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Recharges for new concerts are hardly a gas

Your concert platform spending is about to change.

US lead-free gas prices are currently averaging $ 4.30 a liter, about 20% since mid-February and about 50% more than a year ago, according to GasBuddy. As drivers of the concert economy generally expect to pay for their gas, the platforms are now working to compensate drivers for the increased costs. Uber Technologies Both UBER 9.43%

and Lyft LYFT 5.93%

in recent days they have announced that they will add temporary surcharges to their drivers to recover part of the cost of the rising gas. Meanwhile, Grubhub, owned by Just Eat Takeaway, last week raised its pay-per-mile of all its shipping partners and is also offering extra pay per estimated miles per week. And DoorDash DASH 13.45%

he said in a blog post on Tuesday that he would add weekly allowances to drivers who register a certain number of miles.

The differences in strategy are hardly a barometer of corporate altruism; instead, they highlight the main truths of the industry. The first is that the relationship between walking platforms and their drivers can be more fragile than food distribution platforms and their drivers. DoorDash, for example, seemed to have fewer problems with the supply of the driver than the walkers during the pandemic, as they had to attract drivers with high incentives over the past year and see only supply and demand starting. into balance. Asking consumers to pay extra for each trip — even in an electric vehicle — is a way to motivate drivers to come to their platforms without directly adding to their expenses.

Second, consumers who ship food may be more price sensitive than consumers who transport travel. This makes sense: If you’re out of a car or can’t get a license or are drunk, sick, or working, you have little choice but to call Uber or Lyft. On the other hand, if you are hungry at home, you may not need a food delivery platform to eat.

For its part, Uber, which has a business for travel and food delivery, charges consumers a lower surcharge for sending food than for travel. The company said drivers who distribute food generally travel shorter journeys than drivers and often use other means of transportation, such as bicycles, scooters and mopeds. In fact, DoorDash offers bonuses to drivers who accept and comply with orders of at least 100 miles per week, even though they will refund 10% of gasoline with a prepaid Visa debit card designed for Dash from Thursday onwards.

Whatever the strategy, it’s hard to see how things aren’t even more expensive for consumers in both industries if gas prices don’t fall sharply. Uber said drivers’ earnings would be consistent if each 20% increase in the cost of gas were increased by 1% in passenger fares.

Even with conservative math, we’re at that point. Uber said its Rides customers will pay a 45-cent or 55-cent gas surcharge for each trip over the next 60 days, depending on location. As of mid-February, Bloomberg Second Measure data shows that U.S. Uber riders were spending an average of $ 48.09 a week on the platform. Assuming that Uber’s base rate remained roughly stable — Uber says it did not change the nationwide rate of time and distance rates at the same time — and assumed that consumers made an average long trip a week, Uber’s surcharge. the fee for each ride would increase by about 1%. But if they are doing more and shorter walks a week, consumers would pay an even higher percentage.

Uber has already said it will continue to monitor gas prices and make further changes. DoorDash said it would look into additional resources to help drivers in the coming weeks. Grubhub says he adjusts his dinner fees regularly and scales them according to a variety of factors.

Take it for some high octane tiles.

Write Laura Forman at laura.forman@wsj.com

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Recharges for new concerts are hardly a gas

Source link Recharges for new concerts are hardly a gas

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