The pizza business is the one making the profit here, at doordash's expense.
It'd presumably be trivial for doordash to fix this, by checking the order amount against the cost. The article explains why they might not be doing that ("growth")
The problem is some customers received the pizza cold, and instead of blaming DoorDash, they blamed the restaurant. It's very misleading when DoorDash resell a product and pretend like the restaurant is actively participating in that process. I personally would not hesitate to ramp up the "self ordering", just to f* with DoorDash.
It's an interesting question. I suspect there's some trademark arguments to be made regarding confusion as to who is providing the product and service and whose failures any mistakes reflect. That kind of attribution, and the product quality it promotes, is one of the central purposes of trademark law. But there's also the first sale doctrine--that after you sell your physical product, people can do with it as they please, including resell. I suspect it comes down to how clear Doordash makes it that the restaurant is not involved in the service, but I'm not an expert in these areas, and this is obviously not legal advice.
To speak more precisely, the first sale doctrines prevent the original seller from asserting intellectual property rights (copyright, patent, trademark) as a basis to prohibit resell. I was writing an internet comment, not a legal brief!
It's an obstacle to suing Doordash for trademark infringement, which is what you would typically do when someone is doing business in your name without your permission.
All the regulation around food and beverage sales stands to the contrary - Normal people can't resell liquor, nor resell takeout food from a licensed restaurant.
Relatedly, it's surprising that delivery times aren't monitored because of (totally appropriate!) food safety laws on holding food at proper temperature
Those prohibitions have nothing to do with the original seller asserting his copyright or trademarks or patents, which is what the first sale doctrine prevents. They're just requirements for anyone who is selling food to the public.
> Normal people can't resell liquor, nor resell takeout food from a licensed restaurant
That's actually good and a bit surprising. I find it quite disingenuous that DoorDash lists restaurants that haven't agreed to do take-out or delivery. Not only that by having a call center call into a restaurant it's just making the experience more expensive.
If delivery people are paying with the Doordash debit card (most likely for non-partnered restaurants) you might be able to ban that BIN number (YMMV but it is possible with Stripe Radar + Stripe Terminal), or you could instruct your cashiers to refuse service to doordash drivers based on what card they use. After DoorDash receives enough reports from their drivers/customers it'd probably be delisted.
it will be interesting to see the impact of SoftBank withdrawing on consumption patterns of city-dwelling professionals. So much of their daily life is subsidized courtesy of Son
I'm curious to hear how restaurant delivery services are meant to make profit; is it really through service fees (or a monthly subscription model), and tips?
Cost per meal seems way too high for people to use it often. Maybe it make economical sense for larger party orders, but how often do those kinds of orders happen during considering the COVID situation?
I'm not an expert in this, but I think that the evil VC game plan is to try to make their portal the default first stop when ordering food. If they can get to that point, then they can start transferring the profit from the restaurateurs to themselves. This is more likely if people are indifferent to the specific place they order from after they've selected a dish or cuisine; less likely if people want specific restaurants.
Essentially, they've looked at the food delivery market as thousands of individual orders all going through individual phone calls or web orders and said, if I could take a percentage of all that, I'd have a great business.
This is so asburd it feels like a story in bad movie. We have pushed finance & capital so far into the realm of fiction that it doesn't really make sense anymore.
Artificial growth for the sake of artificial growth, just so you can get to your exit and leave someone else holding the bag. Ponzi schemes at massive scale.
How did the startup/VC world become so entangled in all this bullshit capitalism?
Same way they did in the 90s, lots and lots of dumb money.
My son and i have a tradition when my wife attends a nonprofit board meeting every other month. She leaves and we order some five guys on doordash while we play a PlayStation game. I use a new email every time and usually get free delivery and a coupon. Doordash loses, Five Guys loses, and we get some dude to deliver a burger.
Honestly at times it seems like all these Uber for this or that, DoorDash and whatever other logistical services were created with the premise of just keeping people busy and making them feel like they have a job (one that often costs them money to work at).
Once upon a time you started something and hoped to figure out how to scale and find product/market fit. These days with the cloud it’s become trivial to scale almost anything that’s not building cars or spaceships.
All these other BS startups have no hope for profit and no end game in sight. It’s kind of pathetic.
> Honestly at times it seems like all these Uber for this or that, DoorDash and whatever other logistical services were created with the premise of just keeping people busy and making them feel like they have a job (one that often costs them money to work at).
Are you referring to customers or restaurants or drivers?
I’m referring mostly to drivers, but programmers and basically everyone else in the chain as well.
Let’s throw a stupid amount of (not our own) money and manpower at programming a solution to a well defined problem and then grab a bunch of low wage workers and milk them. We will keep everyone, engineers, drivers, restaurants busy all the time to make it seem like we are making progress but in reality we are just burning time, money, oil and the last mile workers to the ground.
With all this money being thrown around you would think they would be able to engineer a solution wherein instead of committing identity theft (which is essentially what the author describes) and exploiting workers, they are actually solving the problem in an honest way which also provides an equitable wage.
Enough with the unethical bullshit. If you have to pose as the business to “help” a business all while exploiting cheap labor you aren’t solving a problem and you don’t have a right to exist, no matter how much money you got from SoftBank.
Reading the title, I anticipated this was going to be something along the lines of getting Domino's delivered for less than their delivery fee. (Side note, does anyone actually order franchise pizza on an app? They all already deliver for far less)
But this was far more interesting. The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen?
I'm not familiar with the reimbursement model. I'm assuming the driver pays with a credit card, and Doordash reimburses this amount. Regardless, there will now be database entries for a customer paying $160 and Doordash reimbursing $240.
What happens in a company that allows $80 to vanish like that? Unless this is an incentive (I'm doubtful this was deliberate). Wouldn't one of the first things you do is validate your financials? In which case, is the driver getting screwed here? (They charge the customer $160, and reimburse the driver for only that amount)
If not, this opens up a huge potential for fraud. There is a semi-popular YouTube video where some young British folks set up a 'restaurant' in their home kitchen and successfully list on a delivery app. They deliver several orders (reimbursing the customer of course). If it's trivial to get listed, and potentially with the wrong prices, then it's trivial to launder money this way.
Set up a fake restaurant, deliver little/nothing to a known party, profit. Now, maybe it would become obvious if you made the same orders or within the same time frame. But again, trivial to generate randomness.
What protection do these companies actually have against fraud? By nature, they're assuming trust, and this is exploitable.
> Side note, does anyone actually order franchise pizza on an app? They all already deliver for far less
Seen it done a number of times at campuses as the GPS helps the pizza guy find you. Although the pizza guy usually has a very good idea of where the residences are anyway.
Anyone know if it would be considered fraud and/or illegal to exploit this? I would consider doordash and grubhubs tactics of falsely representing themselves as restaurants to be more unethical. It would be great if someone could scale a solution that would take those arbitrage opportunities and pass them on to the drivers and the restaurants.
It seems like it would depend on who's initiating the action.
While the restaurant preparing "partial" pizzas to ship to coordinated orders is obviously fraud, I'm not so sure "Asking the restaurant owner about their costs, then independently ordering a large number of pizzas" qualifies.
It's not your responsibility if Doordash has shit code and auditing. And given VC-onomics, it's not even clear how you would be certain this isn't "operating as intended."
