Took a position with a restaurant delivery business and thought I would pass on the interesting form of compensation they have. I am not sure this would help you owners, but I thought I would add to the knowledge base here. These online ordering/restaurant delivery companies are growing in the U.S. and will be a source of competition as customers have more choices in delivered foods.
The company I work for is behind the industry curve though they have been around over 20 years. They are quickly implementing online ordering but currently just take phone orders for pickup from restaurants. They get a cut from restaurants on each order.
Compensation: No hourly pay. I am an independent contractor. I pay them a $15 per month uniform and catering bag fee. The company I work for makes an unknown percentage off the restaurants I deliver for. I get paid simply from adding a delivery fee and tips, declare my own compensation and deductions for taxes, and pay self-employment taxes.
Lunch: $7.95 per delivery plus mandated 15% gratuity with minimum of $20. These are large orders mostly placed by drug reps to be delivered to medical offices. I pick up from the restaurant, sign the credit card receipt after adding my fee, deliver to the office, and set up. Usually averages $25-40 dollars per delivery. I usually get just one delivery but sometimes two.
Dinner: $4.95 per delivery plus optional gratuity. If it is an apartment or hotel, add another $1. If it is out of the area add another $4. I get a call, pick up the food, deliver, and return to restaurant to pay. In the week I have been doing this I have averaged per delivery 10 dollars in compensation, 10 miles in mileage, and 5 to 8 deliveries over 4 hours.
When they fire up online ordering, they will drop our compensation by a dollar a delivery. In return, they will prompt the customer for 15 or 20 percent gratuity and we will not have to return to the restaurant to “settle up”.
It is a pretty interesting “pure delivery” position though I will have to analyze the tax ramifications to determine how much better it is than PH. I definitely enjoy the work more as there is no in-store grunt work, and I yet to be stiffed.
Before I became Daddio I ran an operation along the same lines. I was the one hiring drivers and sending them to the various establishments. I currently use a service like this for my daytime deliveries.
Hi Charles. We too use a service like Daddio and the company you work for. The company charges us $4.25 per delivery they pay their drivers $3.00 and keep $1.25. Drivers are independent contractors. All you would do is get the orders from the restaurants. Another thing they do is individual deliveries. They charge $4.00 and 10% of bill. They will deliver your groceries, laundry etc. anything legal.
I negotiated a rate for each establishment (flowers, pharmacies, food, law firms, etc.) some were on a percent of order and others were flat rate. I usually would take 25% of the rate and the rest would go to the driver. My drivers would make $100 on a normal 5 hour shift (tips and delivery comission) and at times make up to $300 in a shift.
vehicle expenses @.55 per mile… I dunno… 50 miles @ 10 miles driven per hour? $27.50 = $42.50
$42.50 divided by 5 hours = $8.50 an hour nothing to write home about
Even my crappy pay at PJ’s is better than that after expenses, plus I am covered my workmanâ€™s comp if I am injured on the job.
There can be many advantages to being self-employed:
You are your own boss.
You may be paid more than employees.
No federal or state tax is withheld from your pay.
You can take increased business deductions.
Despite the advantages, however, being self-employed is not always a bed of roses. Here are some of the major drawbacks:
You have no job security.
You might not get paid.
You must pay self-employment taxes.
You may be personally liable for business debts.
You have no employer-provided benefits.
You have no unemployment insurance benefits.
You have no employer-provided workers’ compensation.
You have few labor law protections.
[i]Non Owned Auto (Delivery Liability) - More about this one later, but suffice it to say, that I know of no insurance company that will knowingly include this on a Business Owners Policy unless there is a specific application supplement and a hefty premium charge. If you think you have this for $50 to $100 bucksâ€¦. youâ€™re dead wrong.
Automobile Insurance Policy: This policy can provide a combination of liability protection and physical damage coverage for loss due to damage to vehicles owned, maintained, or used by you. You can go as bare bones as you dare or load things up. Again, I like to think of $1,000,000 as a practical minimum these days with a high limit excess or umbrellathat comes in over the basic $1,000,000 for catastrophe protection.
Once again, do not cheap out on limits. This is the only policy thatâ€™s going to stand up when you have an Auto Accident, make sure it has the muscles to do the job. These polices by definition include Auto Liability for bodily injury or property damage you do with the autos listed on the policy. You can also buy coverage for damage to your own auto regardless of who is at fault. On a state-by-state basis there may be coverage available for injuries you or your passengers sustain during an auto accident. Always sign an application for auto insurance and never sign an application that has false information, shaded information, half-truths or just plain lies. Tell the insurance company what you do and but the insurance you need.
Some points to consider: Covered Autos - There is usually a choice of what autos would be included for coverage. The usually choices being â€œowned & listedâ€ autos â€œnon-owned & hiredâ€ autos and â€œany auto.â€ Of course, the most inclusive choice is â€œany auto,â€ and I like this one. But some insurance companies just wonâ€™t do it. Choose the broadest option available and follow the insurance companyâ€™s rule. Make sure the policy really describes what you do. Do not accept a policy that describes your operations as â€œPizzeria â€“ No Deliveryâ€ if you actually deliver!
