Are Food Delivery Services Actually Losing Money? (themarkup.org) 123
Food delivery services like Grubhub should be thriving, especially during the pandemic. But they're not, The Markup reports:
In August 2019, analysts from the investment firm Cowen estimated that Uber Eats was losing $3.36 on every order and would continue to lose money on every order for the next five years. Uber CEO Dara Khosrowshahi acknowledged that Uber Eats is not yet profitable in an email to employees in March after its parent company laid off more than 3,700 employees.... In early March, DoorDash filed to go public despite losing an estimated $450 million in 2019, according to The New York Times. DoorDash declined to comment on that estimate or its path to profitability, but regarding the latter CEO Tony Xu told Fortune in February that "we're working our way there...."
Meanwhile, other companies have been ditching the food delivery business: Yelp sold Eat24 to Grubhub, Square sold Caviar to DoorDash, and Amazon shut down its Amazon Restaurants delivery service.
Grubhub, which also owns Seamless, is publicly traded and the only one of the big four that has achieved profitability. Still, it lost more than a third of its value after revenue fell below investors' expectations in the third quarter of 2019. In a letter to shareholders, the company revealed two things: Customers were "promiscuous," or not loyal to the Grubhub platform, and the delivery part of the business was fundamentally not profitable. Instead, delivery was just a "means to an end" — getting restaurants to sign up on the Grubhub platform and then upselling them on "marketing" benefits, like greater visibility in Grubhub's search results. In other words, like many tech companies, GrubHub is primarily an advertising company.
"Bottom line is that you need to pay someone enough money to drive to the restaurant, pick up food and drive it to a diner. . . ," the company wrote. "At some point, delivery drones and robots may reduce the cost of fulfillment, but it will be a long time before the capital costs and ongoing operating expenses are less than the cost of paying someone for 30-45 minutes of their time."
Meanwhile, other companies have been ditching the food delivery business: Yelp sold Eat24 to Grubhub, Square sold Caviar to DoorDash, and Amazon shut down its Amazon Restaurants delivery service.
Grubhub, which also owns Seamless, is publicly traded and the only one of the big four that has achieved profitability. Still, it lost more than a third of its value after revenue fell below investors' expectations in the third quarter of 2019. In a letter to shareholders, the company revealed two things: Customers were "promiscuous," or not loyal to the Grubhub platform, and the delivery part of the business was fundamentally not profitable. Instead, delivery was just a "means to an end" — getting restaurants to sign up on the Grubhub platform and then upselling them on "marketing" benefits, like greater visibility in Grubhub's search results. In other words, like many tech companies, GrubHub is primarily an advertising company.
"Bottom line is that you need to pay someone enough money to drive to the restaurant, pick up food and drive it to a diner. . . ," the company wrote. "At some point, delivery drones and robots may reduce the cost of fulfillment, but it will be a long time before the capital costs and ongoing operating expenses are less than the cost of paying someone for 30-45 minutes of their time."
Attrition (Score:5, Insightful)
This is how low tech startups without any USP work now. A bunch enter the ring and then it's a war of attrition until all but one runs out of cash. The survivor can then jack up prices.
At least in theory, sometimes it's just a bad idea and they all fail, like rental scooters.
Re: Attrition (Score:5, Insightful)
Funny. In the 90s, I remember a similar thing in the DIY store business in Europe, where the fun part was a single huge corporation with large money reserves entering the market, flooding it with stores, killing everyone with unprofitably low prices, and then when everyone had died, raising prices a pure evil amount thanks to their de-facto monopoly.
And each time somebody else tried to undercut them, they did it again, with a surgical strike. Until an even bigger fish flopped in.
I guess some startup morons thought they could play that game with other people's venture capital money. Yeah, gooood luck with that, assholes!
Re:Attrition (Score:5, Interesting)
it's a war of attrition until all but one runs out of cash. The survivor can then jack up prices.
