If you’re looking for a profitable side hustle with a low barrier to entry, delivering food may be a great fit.
In fact, you may want to deliver food for multiple apps, optimizing your routes and which deliveries you take based on payout.
Today we’ll take a look at DoorDash, a food delivery app that can make you $20/hour or more — as long as you don’t plan to make a career out of it.
DoorDash Driver Review
Ease of Use
DoorDash is a viable way to make extra money, especially if you live in a city where it’s popular. Drivers report earning up to $20 an hour, but emphasize the importance of working during peak hours and being picky on which orders you accept. Consider how to work deliveries into your daily routine and if you might be able to do them on a bike instead of a car.
What is DoorDash?
DoorDash is an app that connects restaurants, hungry consumers and freelance delivery drivers.
Where is DoorDash Available?
DoorDash says it is available in 4,000+ cities across all 50 states. It’s also available in Washington, D.C. and the American territory of Puerto Rico.
Internationally, you can currently access DoorDash in Melbourne, Australia and in over 80 Canadian cities.
The company is constantly expanding into new markets. You can check and see if they’re in your area by simply typing your zip code into the app or DoorDash’s landing page.
How Does DoorDash Make Money?
DoorDash has a few different revenue streams and some of the highest commission fees on the market.
The company has proven profitable in the past, DoorDash told the Wall Street Journal in 2019, but currently they are relying on outside investors for day-to-day funding. In the same article, DoorDash said this was due to increased investments in growth.
It does have a multi-billion dollar valuation.
Fees Charged to Merchant
DoorDash is known in the industry for taking some of the highest commissions from merchants, though it remains one of the top players in the food delivery space.
It can also charge its merchants additional fees, including:
- Promotion fees
- Marketing fees
- Activation fees
- Order equipment fees
- Subscription fees
- Delivery fees for each Drive order
- Credit card and/or ACH fees
Markups on Menu Items
On top of commissions and fees, DoorDash often charges consumers a higher price than the one listed by the restaurant on each individual menu item. The difference in the markup goes back into DoorDash’s pocket.
Fees Charged to Consumers
Consumers also pay fees to DoorDash. If you’re ordering eats, be aware that you could be paying any or all of these fees, on top of any markup DoorDash has already charged on your order:
- Delivery fee
- Service fee
- Surcharge fee
- Small order fee
How Can You Make Money with DoorDash?
Side hustlers can make money with DoorDash by becoming a “Dasher.” That’s what they call their freelance delivery drivers.
You can work whatever hours you want, taking on orders via the app when they’re available.
When you are trying to decide which orders you do or don’t want to take, DoorDash will give you the price per delivery. To do so, it plugs the following factors into a confusing algorithm which has gotten the company into trouble in the past.
You can earn $2-$10 in base pay for each order. This number is calculated by DoorDash according to the distance you’ll have to travel, the estimated time it will take you to complete the order and the overall popularity of the order with drivers. The worse the metrics, the higher the pay.
There are three different types of bonus pay that count under the promotional category: Peak Pay, Challenges and Drive payments.
- Peak Pay: During prime delivery hours — which will most often occur during lunch and dinner hours — you may be offered Peak Pay. That’s an increase over the base pay of $2-$10 per order.
- Challenges: In certain markets, you can participate in challenges. While it’s listed under promotional pay, Challenges operate more as bonuses than a factor that would be considered in an individual delivery. For example, one past challenge was making 15+ deliveries within a certain geographic area within a certain amount of days in order to earn an additional $20.
- Drive: Drive orders are those initiated by merchants, often as catering orders. You have to be fancy to be offered a Drive order. Requirements include having 100+ deliveries under your belt, a rating of at least 4.8 stars, a 90% completion rate or higher, and an upfront investment in large catering bags.
For your efforts, though, the pay you are offered on Drive orders will include an accounting for setup time and bonuses if you’re on time or have a particularly large order.
This is where DoorDash got in trouble with its algorithm in the past. Essentially, it used consumer tips to subsidize the base pay it should have been paying its Dashers out of its own till. Today, DoorDash claims it doesn’t engage in the practice despite defending it in the very recent past.
That means that if an order comes in with the tip already calculated in, the offer you see will now fully account for 100% of the tip the customer left. If they leave a larger tip, your offer will be larger — penny for penny.
Consumers can also tip after you deliver the food or in cash, which means an order can theoretically net you more than the initial offer. (The “Dasher” I spoke to below said that never happens.)
DoorDash Driver Interview
Nick recently sat down with Kevin Ha — owner of Financial Panther and a Dasher in Minneapolis — to learn a little more about what working with DoorDash looks like on the ground.
To my surprise, Kevin revealed that you don’t even need a car to work as a Dasher! In fact, he started working with DoorDash as a way to stay fit after work, making deliveries on his bike.
