Foodora was extremely popular here in Toronto, you’d see the bike delivery people all over the place and they signed up tons of restaurants but they just shut down citing the margins simply not making sense for the business.
It didn’t help that a month before shutting down a group of workers unionized in Ontario, and further threw a wrench in a terribly low margin business and now none of them have a job and the entire city is stuck using Uber
Note: Foodora only shut down their Canadian business, not their European one.
Foodora had acquired Hurrier which was our other homegrown food delivery service here in Toronto, which is obviously no longer an option either. They too were struggling with margins, which I know from speaking to people who worked there.
> It didn’t help that a month before shutting down a group of workers unionized in Ontario, and further threw a wrench in a terribly low margin business and now none of them have a job and the entire city is stuck using Uber
I don't think unionizing is ever a problem. I you do moralistic acceptable business practices. If your business is only profitable by paying below acceptable
salary, push side costs onto employees or cutting corner wrt. employee safety then it IHMO it is better for your business to close. Additionally if a whole industry is affected by this then IMHO it needs a major reform in how it works or it should just cease to exist.
Sure food delivery can not cease to exist, it's needed but if their is no way to operate it profitable without taking advantage of delivery personal and/or restaurants then it needs a major change. Either people need to accept that delivered food is more costly or the state needs to subvention it (during epidemics and similar where it's an somewhat essential service for some people, like when your stove just broke yesterday).
They aren't making a profit because they're spending more than they're making. They make enough to pay the driver, the operations around that, and the tech running the site.
But their shareholders see this as an opportunity to expand the markets. They aren't taking this for granted, they're aggressively spending on marketing, on signing up restaurants for their platform (except DoorDash, they list most restaurants without partnership), on ads for Google, Facebook, and other major platforms. This is why they aren't making a profit.
But it's eating so much into their costs that they're doing some sneaky practices: they're doing the same that Etsy does, taking more out of the net sales on advertising that the restaurant did not consent to knowing they will be charged for it as much as they were.
Our city has some local restaurant driven “drop points” for getting lots of restaurant prepared meals at a margin better for restaurants. Please see if your city has something similar as an alternative to grubhub, etc
I had an idea, and I think Travis Kalanick started building something like it, where restaurants rent kitchen space alongside other virtual restaurants. The site would have good road access and be centralized, so pickups are faster, and the space would be used more efficiently that high-rent retail space. I got the idea seeing a local restaurant with most of it's orders being picked by a food delivery service, yet they were paying for a good, downtown location where parking is hard.
They thrive because people are lazy - both restaurant and their customers. Restaurants can make a concerted effort to ask regular clients to order from their own websites/apps but rarely do even when they can make an extra 10-15% after giving the customers 10% off.
Customers are lazy because inspite of all the talk of supporting local, they are too hooked on click-click-click and ordered.
The delivery apps have hundreds of millions in investment in technology and marketing, a lot of it shady. The apps can offer addictive flows that restaurants cannot compete with.
The solution out of this is an app co-op model - payment processing (3%) + 2-3% overhead. There are similar offerings in the ride-share world and this should work on the delivery apps as well. I would rather support an app that provides a healthy living to a small company in Tulsa or Talinn that subsidize rents in SF and fatten VC portfolios for an online menu with checkout supported by hundreds of millions in marketing dollars.
I’ve been an AGM and worked the industry six years plus four years adjacent in catering before finishing college and moving into SWE.
Yes an awful lot of them are lazy. I mention him only to mention the scary accuracy of it, but the late Anthony Bourdain has a chapter dedicated to crappy restauranteurs in nearly every book he’s written on the topic of food service as a career (of course his distaste for crappy restaurant owners is poignantly dotted through the entirety of “Kitchen Confidential” to be fair), and I often wonder to this day to hear his voice on the state of affairs in food service during a pandemic, and the micro economy that’s sprung up in food delivery.
You need to find a different word that isn't "lazy".
Perhaps a better way to say this is: restaurants are good at being restaurants, but aren't always good at establishing an online presence. A big part of why these delivery services succeed is that they provide a function that restaurants aren't well suited to provide on their own.
This isn't about being lazy, it's about an industry needing to adapt to the new expectations of the app economy, and often not having the expertise to do so.
A restaurants entire purpose is to provide food for people that’s more convenient than the alternative. If they can’t do that, there is no reason for them to exist. If they can’t survive, someone who can come up with a business model that meets the needs of consumers will take their place.
Times change and circumstances change. Businesses either evolve or get replaced.
The problem now is that delivery services are being subsidized by VC money or however Uber is getting new money after their IPO.
You are right, lazy is the wrong word, irrational perhaps?
I have worked in commercial kitchens and have plenty of friends who run restaurants and have spend time in their operations. They regularly complain about the 30%+ they fork over to grubless. 30% is an insane fraction in a business that barely makes an accounting profit!
In established restaurants, a significant fraction of the orders come from repeat customers. Moving these repeat customers to a 5% friction channel from a 30% channel can be a game changer.
Now when I walk past restaurants, I see banners imploring folks to order from their website. I guess, one silver lining from this pandemic.
> Now when I walk past restaurants, I see banners imploring folks to order from their website. I guess, one silver lining from this pandemic.
Lazy is not the wrong word. They couldn't be bothered to put up that website until now. They couldn't be bothered to innovate and wanted to keep people needing to call on their phones.
They slashed their own wrists with their mediocrity.
This is an area where teenagers routinely make money by building these kinds of websites.
> This is an area where teenagers routinely make money by building these kinds of websites.
... only for those websites' backend services to be breached and the customer account data to be shared on the dark nets by other teenagers, ready to rip off and scam innocent customers.
Sarcasm obviously, but designing an ecommerce site is a serious affair, not an afternoon pastime.
The challenge is how they would do that. It requires expertise which itself costs money and time to gain, and it's an ongoing maintenance cost for a small restaurant that may have extremely seasonal revenue.
It's not actually clear to me that every restaurant acting individually can actually recover that delivery service fee. There's no economy of scale for them to exploit.
what OP describes makes sense to me. but you are right, it is perhaps not laziness. it's a case of not knowing how to do it.
i mean why isn't dominos, pizzahut, etc. teaching them how to do delivery?
with everything going on, with these apps not helping restaurants, i decided to stop using these apps and go get my food myself. i only use apps when i get lazy like OP says.
To your point, Dominos is. Their pizza order tracker is open source [1]. The code is now two years old but I thought it was really cool of them to even do this in the first place.
(I’m still hunting the original article where this was announced, the first version they released I’m pretty sure was linked here on HN in the mid 10’s?)
I think you may be conflating the cooks, waitresses etc. who are certainly not lazy, with the management who tend to be lazy and set in their old ways, not willing to innovate unless absolutely forced to. I suspect the OP had the latter category in mind.
It's very common for businesses of all sorts to view anything not their core competency as a cost to be minimized or a distraction, instead of an investment with return.
a website and online menu is something that they felt they could get away with the bare minimum, no regard for surfer experience. it, along with maybe throwing some money in an seo pit, with a checkbox in a playbook.
Is that anywhere near enough to actually pay for a delivery? I have both the Dasher app and the DoorDash app. That delivery I pay $2.99 for leads to the Dasher often being offered $13 on a $30 order with a $4 tip.
Yes, marketing/customer acquisition. Promotions are increasingly passed onto restaurants. Restaurants have to opt-in to marketing promotions and then the cost is deducted from the order.
Definitely not. But the problem is not that delivery realistically may cost $10-15 to pay for itself, it's that it's coming from the restaurant's margins and being hidden from the customer.
If the fees were real, the restaurant wouldn't need to care about pickup vs delivery, but the apps would lose some business because $15 is a good reason to do pickup.
How is “the market’s” fault that an individual restaurant won’t price its services correctly? Unlike VC funded startups, they can’t keep losing money and pawn off their business to the public.
And if the restaurant doesn’t make enough money to pay its bills, it also becomes an ex-restaurant.
The answer in a capitalist market is that restaurants will raise their prices to stay in business. As prices go up, people who don’t want to spend money in restaurants will find alternatives, you will have fewer restaurants and they will have a sustainable business model.
The home-grown app in Tulsa will never have the capital for marketing and sales reps that allow it to capture a healthy market share of restaurants.
And if they do somehow make it, once they become the market leader, they're going to start asking for a larger portion of the pie. That's how business works, be it in Tulsa or SV.
Um, no. Most businesses seek growth by trying to offer new/upsold products and services rather than trying to squeeze their customers for the same service.
That idea is too much of a reduction of how businesses actually operate.
Most businesses that aren't market leaders have to offer new or upsold products and services to grow because they can't throw around their monopoly power.
If you control 0.01% of the the entire delivery food sales market, and you raise middleman fees 3x, your (restaurant) customers will take a hike and switch to a different, cheaper delivery app.
If you control 75% of the market, your customers might be more willing to accept the increased fees.
Only if there's genuine risk of competition. If there's even the slifhtest whiff of lock-in the executives in any sufficiently large organization start milking their customers to enhance their personal portfolio even at the immediate (not to mention the long-term) detriment of the organization itself. See Oracle.
I think that's about the size of it. This seems like a "bad deal" to restaurants because they aren't really thinking of the problem correctly. Restaurants view having to sell a meal via GrubHub as selling a discounted meal, because the customer pays menu price but the delivery service charges a fee. So the restaurant makes less cash than they would to serve the same food to a table.
And the reason they think this is that when customers used to order "takeout", they'd still pay full price and the restaurant would keep all of it. So it feels like they've lost something.
But that's all wrong, because takeout used to be "improperly" (per a market analysis) marked up. Serving takeout is cheaper: no need for tables and dishes and servers. Lots of restaurants have known this forever and prioritized their takeout business, and done very well.
But now those savings are all being eaten up by another party that is providing useful improved services to the customer, and restaurants don't like it. Well... I guess I wouldn't either, but what they're complaining about isn't so much unfair competition than it is (heh) the elimination of what for them used to be a free lunch.
The market will re-equilibrate. It always does. But yeah, until it does the distribution of changes will not be fair. It never is.
Good analysis on the economics of takeout vs. eat-in. Hence the rise of ghost kitchens which are losing the storefront and all the overhead that goes with it - cutlery, tables, servers etc.
Grubless et.al are really a discovery platform. Once the customer acquisition happens - restaurants need to move to own the customer relationship. There is so much low-haning fruit there - repeat sales, meal subscriptions, boxed lunches.....
Take out customers don’t order high-margin beverages in proportion to dine-in customers. In most of the US, restaurants cannot even sell the highest-margin beverages, alcoholic ones, to go. With the lost beverage margin, increased take out volume is at best a wash for most restaurants.
I'm amazed that Chipotle hasn't packaged it's online ordering app and licensed it to other restaurants. I've never used such a streamlined, polished, and convenient way to make an order for pickup or delivery.
I’ve found Panera Bread’s online ordering system to also be a well crafted order flow. To your question, I wonder if the exact reason they don’t is because they view their order software as something that gives them a competitive edge in their specific cuisines markets.
Panera and Chipotle are about as far apart as you can get, sandwiches and soups versus burritos and burrito bowls yet where I see some alignment is how they both have amazing online ordering experiences which allow deep order customization that eschews a lot of friction in doing so. I can’t think of another large chain with similar order experience between the two (Edit: Potbelly, perhaps for sandwiches?)
Chick-Fil-A’s app is extremely well done. Just this morning I ordered breakfast from a store, but drove to the wrong one and parked. The app noticed this automatically, asked if I wanted to move my pending order to this store, and after pressing “Yes” my food was walked out to my car < 5 mins later.
For food delivery there is CoopCycle[0] in 10+ cities worldwide. I've been seeing their stickers at quite a few restaurants lately in Berlin, where the local chapter formed after Lieferando consolidated IIRC.
This is amazing and I hope it takes off in the US. I wouldn't be surprised if grubhub and uber team together to spend millions in lobbying to ban food delivery co-ops in this country though. Nothing more American than that!