The survivor also benefits from economy-of-scale.
If each company has a tiny slice of the market, they spend a lot of time delivering single orders. As they consolidate market share, a single driver will more often carry multiple orders to the same neighborhood.
It can also be possible to go from a "circuit-switching" model to a "packet-switching" model. So instead of a single driver picking up a meal from the restaurant and delivering it to the user, they could have different drivers doing the pickups, taking them to a central hub, and then redistributing them to different drivers heading out to each neighborhood.
The next step would be vertical integration: Consolidate the kitchens at the hub. "Delivery only" restaurants may become the norm, with no retail presence or seating.
Re:Attrition (Score:5, Informative)
The next step would be vertical integration: Consolidate the kitchens at the hub. "Delivery only" restaurants may become the norm, with no retail presence or seating.
This is already starting to happen. You can find delivery-only (never had a physical presence) places on these platforms today.
There's also some recruiter who keeps pestering me about working for some startup that specializes in the kitchen real estate side of this business model. (because I guess everything tries to be a "tech sector" business these days?)
Re:Attrition (Score:4, Interesting)
They do it already, it is called airline food and hospital food, funny I don't see people ordering it voluntarily ;D. I would not trust food with the cheapest random second party delivery service, either food services staff delivery or I pick up or on the odd occasion eat in. They are losing money because of spotty demand, the loser's who can't cook getting home from work and having forgotten to pick some takeaway up on the way home, a real peak and then well not all that much there after in comparison. I would rather cook than trust my food to a random uber driver who can blame everything on the restaurant (uber is a trial and error service, they do not give a fuck, high turnover, try to get them as cheap as possible and when they fuck up which many do, they get rid of them, trial and error for you).
Re: Attrition (Score:2)
Maybe last year you were right on that, but now demand is pretty high. People are attempting to order from places during lockdown in order to help keep them from going out of business. Its not always about being too lazy to cook. Sometimes you miss that really good burger with that bourbon glaze sauce and onion straws. You dont want them to completely fold, so you order from them once a week to give them some business. In the restaurant business, the only places with enough capital to weather a storm like t
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https://www.npr.org/2019/07/30... [npr.org]
Between the significant cost increase, the slowness, and the inherently poor customer experience if *anything* goes wrong, I'm done with delivery, except maybe for pizza. I pick up my own orders now.
Re: Attrition (Score:2)
It's all VC money. For as long as it lasts I'm good with it as is on occasion even though food arrives only warm most of the time. Any worse and no thanks.
Re:Attrition (Score:4, Informative)
Delivering food is a time sensitive operation, you need to deliver it before the temperature changes too much or the food degrades (eg turns mushy etc). There's not really time to bring it to a central hub and then redeliver it from there.
What would work however, is having several kitchens in close proximity so that food can be produced in a central location and then shipped out more easily. But we already have that in the form of mall food courts and hawker centres in many countries.
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But we already have that in the form of mall food courts
Even in the traditional restaurant business very often many outlets are close together. It makes sense as if a group of people out for the evening want to eat and see a Thai restaurant all but one in the group may be fine with this, so the next door Italian place can pick up the business. Without that proximity the group might decide not to eat at that point at all.
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What they really need is drone food delivery. Either by self driving cars/buggies or with actual flying drones. Cutting the people out of the equation would cut down on costs significantly.
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If each company has a tiny slice of the market, they spend a lot of time delivering single orders. As they consolidate market share, a single driver will more often carry multiple orders to the same neighborhood.
This would probably save the individual divers a bit on gas, but it wouldn't save the company any money.
It can also be possible to go from a "circuit-switching" model to a "packet-switching" model. So instead of a single driver picking up a meal from the restaurant and delivering it to the user, they could have different drivers doing the pickups, taking them to a central hub, and then redistributing them to different drivers heading out to each neighborhood.