Today, he makes deliveries on one of several vehicles:
- His bike
- an e-bike
- an electric scooter
He notes that you could conceivably do this without any vehicle at all, especially if you’re working in a densely populated area.
I’ll be including Kevin’s perspective throughout the rest of the article. Be sure to check out his entire interview with Nick below:
DoorDash Driver Requirements
The biggest requirement is that you have a way to make the deliveries. That could be a bike, a car, or even your own two feet.
While there may not be a lot of restrictions on vehicle type, you will need to be age 18+ and have a smartphone capable of running the app.
If you have a major black mark on your record, like a DUI or homicide (yikes!), you won’t be able to work with DoorDash for seven years. If you have three smaller incidents in the past three years, like a moving violation or accident, you also won’t qualify.
Kevin also recommended an external battery charger for your phone, since any app tracking your GPS tends to pull a lot of battery power.
What’s the DoorDash Signup Process Like?
Kevin says you can sign up for DoorDash entirely from your living room. You just give the company enough information to accurately issue you a 1099 at the end of the tax year.
You’ll also need to give them permission to do a background check, let them know what vehicle you’ll be using and prove that you have a license and insurance if it’s a motor vehicle. Then you’ll wait 1-2 weeks for onboarding to complete.
At the end of the process, you should receive some mail, including an Activation Kit and a thermal bag to keep deliveries warm.
How Much do DoorDash Drivers Make?
Kevin says he makes $250-$500 per month with DoorDash. He estimates his average as somewhere around $20/hour.
He stresses, though, that he primarily works during Peak Pay hours. If you’re trying to do this as a full-time job, your average is going to drop significantly.
Traditionally, breaking $20/hour isn’t a big deal in the food delivery industry. Particularly for drivers in urban areas, prior to apps like DoorDash cutting in on their business, W-2 delivery drivers could easily earn more than $200 over an 8-hour shift if they were working prime hours.
They knew they were keeping 100% of their tips, too, because there was a physical accounting for and reporting of them at the end of every shift. On top of their pay, these drivers had whatever protections their state’s employment laws afforded them.
They also did not incur the costs of paying the employer portion of FICA taxes as Dashers do.
Do DoorDash Drivers get Tips?
Yes. DoorDash has been less than transparent about how these tips are calculated by their algorithm in the past. But the company appears to have reversed its stance on the issue, assuring Dashers 100% of the tips will now go to them on top of — not instead of — their base pay.
How to Maximize DoorDash Earnings
Your best bet to maximize your DoorDash earnings is to work during hours likely to offer Prime Pay: Lunchtime and dinnertime.
Kevin noted another strategy he uses to optimize his DoorDash earnings: Making his commute a delivery route. He has to go home anyway; by pulling out the delivery apps about 15 minutes before he leaves the office, he’s able to make his commute profitable.
What Sucks About DoorDash?
You do what you can to streamline your delivery route and hourly pay, but sometimes even the best-laid plans fall apart in real life. Or just end up not being worth the money.
Kevin says one of the most annoying things about the delivery side gig is that sometimes restaurants won’t have food ready on time. If you have to sit there and wait, that’s time you’re not delivering, bringing down your hourly average.
Sometimes Kevin has had to deal with annoyances from customers, including those who simply won’t come to the door. Once, he was even sent to an address that didn’t exist.
Prior to apps, when delivery drivers tended to carry more cash, this was a common tactic used to trap a delivery driver. When the driver got out of the car to look for the nonexistent address, they’d be held up at gun point.
It doesn’t really make sense to use it on drivers who work with apps like DoorDash, though, as they don’t carry cash.
Customers Otherwise Being a Pain
Customer service is always one of the hardest parts of having a consumer-facing job. You might get complaints about the food you didn’t order and didn’t cook. You might get complaints about delivery time even if you got from the restaurant to the consumer’s home at the speed of light.
Kevin even once had a complaint that the consumer didn’t like the route he had taken to get their house; they had been watching his movements through the app.
While annoying, having to deal with people shouldn’t be something that keeps you from using the app as a side hustle.
Parking and Traffic
If you plan to make deliveries with a car, you’ll want to take parking and your tolerance for traffic into account. In larger urban areas, parking’s more likely to be difficult to find and it will likely cost you money once you do find it.
If you live out in the suburbs or in a more rural area, these two factors may be non-issues.
Other Costs to Consider
Whether you’re doing this with or without a vehicle, there are some auxiliary costs associated with being a Dasher.
Loan or Lease Payments
Do not take out a loan or lease on a vehicle to work for DoorDash. While you can make up to $20/hour, you’re extremely unlikely to achieve that rate for 40 hours per week. This isn’t enough of a full-time job to justify a car note in your budget.