â€œDelivery Liabilityâ€ - If you deliver, put this in ice burg-sized chunks. No further discussion needed. Do not try to use your personal auto policy to cover business exposures. If you use your auto in business, make sure that you either have a business auto policy or that the insurance company knows exactly what you do with the auto. Remember, they have been at this a lot longer than you. They can, and will, see through any subterfuge you can dream up.
Workers Comp - Most states require that every employer provide Workers Compensation insurance for their employees. This insurance provides coverage for accidents or disease arising from employment as prescribed by the state laws. Benefits can include lost wages, medical expenses, and permanent disfigurement/disability payments. The simple truth is that almost no one has â€œindependent contractorsâ€ in the pizza business. The IRS has a 20-point test that is used to determine â€œindependent contractorâ€ status, and itâ€™s a good bet that almost every one of your workers will not qualify as an â€œindependent contractor.â€ Iâ€™ve heard almost every â€œurban myth, campfire story, insiders â€œsecretâ€ and just plain â€œb.s.â€ line out there. The simple fact is that if your state requires Workers Comp, thereâ€™s no legitimate way around it. That having been said, here are some points to consider:
The DIRTY LITTLE SECRET
about “Delivery Liability”
Still, people come up with almost hare brained schemes to deal with this. Hereâ€˜s some that Iâ€™ve heard of:
“… I have my delivery auto registered in a separate company that owns nothing but the auto so Iâ€™m safe from claims” No, youâ€™re not. In most states common ownership of assets and shared operations may allow an injured person to come right back to you!
“…The delivery person has insurance â€“ Iâ€™m safe” No, youâ€™re not. If the delivery guy has little insurance or if it was just cancelled, you have nothing to protect you.
"… The delivery person doesnâ€™t work for me - they are independent contractors so Iâ€™m out of it" No, youâ€™re not. Just because YOU call someone an independent contractor for tax purposes does not make them one. In the end, a finder of factâ€™ (translation: Court of Law) will determine this on a case by case basis.
“…Iâ€™ve got all my assets in my wifeâ€™s name â€“ Iâ€™m judgement-proof…” No, youâ€™re not. Besides still being subject the process and the grief, these arrangements seldom stand up under legal attack.
[i] Now, there are still some things you can do to reduce your costs:
Hire and keep good drivers: Let it be known - IN WRITING that you donâ€™t tolerate bad drivers. Have each driver give you a copy of their drivers abstract every six months - pay the driver to get it ($5). Be ruthless on this - reward good drivers and fire bad ones!
It takes GOOD PAY to keep GOOD DRIVERS! As you can see, one accident with a lifelong disability or a death can be the end to your business. Pay well for the best drivers and you can reduce that risk. There is a reason younger drivers pay MUCH more for car insurance. Hire EXPERIENCED drivers and pay them for the experience and maturity they bring. Pay minimum wage and get minimum experience, maximum liability. Your choice.
Once more (from above quotes) for clairity:
The simple truth is that almost no one has â€œindependent contractorsâ€ in the pizza business. The IRS has a 20-point test that is used to determine â€œindependent contractorâ€ status, and itâ€™s a good bet that almost every one of your workers will not qualify as an â€œindependent contractor.â€ Iâ€™ve heard almost every â€œurban myth, campfire story, insiders â€œsecretâ€ and just plain â€œb.s.â€ line out there.
The traditional tests to determine whether a worker is an employee or independent contractor involve the concept
of control: Are the services of the worker subject to the Taxpayer’s will and control over what must be done and
how it must be done? In Revenue Ruling 87-41, 1987-1 CB 296, the IRS developed 20 factors used to determine
whether a worker is an independent contractor under the common law. Remember: the burden of proof is on the
taxpayer; therefore, in general, at least 11 of these factors must show independent contractor status under the
common law tests. For the following questions, a “yes” answer means the worker is an employee.
Does the principal provide instructions to the worker about when, where, and how he or she is to perform
Does the principal provide training to the worker?
Are the services provided by the worker integrated into the principal’s business operations?
Must the services be rendered personally by the worker?
Does the principal hire, supervise and pay assistants to the worker?
Is there a continuing relationship between the principal and the worker?
Does the principal set the work hours and schedule?
Does the worker devote substantially full time to the business of the principal?
Is the work performed on the principal’s premises?
Is the worker required to perform the services in an order or sequence set by the principal?
Is the worker required to submit oral or written reports to the principal?
Is the worker paid by the hour, week, or month?
Does the principal have the right to discharge the worker at will?
Can the worker terminate his or her relationship with the principal any time he or she wishes without
incurring liability to the principal?
