Food Delivery Riders in Addis Ababa Earn Over 30,000 Birr Monthly

Samuel Germew makes a living delivering meals across Addis Ababa on his bike. From the restaurant to the hungry customer, he pedals swiftly, his mind sharply focused on the next stop. The ambitious 25-year-old manages somewhere between 10 and 20 orders a day, riding a minimum of 40 km. His job takes him across four corners of the city.

“I go wherever there is an order,” he told Shega with a sense of pride.

Samuel is among the hundreds of orange-vest draped delivery personnel of beU Delivery which has become a defining feature among the capital’s urbanities. The company is one of the biggest platforms in Ethiopia engaged in the food delivery business. Samuel joined the emerging sector three years ago, shortly after beU launched. After graduating high school, he did not pursue further education and was unemployed until he joined the platform.

Initially, Samuel and his fellow delivery colleagues worked with the platform as employees with a fixed salary, earning between 5k to 7k birr. These were the early days of beU, and the startup was just dipping a toe into the market. A lot has changed since.

Founded in 2021 by Hao Zheng, beU rapidly established itself as a dominant player in Addis Abeba’s food delivery market. Its distinctive orange-clad riders and competitive pricing propelled the platform to over 200,000 users and partnerships with more than 600 restaurants.

In 2022, beU completed a multi-million-dollar seed round of financing, led by Y Combinator, and Goodwater Capital, a US-based venture capital firm. Meanwhile, in 2023, the startup raised $300,000 from the China-based accelerator MiraclePlus (formerly Y Combinator China).

Along with these changes, the company has transitioned to a commission-based model two years ago, paving the way for its drivers to earn a monthly income as high as 30k birr.

Fikreab Habte, beU’s Marketing Manager, explained the shift in compensation strategy: “To ensure consistent delivery service across all operating areas during our early stages when order volume was uneven, we implemented a fixed salary for our drivers. This guaranteed their availability even in less busy regions. However, as order demand grew and became more evenly distributed, the need for a fixed salary diminished. The commission-based model, which has become industry standard, offers a more equitable and incentive-driven approach.”

beU currently retains an 11 birr commission per order, which means that regardless of the delivery fee, which starts at 35 birr, the platform earns a fixed amount while the delivery personnel receives the remainder.

Additionally, the platform has recently introduced a service charge for customers. According to the marketing manager, these service charges are retained by the platform to cover operational costs. This structure encourages drivers to maximize their earnings through efficiency and performance, with top earners reporting monthly incomes up to 30k birr (315 dollars based on the August 3, 2024 exchange rate).

Samuel is now one of the platform’s top earners, reporting a monthly income between 25k and 30k Birr through diligent effort. His tenure with beU predates the company’s transition to a commission-based model, during which he earned less than 10k Birr per month.

Solomon Kassa and Natnael Shambel are also among the orange vest-clad delivery army of beU Delivery, having joined the platform only this year. However, contrary to the staggering figures reported by top earners like Samuel, they earn a relatively modest 9k to 10k birr.

“Their timid earnings partly arise from limited navigational skills. They need to be familiar with the best routes across Addis Ababa. Communication, order volume management, especially during peak times, and timely delivery also impact their earning potential,” Samuel shares his advice.

Zmall, which recently began Addis Ababa’s first late-night delivery service, has also transitioned from a salary-based to a commission-based payment structure for its delivery personnel three months ago. This strategic move has yielded substantial financial benefits for some drivers, with monthly earnings also reaching as high as 30k birr.

“Our previous salary-based structure was inefficient,” explained Gaspard De Gruben, Zmall’s CEO. “We recognized the potential of performance-linked incentives and transitioned to a commission model to drive faster deliveries.”

Prior to this overhaul, Zmall operated under a dual compensation system for its delivery staff. Drivers owning their motorcycles or bicycles were compensated on a commission basis, while those utilizing company-provided bikes received a fixed salary of no more than 4k birr plus a performance-based bonus of up to 10k birr. This bonus was contingent upon factors such as weekly order volume, effective communication, and navigational proficiency.

However, this bifurcated approach presented operational challenges. The guaranteed income for drivers using company bikes often resulted in inconsistent performance, as motivation to expedite deliveries or enhance customer service was diminished. Moreover, the company incurred maintenance expenses for its motorcycle fleet, even when used for personal purposes by some drivers.

To rectify these issues, Zmall instituted a 70/30 commission structure for all delivery personnel. Drivers now retain 70% of the delivery fee, with the remaining 30% accruing to Zmall. Delivery charges commence at 90 birr per kilometer for motorcycle deliveries and 50 birr for bicycle deliveries.

This commission-based framework has galvanized drivers to optimize their earnings by accelerating delivery times and elevating customer service standards. Consequently, Zmall has witnessed a substantial improvement in operational efficiency and customer satisfaction.

“Our workforce was previously divided into company drivers on a salary-plus-bonus scheme and independent contractors on commission,” De Gruben clarified. “We’ve unified this by placing all drivers on a commission structure.”

According to Zmall’s Marketing Manager, Yoseph Hailu, the shift to a commission-based pay structure has not only enabled delivery personnel to earn significant incomes but has also opened up the possibility for them to eventually purchase company-owned motorcycles. “But, transferring ownership of these motorcycles to drivers under the previous salary-based system was deemed impractical due to their limited earning potential,” he added.

Mikiyas Girma is one of Zmall’s delivery guys and has been part of the team for the past seven months. Reflecting on his earlier experiences, he shared, “I used to rely only on my salary and petrol compensation,” his voice tinged with dissatisfaction. However, when asked about his current situation, his demeanor shifted. “It’s way better now!” he exclaimed. Mikiyas revealed that he now earns an impressive 15k birr every two weeks, a significant increase that has shifted his experience on the platform.

Both Zmall and beU initially operated on a salary-based compensation structure which they later transitioned to a commission-based model after firmly establishing themselves. In contrast, other platforms such as Blu Delivery, Pick Delivery, and Yetem Delivery have been operating on a commission-based structure from the get-go.

Blu Delivery, the first delivery platform in Dire Dawa, works on a commission-based structure. According to its founder, the commission amount depends on whether the delivery personnel are utilizing Blu E-bikes or using their own bicycles or three-wheel Bajaj vehicles. In the latter case, the delivery personnel receive a higher commission.

Global food delivery platforms utilize a range of compensation structures for their delivery personnel, with specific arrangements varying by company and region. Commonly, delivery drivers earn a base pay per delivery that typically ranges from $2 to over $10, depending on factors such as the platform and location, with higher rates often applied for longer distances or during peak demand periods.

On average, drivers can expect to earn between $10 and $25 per hour, while top performers may exceed $30 per hour. Notably, Instacart stands out as one of the highest-paying services, with drivers averaging around $30 per hour.

Uber Eats drivers usually receive a base fare between $2 and $4 per delivery, contingent on market conditions, according to the U.S-based Entrepreneur Media.