While other companies have laid off workers and struggled to survive during the pandemic, Philadelphia-based GoPuff has soared.
The delivery start-up, founded by a pair of Drexel University students, has expanded across the United States and Europe, partnered with tech giant Uber, and more than tripled its valuation to $15 billion — all within the last year. It now delivers beer, snacks, and toiletries in more than 1,000 cities. It could be the next big thing in on-demand delivery.
But as GoPuff grows, it’s facing a backlash from drivers. Much like Lyft, DoorDash, and other gig economy firms, GoPuff drivers are mostly deemed independent contractors. Their pay can rise and fall like a roller coaster based on supply and demand. And it has dropped by hundreds of dollars a week in recent months, drivers report.
Those complaints spilled into public view last month when GoPuff drivers released a petition demanding better pay and working conditions. More than 600 workers across the country signed it, according to Working Washington, a pro-labor group that’s organizing drivers.
The open letter calls for “an hourly guarantee that pays a living wage after mileage and other expenses” that drivers cover like gasoline and car maintenance.
The workers also said that, in a way, GoPuff represents the worst of both worlds in the gig economy. GoPuff, unlike others of its kind, encourages drivers to sign up for scheduled shifts, yet does not provide them with the benefits given regular employees.
These issues recently reached a flash point back home in Philadelphia. In an Aug. 4 email, GoPuff told drivers at its Passyunk Square facility in South Philadelphia that it would slash their minimum guaranteed pay from $12 an hour to $8.50. The announcement, first reported by Business Insider, was made five days after GoPuff raised its latest $1 billion from investors. There were similar cuts in at least 47 other facilities, according to Working Washington.
Some drivers became so angry that they discussed not showing up to a shift in protest, according to messages on a scheduling app that GoPuff drivers use. One called for a “revolution or a riot.”
GoPuff had no direct response to the petition. It did say that the higher $12 “subsidy” — the guaranteed hourly rate that drivers earn if there are few orders during a shift — was always meant to be temporary. But GoPuff officials acknowledged that they never told some drivers that the subsidy increase in May wasn’t permanent.
“During an internal audit, we identified that a limited number of delivery partners received an email that did not specify the duration of the earnings adjustment,” a GoPuff spokesperson said. “This is inconsistent with our goal to provide earnings transparency. As we grow, we will continue to invest in and improve our communications channels with delivery partners.”
How GoPuff drivers are paid
GoPuff makes it simple for customers, charging a flat fee of $1.95 per delivery. GoPuff says it makes money by buying products in bulk and pricing them at market rates.
It’s more complicated for drivers, who are paid through a combination of commissions, tips, subsidies, and other incentives. The pay structure can be confusing and can change their compensation drastically, drivers told The Inquirer. They said the firm has occasionally miscalculated their pay, too.
GoPuff drivers currently earn $18 to $22 an hour, on average, across the United States, according to the company.
The Inquirer interviewed seven Philadelphia drivers, who split on whether they earned that much. One driver said he made $9 an hour during a recent shift, while another said she collected $25 an hour.
Drivers said it depends on order volume, when they work, and whether there are incentives for those shifts. It also depends on how many hours they work. Drivers noted that the hourly pay doesn’t factor in expenses such as gasoline. And the pay has generally gotten worse lately, drivers said.
Generally, the pay structure works like this:
GoPuff drivers earn a commission that ranges from $2.25 to $5 per order. Commissions can vary by city or neighborhood. For example, drivers for the Passyunk Square facility said they earn $3 per delivery. In Manayunk, a neighborhood in lower northwest Philadelphia, it’s $2.75.
“What we are told at the Manayunk facility is that we’re in a good area and the tips are better in this area, so we don’t deserve more than $2.75,” said Candace Hinson, a 29-year-old driver from Philadelphia’s Roxborough neighborhood.
GoPuff will “boost” commissions for certain shifts, often overnight, that can increase pay by $1 to $8 an order depending on the day, according to company texts and emails. The company told drivers about upcoming boosts days or even hours before they began.
On top of that, GoPuff pays weekly bonuses to drivers who rack up high numbers of deliveries. Drivers keep all of their tips.
Finally, there is the so-called subsidy, which sets an hourly earnings floor for drivers who schedule their shifts in advance. For example, if a Passyunk Square driver’s weekly earnings amount to just $6 an hour from orders, GoPuff pitches in extra money to achieve the guaranteed hourly minimum of $8.50.
“Given the fast-moving nature of our industry, we will make adjustments to partner compensation to balance a continuously changing supply-and-demand dynamic in each market we serve,” a GoPuff spokesperson said. “This is industry standard and we do so to ensure delivery partner earnings are not adversely affected as best as possible.”