Does the principal pay the business or traveling expenses of the worker?
For the following questions, a “yes” answer means
the worker is an independent contractor.
Does the worker furnish significant tools, materials and equipment?
Does the worker have a significant investment in facilities?
Can the worker realize a profit or loss as a result of his or her services?
Does the worker provide services for more than one firm at a time?
Does the worker make his or her services available to the general public?
Not to be to persnickety , but you should not subtract income tax when figuring your hourly rate. Or your SS and medicare payments. If I pay you $10.00/ hour, your rate is $10.00/hour and you are financialy responsible for paying the appropriate taxes and fees on that income. You would be correct to comment that SS and medicare increased because of self employment you have to pay both halves of the SS and medicare. That idea is a jokle anyway, somehow the worker is supposed to feel better if the employer pays 50% of his SS and medicare instead of giving the money to the employee and then the employee paying it. Either way its payroll expense to the employer. These are the prices we pay to have a government that has the time and resources to interfere in every aspect of life.
That just can’t be! You just shown how someone could EARN money in this situation but you have clearly stated how you LOSE money working for PJ’s. Or were the following statements made just for dramatic effect?
I am paying more than one dollar per del. outta my pocket to deliver my companies product.
When I worked full time (but the numbers were different) I was losing over seven thousand dollars a year,
Under my current situation I might be loosing about $1200 a year
So using your numbers from other posts I come up with a different story.
These are the numbers you have written that I am using.
You earn $4.00/hour
You average 3 deliveries per hour
You are reimbursed $1.08 per delivery
you average $2.00 per delivery in tips
you travel an average of 4 miles per delivery.
+$3.24/hour in per delivery reimbursement
+$6.00/hour in tips
-$1.01 FICA taxes Employees portion(7.65%)
-1.99 Income Taxes(using your 15% rate used above)
-$6.60 vehicle expenses (4 miles per delivery, 3 deliveries per hour, 55 cents per mile)
So are you using a different set of numbers to calculate your “expenses” to make your “crappy pay at PJ’s” look better? Please enlighten us.
Actually, yes I am. You figured tax with mileage reimbursement included. That portion of income is not taxed. Also, unreimbursed mileage is a income write off, so I get rellief in taxes from that also.
That said, my actual after tax income is not more than the 8.50 as I said, but is not as low as the figure you arrived at either. Here are my figures from my last post at TTPG with taxes now included:
Store: PJ’s franchise (PJ United)
Location: Chesapeake, VA
$1.08 Mileage per Run
58.5 Miles Driven
2.95 Deliveries Per Hour
7.42 Tips Per Hour
$22.81 =Total Sales/Deliveries
Tips as a percentage of sales
Avg Del Distance
4.18 =Miles Driven/Dels
cents per mile paid
$0.26 =Mileage paid/Miles Driven
$7.25 In Store wage
$4.00 on the Road wage <[roll eyes]
0.84 Store Hours
3.91 Road Hours
4.75 Total Hours
$4.57 Hourly Avg wage
$0.55 IRS Mileage rate
$32.18 IRS Mileage owed
$15.12 Mileage Paid
$17.06 Unreimbursed Mileage < money lost due to the DOL not doing their job. [angry]
$3.59 Money Lost per Hour
Effective Earnings per hour including tips
$8.41 =Wages+Tips-Unreimbursed Mileage/Hours
$0.64 FICA (7.65%)
$1.26 15% Income tax <-(my actual tax rate is much lower than this due to being able to itemize deductions)
Effective Earnings per hour including tips - taxes
$6.50 =Wages+Tips-Unreimbursed Mileage -Taxes/Hours
Effective wages after out of pocket expenses
$3.66 =Minimum Wage-Unreimbursed Mileage
So, you are correct in saying that my PJ take home is not better than the $8.50, it’s not as bad as you claim either. Thanks for doing the math to keep me honest. I’ve updated my spreadsheet to include taxes now.
Now that we have put my pay through the ringer, lets look at what your drivers get paid. Care to see how it stacks up Paul? You seem to have a pretty successful shop. Does your drivers pay reflect that? What are you offering the new hire’s these days? I’d be pleasantly surprised to see that your drivers are doing as well as you are!
I’m finding it really hard to keep track if this. One minute ‘tips’ are absolutely nothing to do with hourly pay, the next they are. Your definitions of ‘pay’ and ‘losses’ seems to change depending on whether you are trying to argue for or against something.
One minute pizza delivery is poorly paid yet the next minute it beats an independent contractor.
The more I read your posts the more I’ve of the opinion you’d rather argue with anyone’s point on here rather than do something constructive.
Sure wish gregster had not turned this thread into another of his tirades, especially when he does silly stuff like compute FICA and Income Tax on gross revenue instead of net. I deduct 55 cents for every mile, my cell phone, and any other expenses I can think of and pay taxes on the NET amount.
Oh, and I don’t do any dishes or other lousy work.