This would increase delivery time with an increase in cold food and dissatisfied customers. People already wait an hour or more to get a pizza and at least it is still warm when it arrives. Having to wait 2 hours for take out, paying extra for the delivery, and getting cold food is going to result in a shrinking customer base.
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Taco Bell won the franchise wars.
no, it's cloning a business model before it's prov (Score:3)
no, it's cloning a business model before it's proven.
it may seem like attrition, and kind of is, but the idea is to just copy something thats on the market because you can get investor money behind it, before even if the thing on the market is profitable.
you could see it with the electric scooter boom in europe last year. or in the mobile games boom in early 2000's, it's not about if it's the good time to invest into the market it's about if you can get investment into the market.
the electric scooter compan
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Re: Attrition (Score:4, Insightful)
Im confused how they are losing money.
Pizza deliver has been around since the 80s. Surely to god, by now, we would have heard about deliveries threatening to drag their business down. They charge what? $2 to deliver plus whatever tips the driver gets on top of his flat pay?
Take DoorDash (because i havent used grubhub due to their ludicrous markup); they add $1 to almost all the menu items. So.. you want Chinese food from your fav place? Every entree is about $1 more than in-store pricing and every side dish is anywhere from $0.50 to $1 more. Family of four, ordering 4 entree, some hot&sour soup, and some egg rolls is looking at $6 markup before the other fees and delivery charges. A $45 total can easily become $55-$60 from the magic of gig delivery before you even tip the driver. Thats 33% before the tips. Now if a pizza place can pay a dude $8/hr, and charge $2.50 per delivery, and still avoid losing money, how the hell is door dash sucking with their $15/delivery markups from all the hidden fees? At 4 deliveries per hour per driver, that should cover the overhead. Are the execs THAT overpaid??
Now grubhub, well I can see how they are failing. Their markups are a min $2 per item. Places have stopped using them because the food often gets cold before the driver arrives. One place said food sat 45min often before the driver would show up. It was a burger/fries place. Not good.
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These new services are just too general, and are working with restaurants that ar
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When my son delivered pizzas, it wasn't a frequent occurence to have two pizzas ready for delivery at the same time, especially with both going in the same general direction. YMMV.
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I used to live a five or so minute walk from a pizzeria and I would sometimes stop there on the way home from work if I fancied a pizza and order one and wait. I often saw a delivery driver and it seemed pretty typical for the drivers to pick up one to three orders. It was a very busy place, though, and served an area with student accommodation relatively nearby with no other pizzerias particularly close. Perhaps my experience might be a bit skewed by that instance of a pizzeria.
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Pizza places charging $2 just load up the price of the pizza to compensate. People assume the expensive pizza means it's good, not subsidising delivery.
Since these companies don't make food or set prices they can't subsidise delivery and can't charge too much for delivery because everyone is used to it costing $2.
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Yeah, It's a lot more than $2 for delivery of a pizza. Most places I'm aware of have a heavily discounted walk in price. Just checked a popular pizza place and the price for a Large Delivery is $13.29, but if you walk in and buy the same pizza the price is only $8.99. That's $4.30. But you also have to account for the tip. With delivery it's customary to tip, so you can probably add another $2-$3 for that order, Meanwhile, they don't expect a tip on a take-out order.
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And then there's Domino's...which has been a successful business for decades (irrespective of opinions regarding their pizza quality). For them, delivery is the *sustainable* norm and pick-up only coupons are fairly uncommon.
But...they don't have grubhub taking a chunk of every sale, plus delivery fee, plus interaction fees, etc.
Also FYI - last I heard Grubhub has a price equality stipulation in their contract. In-store pricing is required to be the same as delivery. If you're seeing different prices, it
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As already stated, it can be cheaper for a food outlet to do its own deliveries than for a third party.