>Restaurants can make a concerted effort to ask regular clients to order from their own websites/apps but rarely do even when they can make an extra 10-15% after giving the customers 10% off.
Ridiculous. This is an assertion made by somebody who has never tried to convince anybody of anything, by somebody who doesn't know the meaning of the word "discoverability," who has no concept of what market dominance means.
Without government intervention, you can't "new business model" your way out of this. Especially not in the middle of a pandemic that is being historically mishandled.
One man's "laz[iness]" is another man's efficiency. Think of all the other forms of laziness we have: we don't need to do dishes by hand; the printing press saves us having to scribble letters by hand; we have machines wash our clothes; cars spare our feet and our time; hydraulic excavators let us avoid shoveling dirt with our hands; and aircraft let us save the weeks we'd otherwise waste aboard ships and in rail cars. Is using any of these things some kind of moral failing? Of course not, and neither is using a food delivery service.
People get a lot of value out of delivery apps. If they didn't, they wouldn't use them. You're asking people to forego something valuable on your say-so. How can that be justified?
Every technological innovation is opposed by those used to the old ways or who are financially interested in the perpetuation of inefficiencies from which they benefit. This opposition frequently takes on a moral character, as it has in your comment --- if you use the new thing, you're a bad person making an unethical choice. Well, I reject that.
>Customers are lazy because inspite of all the talk of supporting local, they are too hooked on click-click-click and ordered.
But it's more than that. Centralisation of food delivery also means centralisation of your sign-in details + address + payment.
In the decentralised model, you rely on each of these restaurants to implement these well and securely. In the least worse case scenario they might go with some login with Google/Facebook solution (which is gross for other reasons). Not to mention the friction (and often sub-optimal sign-on flow) on these independent sites because they lack an army of UX A/B testers.
Last time I signed up independently for a restaurant via their app (because they took themselves off Uber Eats) the food took 2.5 hours to come and arrived cold.
So capping delivery fees on unprofitable delivery platforms now means they lose more money or they cut the pay of the drivers.
The only answer is shockingly enough for both the delivery services and the restaurants to charge enough to be profitable and then people will have to choose to get out or pay the market rate. Capitalism is the answer.
On the other hand, since I am a bleeding heart capitalist, I have no problem with the government giving people money who can’t or shouldn’t go out to make it easier for them to get delivery.
I thought the whole point of capitalism is that you don’t have to answer “should” moralisms about any particular business. Consumers will decide and competition among vendors will drive down prices. Why do so many outsiders feel so confident that they know better than Grubhub/Uber Eats/DoorDash what their prices should be?
Food delivery is a complex, three-sided marketplace problem area. Balancing the needs of all stakeholders, especially during a time of consistent innovation is challenging.
I don't work fro UberEats (or any delivery company), but I do work for a company in the local rest space. Uber Eats margins are just as thin as the restaurants. a round trip delivery might take 40 mins. Everyone's margins are super thin.
Is three-sided in reference to the delivery couriers as a group, or the aggregator food delivery app? Clearly, the remaining two parties would be the restaurant and the hungry customer.
As part of trying to provide benefits one would normally get in the office, we provide unlimited Doordash for lunch/dinner. I would prefer to order from places directly, but the choice is either free for me but I order through DD, or pay out of my pocket and order directly. This isn't common I don't think, and we won't have DD anymore after we all go back to the office, but it's a data point.
The accounting is significantly easier apparently when the company just gets a monthly Doordash bill rather than having to deal with individual receipts on concur or something.
> While neither Uber nor Grubhub turns a profit delivering food, they are nonetheless venture-backed and raking in mountains of cash
The author acknowledges that the delivery services are losing money. And yet, the author is essentially saying that the apps should lose even more money because someone else is willing to fund the apps.
First we need to know why they don't turn in a profit.
Potential reasons include:
- Because they pay to the people delivering (I don't think so).
- Because keeping the app running is to expensive, i.e. server costs (I don't think so to).
- Because they payed a lot upfront to create the app and are still paying it of (Maybe, still unlikely, this would have been their own mistake and go away after some time).
- Because they are spending to much on "external" cost, like advertisements (likely).
- Because they know they don't have to yet make profit so they take maximal advantage of venture capital by reinvesting much profits in R&D and similar (somewhat likely)
- Because they are selling a service for to little to the end customer, i.e. making losses to "kill of" competition by taking advantage of venture capital (I think that's the main point).
The thing is paying people to deliver stuff is expensive just the wage which needs to be payed can noticeable increase the price and doing much advertisement isn't cheap either.
So normally I would expect <price in restaurant> + <not small additional delivery cost>
Or alternatively <price in restaurant> + <a small bit more> + <constraints like only delivery if destination close to restaurant (max 15min time) and min order amount (20+$) etc.>
But what we see is prices nut much higher then restaurant, not limited to close proximity, no or low min amount.
So someone has to pay for it, and by using a combination of intransparency and their (perceived) marked power they force a not small amount of the cost they have to operate somewhat profitable onto the restaurants...
They seem to be charging enough to pay delivery drivers on top of their outrageous commission so I don't think that's the real expense. Not like they pay for their insurance or even social security!
Does the reason why delivery services aren't profitable actually matter as long as it's not "paper unprofitable" (i.e. they're unprofitable because they pay large sums as licensing fees to a wholly owned subsidiary)? The important part is that they're not profitable.
It costs money to run the services and someone has to pay for that. It's in these services' interest (as well as all stakeholders: couriers, consumers, and restaurants) to keep those costs as low as possible.
Perhaps the entirety of the cost should be shifted to the end user. Legally mandating caps on commissions would force that shift to happen to some degree. I'm not opposed to such a shift.
If 30% of dine-in prices go to rent / seating / storefront marketing, why shouldn’t 30% of the takeout price (which is the same) go to subsidize the delivery infrastructure?
Why are restaurant owners ok with paying so much for rent on a useless (during COVID) storefront in a high traffic area, but when Uber Eats gives them more marketing and orders than the storefront does, Uber Eats is the bad guy.
You're missing one thing - a restaurant is more then the delivery of food to a plate.
Just because they can have food made for food delivery services, doesn't mean it will be the best choice for regular customers.
Where restaurants compete with food delivery is by being in a physical location that people seek to have an experience. Or a quick stop on a car ride. Or a fast snack near work.
For some restaurants food delivery simply won't work.
There is still an opportunity for innovation. A restaurant that specializes in "experiences" is not doomed to optimize in food alone. For example, when a customer places an order, a restaurant could offer personalized wine pairing, or affix interesting recipes from the chef, or send you a coupon for the neighboring business.
Many restaurants are asking for a flat-fee alternative, similar to the Shopify model for e-commerce. Whoever brings this to market will win the restaurant owners. And then does the consumer loyalty lie with the app or the restaurant? I.e., would I rather order from restaurants on my favorite app or from my favorite restaurant, regardless of the app? Probably the latter, but who knows!
I use ChowNow, which apparently is a fixed fee. I’m not sure if they’re lying or not but there’s a pretty large number of restaurants in my area that send you to their app for online ordering.
The question I keep asking myself is, if Domino’s can be their own delivery system and now most restaurants are 100% delivery why can’t they do the same thing?
I was, a long time ago, a delivery driver for Little Caesar’s and it seemed to work out for everyone without any technology to speak of.
EDIT: I am aware of the three party optimization problem for food delivery services. In housing seems to simplify that problem immensely given there is no /fourth/ party trying to optimize it from the outside and take a cut in the process.
1. Location. Dominos has been within 10 minutes of everywhere I have ever lived or vacationed. My last order of Chinese food came from the other side of the city.
2. Tips. Most people do not tip the app drivers. I suspect more people tip the pizza driver as he sees that you stiffed him. Customers are no longer paying for the delivery.
> Location. Dominos has been within 10 minutes of everywhere I have ever lived or vacationed. My last order of Chinese food came from the other side of the city.
Sure, but that doesn’t preclude that Chinese restaurant from having their own delivery function. Each Domino’s restaurant needs to be self sufficient as well. Googling “Chinese food near me” seems to provide the look up.
> Customers are no longer paying for the delivery.
Have you seen the charges from an Uber eats delivery? We stopped using food delivery services entirely and just pick up now to save the ~$20 overhead on dinner.
People appear to be forgetting how horrible food delivery was pre-UberEats/DoorDash et al. It was horrible and the food was always cold. Once they started doing food delivery it was a game changer. My food arrived hot enough that I had to wait sometimes but almost always pleasantly warm. To me, it’s worth paying the fees, especially since I don’t have to spend time going out, waiting, driving back. When I go for In’n’out these days, it’s almost an hour spent in total. I would rather pay fees and a tip to get someone to bring it to me.
And quite honestly, without food delivery most of these restaurants would be dead anyway so they really should be thankful. There’s no way they could coerce enough customers to drive down, find parking and wait while they expose themselves to COVID just for a meal.
I worked at a pizza place in the early to mid 90s in the suburbs of Chicago. The place ran its own delivery service. The service was fantastic, pizzas delivered piping hot most of the times. It wasn’t very hard for the restaurant to set up and operate the service. 15 year old me understood it pretty well.
That said I think where these delivery services have come in is at places that historically didn’t have their own delivery. Now these places suddenly have “delivery as a service” to add on with Seemingly no additional work, a fee, and additional revenue.
These places could easily start their own delivery service if they want, but they must still think it’s easier to pay the delivery as a service fees.
Yes, pizza places had it figured out. Everyone else, not so much. And on Uber Eats or many of their competitors you can order pancakes with coffee, burgers, traditional food, Georgian, whatever.
In Poland, Pyszne.pl is usually better and offers a wider selection than Uber Eats. The delivery is often provided by the restaurant itself, just like you suggest. In fact, I made two orders from Uber Eats today and both are delivered by the restaurant. But even then the intermediary keeps them honest with reviews and access to the platform. It's not pure rent seeking.
Before that, these platforms do a lot of promotion, marketing, and allow for easy discovery. They have greatly expanded the market. Just like Uber did for taxis.
>People appear to be forgetting how horrible food delivery was pre-UberEats/DoorDash et al. It was horrible and the food was always cold.
No one's forgotten anything, that's just simply not true. I've never used UberEats or DoorDash, and I've had food delivered plenty of times over the years, and never had a problem.
I assume this is the same sort of propaganda Uber fans use when they claim taxi service was universally terrible and corrupt before they came along and disrupted everything. No, for the most part both taxis and restaurant delivery worked perfectly well for most people, most of the time.
Taxi service was absolutely terrible before Uber. You couldn't order a taxi from an app, there were never enough of them, you couldn't figure out what the price was before ordering so there was no direct competition, many localities had an anticompetitive licensing scheme on top of that, and a not insignificant number of drivers would take you the long way during off-peak hours IOT inflate the price.
> Calling on a phone works not so great in crowded and loud places.
Sure, but it works perfectly fine elsewhere, most people aren't calling the taxi from loud, crowded areas. Having an app is convenient but not having an app is hardly a horrible experience.
>Quotes on the phone aren't in writing and I've never had them honored. "Oh that's just an estimate."
The price I've been quoted has always been the price I paid. It's unfortunate that you appear to live in a wretched hive of scum and villainy but your personal experiences are hardly universal. There are plenty of places around the world where taxis work just fine.
Apps are doing well because they are solving a real problem — translating restaurants’ abysmal web sites, PDF menus, and awful online ordering experiences to apps that “just work”. If restaurants put any effort at all into fixing those things, there would not be such a strong demand for apps.
Obviously this is different for different restaurants, and the skill set needed to run a restaurant is vastly different from running an e-commerce site, but just like they need to figure out how to do taxes and read lease agreements, online presence is a necessary thing in 2020.
Theres a nice friction removal for the customer. One account, only typing your credit card number in once, a consistent place to make a complaint or get a refund.
Visa, Amazon, Apple, Google, or Paypal sort of provide that function, but being able to shop many restaurants with a single identity has its benefits. Something that wouldnt be fixed just by restaurants with nice websites.