> While the restaurant preparing "partial" pizzas to ship to coordinated orders is obviously fraud
Does Doordash allow customer menu modification requests? "No cheese, no tomato sauce, no onion" etc. That would also then fall under shit code and auditing :)
> While the restaurant preparing "partial" pizzas to ship to coordinated orders is obviously fraud
How so? They're making the pizzas the way the customer wants them. The 'objective' tastiness is none of the delivery middleman's business. And there's nothing wrong with offering a bad pizza for $24, as long as the customer knows what they're getting.
Well, if the restaurant reimburses the customer after, it probably would become a problem.
Way around this: private owner places his own orders as customer, pockets profits as owner. That might be legitimate - but remember: if you take legal advice from the Internet, you get what you paid for.
(IANAL) My gut says coordination would be be evidence of both (a) premeditated intent & (b) knowledge that actions constituted fraud.
One could place a personal order (or 100) innocently.
One looks substantially less innocent when coordinating with a third party to place orders and transfer money around.
While that speaks to the severity of the crime (if one were proven), as you noted, it doesn't in any way impact whether that behavior is a crime at all.
But who's defrauding who? If the doordash website says I can buy a dough pizza for $19, then doordash has to get me a dough pizza for $19 when I buy one. No fraud is happening, doordash is fulfilling the requirements of the contract they make with all their customers.
If anything, the one who's committing fraud is doordash, because they're putting in "takeout" orders with the restaurant and presenting them as "delivery" orders to the customer.
In the example from TFA, Doordash says you can buy a pizza for $16 and charges you $16. The restaurant menu price is $24, and Doordash pays $24 for the pizza. That's... the starting place. (As screwy as it is)
Now, if I order a dough pizza for $16, in coordination with the restaurant, and Doordash pays $24 to the restaurant, and the restaurant gives me a dough pizza, and then the restaurant makes it worth my while, what do we have?
Doordash has been paid $16, and spent $24 + (cost of delivery) = (-) SoftBank money
The restaurant has been paid $24 and spent ~$1 (cost of dough pizza [1]) = ~$23 profit (minus labor)
I paid $16 (let's ignore tip). The restaurant reimburses me for that (me: $0, restaurant: $7) to make it worth my while, and then splits profits with me (me: $3.50, restaurant: $3.50).
So at the end, Doordash: -$8 - delivery cost, restaurant: $3.50, me: $3.50.
It's the reimbursement of the customer that seems... suspect.
The way to ethically monetize this would be for restaurants to target Doordash misprices, and "sell" coupons (a food box, containing only a paper coupon), good for future food orders directly through the restaurants. Then encourage all their customers to buy as much as possible.
[1] We'll say we return and recycle the boxes, being environmentally conscious citizens
If you intentionally sell a product for cheaper than you buy it to build market share (I think it's fair to call this intentional when they process the payment and don't bother changing the listed price), and you're willing to sell a whole lot of that product to someone, you can't cry foul when someone profits off that.
What you're describing isn't fraud, it's arbitrage: buying low, selling high. Just because Doordash are a bunch of idiots for selling stuff for way less than it's worth doesn't make it illegal for me to trade with them in good faith on their own terms and profit.
Nobody's lying to anybody, no price fixing is happening, or anything. Doordash agreed to sell a product at a price to any of their users, and they are fulfilling the promise they made, end of story.
Doordash is buying it, but I think it makes more sense as "a pizza for Bob" than just "a pizza". I think it would be strange to ignore everything Bob says if he calls in asking for the pepperoni to be on one side.
Though none of this matters if there's a 'special instructions' box. Have a code word for bread pizza.
Your case is more clear cut because that is a glitch in the website. It seems that in this case Doordash is offering a promotion. Calling that fraud would be like calling taking advantage of reward points fraud.
That's not how this works. The glitch is that there's a particular menu-item mispriced by Doordash. You can't just order arbitrary things at arbitrary prices, and when the restaurant takes an order for X and delivers Y, it's taking a step towards making a material false statement to obtain something of value.
This made me wonder: what if a restaurant puts a pain dough "pizza" for $30 on their menu?
Of course, no one would order it. But in this situation, an aggregator could offer it and the restaurant owner could take advantage of that.
It smells like fraud, except that every individual step seems legitimate (albeit weird). I'm pretty sure you're allowed to charge ridiculous prices for common goods if you so choose...
It still requires the aggregator to offer it for less that $30 (at least the cost of dough less). Which, at least in this case, seems to requires a scraping error.
Meanwhile, door dash never asked for the restaurant to participate in the "promotion," so screw them... They are offering to deliver boxes of dough at deathly inflated prices, with no other agreements with the restaurant. How is taking advantage of that "service" fraud?
Exactly. That's the real problem. Even if it's just a "trial". Somehow getting a delivery number on the restaurant's listing without their knowledge or consent is abuse. Good thing they get punished for it.
It doesn't seem like fraud when they are still delivering an actual pizza; that's basically just leveraging a sale. It becomes more dubious when they aren't delivering the finished good.
The fake restaurant in their garden shed, which never took customers or delivered any food, climbed up to #1 best restaurant in London (!) in TripAdvisor's rankings, purely on the strength of fake reviews and fake photos (artfully arranged closeups of bleach tablets etc). For kicks and video gold, they did open for their last night, serving 1-pound microwave meals from the supermarket.
is it actually real though? I imagine it'd be really difficult to pull it off. what if somebody who reviews restaurants would go there on, say, Monday? or at lease, even if they don't get in, just try to check out the place from 'waiting area' or at least outside.
Youtube videos have reputation for being fake, I wonder if this is actually true.
>does anyone actually order franchise pizza on an app
I do. I find the app to be a much nicer experience. I see all the available coupons/deals in a list instead of the 1-2 deals the phone person wants to guide me towards. With an app I can start and order and my family/friends can have an extended conversation to figure out exactly what we want on our pizza, what sides/drinks/etc. And in a pinch, we can completely start the order over from scratch if we change our plan mid-way. It would be rude to hold someone on the phone for that. Plus the app gives better real-time update on the status of my order. I know when it leaves the oven, when it gets picked up by the driver, etc.
I imagine the OP meant through the DoorDash app? Recently, I've used the Dominos, Papa Johns, or Pizza Hut apps, which are, you know, fine enough, they get the job done, but critically: there's no surcharge beyond what you'd pay over the phone.
I would be confused why anyone would buy a chain pizza like this through DoorDash (or a similar service). Beyond the one tenuous benefit of not having to install another app; is it really worth the extra surcharge? Are they even listed in these apps?
You may be right, and if so then I agree that it doesn't make sense to order PJ's, Domino's, or Pizza Hut through a generic app. My (perhaps incorrect) interpretation was based on the fact that I've never seen one of the big chains available in the generic delivery apps.
In the UK the three big pizza chains (Dominos, Papa Johns, Pizza Hut) are on the two big delivery apps (Uber Eats, Deliveroo). I’ve never ordered any of them via it for reasons outlined upthread, with the additional reason that not only is delivery more expensive the chain-specific voucher codes are not available.
> I would be confused why anyone would buy a chain pizza like this through DoorDash (or a similar service). Beyond the one tenuous benefit of not having to install another app; is it really worth the extra surcharge? Are they even listed in these apps?
