-based chain.

Stew Leonard’s shoppers using Instacart spend an average of $110 per order and the top items purchased are organic milk, avocados, chicken breast, Poland Spring 24-packs of bottled water, and strawberries, he said.

“Our sales are up over 20 percent from last year and Instacart continues to be a strong draw for our shoppers,” he said.

Huntington Station resident Mary Betsellie, 52, cut back on ordering food via DoorDash for her family after finding that it added $17 to the cost of a dinner from former barbecue restaurant Radio Radio last year, she said.

But ordering groceries from Best Market or Uncle Giuseppe’s via Instacart has been a lifesaver for Betsellie, who is a certified doula, owner of Traditional Doula and Midwifery Arts, a student midwife enrolled in college, and the married mother of a 15-year-old son, she said.

“When I’m trying to get homework done and I know I have a birth coming up, I just need to make sure that the family has food or the pets have food, I’m going to use the app,” said Betsellie, who said she spends about $300 a week on groceries, with about half of that spent through Instacart.

Elizabeth Woodward, 32, of East Northport, is a freelance marketing professional and the mother of two children, 16 months and 4 years old; her husband is a fire marshal who works long shifts. Food delivery makes life easier for the busy parents, she said, and also allows them to try food from restaurants they wouldn’t normally visit because of the distance.

She spends about $30 to $50 monthly ordering food through the Uber Eats app, she said.

Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.

tory.parrish@newsday.com @ToryParrish1