Tipping in the App Economy

As the temperature drops, food delivery apps like GrubHub, Seamless and Yelp Eat24 make it easy to stay indoors. But data shows that New Yorkers are stingier when it comes to tipping the people who go out so you don’t have to. Emily Dugdale has the story.

 

It’s a familiar sequence in New York – the buzzer rings… the door opens… up a few flights of stairs where the food is handed over… and your delivery guy leaves… with a tip.

 

[AMBI – buzzer sounds, footsteps upstairs, door opening]

 

Angel Cabrera – dressed in a reflective vest and helmet – is picking up orders for a delivery app. Since the entire order is done online, he often doesn’t know what tip he’ll get.

 

CABRERA: [TRANSLATED] Depends – one dollar, two dollars, five dollars or less. (0:03)

 

Data from GrubHub show New Yorkers tipping about 13 percent of their order. The national average is 14 percent. One percent point may not seem like a lot, but for Cabrera, a Dominican immigrant making about $20,000 a year, it adds up. And Cabrera doesn’t expect much.

 

CABRERA: [TRANSLATED] Because the restaurant also pays you, it’s what the other person is willing to give and not what you believe you should be given, because then they won’t order from where you work. (0:10)

 

Cabrera’s spent 16 months delivering six days a week or more for restaurants through apps like GrubHub. He says his best tips are in cash. But delivery apps let customers add tip on their card – which they do more often. And they tip less. Adam Alter researches generosity and population density at NYU, and says low tips have to do with living in a big city.

 

ALTER: So I could imagine that tipping declines because people in New York generally are bombarded by other humans.

 

He says living among 8 million people makes New Yorkers a lot less generous.

 

ALTER: You see them as sort of a crowd rather than individuals with hopes and dreams and needs and desires. And that tends to make you less connected as a human being. (0:13)

 

So when New Yorkers are hovering over the tip button in their app, they don’t think about Angel Cabrera on the other end.

 

ALTER: And what that does is it sort of gives you an excuse not to tip as generously – because you don’t have to look at the person’s face, look into their eyes and feel bad about what you’ve decided to do. (0:11)

 

But GrubHub does automatically calculate tip amounts of 10 percent to 20 percent of your order. Alter says that by setting tip default options, delivery apps can change tipping trends.

 

ALTER: We pay a lot of attention to defaults and we tend to stick pretty closely to them a lot of the time. So if a site is presenting you with a default of 20 percent, you’ll see that the tipping hues to that pretty closely. (0:11)

 

But if that default is smaller, Angel Cabrera is probably walking away with less tip.

 

[AMBI: Sounds from Central Park/ Upper East Side]

 

Food delivery apps cater to busy young professionals, such as Alex and Roger, two friends in their mid-twenties who didn’t want their last names used. I caught them as they left Central Park in the East 90s.

 

They’re both GrubHub users, so I asked them how much they tip on a standard order.

 

ALEX: Probably like… two dollars (0:02)

 

That’s Alex. His friend, Roger, didn’t top him by much.

ROGER: Three dollars – flat rate. It’s like the same thing I tip a Taxi driver.

DUGDALE: So if you had a $40 order, you would still tip –

 

ROGER: Three dollars. I mean, you’re still just bringing it to me, it doesn’t really make a difference. (0:11).

 

The problem is like everything about tipping, the guidelines are fuzzy. And not even the delivery apps are in agreement. GrubHub spokesperson Kaitlyn Carl says the company encourages customers to tip at least 20 percent – the same as if you were dining in a restaurant.

 

CARL: You still have a driver that is leaving a restaurant and traveling sometimes up to a few miles. (0:07)

 

But Mike Ghaffery, the CEO of Yelp Eat24 – another food delivery app – says he’s happy to see their customers averaging 15 percent. Yet similar to GrubHub, Yelp Eat24 data shows New Yorkers tipping below the average. He has his own theory.

 

GHAFFERY: What I think happens is that in New York, there’s a lot of people who are, you know, single or working professionals, they’re ordering for one person, they’re ordering for somewhere nearby, and just a meal for themselves. (0:09)

 

And that small order size usually means tips don’t go much above 14 percent, Ghaffery says.

 

GHAFFERY 2: On a dollar basis, that works out to closer to maybe three dollars and fifty cents, versus four to five dollars in some of these other markets. (0:07)

 

But no matter the size, Angel Cabrera braves weather and walk-ups to bring you your order. And despite fluctuating tips, he’s still optimistic.

 

CABRERA: [TRANSLATED] Mostly, people pay – it just depends on their awareness. (0:05)

 

Perhaps something to think about the next time you order in.

 

Emily Dugdale, Columbia Radio News.

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