Papa Johns is listed on Deliveroo. I often order PJs through Deliveroo when I'm hungry and don't want to think too much.
It costs more in money, it costs less in cognitive load. I know what I'm getting as far as the food is concerned, PJs is remarkably consistent, and I don't need to bother signing up for a new account with someone, working out payment details, etc.
You'd be surprised how many people like myself exist. Not everyone has every aspect of their financial life fully optimised. This is one area where I definitely have room for improvement.
In the mean time, Deliveroo ensures that when I'm exhausted at the end of a long week, I'm only a few clicks away from repeating my last PJs order and my Friday lunch pizza will arrive with minimal effort.
Not sure how Deliveroo works. But I would think the issue here is you may miss out on coupons, promotions and deals chains like Papa Johns usually have. If we say saving yourself 5 bucks using a promo code on a weekly ordered pizza, on a yearly basis this comes out to almost 300/year of savings.
>The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen?
In the article they say:
> We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform.
I'm totally guessing, but I would bet they do an audit of the numbers after the trial period and would have caught it then.
Yes, it has been exploited exactly like you described. An example that I remember - Foodpanda in India. I guess fraud costs are massive for all the food delivery startups.
The driver pays with a Doordash prepaid-reloadable card. When the driver GPS-checkins at the restaurant they're picking an item up at, the card is loaded with the exact balance the restaurant is "supposed to charge"
At that point door dash still thinks the pizza will cost much less, so if it's only the total the customer paid that's authorized, then how does the full cost of the order get paid?
In the article it makes clear that doordash calls the restaurant from their call center to make the order and gets the correct total verbally. Ostensibly this is what gets loaded to the delivery worker’s card.
Since this was part of a “demand test” door dash is more interested in capturing a large number of orders than per order profitability. Once their digital marketing muscle has doordash originating 10%+ of orders to the restaurant they have the leverage to negotiate a per order fee from the restaurant along with an agreement to force the restaurant to manage their prices on door dash, shifting liability to the restaurant for incorrect pricing online.
From the title I expected a story of how Doordash is running a pizza arbitrage scheme. Using an expensive restaurant name, and having the drivers go to a cheap pizza place to get the pie.
Pedantically, that wouldn’t be arbitrage, it’d just be fraud. Arbitrage would involve exploiting differences in price for the same good/commodity, i.e. not substituting a different item...
>If it's trivial to get listed, and potentially with the wrong prices, then it's trivial to launder money this way.
If it's trivial to launder money this way then it is a really good idea to build your own food delivery service and start doing all sorts of money laundering through it.
Lose a few 100 million today for a monopoly next year. I make the assumption here that these delivery services are intent on dominating the search results so that independent restaurants are not able to compete. They are forced into using the services, or rather having a large majority of other orders coming from these services.
>rather having a large majority of other orders coming from these services.
DoorDash has managed to change my behavior to the point that it is where I do when I am hungry, so I can see that being viable for a portion of the population.
Until the prices inevitably rise back up to the level they require to make up for the massive losses. Then that’ll just drive your behavior right back, probably much much faster than it took for DoorDash to establish this, meaning the “monopoly mode” profit time will be so short-lived as to recover next to nothing of the losses.
I am guessing that DoorDash will succeed in the very long term. Eventually they will not need independent restaurants, they can just start their own (and cut ingredient costs to whatever they need to make a profit). And eventually deliveries will be done by robots, so no workers to pay. I'm not saying this will happen tomorrow, but think 20 years out -- there is a lot of money to be made.
I am not sure that making something a commodity is necessarily bad. You can go to the grocery store and get store brand macaroni & cheese, kraft dinner, or some organic brand. Kraft and Amy's stay in business, so people must be buying those despite the higher cost. But the lower quality / lower cost version is available for people that want money more than better cheese powder. I don't think that's a bad thing, and is the direction that food delivery is going. (Starbucks didn't kill independent coffee shops, McDonalds didn't kill fine dining. DoorDash seems like that kind of thing to me.)
McDonalds is valued at billions of dollars. And this one doesn't rely on being located somewhere convenient; they bring the food to you.
I think DoorDash will ultimately be profitable for its investors. I don't think it's good for society (gig economy, growth by getting people to eat more calories, etc.), but that doesn't mean they can't make a lot of money.
The problem is all these businesses (ride share, food delivery), have extremely low margins and the tech to spin up a competitor is extremely cheap and commodity.
Thus the “monopoly” you allegedly get later is deeply unsustainable at the profit level and scale required to recoup losses on any timescale that would work for investors, assuming you can even hold onto it in the face of constant reemergence of competitors.
This is what Naked Capitalism has been point out about Uber for years and years. Uber just keeps changing the story. First rideshare itself would be profitable. Then logistics and trucking would be a sexy new profitable area. Then self-driving cars, then food delivery.
It’s frankly just a Ponzi scheme at this point that was foisted onto unwitting retirement plan investors.
GrubHub / DoorDash / etc., are just more of the same.
You can’t take businesses like taxis or food delivery, with well understood economics, round trip costs, density requirements, low margins, etc., and just slap an app on top and make them somehow different than they really are.
Artificially increasing the supply of something that’s fundamentally not sustainable at that price just will not work.
It works great. All those management middle men of thousands of delivery and taxi companies have been replaced with software. Razor thin margins are enough to keep the servers running and a small team of developers managing it - for the entire planet.
It's difficult for any company to abuse their position as they're easily repalcable. So the margins will get lower, and more of the money paid by the customer will go directly to the supplier. Efficiency incarnate.
Uber is laying off 800 engineers tomorrow, they have thousands. All of them making salaries probably in the range of 250K-500k. Not really a small team of developers.
Numbers are relative? Compared to the management overhead of all the taxi companies in the world it is orders of magnitude smaller. And after today it is 800 people smaller on top of that. So yes, very small, very efficient.
How about public transport? It makes a substantial difference that I can pull up the route suggestion and station timetable from my pocket always-on always-connected supercomputer to know to the minute when I need to start tieing my shoes to get where I'm going. You're basically arguing that adding telepathic conscioussness to a service provides less than zero value.
> the tech to spin up a competitor is extremely cheap and commodity.
This is the part that makes me the most mad. The delivery companies have almost no value as business entities, all of their value is in the technology, and the technology is not complicated at all.
The job that's being done by doordash and grubhub and all of them would be accomplished much more affordably, sustainably, and ethically with a marketing co-op, which is already pretty common in the food industry in America (Blue Diamond, Land o Lakes, Ocean Spray, Sunkist, Sun-maid, Tillamook, Welch's, etc). There's no need for a separate VC-backed for-profit here, a simple confederation of restauranteurs would work fine and be just as effective and way better for the whole marketplace.
What's amazing to me is that they can all so brazenly pursue a strategy of "monopoly or bust" without any fear of regulatory action once they reach that endgame. I'm not sure whether it speaks more to the foolishness of VCs, or to the corruption of regulatory institutions.
