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The Spoon

Daily news and analysis about the food tech revolution

gig economy

Major Investors Avoid Deliveroo, Citing Concerns Over Worker Treatment

Ahead of Deliveroo’s initial public offering next week, six major investors in the U.K. say they will not buy shares of the third-party delivery service, citing concerns over the way the company treats workers. Additionally, hundreds of couriers plan to refuse making deliveries when the company starts trading next week, according to a report from Bloomberg.

Aberdeen Standard, Aviva Investors, BMO Global, CCLA, LGIM, and M&G said they would not participate in the Deliveroo IPO due to the working conditions for Deliveroo drivers and couriers. 

Like other third-party delivery services, including U.S.-based Uber Eats, Grubhub, and DoorDash, Deliveroo classifies its workers as contractors. In doing so, the company does not have to pay things like minimum wage or sick leave. 

Investor concerns come the same week the Bureau of Investigative Journalism published a report that found Deliveroo riders can earn as little as £2 per hour during their shifts. The analysis is based on “thousands of invoices from more than 300 riders over the past year.”

A BMO Global portfolio manager told Bloomberg that the workers’ rights issue “is too big a hurdle for me to take any risks with my clients’ capital today.” He added that there are “better business models” out there than the gig-economy one used by Deliveroo, Uber Eats, and others. 

One alternative model is that of Just Eat Takeaway.com, which has pledged to move away from gig workers recently in order to classify its drivers and couriers as employees. Uber, meanwhile, was recently forced to reclassify its workers as employees in the U.K., after a supreme court case in February, although for now the decision does not apply to the company’s Eats’ business. 

Deliveroo may at some point be forced to do the same. In February, the European Commission launched an initial consultation on conditions for gig-economy workers and is planning to draw up legislation that would govern how the gig economy works in the EU.

That potential legislation also makes Deliveroo a bigger risk for investors. “If Deliveroo is forced to change the way it classifies its riders in the future, it is likely to puncture its profits prospects, and could even derail the delivery giant,” the company said in documents outlining its IPO plans. It has set aside over £112 million to cover the potential legal costs around how the company classifies its workers. 

Grubhub Partners With Lyft to Offer Lyft Pink Members Delivery Perks

Grubhub announced today it has inked an exclusive partnership with rideshare service Lyft to offer the latter’s Lyft Pink members complimentary access to Grubhub+, according to a press release sent to The Spoon.

Lyft Pink is the rideshare service’s membership program that offers riders perks like priority airport pickup, discounts, and bikes and scooters. The free Grubhub+ membership (which normally costs $9.99/month) will add further items to that list, including free unlimited delivery, discounts on meals, and donation matching for contributions made to Grubhub’s Community Relief fund.

Grubhub launched Grubhub+ earlier this year, following in the footsteps of other third-party delivery services that offer membership programs, like DoorDash’s DashPass membership and Uber Eat’s Eats Pass. And much like DoorDash’s DashPass-Amex partnership from earlier this year, Grubhub’s teaming up with Lyft subscribers gives the delivery service access to an even wider base of potential customers.

For Lyft, the partnership could be a much-needed boost at a time when the pandemic has devastated the rideshare business but built up the food delivery sector. Uber, for example, has said its Eats business is now its main money maker. While the Lyft-Grubhub deal is slightly different, since Lyft does not own Grubhub, the rideshare service may still see the partnership as an opportunity to bolster its flailing numbers. With COVID-19 cases rising again and the threat of shutdowns for non-essential businesses looming, Lyft will need new customer acquisition channels outside its ride share business for some time to come.

Grubhub, meanwhile, was the center of a bidding war earlier this year, with food delivery mega-company Just Eat Takeaway.com finally winning out and buying the service for $7.3 billion. Grubhub and other third-party delivery services also remain at the center of many a controversy — commission fees, worker classification, non-partner restaurants. That makes wider access to Grubhub through deals like Lyft and Just Eat Takeaway.com beneficial for customers but not necessarily great news for restaurants. 

UPDATED: Instacart Launches New Benefits as its Gig Workers Planned to Strike

Update: This post has been updated with a statement sent to the Spoon by Vanessa Bain.

Grocery delivery startup Instacart today announced a number of new benefits for its Shoppers (the gig workers who actually go into the stores and deliver food). The new benefits come as Instacart shoppers were planning a nationwide strike this coming Monday, March 30, as first reported by Vice’s Motherboard.