Furthermore, it doesn't have to fund to its entire delivery operation through the mark up for delivery. The margin on the raw materials to make a pizza is typically enormous. For restaurants, generally, it can be 80 or 90%. However, that margin has to fund the cost of the premises, equipment, utilities, staff wages, etc etc. Doing deliveries is a way for a restaurant to sell more food without necessarily i
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My son used to deliver for Jimmy John's where he got minimum wage plus tips, and he quit because they kept sending him on un-tipped errands, like picking up more bread from a different Jimmy John's. Then he worked pizza delivery where he didn't get any hourly wage, he just got the delivery charge plus tips. For both of those he had to pay for his own car and gas.
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I don't see how you can really jack up prices on food delivery though. At some point it just becomes not worth it for the food delivery. People will either just drive/walk there themselves or find a place that has their own delivery drivers and are able to offer a better price such as how pizza places have operated for decades. Food delivery costs really only work when you're placing a big enough order that the delivery costs isn't a huge percentage. If the price is too high, then people aren't going to m
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I'd agree...but then I see people in NYC ordering coffee or ice cream for delivery. Often.
Like most other industries 'cloud-ified' food delivery is going through it's early-ish growing pains. Also, per usual, there was an existing profitable (typically distributed) method who's profits are now being consolidated into one big company.
Probably. (Score:2)
Re: Probably. (Score:2)
No, they are all about funneling off profit for basicall nothing. For the thin sheet of shiny colored plastic betweeen two parties, so they look like the business of the one party to the other party, nd vixe versa. Generating the delusion of them actually having anything to add to the market.
Re: Probably. (Score:5, Informative)
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This, their whole mission is to insert themselves as a middleman between two people conducting business. I hope they all go bankrupt, starting with grubhub.
I call them "Grabhub", and "Poordash"
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The word is "broker" and yes. It is slightly less silly than each restaurant having its own delivery drivers - but the idea comes with a whole set of its own problems.
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It would be slightly less silly if their business model didn't involve creating significant additional costs, and instead leveraged savings available to economy of scale operations.
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Absolutely - if a mom & pop pizza shop can keep a delivery driver employed, then one of these services can certainly cover all the rest of the restaurants in town at better economies of scale.
They're trying to double-dip and overcomplicate. But they're entrenched and operating at a loss, so a new upstart that did everything right would find itself unable to compete.
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Absolutely - if a mom & pop pizza shop can keep a delivery driver employed, then one of these services can certainly cover all the rest of the restaurants in town at better economies of scale.
They're trying to double-dip and overcomplicate. But they're entrenched and operating at a loss, so a new upstart that did everything right would find itself unable to compete.
Nope. In this case you just drastically overpay for shitty pizza. A pizza doesn't cost $20 bucks. It costs them $5, and $10 to send a driver to your house.
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In my area some restaurants have such poor retention of drivers they spread out large banners advertising not their food, but jobs for drivers. Not cheap banners either, we're talking vinyl prints with grommets for ropes. I'd be willing to bet these places would love to contract out all deliveries, and this was before the pandemic.
Re:Probably. (Score:5, Informative)
https://www.theinformation.com... [theinformation.com]
Given that CEO Dara Khosrowshahi was paid a total of $42.4 million in cash and stock in 2019,. share holders are starting to rebel..
https://observer.com/2020/05/u... [observer.com]
Meanwhile, the actual workers - aka drivers - who's efforts support Dara's almost $50M pay earn sub-minimum wage... That's the reality of the GIG economy. It's a scam.. ( median pay is $14.73 WITHOUT accounting for gas, deprecation, insurance...)
https://www.vox.com/2018/10/2/... [vox.com]
AND Uber contributes to traffic congestion... https://www.vox.com/2018/10/2/... [vox.com]
to sum up: workers make less money and get no benefits, it increases congestion and adds to green house gases, investors are losing money - conclusion - it's a scam. Take a real taxi. support a real job with real benefits.
