PYMNTS’ latest research delves into the topic of tipping, which has been a topic of concern for delivery customers. The study titled “Connected Dining: Rising Costs Push Consumers Toward Pickup” surveyed over 2,100 U.S. consumers in January, revealing that 54% of customers who ordered meals for off-premise consumption from restaurants stated they would prefer not to tip their delivery person.
This data highlights the impact of incentives on consumers’ takeout choices. If tipping was not necessary for the delivery person, 54% of consumers said they would be more inclined to opt for delivery for their next meal.
However, the issue remains that most delivery workers rely on tips as a significant portion of their earnings. For restaurants or third-party delivery services to make such a change, they would have to pay their couriers more. This seems unlikely, especially given that even companies that had shifted to a full-time employment model, such as Just Eat U.K., have returned to a gig worker model, letting go of employed drivers.
The notoriously slim margins of food delivery make it unlikely for restaurants or third-party delivery services to invest in higher pay for couriers. Therefore, automated technologies such as drones and sidewalk rover robots might be necessary for tip-free delivery to be possible.
One company that is leading the way in drone delivery is Flyby Robotics. The drone delivery firm announced on April 5th the closing of a $4 million pre-seed funding round and the launch of its pilot program. Flyby Robotics delivers smoothies, salads, sushi, and other food and beverages, charging customers a $3 delivery fee.
Flytrex, a drone delivery service, has also partnered with major companies, including Chili’s parent Brinker International and consumer packaged goods giant Unilever. Flytrex has seen high loyalty levels a year into its first test in Holly Springs, North Carolina, as co-founder and CEO Yariv Bash noted in an interview with PYMNTS.
“In Holly Springs, the first town we started operating in, a year after, we’ve managed to penetrate close to 60% of the households within range, so that means more than half the households downloaded the app and made at least one order,” Bash said in February. “One year after we started, we’re at roughly 50% retention — 50% of the households keep using the service. If you compare that to any other on-demand service, it’s exceptionally great.”
In conclusion, PYMNTS’ research emphasizes the impact of tipping on delivery customers and their choices. While tip-free delivery may seem unlikely with current employment models, innovative solutions such as drone delivery may provide a viable alternative.