One nice theory I've seen floated - which I believe has happened in some places - is for several local restaurants to split the cost of building & running a combined web store and/or app. If word gets around enough that this is a faster or cheaper overall experience, people will migrate. The only catch there is if the stores want to also continue taking GH/DD/UE orders, in which case the menus and branding might have to be different.
In the long run, I honestly think kitchen-only setups optimized for efficiency & food safety will grab a big share of the market. They can experiment with vertical integration, and avoid all the hassles & limitations of sit-down dining. They will be able to more, better, faster and cheaper. It might be hard to copy & paste the entire thing from one city to another, but the core functions should be quite portable.
It would be insane for restaurants to build their own platforms.
It would be crazy smart for someone to standardize an interface (e.g. REST API), let restaurants implement glue to their systems, and then allow a plurality of delivery services to consume and order through the standard interface.
I recently ordered a pickup order that seemed to just be using the restaurant's POS system.
For delivery it's harder because you actually need someone to deliver the food and the logistics are really hard (they have to get there when the food is ready but not too late and not too early, etc.). But... there are like 80 restaurants in a 10 minute walk radius from me, so I can just deal with pickup for now.
The downside is that that one middleman often has incorrect menus, and if there are any issues it then becomes a he-said she-said they-said juggling act with the service, the restaurant, and the driver blaming each other for any problems. The drawbacks balance out the benefits of having one central service, in that way. But that's not everything.
The best part is actually just having a variety to order from. Before these delivery services, there were only a couple of pizza places and a couple of Chinese restaurants and nothing else delivered.
For a lot of restaurants, it never made business sense to deliver, and still wouldn't. But when the delivery service is spread out over many restaurants, it works rather well. That's good for both the businesses and the customers, despite the friction added by the middlemen. It's a real win for people who couldn't as easily go out to eat, due to health or disability or whatever, but also for everyone else.
Apps are doing well because this is another one of those protective moat ideas where once they have established themselves they have no need to innovate further. Sites like grubhub have no physical reason to gouge 20-30% commission on top of charging both sides delivery fees (further on top of guilting customers into tipping more). In the end it's an app serving a few web pages and APIs (these filthy companies don't even deal with the credit card mess).
But because they have an insurmountable most (not earned via any sheer technical breakthrough, just through cunningness and being ruthless) they don't need to care if they have too many engineers,whether these engineers are any good, or if their nodejs ec2 instances serve 100 queries a minute. So they just keep it like that.
Companies like IBM needed decades to get into such a rot, modern VC funding and cloud computing have just accelerated this phenomenon.
I kind of agree, but on the other side - if 20-30% is too much there will be competitors which offer 2-3% and theoretically all restaurants will move there as well as customers to pay 20-30% less.
And tbh this should happen. UBER had to spend billions on marketing and getting their model "right". But now it is clear that such platform is essential for modern city. At some point UBER will have to get this money back with ride fees. Next competitor that can replicate UX of UBER, but raises less capital will be very well positioned to offer competitive pricing. And switching between these platforms is much easier compared to something like Facebook/Apple.
Grub-less et.al are as much about ordering and checkout as they are about discovery. I can rank and view all restaurants offering Sushi in my delivery radius. This is what makes them powerful.
Uber et.al are a marketplace. You are absolutely right in that they have zero switching costs but they have a two sided pool of supply (drivers) and riders (demand). This is hard to replicate.
In Europe takeaway.com took over lots of delivery apps and businesses. In Germany they took over foodora and deliveroo exited the market. takeaway's platform is from a feature and UX point of view not justifying any premiums. You can't tip drivers, which is the most important feature enabling contactless deliveries. There are no new features since years. You can literally filter by cuisine and price; nothing else, not even a map with restaurants nearby, search by dish, etc. People order there because it's the only choice, but everyone agrees the page is just awful.
I'm curious if they are actually a major discovery destination.
I suspect most customers are either starting looking for a restaurant they know by name, or one near them to ensure maximum freshness, using Google Maps or Yelp or the like. Only when they've already chosen a restaurant do we transition into the delivery app flow.
I'm sure a lot of money is being spent for chain restaurants to advertise "order via Postmates" or "exclusively on GrubHub"-- again bypassing them as a discovery system.
But aren't there like 2 dozen competing apps trying to do this? Shouldn't that drive prices down? Or is actually legitimately expensive to provide this service?
We've been told that evil VCs subsidize service to run at below cost to drive competitors out of business. Uber is often accused of this. Why aren't we seeing that phenomenon here? And Uber is literally one of the competitors.
I would not be surprised if the US market had some level of collusion going on. It just doesn't make sense to me that they aren't currently competing on price.
There are some other possible reasons tho, like food actually not being as "commodity"-like as we think it is (like rides are)
That would surprise me. It's unlikely a dozen apps would be able to coordinate like that. The thing about cartels is the first defector can cut prices and capture marketshare, which is what we're supposed to believe evil VC funded cutthroat startups are inclined to do. Raising prices to increase profit but reduce revenue growth is the exact opposite of that.
The other hypothesis is that delivery is simply expensive. The driver has to drive to the pickup place, find parking, stand in line potentially for awhile, drive to the delivery, park again, walk to the delivery location to drop off the item. Most of those things an ordinary uber fare would not have to deal with.
The concert case single monopoly that controls both part of the source as well as basically all sales is now comparable to the pile of separate delivery services that compete against each other.
A claim that all of these have formed a cartel requires strong evidence.
It's possible collusion is a factor, however another observation I've had could explain it: the VC-finance industrial complex - in that there are dominant incumbents who have so much profit that they simply buy any up and coming new competitors in the market, to which the founders and VCs are happy for that payday. Or you have two big companies doing mergers, giving multiple advantages including a bigger pool of profits/revenues to leverage and outbid their other large competitors in the market. This is the main reason that they're all able to continue to charge arguably unreasonable and unnecessary fees to restaurants, because the barrier to entry is heavily having enough funds to build such a platform - and the gatekeepers are in the VC industrial complex where most want unreasonable returns (requiring unreasonable, excessive fees and other grey or dark practices) and an exit event in 10 years.
VCs don't subsidize the transaction cost (unit economics), they subsidize the (customer) acquisition cost. That is to say, they don't want you losing money on the execution of the transaction, but if the sum total of net revenue from a customer's transactions don't equal the cost to acquire (market, etc.) the customer -- there's the subsidizing.
If you went to a VC with a model for a food service delivery taking less than 30% of the transaction, they'd more than likely pass. 30% is the bar that's been set, and your unit economics have to be as good or better than the existing players. They're not keen on investing in "just a cheaper version of something that already exists." -- If you're marketing yourself as "cheaper," it has to because some innovation has eliminated more cost out of the transaction than you have eliminated in net revenue.
I don't think you really understand how software works. No software has a "physical reason" to ask for money once they are done. It's really a terrible argument that you seem to try and turn into a quip against delivery apps.
Your moat argument is the same that had people invest in uber 10 years ago, which we are seeing is failing in regions like EU where Uber is getting lambasted.
If you'd invented in Uber 10 years ago, you'd be rich. Let's say you paid $5 (though it's probably closer to $0.01 if you got in on their seed round in Sept 2010). With 250k shares, even at the "abysmal" price of $45/share, that's still a cool $10 million, before taxes. As a seed investor, you liquidated on the day of the IPO and what happens to Uber no longer particularly matters to you - you've already made a giant pile of money. It's interesting as a point of curiosity. Like updates on a friend/acquaintance's cat.
Of course, you'd have to be rich in order to have done that in the first place (an "accredited investor" as defined by the SEC), and this ignores the other investments you made in 2010 that went bust.
Later investors got screwed by the poor IPO performance, especially those that bought, hard, into the "moat" argument. Hell, softbank is possibly underwater on its investment.
Not just that, but it's expensive to build and maintain a website, and no one's going to install and app for a restaurant with a handful of locations. These apps built a marketplace, and people say "they're just middlemen," there's absolutely a value-add to what they do.
Yes and no. There are services out there that make it easy for restaurants to have a great online presence, including online ordering (here is an example www.getbento.com). And generally I think restaurant websites have been getting better and better. Restaurant owners are much more aware of the importance of online presence.
That's only half the battle though, food delivery marketplaces like Grubhub are very entrenched and changing consumer behavior back to using the restaurant's website takes time and effort. Marketplaces also spend a ton on marketing to make sure consumers go through them and not directly via the restaurant's website. It's an uphill battle for the restaurants.
With Google/Apple pay, I can order on most restaurant websites as easily as ordering on grub-less. Restaurant apps have a similar experience. Restaurants use third party services for apps/websites that provide experiences comparable to grub-less without the discovery platform. These services have a fixed price (<$100/mo) and reasonable card processing fees.
>> If restaurants put any effort at all into fixing those things, there would not be such a strong demand for apps.
In such a world, Some model of Ghost kitchens will thrive anyway, not small restaurants.
Why ?
The area a kitchen serves will become much larger - distance matters less when you don't need to go pick the food. And even when food freshness matters, there are some solutions like parcooking and finishing the cooking in ovens inside delivery vans.
The type of food a kitchen serves becomes much more varied - today your Chinese restaurant has one kitchen, and the Mexican place has a different one. But with delivery-only, a single kitchen can open many virtual restaurants.
This also helps with delivery - a single family who likes different food, can order from the same kitchen, and get the order delivered in one go.
And this is now an internet business - since customers prefer all the restaurants in a single app, single search - and those add new complexities.
And usually, small business(in aggregate) often had the benefit of agility over large businesses. But a virtual restaurant is very agile, conducting business experiments is rather cheap.
And personal service and deep relationships don't exist in food delivery - and that was a weakness for big businesses over small ones.
So long term i don't think delivery a good place for restaurants to be.
That's because it is. What makes restaurants different is their specialization in an area, and excelling at that along with atmosphere. Without that there's no value add.
I have worked with these large kitchens that can make different types of cuisines depending on your want, but they all turn out mediocre.
My family completely stopped ordering out during this pandemic because most restaurants have lost the key employees who make their food special, there is no atmosphere, and GrubHub et al add no value.
As an example, most people buy from amazon even though other retailers have very good websites, without inline advertisements and many times with lower prices.
another interesting example is tow truck services.
I buy from Amazon instead of other retailers because Amazon has almost-always free shipping for Prime members, a consistent (and fast) website experience I know how to use, and great customer service.
Some retailers have good websites (most don't), but I've always found issues like: slow shipping, having to create an account, spam from the retailer, poor customer service, etc.
If you look at the numbers delivery apps are not doing well they are yet to make a profit, its a failing business. They are burning investor money for instance in UK Deliveroo Lost $244 Million in 2017, $284 Million in 2018 perhaps the same in 2019. Delivery is at current rate an unsustainable profitability problem. And I dont think it would change unless we have drone deliveries.
> If restaurants put any effort at all into fixing those things, there would not be such a strong demand for apps
What about the delivery part of the problem? Everyone does realize that Seamless etc. actually provide the delivery staff for many of the restaurants on the platform, right?
The industry in the US is ridiculous. In a different country my friends run a newish (7 months?) cafe where they aren't on any apps. Instead you can send them a facebook message or call, and they will dispatch a shipper to you. They will then send one of their baristas who aren't busy, or if necessary they've built up a list of delivery drivers who like to hangout near their restaurant, they "sell" the food to the shipper, and then the shipper is in charge for collecting payment to compensate themselves.
The restaurant loses some money because they have to pay for take out containers instead of being able to use a reusable plate, but they're not having 30% taken from them. I guess it helps that their customer base is those who probably aren't going to try to pull a fast one on the restaurant (one that caters to foreigners) but I don't think screwing over delivery people is very ingrained in the culture eitherway.
The 30% doesn't subsidize the shipping at all? How expensive is to to upload a picture of a menu, have someone keep an eye on a cell phone for text messages, and take credit card payments if you want to go cashless. Surely the benefit of having a "verified" payment method doesn't outweigh the shrink that would be caused by having people pay on delivery or run it through Square or something. Setup a shopify or literally anything.