The proposed strike was called in response to what was being called Instacart’s insufficient response to the dangers its Shoppers face during this COVID-19 epidemic. Vanessa Bain, an Instacart Shopper who has spearheaded previous gig worker stoppages at Instacart over its pay structure, laid out demands in a post on Medium:

On Monday, March 30, Shoppers will walk off of our jobs, and will not return to work until our demands are met. We demand that Instacart meet the following conditions:

  1. Safety precautions at no cost to workers — PPE (at minimum hand sanitizer, disinfectant wipes/sprays and soap).
  2. Hazard pay — an extra $5 per order and defaulting the in-app tip amount to at least 10% of the order total.
  3. An extension and expansion of pay for workers impacted by COVID-19 — anyone who has a doctor’s note for either a preexisting condition that’s a known risk factor or requiring a self-quarantine.
  4. The deadline to qualify for these benefits must be extended beyond April 8th.

As Bain rightly points out, gig workers are on the front lines of this pandemic, venturing into public grocery stores on behalf of others, and making deliveries to strangers’ front doors. They are putting themselves at risk so people like you and me don’t have to venture out.

In a corporate blog post today, Instacart launched a number of new measures and benefits it was adding to help its Shoppers, including:

  • Extending pay for those unable to work because they are stuck with COVID-19 or placed in isolation or quarantine because of the disease
  • Additional bonuses for Shoppers ranging from $25 to $200
  • Additional pay boosts through batch promotions
  • Contactless alcohol delivery

Instacart also provided this statement via email to The Spoon:

“The health and safety of our entire community — shoppers, customers, and employees — is our first priority. Our goal is to offer a safe and flexible earnings opportunity to shoppers, while also proactively taking the appropriate precautionary measures to operate safely. We want to underscore that we absolutely respect the rights of shoppers to provide us feedback and voice their concerns. It’s a valuable way for us to continuously make improvements to the shopper experience and we’re committed to supporting this important community during this critical time.”

Will Instacart’s new moves be enough to ward off the strike? We reached out to Bain on Twitter, and will update this post as soon as we hear back. UPDATE: Bain sent us the following response:

Instacart’s response lacks any real substance. While I am glad they agreed to our fourth demand to extend the eligibility period for COVID-19 pay, they’ve provided no meaningful concessions to our demands in full. It’s far too little too late. We are still calling for an emergency walk off/work stoppage until our demands are met in full.

Instacart is busier than ever, thanks to people sheltering in place and social distancing, and to better accommodate its surge in demand, the company is looking to bring on an additional 300,000 shoppers in the coming months.

With unemployment spiking amid business closures, a lot of people will be looking to Instacart for some kind of steady paycheck. Ensuring that its growing workforce is fully prepared to face the challenges of this outbreak seems not only reasonable, but the morally correct thing to do. On a more personal note, I literally just got my parents to start using Instacart, and I’m sure they aren’t the only elderly (read: more at risk) people who are doing so. So here’s hoping Instacart and its Shoppers can iron all this out and truly be a force for good in these trying times.

DishDivvy to Expand Homemade Food Marketplace to Utah

Talented cooking hobbyists of Utah, you’ve got a new potential side hustle. Yesterday DishDivvy, a marketplace which connects home cooks with hungry neighbors, announced that it had begun operations across Utah.

DishDivvy is a mobile app that lets preapproved home cooks sell food to local consumers. The startup helps home cooks get certified and onboarded onto their platform. They also handle all ordering and payment internally, and can even help arrange for home delivery. Utah will be the second territory for Glendale, CA-based DishDivvy, the first being its home state of California.

DishDivvy wasn’t the first company to try and create a cottage food marketplace. Josephine was an early entrant in the food sharing economy, similarly connecting home cooks with hungry consumers. Due to regulatory issues they were forced to suspend operations at the end of 2017. However, with the passage of California law AB-626 (which was pushed forward by Josephine’s team), DishDivvy was able to commence operations in California at the end of 2018.

Utah has just passed a similar law with H.B. 181, The Home Consumption and Homemade Food Act. Under the law, home cooks in Utah are “exempt from any state, county, or city licensing, permitting, certification, inspection, packaging, and labeling requirements,” provided they comply with certain requirements set in the law. Therefore Utah residents, like Californians, are now able to sell homemade food directly from their home — as long as they have the proper permits to do so and follow some basic rules (food must be for home consumption, sold directly to consumer, etc).

We at the Spoon have been intrigued by the idea of a home cook marketplace for awhile. It’s an interesting way to give people a supplementary revenue source, keep money within a community, and connect neighbors, all while cutting down on food waste. That’s why we named DishDivvy one of our FoodTech 25 for 2019.