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Its the modern world - the "intelligentsia" class have decided that they are special, and everyone else should simply work for their benefit. Slaves and masters, only now the masters are pretending to be 'woke' so they can carry on with their greed without the usual scrutiny.
so if you want to complain about Uber management and business model, then they, and their brainwashed minions,will call you a racist for trying to stop jobs for poor migrant workers, you awful person. And so on.
There's an article in the
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He is also hated for forcing the SAGE team to recommend what Boris Bloody Johnson wants them to recommend, and the event that you were referring to is the case that the government advisor who argued most strongly for a lockdown was the one who broke the ru
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Just to be clear: Uber doesn't 'contribute' to traffic congestion, it's the largest *cause* of it in major cities at this point. Fuck them and their $8.5b loss on the backs of non-employee employees 9aka BS gig workers) they feel entitled to mislead and profit from.
To wit: in NYC 'TC' plates are more common that non-TC plates on the road. They even outnumber yellow cabs by a large margin...who's numbers have been very intentionally limited over the years primarily to PREVENT TRAFFIC.
(and yes, i know all a
restaurants doing delivery for over half a century (Score:3)
Somehow restaurants have been doing home delivery since I was a kid over half a century ago, the spread of the telephone from 1880 onward was a game changer...
Re:restaurants doing delivery for over half a cent (Score:5, Insightful)
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There's nothing preventing a restaurant from still doing their own delivery. But there's this thing called basic economics which prevents service providers offering services for free.
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'nothing stopping them' doesn't mean that business interests far larger than any restaurant will ever be haven't changed the playing field to make it untenable or nearly so.
And even when restaurants DO exactly what you suggest, grubhub and it's ilk have taken to listing the restaurant anyway, without their consent or agreement, charging significantly more, and using their own drivers - all while leveraging the restaurant's name and reputation but typically delivering a substandard (cold, late) product. And
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Except they didn't. For most of us, it was only the pizza places who bothered doing delivery. For anything else, you needed to do takeout and go pick it up yourself. (Though takeout often ended up being synonymous with Chinese places, even if it was available more broadly.)
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Maybe you weren't in suburbs of big city? The chinese places were doing delivery too besides the takeout since 1950s.
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In Argentina, delivery is offered in almost every restaurant. And it's been like this for decades. There are a couple of new "apps" to do this but restaurats are starting to ditch them since they want a cut of the sale, not a fee for delivery....
and that cut has been jacked to 30%.
An app provider wants THIRTY PERCENT of a sale.
What do people do? Just a WhatsApp phone and take orders from there. Sure, you have to dedicate a person for it. But if you do the math, ONE employee is not going to cost you as much
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All of them? Really? That many?
Maybe think back to your childhood and you'll realise that in 2020 those restaurants of offered home delivery still do, and those that didn't outsourced to others.
Hell my local restaurant offer delivery only within the postcode and you need to use Ubereats or something if you live just a little further away.
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It is true the ones from my childhood 50 years ago only delivered in the same suburb or the one right next to it.
Amazing (Score:4, Insightful)
that Uber Eats is not yet profitable
You mean the Uber Taxi Company, which continues to lose billions of dollars, is also losing money as a food delivery service? Who would have guessed!
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that Uber Eats is not yet profitable
You mean the Uber Taxi Company, which continues to lose billions of dollars, is also losing money as a food delivery service? Who would have guessed!
Sadly Not about profits but share value the original investors have made a profit and sold enough shares to bail out the current shareholders haven't seen the books but the marketing and the value of that is easily disrupted by a bean counter.
Also delivery services are easy to see why they work or not in a pizza shop a high number of deliveries means the runs are short and local and back to base immediately for the next delivery where they use one of these services they quite often use one that uses their
That's okay! (Score:5, Funny)
They're losing money on every transaction, but they'll make it up on volume!
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Re: That's okay! (Score:5, Interesting)
To the consumers, who don't pay the actual cost for the services rendered. The cost of food delivery is probably in the $8-$10 per order range, and when you only pay $2.99 - then Uber Eats/Grubhub/Postmates pays the rest. The owners - shareholders/investors - are paying to deliver you food in the twisted belief that it will eventually make money. Much like pets.com back in the dot-bomb days.