Besides, with DoorDash you don’t even need a motor vehicle. Make like Kevin and hop on your bike.
If you already have a car, all you need is a license and insurance. Not only is driving without it illegal, but you’ll be asked for proof of it when you apply with DoorDash.
Unlike some other delivery apps, DoorDash does have a commercial policy that covers its Dashers. Coverage is up to $1,000,000 in bodily injury and property damage coverage for third-parties.
It’s important to know that DoorDash’s policy only covers Dashers if the food is in your car. No food in the car, no coverage.
If you’re on your way to the restaurant to pick up the food or have already dropped it off, you may want to speak to a lawyer before telling your insurance agent, “I was on a DoorDash delivery when...”
Gas & Vehicle Maintenance
Auto insurance costs are likely to be negligible if they jump at all. However, unless you’re scheduling your deliveries along routes you’re already driving, you will be seeing an uptick in gas spending.
If you’re going too far off of your regular path, you’re putting more miles on the car. This ups the odds that your insurance costs will go up. It also means you’re likely to be paying for routine maintenance far more often.
The faster you rack up miles on your car, the faster that sucker’s going to depreciate. Resale or trade-in value go down at a faster clip when you drive your vehicle further distances in shorter periods of time.
As a freelance delivery driver without the protections of a W-2 employee, you have to pay your own taxes.
That means you’ll have to set aside a good portion of any money you make from DoorDash to pay the federal, state and local government their fair share of your earnings on a quarterly basis.
You can bring your taxes down by logging your miles as a delivery driver in a motor vehicle. This deduction can be significant; the standard mileage deduction has sat well over $0.50/mile for years.
By logging your miles and taking the deduction, you can seriously lower those extra taxes you’ll owe.
Pro Tip: Use a mileage tracking app like Hurdlr.
Twenty dollars an hour during peak hours isn’t a bad side hustle.
Unless you’re using Kevin’s commute method, it’s worth considering that time you spend with DoorDash is time you can’t spend:
- Honing a valuable skill that could yield more per hour OR
- Building a business that could potentially allow you to stop the cycle of trading your time for cash.
If you’re real with yourself and you’re not going to do neither of those things with your time, it’s going to take a lot to beat out a $20/hour gig.
It’s better to think of DoorDash’s competition as supplements rather than alternatives.
Kevin uses DoorDash in conjunction with other apps to optimize his deliveries and make the most money for his time.
To do this, you’ll want to look into DoorDash’s primary competition:
You may already have a sense of which apps are more popular in your area. He described running 4 delivery apps simultaneously to minimize downtime and try and “stack” orders going in the same direction.
Related: Here are our top money-making apps.
Other Alternatives to Consider
Of course, DoorDash isn’t the only way to make extra money. Here are some similarly time-flexible ideas.
Teaching English Online – Services like VIPkid connect you with students in China, and pay up to $20 an hour. This is one you can do from the comfort of your home, without the additional risks and costs, but there are a few more requirements to get started. And instead of “dashing” around in the evening, this usually takes place in the early morning hours because of the time zone differences.
Become a Mobile Notary – Loan signing agents have similar flexibility to DoorDash drivers, but have higher earning power. Of course, there’s some upfront investment in education and equipment here.
Reselling on Amazon – Product flipping is nothing new, but this has the potential to be a little more time-leveraged down the road.
DoorDash Driver Review Summary: Pros and Cons
- The entire application process can be completed from your couch.
- You don’t technically need a vehicle of any kind to work with DoorDash. Depending on where you live, that is.
- DoorDash provides bodily injury and property damage coverage for third-parties. At least when the food is in your car.
- If you strategize, you can use DoorDash with other delivery apps to monetize your regular commute.
- DoorDash’s past reactions to complaints about its payment algorithm, combined with its continued advertorial language, are concerning enough that those considering working for them should take pause. Or at least note that the company doesn’t appear to be watching out for your long-term interests.
- The cost of vehicle maintenance is real when you’re a delivery driver. Make sure the routes you’re taking aren’t causing more damage to your car than it’s worth. (Another reason why Kevin recommended biking!)
- It’s not something you can reliably turn into a full-time gig.
But if you’re aware of the conflict and still want to take on Dashing as a side gig, $20 an hour is decent money, especially if you use Kevin’s commute method.
I think this gig is best for those who:
- Are looking for something part-time and noncommittal; you might want regular-ish work, but not a full-time business.
- Live in densely-populated areas where alternative transport is a viable way to completely cut vehicle expenses.
- Can multitask, simultaneously monitoring and comparing offers from DoorDash and its competitors during peak hours.
Thank you to Kevin for his honest, behind-the-scenes perspective!
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