30% might be worth it if the only way people will discover you is if they search "pizza" into an app and you have the highest rating within the first three results, but if people are seeking out your restaurant as returning customers then you shouldn't need to pay 30% for a very expensive ad.
This is definitely not limited to the US, for what it's worth. The type of informal arrangement you describe seems rather undesirable if we're trying to enforce safety and labor regulations, tax collection, etc. I'm sure there are some exceptions but where I live as well as in other western European countries in which I've looked into food delivery, there were companies that operate an app-based platform, similar to in the US.
Basically small shops doing 40-80% of their revenue by delivery but limit delivery to places reachable shortly with a scooter and min amounts of 20€ or so.
This shops then have their own delivery person working part time for them and when they have many orders or orders at times where the delivery person doesn't work they order an external delivery person (and then often make very little profit with that delivery).
The only difference is that you pay the company and they pay the delivery personal.
Orders are mostly done per phone. And payment mostly done in cash. Through often the delivery personal has a mobile card reader, too.
Through we also have US stile apps, with similar problems (but better labor laws, so at least wrt. employee abuse they tend to be slightly less terrible).
This is one of the reasons why marketplaces that took the place in customer interaction make most of the money and the supplier(restaurant) is poorly paid. Getting in between the customer and the supplier can put you on the top of the food chain.
Does anyone think these food delivery companies are ever going to go away? I mean the restaurants don't seem to like them, the delivery people are pissed, vcs are burning money, and through all this these huge companies are still having a trouble turning a profit. This doesn't seem to be working for anybody except maybe the consumer who is just currently subsidized directly and indirectly through all the above parties. It doesn't make too much sense to me
I'm not a huge fan of moralistic takes on business. If you're selling something dangerous then that's wrong, but it's very easy to be blinkered from a high position.
If people want to buy food in a certain way I can't really blame them - arguably the same with Uber and taxis, Uber has disrupted an industry which was fairly uncompetitive and politically charged (Their prevalence indicates the customers appreciate their presence in the space)
Yeah I feel like the “people shouldn’t profit from catastrophe” thing is a big part of why it’s still hard to get PPE (no one can justify extra manufacturing etc.)
You misunderstand the difference between profiting and profiteering. Nobody is claiming companies should sell toilet paper at cost, but they are saying toilet paper shouldn't get 5x more expensive.
IMO some price increase is a good idea to discourage hoarding, promote investment, and promote alternatives like a bidet. But, I think you achieve most of that with simply doubling prices, after that it’s generally more harm than good.
The profit in a competitive market is usually ~5%. Double prices while selling out and profit increases by 21x if not vastly more which is a huge incentive. To the point where doubling the profit again is unlikely result in meaningfully increased production.
PS: And yea it’s more complex than that, you can generally skip out in advertising but may be paying significant overtime etc. But that’s rarely particularly important as there are so many inputs involved in ramping up production that you hit multiple different limits.
How is that not particularly important? In a shortage scenario, you don’t just crank up a dial to make the factory output more. You might need additional facilities, new factories, new workers, etc at the same time others are trying to secure resources too.
People in short supply also don’t just work additional hours for double pay. An hour of my leisure time is worth far more than double.
To argue that every possible choice to both produce and conserve toilet paper is incentivized at $1.68 is an extraordinary claim. Almost all supply and demand curves don't have cliffs. And without extraordinary knowledge of toilet paper manufacturing and consumption how would you know this cliff exists at $1.68 per roll.
But that constricts the supply because if you want to make a short term investment (the length of the pandemic) to increase the supply of home toilet paper, you can't as that investment can't generate a return. Most production is based on demand being there for 5+ years the current prices.
If home toilet paper demand will only be high for 2 years you can't make money.
You also want prices to increase to discourage hoarding. Otherwise what happens is that people with disposable income just strip the shelves because there is no possible downside to hoarding toilet paper. They can just not buy it later with no loss to themselves if the price is the same.
That is addressing a different point. The comment I was responding to claimed people were upset that companies are making a profit. I countered that profit is OK, profiteering is what has people irate.
What is the ideal pricing to achieve long term goals wasn't something I was addressing.
And MattGaiser's point is that the line between profit and profiteering is vague. The claim is that by saying no to vague "profiteering", we have at least discouraged some of the morally healthy profit that would've encouraged otherwise inefficient production.
The short term is too short: the investment won't pay back. Almost all profiteering reduces supply by causing hoarding and waste rather than use. Plus the dead weight loss of people killed by lack of PPE.
But they may be able to hire additional shifts or work overtime on existing production lines.
Not every plant is run at a constant 24x7 three shift schedule. There are plenty of businesses that keep some slack in their manufacturing to respond to changes in demand as part of their corporate strategy, especially if they think there's an opportunity to gain market share.
That's the rub, of course, it's going to vary by time and by industry and I doubt anyone but those who run the places can give you real numbers.
But in my experience, there's usually some slack. Maybe not enough to pick up all the demand, but there's some. Maybe they have three shifts but don't work weekends or such. Then they can have people pulling lots of overtime.
Raw materials are usually well-stocked in advance. There is a limit on how much demand can spike before there are issues, of course, but some industries may have weeks or months worth of raw materials stocked. This is going to be highly variable by industry, though. Something like raw glass is nothing like stocking chickens for processing.
For TP I'd guess that they can stock a lot of raw materials, though. It's not made from anything that's going to go bad on them, so they probably stock up a lot based on whatever is cheapest.
I know an EE in the toilet paper manufacturing. The production rate wouldn't change in the time frame you want it to because it is impossible. You'd have to bring in new machines, set them up on the line (the rest of the line has to stop), and trouble shoot any issues - this reduces production in the short term. For any temporary price increase it just isn't going to happen.
So, raising the price on TP does nothing to increase supply in a 1 month time frame and reduces availability to the poorest. Instead, reduce demand with a bidet and limit customer purchases.
Do you think there would be any effect on the mindset of toilet paper manufacturers if they knew they could raise the price in a shortage? Would they not want to prioritize higher flexibility in production, since they would be able to profit from the higher prices during a shortage?
That's only true if all the plants run all their lines 24x7.
If you have some plants that are not at capacity, you can hire additional shifts to produce more, run on weekends, etc. Then you have additional labor costs, overtime, materials costs, etc. to recoup.
The manufacturing plant I once worked for had spare capacity for the better part of a decade, so it's not some completely unusual thing and was in fact part of our corporate strategy at the time to gain market share.
Right, but that doesn't mean the price has to increase. If they are profitable and handle all their fixed costs running a single shift, then the second shift should be more profitable at the same price. (Assuming the machines can handle it, etc.)
Depends on how much overtime they have to factor into there. In the short term, especially for short term demand, it's going to be a lot of people making time and a half or 2x more likely than not.
A new shift will take a while to train up and temps are... ugh... don't even get me started about the sort of people temp agencies send. We had some that only lasted a day for not listening and doing stupidly unsafe things. One of them nearly hit me upside the head with a piece of glass because he wasn't paying attention to where he was swinging it. That was his last day on the job, for precisely that reason.
That's true but there are quite a few people out there who don't understand/believe in that.
Talking about buying your own health insurance is taboo amongst some in the UK, even though it reduces pressure on the (I should "our") NHS, because to them it's immoral to have capitalism in healthcare or something like that
5x more expensive might actually be the correct price. Remember that you cannot compare a price for a good manufactured overseas with lack labor laws vs something manufactured in the US with laws, insurance, regulations, etc.
Further, just as the US abandoned domestically made masks after the H1N1 epidemic, and went back to inexpensive overseas versions -- they may do it again with PPE. So you also need to cover the costs for quite-possibly a factory you are building that might stop operating in a year or two.
> 5x more expensive might actually be the correct price. Remember that you cannot compare a price for a good manufactured overseas with lack labor laws vs something manufactured in the US with laws, insurance, regulations, etc.
Perhaps so, but if that were the case, the producer wouldn't be fairly accused of profiteering. Usually these accusations arise when the production or acquisition cost for the seller is low and the sale price is very high.
In cases where the free market isn't incentivized to make the supplies we need, it's the job of the government to take over and make them. "Profiting from catastrophe" as you put it will result in price gouging.
I think they were arguing that measures intended to stop price gouging can disincentivize an increase in supply, e.g. it's a lot harder to undercut someone selling a pack of toilet paper for £10 than £1.
Definitely possible but I'm not sure it's happening specifically at the moment.
Depends on the timeframe. If you want 5 million masks next week and each machine produces 1 million a week, you need 5 machines. If you can wait 5 weeks, then one machine will do.
Your take itself is a judgement. Does a company indulging in non-coerced commerce (i.e. voluntary) make it virtuous? Why is questioning the efficacy, for society, of the economic models of any company considered immoral?
Capitalist enterprises are neither immoral (left) nor moral (right). They just happen to be the most efficient - read easy to cobble together. It does not mean they are the best outcome for society.
Best outcome for whom? I trust people to spend their own money in the way that they want rather than some top down dictated manner.
I don't like the societal purpose questioning because people forget that not everyone has a lot of money to spend - the trade-off will almost definitely be between "ethics" and the cost to the person on the street.
I don't buy my books from Amazon because I love Amazon, I do it because it's the cheapest option and I know it'll work. If you want to spend a bit more and support a local book company that's up to you but Amazon is undoubtedly a better experience than any other company I've seen (Specifically for relatively niche technical books, if it was a fiction book it's basically the same).
^ that isn't to say Amazon should he left to monopolize as they please, just that the nuance is easily missed.
I never ever said anything about top-down choice depriving solutions. That is a straw-man you have dragged into this conversation.
This is not a debate about the merits of capitalism vs. socialism (or communism).
This is simply saying that some free-market solutions lead to worse outcomes for society. My hoped-for solution was a co-op model app which is completely in the free market realm.
You went ahead and made this about the inherent virtue of capitalism and choice.
I really dont know what you are saying about Amazon since you seem to be equivocating. Not letting Amazon be a monopoly is depriving their customers of choice!
> Does a company indulging in non-coerced commerce (i.e. voluntary) make it virtuous?
No, the reward is money/resources and the person wasn't implying the polar opposite of the article. You are creating a false dichotomy here by trying to split things into good or bad. There is a neutral position that you don't have to be invested in.
> Why is questioning the efficacy, for society, of the economic models of any company considered immoral?
They are saying the exact opposite. They don't like assigning a moral judgement either way to a business that isn't hurting anyone. You were replying as if they had said that instead of something being bad, it was good. That is not the same thing. Treating something as neutral is not the same as saying something is an opposite.
No, that's ridiculous. Saying you don't like assigning moral judgements to companies is essentially saying you think they should be looked at as neutral.
If someone says they don't like cauliflower, that isn't a moral judgment. You are not understanding what is being said or what it implies.
You fail to see the distinction but on a meta level they are the same thing. Labeling something as a "moral thing" and saying you don't like is a judgment. Value? Moral? Esthetic. . We are semantic hair splitting here.
You are just reasserting the same thing without backing it up in any way. Saying something shouldn't carry any moral weight is not a moral judgement because who would it be judging?
Correcting someone about is not casting a moral judgement. Saying a piece of a system meant to create and capture some value doesn't need to be ascribed good or evil is a statement that can be taken at face value. Trying to say everything is a moral judgement that someone else is creating a false dichotomy is just projection.
I love food delivery apps. It’s incredibly convenient to have a single consistent app that provides me with so many options in one place. I’m also not blind to the fact that this convenience comes at a huge and invisible cost: it’s being used as a cudgel to literally beat the snot out of my local restaurants, quite possibly resulting in many of the best ones going out of business. The power of this small and apparently harmless gatekeeping effect is one of the most unfortunate aspects of capitalism as practiced by real human beings —- and that inefficiency is precisely why so much VC capital is being invested in capturing the customer interface to various industries, rather than in new productive applications.