By using independent contractors instead of staffers, gig economy companies such as GoPuff don’t have to pay for drivers’ health insurance or vacation time.
But the biggest savings with the gig industry is paying people for the time they’re most productive, said Gad Allon, the Wharton School’s director for the management and technology program.
“It allows you to scale up or down based on demand. It allows you to pay people only for the time they’re actually productive in their delivery,” Allon said. “So you’re not paying for their cost when they’re sitting on the corner waiting for something to happen.”
GoPuff, which has about 8,000 employees in offices and warehouses, would not say how many independent contractors it uses to deliver orders.
Fewer deliveries
For some drivers, GoPuff was a good gig for a while. There were plenty of orders to go around, especially at the peak of the pandemic.
And GoPuff was seen as a better job than gig economy rivals such as Instacart, which requires delivery workers to weave through aisles of grocery stores to grab items. GoPuff runs its own warehouses with staffers who prepare bags and hand them to drivers.
But now, some drivers said, they are getting fewer deliveries and earning less money. They said the company has partnered with too many drivers, reducing the number of deliveries for any worker per trip. This, they add, has made longer drives across the city less profitable when accounting for gas mileage.
Two drivers said they at times made as much as $1,000 in a week, or $33 an hour, last year. Now, they earn about $500, or about $17 an hour.
“Our money is decreasing drastically because we’re not getting the same amount (of deliveries),” said Hinson, the driver from Roxborough. “There are times where I’ll go in and I’ll work at night, and I’ll get a bag. I’ll come back and I have to wait 45 minutes until I get another one or two bags.”
In GoPuff’s Ludlow facility, south of Temple University in North Philadelphia, GoPuff temporarily boosted pay in May as it had drivers deliver to just one customer per run, according to an internal email.
The firm aimed to cut the time drivers spent waiting in line for orders and deliver bags to customers faster. GoPuff advertises deliveries that take half an hour.
But the Ludlow pay bump has since expired. The single-customer trips are less profitable for drivers who pay their own gas mileage. The Ludlow driver says she now at most delivers to two customers a trip. She used to make about 80 deliveries in a 20- to 25-hour workweek, she said. Now, she handles only 40 deliveries.
There are drivers who are happy at GoPuff. Julius Hayes, a 74-year-old from Mount Airy in northwest Philadelphia, is retired and delivers orders to make extra cash for his grandchildren.
He said it’s an easy job that doesn’t require much contact with customers during the pandemic, and he generally likes the managers who assign him orders. Hayes noted that he’s in a different situation from other drivers, who rely on GoPuff as their primary income.
“For me, if I can average in a five-day week, or even a four-day week, $500? Well, that’s like gold to me,” Hayes said.
GoPuff’s global growth
Rafael Ilishayev and Yakir Gola were sophomores at Drexel when they came up with the idea behind GoPuff. According to the company’s website, they found shopping for snacks and essentials time-consuming on top of schoolwork and their social lives. They drafted mock-ups of the app on class notes and delivered convenience items around campus from the back of a Plymouth Voyager minivan.
Eight years later, and fueled by $2.5 billion from investors just since 2020, GoPuff has bought up rivals and expanded across North America and into France, Spain and the United Kingdom.
Since last year, the company has acquired the California liquor delivery service BevMo!, a U.K.-based last-mile delivery platform called Fancy, and another European delivery service named Dija.
GoPuff also reached a deal to deliver Items for Uber Eats customers, a partnership reportedly under federal scrutiny as anticompetitive. The company has expanded its offerings to include hot meals, such as chicken tenders and mozzarella sticks, too.
That rapid growth has gotten the attention of the labor advocacy group Working Washington, which the Service Employees International Union (SEIU) helped found in 2011. The group, which published the GoPuff petition online, takes credit for pushing Instacart and DoorDash to reverse policies that took some tips from drivers.
GoPuff is in some ways unique from those other gig delivery firms because drivers are encouraged to work scheduled shifts and are managed by company staffers, but remain independent contractors, said Working Washington spokesperson Sage Wilson.
Drivers, Wilson said, “don’t get the benefits of employment, don’t get the flexibility to be a contractor. They just get whatever GoPuff wants to give them.”
Working Washington is in contact with hundreds of GoPuff drivers and evaluating next steps for its campaign, he added. Their immediate demand is for GoPuff to reverse the recent cuts to driver subsidies.
Up to this point, the priority for GoPuff was to grow the business, according to Wharton’s Allon. But there is pressure from investors to show that the business is sustainable, too. That could either mean raising prices for consumers, or decreasing pay for drivers.
“Customers are not going to be willing to pay more, and the drivers will not be willing to work for lower pay,” Allon said. “So what you’ll see in the next few years is a lot of tugging back and forth between the two pressures.”