The restaurant owners pay most of the rest. The amount that these services charge to the restaurants ranges between 10% and 30% of the bill. I don't know how any restaurant can support that amount.
Now, the pizza companies have figured all of this out a long time ago, by integrating delivery into their production stream. When a restaurant is contracting to another company to do something -- anything -- for them, they're paying for that company to post a profit. Restaurants have narrow margins (most of them, at least) so without someone else footing the bill for delivery, the business model for delivery-only services just doesn't make sense.
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They factor it into the price...
If you eat in you have to cover the cost of waiter service and the costs associated with operating the dining area itself.
Restaurants have been providing delivery services for a long time...
What you should be asking yourself is why aren't self-collection orders much cheaper?
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Depends which country you talk about.
In the US, the labor cost is largely offset by tipping. Furthermore, dine-in eaters will often buy multiple, very-high-margin products (e.g. drinks) that take-away often doesn't. When you factor in a nearly-free waitstaff and common up-sell for dine-in, the other overhead costs are amortized more or less equally between customers.
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Pizzerias 'figured it out' by having a perfect storm:
- high-margin product
- easy to make on-demand with low effort
- fast turnaround/production
- multi-person orders are often for a single, shared item
- remains fresh for a substantial period of time, especially if kept warm/hot
- isn't ruined if it gets cold aka reheats well
- above leads to people often over-ordering
Delivery aligns well with above. Chinese restaurants adopted a similar model with similar results.
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No, capitalism is meant to work by having many buyers and sellers that have enough knowledge of the market to settle on the best deals for themselves.
Well, they ARE pure leeches. (Score:2)
They sit in between the one who actually makes the food, and the one who actually has the money, to funnel off "what the market will bear", for completely usless "service" that everyone would do and did just fine without that leech on their neck.
It could just be a free market of delivery people and restaurants getting together. No third party involved. A simple open website made by the restaurant owners would do.
Same thing as with WeWork, sharing of any vehices etc.
All it is, is an asshole trying to almost
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It could just be a free market of delivery people and restaurants getting together. No third party involved. A simple open website made by the restaurant owners would do.
So the restaurant would hand my order off to a random anonymous homeless person and then this person would reliably deliver the unopened meal straight to my door with great alacrity? Sounds good.
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There is however some value in the delivery service model vs the restaurant having its own drivers...
If you have a central app, you can use it to actually find new places to eat (especially useful if your in a new town, but also good for finding places locally that you didn't know existed).
You have a pool of drivers, so you can handle situations where you have an unexpectedly high volumes of orders, and the drivers still have work to do if one restaurant is quiet but others are busy.
Potentially you could al
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Re: Well, they ARE pure leeches. (Score:3, Interesting)
The post office, FedEx, UPS, taxi cabs, busses, air planes, trains, ships, and numerous others perform this service for a fee.
Why should it be magically free for restaurant food delivery?
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doing something that is seemingly cheaper when done by the restaurants themselves
Implying that all the restaurants currently offering something via these 3rd parties are a) capable, b) interested, or c) find it profitable to do these deliveries? There's a reason you have *more* choice now than you ever had in the past, the vast majority of restaurants do not offer such a delivery service, and if Ubereats or whatever company they are using shutdown they won't magically profitably start their own delivery chain.
Also this isn't new. The company which invented this concept Takeaway.com N.V.
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the vast majority of restaurants do not offer such a delivery service
I'm in the UK. The vast majority of restaurants that offer food that is generally considered typical for takeaway (pizza, burgers, kebabs, Chinese, Indian, Nepalese, some Mexican, fish and chips and a few others) have their own delivery services. There are probably a few that don't make food that you would normally expect to be takeaway (e.g. a fine-dining French restaurant) that might use such a service, but that would be quite a small market outside a pandemic. And they don't even offer a pick-up service
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Slashdot is a pure leech. It sit between your shitposting, and the poor people who have to endure your ignorant drivel.