Yes, what you describe sounds similar to what I'm starting to see everywhere too. Join me in moving to Open/Protocol Cooperativism (vs. today's Platform Capitalism), and Commons based peer production.
The real matrix over our eyes is mis-judging 'money' as a neutral protocol - when it is in fact a proprietary protocol that steers every part of our lives and is aimed at extracting a rent. [1][2]
But is there really competition? All platforms seem to charge the same outrageous fees to the businesses, we're not seeing competition driving fees down. It's more like a coordinated oligopoly with price-fixing.
I personally believe these businesses have lagged seriously in upgrading themselves to what was coming for them. They would have paid a certain percentage to cooks, and staff from the prices they were charging, definitely lower than they deserved (hence tipping). Nobody ever complained about them not paying enough and not buying insurance for them. Now once these delivery companies have forced their hands into paying commissions (BTW same items are expensive 10-30% on Uber/DoorDash and people still order) they have suddenly came to a rude awakening. Not that I don’t sympathize with small business owners going through trouble, but this sound hypocritical when Amazon in retail space has done exact thing and nobody cares, but over here everyone sees opportunity for political point scoring.
Tiping and how it is used in some countries to basically subsidize staff wages is just so wrong.
For example in Japan there is no tipping and trying to do so will be considered very rude. The restaurant and its staff are professionals, they have set a price and you are paying it. They dont expect a tip for doing a good job as they simply strive to do a good job each and every time they serve guests.
> prevalence indicates the customers appreciate their presence
Focusing solely on consumers ignores negative externalities. There are many situations in which cost benefits from such externalities (slavery, pollution, human rights abuses, animal mistreatment) can lead to a favorable marketplace position vs competitors who do not exploit such externalities.
What is more, many of these exploits (slavery, pollution, human rights abuses, animal mistreatment) were or are legal at the time such exploitation occurred. Therefore using legality as sole criterion of propriety is insufficient. A moralistic/ethical take on business is, far from a negative thing, highly necessary.
This is such a beautiful answer. I never thought of that, what we consider today as the absurd was knife the norm, so challenging the quo is so important
I addressed consumer choice in my first paragraph. Let me expand on that:
There have in fact been successful consumer-led movements, but the most successful of these concern cases where the consumers also happened to be the same people being exploited (colonial India's rejection of dumped British textiles, the Montgomery bus boycott, the Boston tea party, etc).
Cases where consumers have acted en masse on behalf of another exploited class are a lot fewer and weaker. To some extent, one may point to the current growth of organic animal products as an example of this, but even in this case, this has been boosted by consumers seeing these choices (in some cases rightly, in some wrongly) as also healthier for human end consumers besides the question of animal cruelty.
History's guide suggests that while morally-minded consumers can and should vote with their wallets, such personal virtuous choices are largely useless without a larger movement to effect change.
If consumers are not morally-minded enough to act on the behalf of another exploited class, then how can you expect them to vote on behalf of the exploited class?
And if history suggests that people's virtuous choices are largely useless, then how is their voting going to be any better?
That assumes consumers actually have a choice to make in the situation. For example let's say you disagreed with how Comcast throttles the internet or behaves in monopolistic behavior. Your only option to make the moral choice is to simply not have internet at all in certain regions.
A more topical one might be if you disagree with a company using sweatshop labor. Figuring out which companies engage in sweatshop labor and avoiding them is a remarkably difficult task, not in the least because companies do whatever they can in order to hide said actions. And even if you do manage to create a list of good/bad companies, there's no guarantee that you can purchase solely from the good companies without having to go through some other morally dubious medium such as Amazon.
The idea of shopping based on your moral conscious might've worked 50 years ago when the supply chain was far smaller, but nowadays it's so complex as to be almost unfathomable for one user to shop their moral compass without touching at least one thing they disagree with.
Comcast is in a position to throttle the internet because voters voted against the interests of the consumers. Specifically, the voters restricted other market participants from competing with Comcast. So the consumers are not acting in their own best interest as consumers and they're not acting in their own best interest as voters. Why is Comcast on the hook?
With regards to the sweatshop labor: if you care not to buy sweatshop clothes and you can't reasonably establish the origins of the clothes, then don't buy them. Only stick with manufacturers who have had their products verified by a trusted third party.
For your first argument: Isn't that argument absolving companies of all blame possible? If a company for example chooses to dump waste in a local river and there aren't any laws preventing that, is that because of the consumers failing to act in their own best interest? I just want to establish according to your logic at which point a company should be blamed for immoral behavior.
It's also overly reductive and ignores things like voter suppression, extralegal affairs and abusing the court system.
For your second argument, you seemed to ignore my original point which is that it's generally impossible to actually establish the origin of said clothing due to the complex supply chain behind the scenes. Even if it's a trusted third party, that clothing is still being delivered via companies that deliver sweatshop clothing and sold in stores which sell sweatshop clothing. At a certain point some percentage of what you pay will go to support said sweatshops whether directly or indirectly, so how can you expect a consumer to operate in a full moralistic behavior when all of their actions are losses? At that point the only winning move is to not play, which is also not possible because, well, Capitalism.
On the issue of moral responsibility, I'm not sure I follow the analogy with dumping waste. Comcast has monopoly status because the government gives them exclusive access to the market. The company should be blames for immoral behavior when it morally responsible for the situation at hand. Comcast didn't make the laws that give it monopoly status, the voters did through their representatives.
Given how many people actually don't even bother to vote, I doubt voter suppression is the problem. It seems like an issue of implementation and limitation of the current political system. In contrast, "voter" turnout by consumers is 100%. Every product you buy is a vote you cast.
With regards to tracing the origins of a product: you're trying to fix a problem that's even worse with government. If you're so concerned that you aren't able to identify the origins of a product with 100% certainty, then we ought to compare it with the baseline: what is the trust factor with government? At any rate, the traceability of a product can get as accurate as you want it to be... so long as you pay enough money to establish it. If you want, you can be flown to every part of the world and you can personally ensure that every fiber of your clothes is not coming from a sweatshop. Of course, that would be insanely expensive, but it is possible. 99.99999999999% of consumers don't want that much transparency.
I think it's helpful to separate out pricing from product when talking about morality in business.
What a product should cost depends on how much people are willing to pay for it. Whether a product should be allowed to exist depends on whether it's morally acceptable.
The issue with slaves, and products that pollute the environment or mistreat living things isn't how much they cost - it's that they exist at all.
> I think it's helpful to separate out pricing from product when talking about morality in business.
I don't think the two are so easily separable. If you take for example, "a dozen eggs", most people would consider that an acceptable product. But if you said "a dozen eggs for ten cents", for those to be legitimate eggs, they must be stolen. If you could somehow inspect them and guarantee they were legitimate, I am sure plenty of people would accept those stolen eggs at that price, but their willingness to pay for it doesn't mean the existence of a market for "a dozen eggs for ten cents" is moral.
I'd argue that blaming the buyer is not appropriate though - the problem is the lack of regulation (preventing theft in this case) so you can blame the thieves and/or the police/government, but you can't expect the buyer (or anyone) to determine exactly what price is too good to be true. If you could, then we wouldn't need to have a market pricing system in the first place.
I'm reminded of how people would express outrage over products made in a low wage country being defective or toxic, and sometimes a response would be "well, people who demand ultra-cheap products deserve what they get". That's a denial of the fraudulent aspect of such a transaction, and the inability of the consumer to solve it.
I'm not aware of anyone running Uber, DoorDash, etc. where that's true. They require some sort of transport which prices the poor out of being able to provide that service in the poorest area I know of where such services are popular (Brazil).
It's not unusual for poor people who don't own cars to rent (with a Uber driver discount). Otherwise, they work using bicycles in the case of Uber Eats and other food delivery services. Source: I live in Brazil.
The argument recommends take out which also involves driving somewhere, and given that deliverers many times deliver to more than one household this is an argument for delivery over take out. Also it's not significant, even with a carbon tax to eliminate this externality that would be at most a dime or quarter of pollution.
And human rights abuse? I had a job delivering, and it was honestly one of my favorite jobs. The pay wasn't great but just cruising around listening to music all night was awesome.
Now you're talking about price discrimination, which customers DO prefer.
If I wanted premium service and a premium seat, I can pay the premium price for business or first class, or fly on a better airline. Even though people complain about the terribly small seats and lack of service on budget airlines and economy tickets, they still choose the lowest seat price above anything else. And the cost of plane tickets has fallen drastically over the past few decades so it's not like the same product is more expensive, people just want cheap flights.
From a business perspective, it seems the biggest issue is that this price gouging is short term thinking. It may simply be that a sustainable (where no participants are victimized) version of this business model doesn't exist.
IMO it does show that restaurants have to downsize their footprint to not really be restaurants anymore as the costs are just too high for the slim margins. An idea would be to convert to smaller purposeful rented kitchens or even food trucks that are in zoned parking lot delivery pickup areas for app services to quickly go to and deliver to clients. I lean toward the food truck model as you have the best of both worlds where you have a gathering of food choices in-person when nearby and a way for delivery areas to be centralized and more efficient. In the end, the margins are too high from apps though but it does show a need to start changing how things are done.
Maybe some people could setup a non-profit platform
to connect delivery driver and restaurants and is focused on transparency?
Operating such a platform shouldn't be to expensive. The major cost (I guess) lies in advertisement and paying people to actually do the delivery.
I believe customer being able to see how much of the price goes to the platform, the delivery driver and the restaurant (maybe required by a law?) would not just open up the eye for unfair practices but also
for understanding why prices are higher when delivering (as it becomes clear that 3 parties instead of one need to live from the money).
Given how many complains against delivery services cropped up in the recent half year on hacker news it maybe might be time for (small&mid-sized) restaurants to organize?
I have both DoorDash and the Dasher app. I've seen the order I might regularly pay a $2.99 fee for (I don't as I have DashPass) be offered to drivers for $13 with a $4 tip. This was on a $30 order for two.
> Operating such a platform shouldn't be to expensive.
What I meant is the cost for the platform not the products and service on it. I.e. the costs to keep the app running and doing the bookkeeping on in the server.
The idea is that if it's hard to profitable operate platforms for food delivery if you properly pay the delivery person and the restaurant, then maybe it would be better to not try to do so and instead operate such a platform as a non-profit (or shared responsibility of a large group of restaurants) focused on connecting independent delivery personal and restaurants.
With that you would only have the service/app operational cost and if the area you cover is large enough you probably could have something like a fixed $1 or less cost per delivery (+food cost + delivery personal cost).
Naturally this also would mean you don't have money for doing much R&D or advertisement. So it would be in the responsibility of the restaurants to advertise that people can order online over that platform.
I.e. it would turn the whole delivery business conceptually upside down by putting the focus
on the restaurants. Or you could say it's
just going back to the roots.
I'm not sure if that could work in the US. But I think it has a chance of working in many EU countries.
I think you're underestimating how much it costs to maintain a global, distributed application that has a lot of money running through it 24/7.
You'll need legal teams to write up you contracts/TOS, and keep them updated in the face of changing laws and regulations. Site reliability engineers to keep everything running, and dedicated development teams for bug fixes and unavoidable application changes (say you realize there's a bug exposing customer data, you need that fixed now, not whenever you can find a contractor). Don't forget phone support.
When you factor in the cost of running the delivery app, plus about $10-15 per hour to pay the driver, which has to account for driving to the restaurant and to the customer, I'm not sure how much cheaper food delivery can be. It's already a competitive marketplace, and there's even small, regional apps, but I haven't seen any that are significantly cheaper in general (excluding things like temporary specials, deals with a restaurant chain, etc...)
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[ 3.4 ms ] story [ 262 ms ] threadIt didn’t help that a month before shutting down a group of workers unionized in Ontario, and further threw a wrench in a terribly low margin business and now none of them have a job and the entire city is stuck using Uber
Note: Foodora only shut down their Canadian business, not their European one.