I'm afraid that soon any regulation action will be seen as a death knell for the stock market, and all the monopolies will be judged "too big to fail". Then we'll have regulations not controlling, but cementing these monopolies
What if you strip out the entire 'aggregation' and customer facing side of DoorDash/GrubHub/UberEats and rebuild them as complete back-end logistics services to the restaurants? You charge lower percentage of orders or just a monthly fee to help procure and pay the labor and route deliveries. Seems like that's the actual challenge for restaurants
CloudKitchens is more the kitchen infrastructure for restaurants who only have a presence on delivery apps. They are trying to facilitate a restaurant model that is optimized for the delivery apps'supply chains rather than starting their own
Chipotle has white labeled DoorDash for delivery in my area. If I open the Chipotle app and make a delivery order, the "track your order" screen says it's "Powered by DoorDash."
DoorDash already serves as the back end for a number of other services.
But being a courier company is not near as good of a business model. The aggregation element means that they own the end customer and payment flow, which among other things increases spend since you discover new restaurants via the platform and can transact seamlessly with any restaurant on DoorDash vs giving your card info to each new place
More importantly, as a two-sided marketplace DoorDash enjoys network effects which are the source of its defensibility. If they were just a courier company, restaurants could just switch over when they found the next company that could deliver marginally faster or undercut them with VC funding. As a two-sided marketplace, the restaurants can't turn them off without losing all the demand coming through the platform, demand which is captured by DoorDash is because they have tons of restaurants on the platform, creating a feedback loop.
Very important note (near the bottom of the post) on why Doordash did what they did:
> Note 1: We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform.
It doesn't fully explain why they priced a $24 pizza at $16. I wouldn't be surprised if they're subsidizing purchases, but just skipping fees doesn't explain that.
"My second thought: I knew Doordash scraped restaurant websites. After we discussed it more, it was clear that the way his menu was set up on his website, Doordash had mistakenly taken the price for a plain cheese pizza and applied it to a 'specialty' pizza with a bunch of toppings."
Web-scraping is hard man, especially with mom-and-pop restaurant websites that are often exported straight from microsoft word or some ancient "platform" that got reconfigured 20 times over.
As article pointed out it picked up full-toppings pizza as plain cheese.
Table Column A, menu items, lowest to highest in cost.
Table Column B, prices, highest to lowest in cost.
Naive scraper associates rows as menu item and cost.
You use CSS, etc., to rearrange things correctly. People looking at your site get info as intended, scrapers have problems, and it's only a dark pattern to them.
You can't make up for it in volume if each order makes a loss and you get no benefit from having more orders (they still pay each time the full price to the restaurant!)
Can you imagine getting that call "Hi, little Pizza place, we've been fraudulently impersonating your business, dragging your brand through the mud and pissing off all your customers selling your pizza at a loss, clearly we're the sort of people you need to do business with"
I think there's a huge grey area between "hire a 3rd-party person to pick up your food and deliver it to you" and "impersonating your business."
Like DD, GrubHub, or whatever aren't pretending to be the restaurant (shady website bullshit notwithstanding). They're just saying that they can buy and drive the food to you on your behalf.
Absolutely they are. They'll set up phone numbers and answer as though they're your restaurant. They'll set up websites (which I think you allude to? "they aren't pretending to be the restaurant... other than setting up a website pretending to be the restaurant"). They'll pretend to be the end customer if they have to.
The restaurants need to work through their own trade organization where they band together and push out the delivery businesses that are costing them money, and then allow delivery companies to bid for their business.
In the end the customer needs some single easy interface where to order food from. It is kind of difficult to see how this could work in a way where restaurants would dictate how customers prefer to order.
Why doesn't Google build this as an extension of Google Maps?
Charge restaurants no fee for the platform, if they provide their own drivers. Charge restaurants money through Google Ads to promote their restaurants for higher results.
In a few years, get Waymo's driverless cars on the game.
Why? All I want is for each restaurant to have their own website (which most already do), and to have a menu, a way to place an order, and a way to enter a credit card online, or for the person who comes to my door to be able to take a credit card. I don't care about an app or centralization, or having it be the same for every business. I just want to give them my money for their food in my house. So long as it works, doesn't get in my way, and doesn't cost me 30% extra, I don't have too many preferences on how it's done.
Same as it works today, but replace the VC funded app with a different app that a critical mass of restaurant owners get behind. That app could be owned, funded, managed by a group of restaurants in order to better serve their needs. Perhaps there could be some kind of federated standard.
The restaurants (that aren’t mega chains like McDonalds) are usually utterly incompetent in spheres of logistics and IT. I don’t see how this can end up well.
That's what federations and marketing co-ops are for. They're really common in the agriculture sector. Nut, dairy, berry, and fruit farmers buy into groups like Land O Lakes, Blue Diamond, Sun-Maid, Tillamook, and Welch's, and then those entities handle the logistics and distribution and pass back the profits.
Platforms like grubhub and doordash could and should still exist, but they shouldn't be separate VC-backed for-profits, they should be restaurant-owned.
After reading more about how these delivery companies function, we stopped using Door Dash a few days ago. We found it very convenient during the pandemic, but we like our local restaurants and we thought we were helping them out by ordering delivery pretty often. So now we just order it as take-out and then we go pick it up ourselves. Screw Door Dash.
We came to the same conclusion a couple weeks ago. As a bonus, you're eliminating a person/environment from the loop (the delivery driver & their car), thereby reducing your Covid-19 attack surface.
Edit: I have also both read about & seen firsthand food delivery drivers with someone else in the car. It's almost certainly someone from the same household, but still, that's potentially yet another unknown, potentially untraceable person in the loop.
I've had amazon deliveries where it appears the whole family was in the car. Kind of heart breaking to think that a family of 4 has to drive around so I can get my AA batteries same day. We need drone deliveries.
Can I choose option C? :). I don't want drones buzzing around my neighborhood. I am 100% willing to pay for professional delivery drivers.
To be fair, I guess, the days of random people driving junky old compact sedans filled to the roof with Amazon packages seems to be gone in my area. All the Amazon deliveries are now done by a guy driving a large Sprinter van painted glossy gray with Prime written on the side.
I'm in Canada so we don't yet have the Amazon branded delivery drivers. In my city, many Amazon packages are delivered by a company called Intelcom. It's people driving around their own cars, delivering packages.
That's an interesting point. You might be able to argue that subsidizing day care - particularly if you could bring higher standards/efficiency along for the ride - could have a greater economic impact than subsidizing college. It would certainly win out in short term effects. [Although I do think most of a bachelor's degree should be attainable from home for little to no cost.]
When my parents brought me to Canada, my dad briefly worked as a pizza delivery driver and me and my mom would often ride with him just to keep him company. Not sure if that's the case here, but they might just be spending time together.
I've seen plenty of couriers with their families inside riding around with them delivering food. Sometimes just a guy and the younger son? who hops out, picks up the food, and the dad drives off to deliver the item. It makes me sad.
Friend of a friend has the same issue, works for Instacart or one of the grocery delivery services. With their kids in the car. And they spend their days waiting in grocery store parking lots as that maximizes their throughput.
There are many businesses Amazon doesn’t enter. I personally don’t see how Amazon’s strengths can help them compete against other food delivery services. After all, same day delivery is the norm there.
I do suspect their focus on logistics and having an existing network would make it easier for them than others. They are doing food delivery through Amazon Fresh and also have been hiring contractors to do package delivery. Food, of course, has it's own constraints but compared to many they would be in a decent spot.
True. But that industry already has a duopoly with very strong network effects. Food delivery is extremely fragmented and it looks as if there's no one actually doing it profitably.