Last June, when Mike Wolf wrote about AB 626, he noted that “California often leads the country when it comes to forward-leaning legislation” and that the new law “could open the door for nationwide legalization and give a framework for home food entrepreneurs.” It seems like California has indeed opened that door for Utah — and I’m guessing we’ll see some more states pass laws to welcome cottage food industry in 2020.

Amid Strikes (and Holidays!), Instacart Cuts Bonuses for its Shopper Workforce

One would think that Instacart, a startup that has raised nearly $2 billion in funding, would not want to do anything that could be perceived as particularly Grinch-y this time of year. But evidently Instacart has no such holiday hangups.

Last week, the online grocery delivery company cut bonuses for its Shoppers, the contract workers who go out and do the actual work of getting and delivering groceries to customers. The cut came just days after those Shoppers instituted a three-day work stoppage to protest previous changes to their pay.

According to The Mercury News, on November 8 Instacart cut the $3 per order quality bonuses its Shoppers received for getting a five star review. The Mercury News writes:

“Over the last several years, we’ve experimented with numerous versions of the quality bonus, in addition to other boosts and incentives,” Instacart said in a message informing shoppers of the cut. “During the last year, we offered a new version of the quality bonus and found that it did not meaningfully improve quality.”

Vanessa Bain is an Instacart Shopper who helped organize last week’s work stoppage after the company changed the default tip and service fee structure. After Instacart eliminated the quality bonus, Bain wrote a post on Medium saying this latest move could mean a pay cut as much as 40 percent per order.

Quick sidenote, as if all that weren’t enough, evidently after Bain first posted story to Medium about the quality bonus cut, Instacart reportedly had it taken down for violating Medium’s rules. The post was since reinstated without addressing individuals.

For its part, Instacart told The Mercury News that the quality bonus cut was “not a form a retaliation.” Whether or not Instacart’s motivations were legitimate or not kinda doesn’t matter. The optics on it are really bad. Does it really want to antagonize its workforce as we enter the next Thanksgiving, where people will be shopping for all kinds of food? Especially since Amazon now offers free grocery delivery for Prime members and Walmart rolls out its Delivery Unlimited service nationwide.

Maybe don’t be a mean one, Instacart?

Will California’s AB-626 Bill Serve Home Cooks, Entrepreneurs, or Tech Giants?

When AB-626 (also known as the 2018 Homemade Food Operations Act) passed in California last year it ushered in the start of what we at The Spoon have started calling the Home Cook Economy. Now, home cooks in the Sunshine State are allowed to sell up to 60 meals a week and make up to $50,000 in annual revenue.

Yesterday the L.A. Times ran a story on the Home Food Economy in which author Frank Shyong argued that AB-626 is not, in fact, helping the immigrant and low-income cooks that it promised it would.

Shyong certainly makes some valid points — especially when it comes to immigrants and immigration officials — but I finished the piece feeling that we had some very differing views on what exactly AB-626 would look like.

First of all, Shyong seems to think that most home cooks who will take advantage of AB-626 are trying to start their own food business. To that end, he argues that the bill is too vague in its language about what constitutes a “meal,” and the 60 meals per week/ $50,000 annual revenue caps make it too difficult for entrepreneurs to actually make a living off of sales from homemade goods.

True. But the way I understood it, AB-626 was never meant to facilitate full-fledged cottage food businesses. Instead, it was intended to offer economic empowerment through supplementary income via home-cooked foods.

To confirm this I called up Ani Torosyan, founder of DishDivvy, a Glendale, CA-based company with a mobile app that connects consumers with pre-approved home cooks in their area. She also had a few issues with the L.A. Times article. “If you get anywhere close to $50,000 gross revenue… you really should be going to an industrialized kitchen,” she said.

In short, AB-626 is not for people who are looking to start a full-fledged food production business. It’s for home cooks that are looking for a little bit of extra money, or maybe want to dip their toe in the food business before they decide to ramp up production and rent out a commercial kitchen space.

Reading the piece, I was a little surprised by Shyong’s argument that more than any other party, AB-626 would end up benefiting tech giants. He predicts that the home-cook economy will quickly be dominated by tech giants like Uber who will step in to help home cooks — many of whom have no entrepreneurial experience of their own — do things like manage payments, market their product, and ensure last-mile delivery. In exchange for a percentage of their profits, of course.

I agree that tech companies will play a role in shaping the home-cooking industry — this day and age, it’s inevitable. In fact, it was a tech company who first paved the way for the home-cook economy. C.O.O.K. Alliance, a group founded by the now-defunct startup Josephine which was one of the first to give home cooks a platform from which to sell their food, was one of the primary advocates for AB-626. Even without an official marketplace, sites like Craigslist, Facebook, and even Nextdoor have served as platforms on which people can buy and sell homemade food.

