It's never a good look to be negotiating a pay deal in public. Having announced a plan to move from hourly pay to per-delivery pay, Deliveroo has now had to back down after a strike by drivers, announcing that it would retain the hourly model. As this interesting Telegraph piece points out, the proposed pay deal might have been a symptom of low utilisation rates among drivers - and the forced climbdown may spell difficult times ahead for Deliveroo, particularly with the imminent arrival of a well-funded competitor, UberEats.
It comes at a time when the gig economy is under real pressure: employment tribunal claims against Uber itself and various delivery/courier businesses may mean that many businesses run on the "gig" model will need to pay their workers the minimum wage and give them basic employment rights such as paid holiday and sick pay. In many cases, this would seriously threaten the viability of their businesses. At the same time, Airbnb is under increasing scrutiny in the UK, with concerns about the extent of illegal subletting. Many of these businesses have thrived by expanding quickly and aggressively, then dealing with the regulatory issues afterwards. But is the clock running down on this approach?
Deliveroo ought to have seen that even on the face of it, its plan might backfire. Putting aside the politics of the “gig economy”, the fact that it pressed ahead anyway suggests flaws in its business and a degree of desperation.