I mean, think about it – Amazon can't run it like their current delivery service. They can't mark it as delivered, but then not deliver it until the next day. They can't drive up to the curb, throw it over your fence and then drive off. They can't claim to have delivered it but just not bothered. They can't say they're giving you a pizza from Pizza Hut and then actually give you a pizza some guy made in his basement. In other words, they can't run it like their current business.
Yea for sure. At the same time they did acquire Whole Foods and are doing food delivery through prime. They do own the warehouses here rather than acting as couriers but I would not be surprised if they just found out the economics (especially given their strengths) to just not work out for them.
DoorDash has been an excellent transfer of wealth to me from stupid Arabs with too much money and restaurants that want introverted me to call their phone to order.
This is absurd. Can someone explain to me why DoorDash exists? They're #1 in share, but I get the impression that they basically bought their spot.
Grubhub has been operating in the space forever, is public, and generally had been profitable until VCs came to town. How is DoorDash doing anything than Grubhub? Wouldn't this capital do better in other investments?
From the outside it seems like they've duped investors into burning hundreds of millions of dollars to hopefully build a monopoly in a structurally iffy market.
I bet a big thing for DoorDash is DashPass. That would lead to people ordering food for anything as the price is basically the same as in restaurant then.
Definitely agree that they're winning (the Second Measure blog is fascinating), it just seems like they bought their way to the top at a very high cost.
DashPass is definitely keeping me a DoorDash user, it's benefits are significantly better than Uber Eats pass, but idk if that's sustainable for DoorDash.
The thing that really allowed DoorDash (and UberEats) to pull ahead was investing in partnerships with chain restaurants vs focusing on independent restaurants. Which hasn't necessarily resulted int he best product
I have Dashpass free from my credit card. Its not the same as ordering from directly from restaurant as Doordash marks up the prices 10% to 25%. I always thought Doordash was a terrible deal without it, you're paying marked up prices, delivery fee and a tip. Doordash is winning because they have the widest selection of restaurants since they are using their own drivers compared to Grubhub. Not sure why Postmates and UberEats failed to capture more market share since they offer the same service.
Grubhub for years were just a marketplace for customers to find food to order online / restaurants to find customers online. They'd charge a commission on order amount for fulfilling the match but the restaurant would have to deliver the food, manage their own delivery drivers etc. This is why they were profitable for years - they were a two-sided marketplace with a high commission percentage and low cost based since they didn't have any delivery costs.
DoorDash came along (after Postmates btw) and offered the same marketplace, but with delivery drivers too (a three-sided marketplace) - so that a restaurant didn't need to employ delivery drivers. This meant a higher cost base for DoorDash, lower for the restaurant, but similar commission fees. The simplicity of offering online marketplace ordering and delivery was very enticing for restaurants not wishing to manage this themselves, hence DoorDash's huge rise in market share, at the cost of Grubhub's over the last 2 years.
Grubhub has now for the past 3 years been busy spinning up delivery in its markets but is way behind DoorDash and Uber Eats. They have also admitted to falling behind in their Q3 2019 announcement[1] to the new competition (their late admission caused their stock to drop 43% in 1 day on the earnings announcement), and started also spinning up the non-partner side of the marketplace (adding restaurants without an agreement in place) to give customers more to order from (this is what Postmates then DoorDash pioneered). This is why they've started hemorrhaging cash and became loss making.
Yeah, Grubhub were touting themselves to restaurants as more of a marketing channel partner - find customers, advertise etc. Still, I'm not sure why that business service warranted a 20% commission fee in the first place to be profitable from.
Because who is going to balk at more sales for slightly less of a cut unless you have priced yourself to the bone already anyway?
Tech is all about inserting yourself in previously untransactable business opportunities via the leveraging of near universal connectivity to the Net, and the ease of electronic transaction settling.
Sometimes, this means taking a momentary haircut to get the right signatures in place, but fee taking and leveraging economies of scale does the rest.
The big head scratcher for me personally is how long it'll take until most people catch on to the pattern, and say "no more".
20% fee isn't the whole story - about 5% is the cost-of-fulfillment - website, phone support, CC processing, fraud protection, etc. The rest of the "fee" is variable marketing and promotions costs - higher search placement, "buy one get one" offerings to customers, etc. The calculus for the restaurants is whether they spend any marketing budget, and if they do, is it going to be junk-mail flyers or targeted advertising that they have some hope of tracking success with.
Just some back-of-the-napkin math if you wanted to do this "right".
Let's say you hire drivers as employees and pay them $15/hr plus tips and reimburse them for mileage. You charge a $4.99 delivery fee. Drivers work set shifts and are paid hourly whether they are making deliveries or not.
That means each driver needs to be making at least 4 deliveries an hour or you're losing money. That's not even really counting for mileage or any other benefits like health insurance or retirement (not that jobs like this usually provide this, but people seem to think that they should).
When I lived in DC, driving anywhere could take at least 15 minutes. Getting 4 different trips from a restaurant to somewhere reliably every hour would be difficult. Obviously, drivers can pick up multiple orders and take them in one round trip, but you're at the mercy of what orders happen to come in and where they happen to be located. It seems like it would be very hard to make that sustainable.
Of course, Domino's and lots of other places do it, but they probably aren't paying $15/hour and they also have one central location and more predictable demand. It's more feasible if drivers always go back to one central hub rather than having to get orders from random different restaurants all over the city.
> Domino's and lots of other places do it, but they probably aren't paying $15/hour and they also have one central location and more predictable demand.
One thing to note about Dominos is that people pay at the door, so they would need to look the delivery guy in the face as they stiff him on the tip. Not required for the delivery apps and fewer people tip there.Because people tip, you can pay lower wages.
I had a relative who worked as a Chinese food delivery guy for a while and he did it exclusively for tips. The restaurant did not pay him at all.
In the UK tipping delivery drivers is basically unheard of, except maybe if they're delivering on Christmas Day or something. Despite that people I know who've worked as drivers for Dominos say its one of the best unskilled jobs available, the pay is good, it comes with some benefits if you're working enough hours, and they generally take care of their employees.
As someone who delivered pizza for a long time, I can assure you that folks who don't tip absolutely do not care about having to look you in the face or not.
If it's an existing restaurant that has excess kitchen capacity they probably don't need that many deliveries per hour as he customer isn't paying for a table and that margin can go towards paying the driver.
A bunch of delivery 'drivers' here in sunny Sydney just use a bicycle - and they're often just students or backpackers etc making a couple of bucks in the afternoon while getting fit. They're happy to make $10 an hour which would normally be illegal under Australian employment laws.
It's hard for a local pizza shop to compete with this kind of thing and the sheer scale of Uber Eats.
Unfortunately in the US you get people screaming that those drivers are criminally underpaid and are being exploited by heartless capitalists. Because of course random Internet commenters are better able to judge the drivers' priorities and desires than the drivers themselves.
I am arguing that they would rather be paid some wage rather than have no job available.
A backpacker who just wants to make enough money to get to their next destination probably doesn't want to deal with the overhead of taking on a full-time job and is happy to have the flexibility in exchange for less money.
Fair is determined by the two people who are party to the transaction. If they both agree to it, then they consider it to be fair. If it is unfair, they are free to decline. The opinions of unrelated third-parties about whether a transaction is "fair" are irrelevant.