BAReFO0t, a guy who thinks the entire service industry is a leech, but who no doubt would have passed away from starvation if pizza delivery didn't get to his mom's basement.
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Slashdot is a pure leech. It sit between your shitposting,
Ah, so that's why the editors are so full of shit... They keep leeching it instead of letting us get the full meal.
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You're forgetting that the food has to get from the restaurant kitchen to my front door. Providing that service is not "completely useless".
I agree it could be done cheaper by the restaurant themselves, but that is a solution that might not scale well e.g. if they have a run of orders or the delivery person calls in sick one day. Having said that, the delivery service model clearly doesn't work if nobody can make a profit, even with taking a slice of the restaurant's revenue.
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Down Under there have been media articles popping up of restaurateurs ditching the food delivery platforms for just that reason - too much leeching of profit.
A service rendered which is too expensive to afford does not make the service a leech. Restaurants are more than welcome to do their own delivery... except they don't because it's actually expensive to do.
Very generous discount - not!
Hey I have an idea. Since you're already losing money how about you be generous and lose even more money! Are you a venture capitalist by any chance? Because that's about the only place this kind of reasoning makes any sense.
Yeah, that restaurant is disengaging from the whole concept in disgust.
Do they still offer delivery?
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Yeah the restaurant shouldn't be paying out if the food left their premises in good condition and was screwed up by the delivery driver... The delivery service should be footing the bill if the food subsequently arrives cold, late or damaged.
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Being able to pluck the parasite and continue with no change in process does "make the service a leech".
No, it makes the service a service, nothing more. I too could build my own house. I too could grow my own vegetables. I don't. That doesn't make a carpenter or a farmer a "leech".
It's not being a semantic pedant. It's not a question of subtlety in definition. It's calling our your and the GP's assertion (or perhaps ignorance?) for the absolute bullshit it is.
Also why not google what the no true Scotsman is: Hint If you say something that is utter rubbish and get corrected for it, that's not a fallacy. The s
Once... (Score:5, Funny)
I once considered starting a startup to provide EV charging services for apartment dwellers - e.g. someone would come pick up your car drop it off at a charging station, come back later (employees carpooling for dropoffs), and return it, alongside offering various cleaning services and optional extras. Ultimately I didn't because I determined that it was impractical without either paying employees exploitative rates or operating at a loss.
Apparently, however, most tech companies look at such a situation and think, "Why not both?" :P
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Apparently, however, most tech companies look at such a situation and think, "Why not both?" :P
You don't need to be exploitative if you can set your own market rate. Uber eats has been around for like 4-5 years and have never made a dollar. On the flipside companies like Takeaway.com N.V. who invented this damn concept have been around for 20 years and have mostly made a profit (though not in 2019). The problem is that some companies have a business model of grabbing VC cash and setting it on fire in an attempt to put the competition out of business. Unfortunately Uber has yet to put any competition
They're trying to "skim the top" (Score:5, Insightful)
All of these companies/services only want to achieve one thing: become the middleman and "skim the top" of every transaction that exists... same as Amazon, Yelp, Apple, Google, and countless others.
What's worse about the food delivery ones is that they're abusing restaurant owners and their delivery "contractors" in order to achieve it, while offering nothing of value to society in the process (only to their real customers: their investors>.
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Are the people placing the orders also getting abused?
Yes they are, they try to call a restaurant and wind up using a number that unknowingly redirects them thru places like grubhub, which then takes their cut even if it loses the restaurant money.
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They aren't necessarily offering anything of value to their current investors, but they have provided value to their original investors: A wildly overpriced IPO.
Re: They're trying to "skim the top" (Score:3, Insightful)
Re: They're trying to "skim the top" (Score:2)
Someone ordering food from a service is not at fault here. They paid what the considered a fair price for something they wanted.