Foodora had acquired Hurrier which was our other homegrown food delivery service here in Toronto, which is obviously no longer an option either. They too were struggling with margins, which I know from speaking to people who worked there.
I don't think unionizing is ever a problem. I you do moralistic acceptable business practices. If your business is only profitable by paying below acceptable salary, push side costs onto employees or cutting corner wrt. employee safety then it IHMO it is better for your business to close. Additionally if a whole industry is affected by this then IMHO it needs a major reform in how it works or it should just cease to exist.
Sure food delivery can not cease to exist, it's needed but if their is no way to operate it profitable without taking advantage of delivery personal and/or restaurants then it needs a major change. Either people need to accept that delivered food is more costly or the state needs to subvention it (during epidemics and similar where it's an somewhat essential service for some people, like when your stove just broke yesterday).
But their shareholders see this as an opportunity to expand the markets. They aren't taking this for granted, they're aggressively spending on marketing, on signing up restaurants for their platform (except DoorDash, they list most restaurants without partnership), on ads for Google, Facebook, and other major platforms. This is why they aren't making a profit.
But it's eating so much into their costs that they're doing some sneaky practices: they're doing the same that Etsy does, taking more out of the net sales on advertising that the restaurant did not consent to knowing they will be charged for it as much as they were.
You might have already been ordering from them & not realised - they used to be marked as “Editions” on Deliveroo:
https://foodscene.deliveroo.co.uk/promotions/deliveroo-editi...
If I could have a nice meal out right now, I’d probably spend 2x what I would pre covid! Anything just to do something nice away from home.
Customers are lazy because inspite of all the talk of supporting local, they are too hooked on click-click-click and ordered.
The delivery apps have hundreds of millions in investment in technology and marketing, a lot of it shady. The apps can offer addictive flows that restaurants cannot compete with.
The solution out of this is an app co-op model - payment processing (3%) + 2-3% overhead. There are similar offerings in the ride-share world and this should work on the delivery apps as well. I would rather support an app that provides a healthy living to a small company in Tulsa or Talinn that subsidize rents in SF and fatten VC portfolios for an online menu with checkout supported by hundreds of millions in marketing dollars.
Yes an awful lot of them are lazy. I mention him only to mention the scary accuracy of it, but the late Anthony Bourdain has a chapter dedicated to crappy restauranteurs in nearly every book he’s written on the topic of food service as a career (of course his distaste for crappy restaurant owners is poignantly dotted through the entirety of “Kitchen Confidential” to be fair), and I often wonder to this day to hear his voice on the state of affairs in food service during a pandemic, and the micro economy that’s sprung up in food delivery.
Perhaps a better way to say this is: restaurants are good at being restaurants, but aren't always good at establishing an online presence. A big part of why these delivery services succeed is that they provide a function that restaurants aren't well suited to provide on their own.
This isn't about being lazy, it's about an industry needing to adapt to the new expectations of the app economy, and often not having the expertise to do so.
That's the majority of all businesses. And like many similar industries, the razor thin margins don't allow restaurants to properly invest in tech.
Times change and circumstances change. Businesses either evolve or get replaced.
The problem now is that delivery services are being subsidized by VC money or however Uber is getting new money after their IPO.
I have worked in commercial kitchens and have plenty of friends who run restaurants and have spend time in their operations. They regularly complain about the 30%+ they fork over to grubless. 30% is an insane fraction in a business that barely makes an accounting profit!
In established restaurants, a significant fraction of the orders come from repeat customers. Moving these repeat customers to a 5% friction channel from a 30% channel can be a game changer.
Now when I walk past restaurants, I see banners imploring folks to order from their website. I guess, one silver lining from this pandemic.
Lazy is not the wrong word. They couldn't be bothered to put up that website until now. They couldn't be bothered to innovate and wanted to keep people needing to call on their phones.
They slashed their own wrists with their mediocrity.
This is an area where teenagers routinely make money by building these kinds of websites.
... only for those websites' backend services to be breached and the customer account data to be shared on the dark nets by other teenagers, ready to rip off and scam innocent customers.
Sarcasm obviously, but designing an ecommerce site is a serious affair, not an afternoon pastime.
It's not actually clear to me that every restaurant acting individually can actually recover that delivery service fee. There's no economy of scale for them to exploit.
i mean why isn't dominos, pizzahut, etc. teaching them how to do delivery?
with everything going on, with these apps not helping restaurants, i decided to stop using these apps and go get my food myself. i only use apps when i get lazy like OP says.
[1] https://github.com/nikolas/dominos-pizza-tracker
(I’m still hunting the original article where this was announced, the first version they released I’m pretty sure was linked here on HN in the mid 10’s?)
a website and online menu is something that they felt they could get away with the bare minimum, no regard for surfer experience. it, along with maybe throwing some money in an seo pit, with a checkbox in a playbook.
Is that anywhere near enough to actually pay for a delivery? I have both the Dasher app and the DoorDash app. That delivery I pay $2.99 for leads to the Dasher often being offered $13 on a $30 order with a $4 tip.
If the fees were real, the restaurant wouldn't need to care about pickup vs delivery, but the apps would lose some business because $15 is a good reason to do pickup.
The answer in a capitalist market is that restaurants will raise their prices to stay in business. As prices go up, people who don’t want to spend money in restaurants will find alternatives, you will have fewer restaurants and they will have a sustainable business model.
And if they do somehow make it, once they become the market leader, they're going to start asking for a larger portion of the pie. That's how business works, be it in Tulsa or SV.
These entities are the exception and not the rule but one can always hope. I know, I know, hope is not a strategy ;)
Um, no. Most businesses seek growth by trying to offer new/upsold products and services rather than trying to squeeze their customers for the same service.
Most businesses that aren't market leaders have to offer new or upsold products and services to grow because they can't throw around their monopoly power.
If you control 0.01% of the the entire delivery food sales market, and you raise middleman fees 3x, your (restaurant) customers will take a hike and switch to a different, cheaper delivery app.
If you control 75% of the market, your customers might be more willing to accept the increased fees.
And the reason they think this is that when customers used to order "takeout", they'd still pay full price and the restaurant would keep all of it. So it feels like they've lost something.
But that's all wrong, because takeout used to be "improperly" (per a market analysis) marked up. Serving takeout is cheaper: no need for tables and dishes and servers. Lots of restaurants have known this forever and prioritized their takeout business, and done very well.
But now those savings are all being eaten up by another party that is providing useful improved services to the customer, and restaurants don't like it. Well... I guess I wouldn't either, but what they're complaining about isn't so much unfair competition than it is (heh) the elimination of what for them used to be a free lunch.
The market will re-equilibrate. It always does. But yeah, until it does the distribution of changes will not be fair. It never is.
Grubless et.al are really a discovery platform. Once the customer acquisition happens - restaurants need to move to own the customer relationship. There is so much low-haning fruit there - repeat sales, meal subscriptions, boxed lunches.....
Panera and Chipotle are about as far apart as you can get, sandwiches and soups versus burritos and burrito bowls yet where I see some alignment is how they both have amazing online ordering experiences which allow deep order customization that eschews a lot of friction in doing so. I can’t think of another large chain with similar order experience between the two (Edit: Potbelly, perhaps for sandwiches?)
[0]: https://coopcycle.org/en/
Ridiculous. This is an assertion made by somebody who has never tried to convince anybody of anything, by somebody who doesn't know the meaning of the word "discoverability," who has no concept of what market dominance means.
Without government intervention, you can't "new business model" your way out of this. Especially not in the middle of a pandemic that is being historically mishandled.
People get a lot of value out of delivery apps. If they didn't, they wouldn't use them. You're asking people to forego something valuable on your say-so. How can that be justified?
Every technological innovation is opposed by those used to the old ways or who are financially interested in the perpetuation of inefficiencies from which they benefit. This opposition frequently takes on a moral character, as it has in your comment --- if you use the new thing, you're a bad person making an unethical choice. Well, I reject that.
But it's more than that. Centralisation of food delivery also means centralisation of your sign-in details + address + payment.
In the decentralised model, you rely on each of these restaurants to implement these well and securely. In the least worse case scenario they might go with some login with Google/Facebook solution (which is gross for other reasons). Not to mention the friction (and often sub-optimal sign-on flow) on these independent sites because they lack an army of UX A/B testers.
Last time I signed up independently for a restaurant via their app (because they took themselves off Uber Eats) the food took 2.5 hours to come and arrived cold.
The only answer is shockingly enough for both the delivery services and the restaurants to charge enough to be profitable and then people will have to choose to get out or pay the market rate. Capitalism is the answer.
On the other hand, since I am a bleeding heart capitalist, I have no problem with the government giving people money who can’t or shouldn’t go out to make it easier for them to get delivery.
The accounting is significantly easier apparently when the company just gets a monthly Doordash bill rather than having to deal with individual receipts on concur or something.
The author acknowledges that the delivery services are losing money. And yet, the author is essentially saying that the apps should lose even more money because someone else is willing to fund the apps.
First we need to know why they don't turn in a profit. Potential reasons include:
- Because they pay to the people delivering (I don't think so).
- Because keeping the app running is to expensive, i.e. server costs (I don't think so to).
- Because they payed a lot upfront to create the app and are still paying it of (Maybe, still unlikely, this would have been their own mistake and go away after some time).
- Because they are spending to much on "external" cost, like advertisements (likely).
- Because they know they don't have to yet make profit so they take maximal advantage of venture capital by reinvesting much profits in R&D and similar (somewhat likely)
- Because they are selling a service for to little to the end customer, i.e. making losses to "kill of" competition by taking advantage of venture capital (I think that's the main point).
The thing is paying people to deliver stuff is expensive just the wage which needs to be payed can noticeable increase the price and doing much advertisement isn't cheap either.
So normally I would expect <price in restaurant> + <not small additional delivery cost>
Or alternatively <price in restaurant> + <a small bit more> + <constraints like only delivery if destination close to restaurant (max 15min time) and min order amount (20+$) etc.>
But what we see is prices nut much higher then restaurant, not limited to close proximity, no or low min amount.
So someone has to pay for it, and by using a combination of intransparency and their (perceived) marked power they force a not small amount of the cost they have to operate somewhat profitable onto the restaurants...
Which is the actual problem I think.
It costs money to run the services and someone has to pay for that. It's in these services' interest (as well as all stakeholders: couriers, consumers, and restaurants) to keep those costs as low as possible.
Perhaps the entirety of the cost should be shifted to the end user. Legally mandating caps on commissions would force that shift to happen to some degree. I'm not opposed to such a shift.
Why are restaurant owners ok with paying so much for rent on a useless (during COVID) storefront in a high traffic area, but when Uber Eats gives them more marketing and orders than the storefront does, Uber Eats is the bad guy.
Be mad at the landlord or COVID, not Uber.
Just because they can have food made for food delivery services, doesn't mean it will be the best choice for regular customers.
Where restaurants compete with food delivery is by being in a physical location that people seek to have an experience. Or a quick stop on a car ride. Or a fast snack near work.
For some restaurants food delivery simply won't work.
A comment I made about that here: https://news.ycombinator.com/item?id=23195743
I am definitely in the minority on that, but not in a tiny minority.
I was, a long time ago, a delivery driver for Little Caesar’s and it seemed to work out for everyone without any technology to speak of.
EDIT: I am aware of the three party optimization problem for food delivery services. In housing seems to simplify that problem immensely given there is no /fourth/ party trying to optimize it from the outside and take a cut in the process.
2. Tips. Most people do not tip the app drivers. I suspect more people tip the pizza driver as he sees that you stiffed him. Customers are no longer paying for the delivery.
Sure, but that doesn’t preclude that Chinese restaurant from having their own delivery function. Each Domino’s restaurant needs to be self sufficient as well. Googling “Chinese food near me” seems to provide the look up.
> Customers are no longer paying for the delivery.
Have you seen the charges from an Uber eats delivery? We stopped using food delivery services entirely and just pick up now to save the ~$20 overhead on dinner.