How many transient backpackers actually work for these companies to fund their immediate journeys and what do they have to do with a debate on localized externalities that they never experience?
No idea. It is probably not anywhere near the number of salaried employees who bully local governments into passing wage laws they will never experience the unintended consequences of. Yet somehow they still feel entitled to decide for other people what working arrangements they should be allowed to make for themselves.
Let's assume for a moment that people are not helpless imbeciles who need us to tell them what to do and that they choose the best option available to them, within the constraints of their life. Let's further assume that they are more familiar and better equipped to balance the constraints of their lives than we are.
Then we can deduce that if we remove the option they have chosen by making it illegal they will necessarily be left with a worse option. Since if there had been a better one, they would have taken it.
If we feel that the best option they have is not good enough because it makes us feel bad or whatever, then the question we should ask is "How can we make better options available?", not "How can we take away the best of the available options?"
Legislating a price floor does
not magically change the underlying economics of a business. It just makes the jobs below that floor go away.
> Let's assume for a moment that people are not helpless imbeciles who need us to tell them what to do and that they choose the best option available to them, within the constraints of their life.
That's a big assumption to make, especially on the lower end of the socioeconomic spectrum; desperation often leads to suboptimal decisions:
> Legislating a price floor does not magically change the underlying economics of a business. It just makes the jobs below that floor go away.
It may make some of those jobs go away. The price of the product/service will go up a bit, which will reduce a demand a bit, so the market will get oversaturated supply-side until some of the companies in it scale down or close up. Those who lose jobs will be worse off, those who will keep jobs will be better off. Yes, it sucks for those who lost jobs, but we can cater to them elsewhere in the system (e.g. different industry).
Competition will happily push the salary floor to as low as legally possible, so it's up to the legal system to ensure that floor doesn't go too low; in fact, I'd argue laws should be always set up in a way so that doing unsustainable business off unlivable wages should not be possible. The market is good at figuring out solutions to multifaceted problems, so let it deal with that constraint.
Lots of people with a 200k salary, entitlement, keyboard, and some time, itching yo have a say on how people making min wage should be able to transact.
Nothing new under soviet-harvard education. Please move along.
> they're often just students or backpackers etc making a couple of bucks in the afternoon while getting fit
I did this in lieu of going to the gym daily a while back ago. Adds a bit of gamification and social interaction, although takes a bit longer for the same intensity. I can't imagine having to live off that wage though.
1) Drivers can do other work during down time (wash dishes, clean, etc.). I think some places don't even hire drivers, they just have whoever is free deliver the order.
2) They can eat the loss because it will be less than the 20-30% that delivery platforms take from the restaurant.
I know you probably realise this but I think you missed a few important factors that can justify losing some money on deliveries.
- Takeaway/delivery food costs less to produce than dining in - no cleaning, no turning away customers who want to eat in because the place is full, no hiring wait staff, less fixed rental space cost, etc.
- Delivery reaches people who are too lazy to come to the restaurant. Ask most businesses if they will take a dollar or two profit less and make the sale, compared to losing it. Most will say yes.
- Delivery/convenience puts the brand top of mind for people feeling lazy (plus others see the car driving around). This is marketing.
- People are usually willing to wait for deliveries. At least here in Australia, if I order pickup it's ready in 15 minutes or up to an hour for delivery. This allows some flexibility with scheduling in the kitchen around the driver's schedule.
I think it is a lot more expensive than a lot of us give credit for (I visited Canberra and was aghast at the $9 delivery fees), but there are some benefits and savings to offset this.
$15/hr plus tips plus mileage is overkill. Let's say you cut out the awful feature that is tipping and make it $15/hr plus mileage, which is a perfectly good wage.
If I was previously paying $6-7 in fee+tip for a limited selection of restaurants, I'd be okay paying $10 for places that don't normally have delivery.
If that means two trips per hour, and you're not in one of the ten worst cities for traffic in the entire country, then that actually sounds pretty viable.
You forgot wear and tear on the car, and gas. 15/hr is decent without additional expenses. Take out gas and tires and brakes and maintenance and it's poverty level.
And the standard formula for mileage compensation that everyone follows is super generous. If you're driving a car with even half-decent mileage and reliability you come out ahead.
> Of course, Domino's and lots of other places do it
They kind of go into this in the article -- that since Domino's has made delivery work for decades now, it must be possible to do it sustainably; and that although most of the author's restaurant friends considered it "not worth the effort", individuals had managed to make the economics work for their very specific circumstances.
BUT -- that the fact that it can be made to work in specific circumstances sort of undermines the whole idea of DoorDash, which is a generic "food delivery wrapper" around any restaurant. DoorDash by definition can't do the kind of integration that Domino's does.
The business model is to charge both a delivery fee and a commission on the sales price. That way, you can make it profitable, even when paying a fair price to couriers, as long as you can keep your business lean and your delivery routing efficient.
This reminds me of a post I submitted a few weeks ago on HN.
A friend of mine works for a restaurant group in NYC and they like many they have had to respond by offering delivery to folks in order to keep some revenue flowing. He and I were chatting and he mentioned that lately, a large majority of high value ($500+) orders were fraudulent with the fraudster ordering things that can be resold such as high-value wine, liquor, etc that isn't necessarily perishable. He says that the scams work like this:
1. The order comes in via Caviar usually with a ridiculous amount of booze. It is usually a courier delivery but he says looking back, some have been picked up by 'customers'.
2. There are some instances where the order gets canceled either by the scammer within the 2 min grace period post ordering of from the actual customer who had their account phished/received some sort of alert/and stopped the transaction.
I am intrigued by this because there is obviously someone on the receiving end that's ending up with a boatload of high-end booze and then offloading it somehow while Caviar eats the dispute later on and still pays the restaurant out.
Literally, thousands of dollars a week of fraudulent booze orders are being fulfilled to people fraudsters using phished accounts with valid cc's. The consumer eventually realizes the charge, disputes it, and gets their money back leaving Caviar with the bill.
Consumers often don't realize the charge, I believe, until it's too late. Tech-illiterate old folk getting hit by the latest leak of information from <take your pick of large company>.
Well, since DoorDash is listed as the copyright holder on the bottom of www trycaviar com it looks like DoorDash is just bleeding their $400mm series F out under a different name.
Maybe have them try the arbitrage themselves per the article and put the profit _and_ the booze directly in their pockets... (/s?)
I assume DoorDash doesn't want to alienate loyal Caviar customers and so is continuing to operate it independently, similar to how Grubhub and Seamless merged seven years ago but still run two different websites (albeit with identical design).
I bet the person physically receiving the wine/goods is some gullible, naive person who has been social engineered into thinking they're working for a legit business.
It's like the 419 emails where they are trying to "recruit a remote working employee in our finance department" where your job is actually to receive fraudulent ACH wire transfers and send the money to some overseas destinations, go to a bitcoin ATM and buy bitcoin to send to the scammer, etc.
If the scammers are reasonably intelligent and have put a degree of thought into how to not get caught doing this, they'll introduce multiple layers of abstraction between the physical delivery of $450 bottles of liquor, and the point at which that booze is turned into (gift cards, bitcoin, ethereum, etc) and ultimately in their hands. They're probably calculating on taking at least a 20-35% haircut on the revenue before the somewhat-cleaned-up cryptocurrency or gift cards makes it to them.