But I don’t think that tech companies will destroy the heart and soul of the home-cook economy. And neither does The Spoon’s Michael Wolf.

Back in June he wrote a piece responding to a different L.A. Times article which took a similarly worried view about the opportunistic role that tech giants could play in the emerging home cook economy. Wolf argued that even if Uber or Airbnb did enter the home meal sharing market and charge 15 percent fees (which is what DishDivvy currently charges), so what? As long as legislation is in place to ensure food safety and third party fee transparency — both of which are clearly outlined in AB-626 — why not open up a new, flexible market opportunity to budding food entrepreneurs?

The more I thought about it, the more I realized that the home cooking marketplace is another example of how complicated it is doing business in a tech-filled world. Yes, the home meal sharing economy is a ripe target for hungry tech businesses to take advantage of people. Which is especially dangerous when the target beneficiaries would be immigrants, people of color, and women.

But in the end, it boils down to what the home cooks want. If tech giants can give them access to an instant audience, providing a marketplace that new food entrepreneurs can easily plug into, then I say bring it on. But for now, it’s smaller tech startups like DishDivvy that are paving the way in the home food sharing economy.

Sure, Big Tech players will likely enter the home-cook economy in order to grab a piece of the (homemade) pie. In fact, AirBnB has already done so: Shyong references how the company sponsored the passage of AB 626, likely because homemade food preparation is a key part of some of its “experiences.” But there’s also a future where tech companies can help grow the home cook economy without destroying it.

Chef Dazzer Wants to Bring Professional Chefs Into Your Kitchen

In the past, if you wanted to book a decent caterer, you either had to find one through word of mouth, do a lot of googling, or just settle for a pre-made crudité plate with Ranch from the supermarket.

Chef Dazzer, a Boston-based startup which just launched in March 2018, hopes to change that. Its platform connects culinary professionals, personally vetted by their staff, with people for private event catering.

Chef Dazzer works in two ways: Customers can either get in touch through the company’s website, where they can chat with a staff member who acts as a personal “concierge” to match them to a chef. They can also download the app. On the app, chefs can create profiles, showcasing different menus and cuisines that they offer. Customers can flat-out book a particular menu from a chef, or they can chat via a built-in messaging platform in the app to customize which dishes they would like at their event. 

The two different platform entry points put me in mind of dating services: you can either go into an app and see what’s available, or you can go through an intermediary — like a matchmaker — to help with the selection process. In general, the website is for customers who want a little more hand-holding and want a person to talk to about their event — which, according to their CEO Mike Cormier, is one of the most popular aspects of the platform. 

After their catering event, customers have the opportunity to rate the chefs on a five-star system. When the clients pay the chefs, Chef Dazzer takes a 15 percent cut.

Chef Dazzer is not the first company trying to connect professional chefs to private clients. But it might have come along at the right time. One of the first companies to try this model was Kitchensurfing, which closed in 2016 after raising $20 million in capital. According to Cormier and Avery Gordon, who runs the chef operations side of Chef Dazzer, it’s at least in part because they launched before the Boston market was ready for this kind of model.

“Back when Kitchensurfing came out, having someone come to your house and cook for you was still a very new idea. Now with things like care.com, people are much more comfortable with the idea of having someone you don’t personally know come over,” said Cormier. 

Chef Dazzer also hopes to distinguish themselves by curating a high-quality experience, both for the chefs and the clients. They want to showcase culinary talent by choosing chefs that they know are high-quality, so you won’t book a local high schooler posing as a Michelin-star to cater your 400 person black-tie event. 

To pick which chefs will join their platform, Gordon dips into her years of experience in the Boston culinary community. The approach seems to be working for them now, since they’re new and small, but it will be interesting to see if they can keep up this vetting strategy as they grow and expand to new cities. 

Another potential issue for the company is lead time: most of ChefDazzer’s clients book chefs two weeks to one month out, though they can also contact a chef a few days before the event. At a time where people are used to ordering a slew of pizzas for a party and having them delivered in 45 minutes, it’s a risk to bet on customers being willing to plan that far ahead.

So far, Chef Dazzer has seen a good bit of demand — mostly on the chef side. They have a queue of 55-60 chefs who are interested in joining the platform, but only 10 or so are currently live on the website and app. They hope to scale up as they build their community of both chefs and clients.

Chef Dazzer is bootstrapped and hopes to create a solid user base before building their seed round. Until then, Bostonites can browse chefs to cater their next event, as long as they’re ready to plan a bit ahead.