And quite honestly, without food delivery most of these restaurants would be dead anyway so they really should be thankful. There’s no way they could coerce enough customers to drive down, find parking and wait while they expose themselves to COVID just for a meal.
That said I think where these delivery services have come in is at places that historically didn’t have their own delivery. Now these places suddenly have “delivery as a service” to add on with Seemingly no additional work, a fee, and additional revenue.
These places could easily start their own delivery service if they want, but they must still think it’s easier to pay the delivery as a service fees.
In Poland, Pyszne.pl is usually better and offers a wider selection than Uber Eats. The delivery is often provided by the restaurant itself, just like you suggest. In fact, I made two orders from Uber Eats today and both are delivered by the restaurant. But even then the intermediary keeps them honest with reviews and access to the platform. It's not pure rent seeking.
Before that, these platforms do a lot of promotion, marketing, and allow for easy discovery. They have greatly expanded the market. Just like Uber did for taxis.
No one's forgotten anything, that's just simply not true. I've never used UberEats or DoorDash, and I've had food delivered plenty of times over the years, and never had a problem.
I assume this is the same sort of propaganda Uber fans use when they claim taxi service was universally terrible and corrupt before they came along and disrupted everything. No, for the most part both taxis and restaurant delivery worked perfectly well for most people, most of the time.
Never needed to, I could just call them on the phone.
>you couldn't figure out what the price was before ordering so there was no direct competition
Sure I could, I would just ask them how much to get from point A to B. The price I was quoted was always accurate.
>many localities had an anticompetitive licensing scheme on top of that
Has no effect whatsoever on me as a customer.
>and a not insignificant number of drivers would take you the long way during off-peak hours IOT inflate the price
I've literally never had that happen.
Quotes on the phone aren't in writing and I've never had them honored. "Oh that's just an estimate."
Lack of competition has an effect on all customers. Nobody is exempt from economics.
Sure, but it works perfectly fine elsewhere, most people aren't calling the taxi from loud, crowded areas. Having an app is convenient but not having an app is hardly a horrible experience.
>Quotes on the phone aren't in writing and I've never had them honored. "Oh that's just an estimate."
The price I've been quoted has always been the price I paid. It's unfortunate that you appear to live in a wretched hive of scum and villainy but your personal experiences are hardly universal. There are plenty of places around the world where taxis work just fine.
Obviously this is different for different restaurants, and the skill set needed to run a restaurant is vastly different from running an e-commerce site, but just like they need to figure out how to do taxes and read lease agreements, online presence is a necessary thing in 2020.
Visa, Amazon, Apple, Google, or Paypal sort of provide that function, but being able to shop many restaurants with a single identity has its benefits. Something that wouldnt be fixed just by restaurants with nice websites.
In the long run, I honestly think kitchen-only setups optimized for efficiency & food safety will grab a big share of the market. They can experiment with vertical integration, and avoid all the hassles & limitations of sit-down dining. They will be able to more, better, faster and cheaper. It might be hard to copy & paste the entire thing from one city to another, but the core functions should be quite portable.
It would be crazy smart for someone to standardize an interface (e.g. REST API), let restaurants implement glue to their systems, and then allow a plurality of delivery services to consume and order through the standard interface.
It needs to be a protocol like email or http, not another company with a proprietary aggregator.
For delivery it's harder because you actually need someone to deliver the food and the logistics are really hard (they have to get there when the food is ready but not too late and not too early, etc.). But... there are like 80 restaurants in a 10 minute walk radius from me, so I can just deal with pickup for now.
The best part is actually just having a variety to order from. Before these delivery services, there were only a couple of pizza places and a couple of Chinese restaurants and nothing else delivered.
For a lot of restaurants, it never made business sense to deliver, and still wouldn't. But when the delivery service is spread out over many restaurants, it works rather well. That's good for both the businesses and the customers, despite the friction added by the middlemen. It's a real win for people who couldn't as easily go out to eat, due to health or disability or whatever, but also for everyone else.
But because they have an insurmountable most (not earned via any sheer technical breakthrough, just through cunningness and being ruthless) they don't need to care if they have too many engineers,whether these engineers are any good, or if their nodejs ec2 instances serve 100 queries a minute. So they just keep it like that.
Companies like IBM needed decades to get into such a rot, modern VC funding and cloud computing have just accelerated this phenomenon.
And tbh this should happen. UBER had to spend billions on marketing and getting their model "right". But now it is clear that such platform is essential for modern city. At some point UBER will have to get this money back with ride fees. Next competitor that can replicate UX of UBER, but raises less capital will be very well positioned to offer competitive pricing. And switching between these platforms is much easier compared to something like Facebook/Apple.
Grub-less et.al are as much about ordering and checkout as they are about discovery. I can rank and view all restaurants offering Sushi in my delivery radius. This is what makes them powerful.
Uber et.al are a marketplace. You are absolutely right in that they have zero switching costs but they have a two sided pool of supply (drivers) and riders (demand). This is hard to replicate.
There is an argument to be made, that if I just want a pizza, then my major decision-maker will be price.
I suspect most customers are either starting looking for a restaurant they know by name, or one near them to ensure maximum freshness, using Google Maps or Yelp or the like. Only when they've already chosen a restaurant do we transition into the delivery app flow.
I'm sure a lot of money is being spent for chain restaurants to advertise "order via Postmates" or "exclusively on GrubHub"-- again bypassing them as a discovery system.
We've been told that evil VCs subsidize service to run at below cost to drive competitors out of business. Uber is often accused of this. Why aren't we seeing that phenomenon here? And Uber is literally one of the competitors.
There are some other possible reasons tho, like food actually not being as "commodity"-like as we think it is (like rides are)
The other hypothesis is that delivery is simply expensive. The driver has to drive to the pickup place, find parking, stand in line potentially for awhile, drive to the delivery, park again, walk to the delivery location to drop off the item. Most of those things an ordinary uber fare would not have to deal with.
A claim that all of these have formed a cartel requires strong evidence.
And 2 of those are potentially combining.
Looks like a split amongst 4 right now, as far as the big ones go. This doesn't include the smaller startups as well.
Reminder that Adobe, Apple, Google, Intel, Intuit, Pixar, Lucasfilm and eBay all colluded to keep engineer compensation below market value[1].
[1] https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
If you went to a VC with a model for a food service delivery taking less than 30% of the transaction, they'd more than likely pass. 30% is the bar that's been set, and your unit economics have to be as good or better than the existing players. They're not keen on investing in "just a cheaper version of something that already exists." -- If you're marketing yourself as "cheaper," it has to because some innovation has eliminated more cost out of the transaction than you have eliminated in net revenue.
Your moat argument is the same that had people invest in uber 10 years ago, which we are seeing is failing in regions like EU where Uber is getting lambasted.
Of course, you'd have to be rich in order to have done that in the first place (an "accredited investor" as defined by the SEC), and this ignores the other investments you made in 2010 that went bust.
Later investors got screwed by the poor IPO performance, especially those that bought, hard, into the "moat" argument. Hell, softbank is possibly underwater on its investment.
That's only half the battle though, food delivery marketplaces like Grubhub are very entrenched and changing consumer behavior back to using the restaurant's website takes time and effort. Marketplaces also spend a ton on marketing to make sure consumers go through them and not directly via the restaurant's website. It's an uphill battle for the restaurants.
In such a world, Some model of Ghost kitchens will thrive anyway, not small restaurants.
Why ?
The area a kitchen serves will become much larger - distance matters less when you don't need to go pick the food. And even when food freshness matters, there are some solutions like parcooking and finishing the cooking in ovens inside delivery vans.
The type of food a kitchen serves becomes much more varied - today your Chinese restaurant has one kitchen, and the Mexican place has a different one. But with delivery-only, a single kitchen can open many virtual restaurants.
This also helps with delivery - a single family who likes different food, can order from the same kitchen, and get the order delivered in one go.
And this is now an internet business - since customers prefer all the restaurants in a single app, single search - and those add new complexities.
And usually, small business(in aggregate) often had the benefit of agility over large businesses. But a virtual restaurant is very agile, conducting business experiments is rather cheap.
And personal service and deep relationships don't exist in food delivery - and that was a weakness for big businesses over small ones.
So long term i don't think delivery a good place for restaurants to be.
Which only seems compelling in a future in which people are literally unable to cook for themselves.
I have worked with these large kitchens that can make different types of cuisines depending on your want, but they all turn out mediocre.
My family completely stopped ordering out during this pandemic because most restaurants have lost the key employees who make their food special, there is no atmosphere, and GrubHub et al add no value.
As an example, most people buy from amazon even though other retailers have very good websites, without inline advertisements and many times with lower prices.
another interesting example is tow truck services.
Some retailers have good websites (most don't), but I've always found issues like: slow shipping, having to create an account, spam from the retailer, poor customer service, etc.
What about the delivery part of the problem? Everyone does realize that Seamless etc. actually provide the delivery staff for many of the restaurants on the platform, right?
The restaurant loses some money because they have to pay for take out containers instead of being able to use a reusable plate, but they're not having 30% taken from them. I guess it helps that their customer base is those who probably aren't going to try to pull a fast one on the restaurant (one that caters to foreigners) but I don't think screwing over delivery people is very ingrained in the culture eitherway.
30% might be worth it if the only way people will discover you is if they search "pizza" into an app and you have the highest rating within the first three results, but if people are seeking out your restaurant as returning customers then you shouldn't need to pay 30% for a very expensive ad.
Basically small shops doing 40-80% of their revenue by delivery but limit delivery to places reachable shortly with a scooter and min amounts of 20€ or so.
This shops then have their own delivery person working part time for them and when they have many orders or orders at times where the delivery person doesn't work they order an external delivery person (and then often make very little profit with that delivery).
The only difference is that you pay the company and they pay the delivery personal.
Orders are mostly done per phone. And payment mostly done in cash. Through often the delivery personal has a mobile card reader, too.
Through we also have US stile apps, with similar problems (but better labor laws, so at least wrt. employee abuse they tend to be slightly less terrible).
(Ref: Germany, Berlin)
That's a deal-breaker for me as I want to pay with a credit card.
https://atyourdoor.co/ does delivery for a lot of local distilleries.
I think this local consortium thing is the way a lot of smaller businesses will go.
I'm not a huge fan of moralistic takes on business. If you're selling something dangerous then that's wrong, but it's very easy to be blinkered from a high position.
If people want to buy food in a certain way I can't really blame them - arguably the same with Uber and taxis, Uber has disrupted an industry which was fairly uncompetitive and politically charged (Their prevalence indicates the customers appreciate their presence in the space)
How can one make such a vast claim without knowing things such as cost of input materials, machinery, labor, etc?
PS: And yea it’s more complex than that, you can generally skip out in advertising but may be paying significant overtime etc. But that’s rarely particularly important as there are so many inputs involved in ramping up production that you hit multiple different limits.
People in short supply also don’t just work additional hours for double pay. An hour of my leisure time is worth far more than double.
If home toilet paper demand will only be high for 2 years you can't make money.
You also want prices to increase to discourage hoarding. Otherwise what happens is that people with disposable income just strip the shelves because there is no possible downside to hoarding toilet paper. They can just not buy it later with no loss to themselves if the price is the same.
What is the ideal pricing to achieve long term goals wasn't something I was addressing.
Not every plant is run at a constant 24x7 three shift schedule. There are plenty of businesses that keep some slack in their manufacturing to respond to changes in demand as part of their corporate strategy, especially if they think there's an opportunity to gain market share.
But in my experience, there's usually some slack. Maybe not enough to pick up all the demand, but there's some. Maybe they have three shifts but don't work weekends or such. Then they can have people pulling lots of overtime.
Raw materials are usually well-stocked in advance. There is a limit on how much demand can spike before there are issues, of course, but some industries may have weeks or months worth of raw materials stocked. This is going to be highly variable by industry, though. Something like raw glass is nothing like stocking chickens for processing.