If the restaurant is losing money then they shouldnâ(TM)t use the delivery service. No one is forcing them to use them. Restaurants pay these companies 30 percent because they think it is worth it. I have noticed that several restaurants in my area only allow grubhub during non-peak hours and plenty do not use grubhub at all. Why would a business continue to do business w
Re: They're trying to "skim the top" (Score:2)
How are they abusing restaurant owners? They are offering a service to a restaurant that increases their business and makes them more money. If the business did not think it was worth it then they would not use them. Many restaurants in my area only allow grubhub during non peak hours and none of them are forced to use a delivery service.
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become the middleman and "skim the top"
Yes that's in general how the service industry operates. I have yet to find a builder willing to work for free, a taxi driver willing to drive me for free, or a restaurant delivery person who is willing to work for free (though I have found restaurants that are willing to foot the bill for the latter for free).
Falling for the “upsell” Is stupid (Score:4, Insightful)
Who cares where your restaurant is listed on GrubHub’s search results - or even if you’re listed with them at all? It seems unlikely any significant number of your customers are using that tool anyway. If I want to order food, my first thought is never “what local restaurants are GrubHub customers?”.
There’s a reason GrubHub keeps getting in trouble for pulling dirty tricks to inject themselves into purchases - NO ONE CARES WHO THE MIDDLE MAN IS.
But? But?.... The financials don't matter?... (Score:2)
[brainfart] -- My big startup idea is to have garbage men deliver packages. They had to go to everybody's house anyway.
Who actually needs delivery? (Score:3)
In normal times you would have driven to the restaurant to eat there, right? So why not drive there and pick your order up? That's why around here the restaurants doing delivery are the same three pizza places that always had delivery. Everyone else has gone "curbside."
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Just another word for take out, 70+ year old thing
Non-driving customers need delivery (Score:3)
The Wendy's and Arby's restaurants near me do not offer curbside pickup. It's either drive-thru or delivery. Because these restaurants have banned pedestrians and cyclists from the drive-thru, pedestrians and cyclists are stuck with delivery.
I call BS (Score:2)
Bottom line is that you need to pay someone enough money to drive to the restaurant, pick up food and drive it to a diner. . . ," the company wrote. "At some point, delivery drones and robots may reduce the cost of fulfillment, but it will be a long time before the capital costs and ongoing operating expenses are less than the cost of paying someone for 30-45 minutes of their time
They mean that $2 they pay for 45 minutes of time (actually 1.5hrs counting wait time between deliveries). No. The truth is all of the delivery app companies are complex scams that rip off everyone to pay the execs.
I recently just ordered a bottle of wine from Postmates. They charged $14.99 for a 10.99 bottle (40% upcharge). They charged a 15% "service charge" and "waived" the delivery fee as part of some special. After taking $6.25 for themselves they paid the delivery driver $2.15 (I asked him).
If t
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$19 to have a frosty from Wendy's delivered will cause there to be 0 orders and kill that business. While that seems fair, it would basically make food delivery go away. If that's your goal, then you have an excellent solution. that would also incentivize some drivers to take speed to deliver food since they would make more stops and more money.
It you want to make it more fair with laws, make the companies provide vehicles, fuel, and pay minimum wage + tips. Again though, I suspect they don't do that for a
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So, it would work like this: you would place an order for food to be delivered (from one restaurant or more than one), those delivery drivers who were willing to pick up the food and deliver it would enter how much they would charge to make the de
Business model flawed? (Score:2)
DoorDash lowered the price to conduct a "demand test". But what business even needs to know how much stuff it could sell at an unrealistically low price? Maybe you need a degree in economics to figure that one out.
How to make money at food delivery. (Score:2)
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And to be fair, long before this wave of high visibility companies came around, there have been countless regional variants that have been operating for decades... but they all carefully choose their locations and oper