Appears likely that someone that has access to the hotel’s customer CC data might be behind this and the local police are aware of it too...
“Not only is this hotel horrible, our guests had their credit card stolen and $500 worth of purchases made on it!!! Reporting this place to the police. Do not even go near this hotel. Total crooks, denied everything when confronted but they were caught red handed” [1]
There are fences (shady stores) in shady locations that will buy booze, baby formula/diapers, and over the counter medicine like daily Anti-acids. If you order liquor or wines that people sing/rap about you can find a place to sell it.
The scammers just need to find a fence which is pretty easy if you know where to look. They’ll even tell you what is the best stuff to get.
Last week I noticed that my credit card number had been stolen. But only for UberEats, I had tons of UberEats transaction of $30-$50. It's not my UberEats account that was stolen because I logged in in my account and I had not ordered anything. So looks like there's a market to get those stolen CC and use it to order a bunch of stuff from restaurants. Perhaps you're right, it's to order things that can be resold (wine, etc).
And because it's the pandemic, i'm sure lots of people wouldn't notice those extra charges to their credit card right away because they already order through those apps. I haven't used UberEats in a year so it was easy for me to notice.
I said this in another post about Grubhub but similarly to this article I really don't get it.
Those apps are all 25%+ expensive than ordering take out directly with the restaurant, they screw the restaurants and all those delivery companies lose millions.
Did everyone really become THAT lazy that driving 10 minutes to get your meal is that much trouble?
> Did everyone really become THAT lazy that driving 10 minutes to get your meal is that much trouble?
Depends on density, and traffic.
Getting to a nearby restaurant to pick up dinner, even a close by one, would easily take 30 minutes+ round trip. If I want food from someplace more than a couple miles away, make that 45 minutes or more round trip for dinner.
Or I can order from an app and have food delivered.
The question then becomes, is saving almost an hour of time worth $20?
For me, it's sometimes laziness, but usually not. The long and short of it is that delivery only happens when it's hard to leave the house for whatever reason. If getting myself to the restaurant is an easy option, then dining in generally is, too. Takeout only happens when I've been tasked with picking up burritos on the way home from work.
I've probably only used each of the major delivery apps once or twice, so I'm not representative of their customer base, but yeah, every now and then I'm having a specific day where I'm feeling that lazy (and of course driving anywhere in the bay area around dinner time is likely to take a lot longer than 10 minutes round trip). Then again I'm living in the bay area and not making anywhere near FAANG money. I can definitely see the delivery fees being negligible compared to the value of my time if I was making 2-3x my current salary.
Meal delivery doesn't just exist because people are lazy. It has been around a long time via the much more inefficient process of calling a restaurant that you already knew about, having someone spend time with you on the phone getting your order and credit card # and then dispatching a delivery person they employed directly to deliver the order to you.
3. We realized getting children (who may be sleeping) into a car for even a 10minute drive becomes a big production
4. We got rid of our car
Also, other reasons:
A. It is 8:30pm, you're at the office, have another 3hrs of work to do and cant spare even 10min to get away. Very common in my Junior Analyst days. In fact, we had a company sponsored SeamlessWeb account that we could use anytime.
B. You are on a business trip at a random city/hotel w/o a car
C. Your car is in street parking and you dont want to lose the spot (wicked, i know...)
I'm in Toronto, so we have Skip (Skipthedishes) instead of GrubHub along with UberEats and Doordash
1.) Skip doesn't allow the restaurant to jack up the price, so to the customer the total cost is the same
2.) These companies toss out tons of coupon codes and referral codes that bring the overall cost down (sometimes even cheaper than ordering directly from the restaurant)
3.) In dense urban centers, a ten minute "drive" is way more challenging/time consuming/effort than it would be somewhere else. In fact, these services use bicycle couriers in these areas.
I don't understand why doordash, uber eats, deliveroo, and similar business are starting to exist. Restaurants have been running successful delivery operations independently for ages. And there are many software offerings to help businesses get set up with delivering food.
Why do we need a centralized on? Is it just the benefit of being able to browse in one app/website everything available for be delivered to you?
I can fly into a city not knowing anything about how they do taxi
What airports are you flying into where you could avoid signage/references to local taxis/buses/transit if you wanted to? Heck, most have taxi stands right outside baggage claim, if not all exits.
How much do they cost? Do they know where my hotel is or do I need to provide a specific address for their GPS? Are specific taxis limited to specific jurisdictions? Can I get a van if I have 6 people or do I need two vehicles? Do they go out as far as the somewhat rural university? How about to the manufacturing plant 20 km outside the city?
The cost for a taxi is way less reliable, and harder to dispute. It's a common but unpleasant way to arrive to a new city to realise you've been shafted on the taxi fare.
100% my least favorite part of traveling in the pre-rideshare world. Has happened to me plenty of times.
If taxis just had upfront pricing and followed Google Maps it wouldn’t be a problem. I’d my happy to give them my business. I don’t really care too much about the app or whatever.
Like it could be super informal like $1/minute for whatever it says on Google Maps at the start and it would be fine.
It's the how that matters. Some countries have "interesting" taxi ecosystems.
I had a friend whose taxi would drop her off to a certain part of the city she was in in Malaysia. She liked him and wanted him to bring her back home later because she felt safe. He couldn't. Apparently there were taxi gangs controlling territory and he could only drop off and GTFO.
Or there's what I saw in Peru where a guy was selling TAXI signs at a traffic light. That's all it takes in some countries, whack that on top and you're good to go. Nice to get a tourist halfway down the freeway then "renegotiate".
I think that's an exaggeration. Uber/Lyft have some standards and questions before they let you join as a driver, not just a plastic sign you throw on the car. And if something goes wrong they have an audit trail. They at least know who picked you up before you went missing and where you were. You get none of that with a plastic sign.
Majority of times I order from these centralized sites becauae of convenience. Id like to support my local restaurant by ordering via phoning the restaurant directly, but it is pain in the arse compared to the convenient web ordering process.
Given that, I wonder if there is an opportunity to provide the ordering service and leave the delivery up to the restaurant... It would be dramatically easier to start up, require far less capital, require almost no human resource challenges, etc, etc.
Edit: Just noticed lower in the comments that this is exactly what GrubHub was doing before Doordash showed up.
I've spent many thousands of dollars on app-delivered food over the last few years (Foodpanda, Uber Eats, Grab Food, Lineman, and Deliveroo). I use the apps because:
- GPS tracking of the driver, and helpful notifications
- Discovery of new restaurants
- Detailed menu (and occasionally useful suggestions of menu items)
- I don't have to create a new account or fuck around with giving some restaurant my credit card
- I don't have to speak to a human
I'm hungry right now. I can pick up my phone, and in 30s, without needing to do anything other than click on the food I want to eat, in 25m I will have a human with food at my building's lobby.
It does become a problem depending on their POS vendor deciding to flag prepaids, I've seen several dislike this because of the ability to modify transactions afterward / tip or something of the sort, for the restaurant industry.
Mine has been excellent apart from the daily limit and merchants that don't accept their cards like cloud providers. Takes a bit of regular activity before support will raise the limit but the fact that Privacy.com cards show up as prepaid (try it out with the Stripe api, for example) is a show stopper for some narrow use cases - which overlap almost perfectly with spammers so who can blame the merchants.