For TP I'd guess that they can stock a lot of raw materials, though. It's not made from anything that's going to go bad on them, so they probably stock up a lot based on whatever is cheapest.
If anything it's the opposite.
So, raising the price on TP does nothing to increase supply in a 1 month time frame and reduces availability to the poorest. Instead, reduce demand with a bidet and limit customer purchases.
If you have some plants that are not at capacity, you can hire additional shifts to produce more, run on weekends, etc. Then you have additional labor costs, overtime, materials costs, etc. to recoup.
The manufacturing plant I once worked for had spare capacity for the better part of a decade, so it's not some completely unusual thing and was in fact part of our corporate strategy at the time to gain market share.
A new shift will take a while to train up and temps are... ugh... don't even get me started about the sort of people temp agencies send. We had some that only lasted a day for not listening and doing stupidly unsafe things. One of them nearly hit me upside the head with a piece of glass because he wasn't paying attention to where he was swinging it. That was his last day on the job, for precisely that reason.
Talking about buying your own health insurance is taboo amongst some in the UK, even though it reduces pressure on the (I should "our") NHS, because to them it's immoral to have capitalism in healthcare or something like that
Further, just as the US abandoned domestically made masks after the H1N1 epidemic, and went back to inexpensive overseas versions -- they may do it again with PPE. So you also need to cover the costs for quite-possibly a factory you are building that might stop operating in a year or two.
Perhaps so, but if that were the case, the producer wouldn't be fairly accused of profiteering. Usually these accusations arise when the production or acquisition cost for the seller is low and the sale price is very high.
In cases where the free market isn't incentivized to make the supplies we need, it's the job of the government to take over and make them. "Profiting from catastrophe" as you put it will result in price gouging.
Definitely possible but I'm not sure it's happening specifically at the moment.
And how that usually works is that the government offers to pay a very high price to someone willing to doing so.
This isn't all that different as the government then pays 5x for the item.
But yes, this certainly could be true.
Capitalist enterprises are neither immoral (left) nor moral (right). They just happen to be the most efficient - read easy to cobble together. It does not mean they are the best outcome for society.
I don't like the societal purpose questioning because people forget that not everyone has a lot of money to spend - the trade-off will almost definitely be between "ethics" and the cost to the person on the street.
I don't buy my books from Amazon because I love Amazon, I do it because it's the cheapest option and I know it'll work. If you want to spend a bit more and support a local book company that's up to you but Amazon is undoubtedly a better experience than any other company I've seen (Specifically for relatively niche technical books, if it was a fiction book it's basically the same).
^ that isn't to say Amazon should he left to monopolize as they please, just that the nuance is easily missed.
This is not a debate about the merits of capitalism vs. socialism (or communism).
This is simply saying that some free-market solutions lead to worse outcomes for society. My hoped-for solution was a co-op model app which is completely in the free market realm.
You went ahead and made this about the inherent virtue of capitalism and choice.
I really dont know what you are saying about Amazon since you seem to be equivocating. Not letting Amazon be a monopoly is depriving their customers of choice!
as determined by who?
No, the reward is money/resources and the person wasn't implying the polar opposite of the article. You are creating a false dichotomy here by trying to split things into good or bad. There is a neutral position that you don't have to be invested in.
> Why is questioning the efficacy, for society, of the economic models of any company considered immoral?
I don't think the parent said this at all.
If someone says they don't like cauliflower, that isn't a moral judgment. You are not understanding what is being said or what it implies.
Correcting someone about is not casting a moral judgement. Saying a piece of a system meant to create and capture some value doesn't need to be ascribed good or evil is a statement that can be taken at face value. Trying to say everything is a moral judgement that someone else is creating a false dichotomy is just projection.
The real matrix over our eyes is mis-judging 'money' as a neutral protocol - when it is in fact a proprietary protocol that steers every part of our lives and is aimed at extracting a rent. [1][2]
[] https://www.resilience.org/stories/2017-08-03/book-day-corru...
[] https://www.artbrock.com/2014/11/21/designing-social-flows-c..., http://eric.harris-braun.com/blog/2012/01/03/id-225
Some people care about both.
For example in Japan there is no tipping and trying to do so will be considered very rude. The restaurant and its staff are professionals, they have set a price and you are paying it. They dont expect a tip for doing a good job as they simply strive to do a good job each and every time they serve guests.
Focusing solely on consumers ignores negative externalities. There are many situations in which cost benefits from such externalities (slavery, pollution, human rights abuses, animal mistreatment) can lead to a favorable marketplace position vs competitors who do not exploit such externalities.
What is more, many of these exploits (slavery, pollution, human rights abuses, animal mistreatment) were or are legal at the time such exploitation occurred. Therefore using legality as sole criterion of propriety is insufficient. A moralistic/ethical take on business is, far from a negative thing, highly necessary.
If consumers lack the moral conciousness on their day to day transactions, then how can we expect them to make the right moral choices when they vote?
There have in fact been successful consumer-led movements, but the most successful of these concern cases where the consumers also happened to be the same people being exploited (colonial India's rejection of dumped British textiles, the Montgomery bus boycott, the Boston tea party, etc).
Cases where consumers have acted en masse on behalf of another exploited class are a lot fewer and weaker. To some extent, one may point to the current growth of organic animal products as an example of this, but even in this case, this has been boosted by consumers seeing these choices (in some cases rightly, in some wrongly) as also healthier for human end consumers besides the question of animal cruelty.
History's guide suggests that while morally-minded consumers can and should vote with their wallets, such personal virtuous choices are largely useless without a larger movement to effect change.
And if history suggests that people's virtuous choices are largely useless, then how is their voting going to be any better?
A more topical one might be if you disagree with a company using sweatshop labor. Figuring out which companies engage in sweatshop labor and avoiding them is a remarkably difficult task, not in the least because companies do whatever they can in order to hide said actions. And even if you do manage to create a list of good/bad companies, there's no guarantee that you can purchase solely from the good companies without having to go through some other morally dubious medium such as Amazon.
The idea of shopping based on your moral conscious might've worked 50 years ago when the supply chain was far smaller, but nowadays it's so complex as to be almost unfathomable for one user to shop their moral compass without touching at least one thing they disagree with.
With regards to the sweatshop labor: if you care not to buy sweatshop clothes and you can't reasonably establish the origins of the clothes, then don't buy them. Only stick with manufacturers who have had their products verified by a trusted third party.
It's also overly reductive and ignores things like voter suppression, extralegal affairs and abusing the court system.
For your second argument, you seemed to ignore my original point which is that it's generally impossible to actually establish the origin of said clothing due to the complex supply chain behind the scenes. Even if it's a trusted third party, that clothing is still being delivered via companies that deliver sweatshop clothing and sold in stores which sell sweatshop clothing. At a certain point some percentage of what you pay will go to support said sweatshops whether directly or indirectly, so how can you expect a consumer to operate in a full moralistic behavior when all of their actions are losses? At that point the only winning move is to not play, which is also not possible because, well, Capitalism.
Given how many people actually don't even bother to vote, I doubt voter suppression is the problem. It seems like an issue of implementation and limitation of the current political system. In contrast, "voter" turnout by consumers is 100%. Every product you buy is a vote you cast.
With regards to tracing the origins of a product: you're trying to fix a problem that's even worse with government. If you're so concerned that you aren't able to identify the origins of a product with 100% certainty, then we ought to compare it with the baseline: what is the trust factor with government? At any rate, the traceability of a product can get as accurate as you want it to be... so long as you pay enough money to establish it. If you want, you can be flown to every part of the world and you can personally ensure that every fiber of your clothes is not coming from a sweatshop. Of course, that would be insanely expensive, but it is possible. 99.99999999999% of consumers don't want that much transparency.
What a product should cost depends on how much people are willing to pay for it. Whether a product should be allowed to exist depends on whether it's morally acceptable.
The issue with slaves, and products that pollute the environment or mistreat living things isn't how much they cost - it's that they exist at all.
I don't think the two are so easily separable. If you take for example, "a dozen eggs", most people would consider that an acceptable product. But if you said "a dozen eggs for ten cents", for those to be legitimate eggs, they must be stolen. If you could somehow inspect them and guarantee they were legitimate, I am sure plenty of people would accept those stolen eggs at that price, but their willingness to pay for it doesn't mean the existence of a market for "a dozen eggs for ten cents" is moral.
I'm reminded of how people would express outrage over products made in a low wage country being defective or toxic, and sometimes a response would be "well, people who demand ultra-cheap products deserve what they get". That's a denial of the fraudulent aspect of such a transaction, and the inability of the consumer to solve it.
As for pollution, if that's immoral, then so is going to the restaurant to eat itself as well as driving in general.
Not counting of course the fact that in certain regions of the world, if they don't do that they'll starve to death.
And human rights abuse? I had a job delivering, and it was honestly one of my favorite jobs. The pay wasn't great but just cruising around listening to music all night was awesome.
then "humans right abuse is somehow related to delivery but I won't specify how"
then I replied "I was a deliverer and it was a fine job"
Of the three arguments mine is most relevant.
Maybe you can explain how subway delivery involves human rights abuse.
right, so if you get pizza delivery, you're probably Hitler running Deep Horizon. What a nice way to argue your point.
If I wanted premium service and a premium seat, I can pay the premium price for business or first class, or fly on a better airline. Even though people complain about the terribly small seats and lack of service on budget airlines and economy tickets, they still choose the lowest seat price above anything else. And the cost of plane tickets has fallen drastically over the past few decades so it's not like the same product is more expensive, people just want cheap flights.
Appreciated their presence in the space or appreciated that some VC bozos were handing out huge discounts on taxi rides?
Maybe some people could setup a non-profit platform to connect delivery driver and restaurants and is focused on transparency?
Operating such a platform shouldn't be to expensive. The major cost (I guess) lies in advertisement and paying people to actually do the delivery.
I believe customer being able to see how much of the price goes to the platform, the delivery driver and the restaurant (maybe required by a law?) would not just open up the eye for unfair practices but also for understanding why prices are higher when delivering (as it becomes clear that 3 parties instead of one need to live from the money).
Given how many complains against delivery services cropped up in the recent half year on hacker news it maybe might be time for (small&mid-sized) restaurants to organize?
I have both DoorDash and the Dasher app. I've seen the order I might regularly pay a $2.99 fee for (I don't as I have DashPass) be offered to drivers for $13 with a $4 tip. This was on a $30 order for two.
How you pay for delivery is a major issue.
What I meant is the cost for the platform not the products and service on it. I.e. the costs to keep the app running and doing the bookkeeping on in the server.
The idea is that if it's hard to profitable operate platforms for food delivery if you properly pay the delivery person and the restaurant, then maybe it would be better to not try to do so and instead operate such a platform as a non-profit (or shared responsibility of a large group of restaurants) focused on connecting independent delivery personal and restaurants.
With that you would only have the service/app operational cost and if the area you cover is large enough you probably could have something like a fixed $1 or less cost per delivery (+food cost + delivery personal cost).
Naturally this also would mean you don't have money for doing much R&D or advertisement. So it would be in the responsibility of the restaurants to advertise that people can order online over that platform.
I.e. it would turn the whole delivery business conceptually upside down by putting the focus on the restaurants. Or you could say it's just going back to the roots.
I'm not sure if that could work in the US. But I think it has a chance of working in many EU countries.
You'll need legal teams to write up you contracts/TOS, and keep them updated in the face of changing laws and regulations. Site reliability engineers to keep everything running, and dedicated development teams for bug fixes and unavoidable application changes (say you realize there's a bug exposing customer data, you need that fixed now, not whenever you can find a contractor). Don't forget phone support.
When you factor in the cost of running the delivery app, plus about $10-15 per hour to pay the driver, which has to account for driving to the restaurant and to the customer, I'm not sure how much cheaper food delivery can be. It's already a competitive marketplace, and there's even small, regional apps, but I haven't seen any that are significantly cheaper in general (excluding things like temporary specials, deals with a restaurant chain, etc...)