That last bit only applies in dense downtowns. In the Bay Area, if I'm hungry right now and that happens to be roughly dinner time, I'm waiting 50-70 minutes for a food delivery.
My guess is that your app of choice can show you estimated delivery times for different restaurants based on distance and avg preparation, adding yet another reason for using
Yes. I'm just saying that the majority of restaurants in the greater bay area will have lengthy delivery times during weekday dinner hours... the exception being if you order from a place physically close to your delivery point.
Is it just the benefit of being able to browse in one app/website everything available for be delivered to you?
It's not just that, it's also a centralized payment system. You set up your account and you can order from any restaurant on the app without having to give them your address+payment info. Couple that with very simple, centralized dispute resolution and refunds as well as notifications of special offers. It's very, very convenient.
The economy of scale for the drivers is also much better with a centralized model. Instead of every mom and pop restaurant having to hire their own delivery staff there is one centralized pool of drivers available to everyone. A lot of restaurants just don't get consistent enough demand to hire a full-time driver.
> Restaurants have been running successful delivery operations independently for ages.
Crappy phone call driven ones with few checks for information accuracy.
> Is it just the benefit of being able to browse in one app/website everything available for be delivered to you?
Yes, that is a large part of it. I can be hungry and just pick up the DoorDash app and browse for food. I also have a single point of complaint for any issues with the food, can be confident that DoorDash got my address correct do not need to deal with a credit card at the door, and when I am in a new city, can instantly know what is available.
One selling point is ordering from places that don't offer deliveries, like McDonald's or Burger King. Essentially pay someone else to order and collect for you.
That can backfire, as with the article here...
McDonald's is now partnering with Uber Eats, but in the wild west days there were a few apps which let you order from pretty much anywhere.
One app in my area (Glovo) still lets you do a free-form request: just write whatever you want delivered from any shop within a certain radius of your house. I never tried it, though.
One reason I haven't seen mentioned, maybe because it's not the case in America, but in Australia before Uber Eats your options for takeaway were somewhat limited. You could have all the Italian/Chinese/Indian you wanted delivered, but if you wanted a burger, or Mexican, or French food it was probably 50/50 there'd be anyone around who delivered.
Uber Eats vastly expanded the range of cuisines available, if they simultaneously lowered the quality (since these restaurants had no experience preparing food for delivery, and the delivery was usually slower since they didn't have in-house drivers).
It’s why I do order on DoorDash too. My local Indian place doesn’t do delivery, neither does my local deli, and my favorite pizza place won’t deliver to my address.
I’m more than happy to cut out the middleman and order direct but they turned me down when I offered to pay more to deliver to my address. I’m literally 50 ft outside their posted delivery area.
> Restaurants have been running successful delivery operations independently for ages
Have they? Because in my experience delivery from anything but major chains like dominos, mcdonalds etc. has always been awful everywhere in the world.
With delivery services I can get my favorite dish from my favorite small shop hassle and cash free.
In the UK before Deliveroo you could only order food from traditional take-away restaurants (Chinese, Indian, Pizza, etc). Delivery time could easily take north of 1.5 hours. Deliveroo takes 20-30 minutes. And you can order from really good restaurants.
A company focusing on delivery can do the job more efficiently and competently. Just the fact that they can route deliveries more effectively instead of going restaurant-customer-restaurant is a big win.
It's funny that liberals complain about delivery services and VCs. Isn't this exactly what they want: a massive transfer of wealth from those who have a lot of it to those that don't? Because that's what Uber, DoorDash, etc all are.
Theaters still have to report tickets sold and kick back roughly 50% of the ticket price, so you would need to cut that revenue number in half. Also I don't remember the exact timeline for Moviepass's various restrictions, but there was a limit on the upside at various times due to policies like preventing users from watching movies multiple times (which would generally cap the max tickets below 30 since most theaters don't get 30 new movies a month), limits on how many tickets can be purchased for a single theater that would lock users out from using that theater for the rest of the day, and users being suspended for "fraud" that was often reported to be just heavy use.
Initially I thought this may have gone the other way, setup a business with no physical location, get on Doordash, and when you get orders you place orders at other restaurants not on the platform, then pick up and deliver their food, while charging some kind of markup on their prices.
Oh, one other interesting thing I've heard happens regularly. Couriers have multiple cellular devices. The second account usually get batched orders from the same restaurant they are already at which leads to a host of problems for the customer and restaurant. This leads to the order that was ready first to just sit and die in the courier bag while they work to maximize their earnings. Couriers sometimes leave before the second-order is ready and return well AFTER it's been ready to retrieve it because they are out and about delivering other orders.
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[ 4.6 ms ] story [ 363 ms ] threadIt'd presumably be trivial for doordash to fix this, by checking the order amount against the cost. The article explains why they might not be doing that ("growth")
Yep! First sale doctrine applies to all transactions. This is why my gammy can resell her Oxy’s and it’s all nice and legal.
Relatedly, it's surprising that delivery times aren't monitored because of (totally appropriate!) food safety laws on holding food at proper temperature
The safety angle is interesting.
That's actually good and a bit surprising. I find it quite disingenuous that DoorDash lists restaurants that haven't agreed to do take-out or delivery. Not only that by having a call center call into a restaurant it's just making the experience more expensive.
There is one restaurant in SF that was going to push for legal action. https://www.eater.com/2020/1/29/21113416/grubhub-seamless-ki...
Cost per meal seems way too high for people to use it often. Maybe it make economical sense for larger party orders, but how often do those kinds of orders happen during considering the COVID situation?
Essentially, they've looked at the food delivery market as thousands of individual orders all going through individual phone calls or web orders and said, if I could take a percentage of all that, I'd have a great business.
Artificial growth for the sake of artificial growth, just so you can get to your exit and leave someone else holding the bag. Ponzi schemes at massive scale.
How did the startup/VC world become so entangled in all this bullshit capitalism?
My son and i have a tradition when my wife attends a nonprofit board meeting every other month. She leaves and we order some five guys on doordash while we play a PlayStation game. I use a new email every time and usually get free delivery and a coupon. Doordash loses, Five Guys loses, and we get some dude to deliver a burger.
There were smart investors who saw through the facade and didn't invest and there were smarter ones who saw through it and invested despite that.
Once upon a time you started something and hoped to figure out how to scale and find product/market fit. These days with the cloud it’s become trivial to scale almost anything that’s not building cars or spaceships.
All these other BS startups have no hope for profit and no end game in sight. It’s kind of pathetic.
Are you referring to customers or restaurants or drivers?
Let’s throw a stupid amount of (not our own) money and manpower at programming a solution to a well defined problem and then grab a bunch of low wage workers and milk them. We will keep everyone, engineers, drivers, restaurants busy all the time to make it seem like we are making progress but in reality we are just burning time, money, oil and the last mile workers to the ground.
With all this money being thrown around you would think they would be able to engineer a solution wherein instead of committing identity theft (which is essentially what the author describes) and exploiting workers, they are actually solving the problem in an honest way which also provides an equitable wage.
Enough with the unethical bullshit. If you have to pose as the business to “help” a business all while exploiting cheap labor you aren’t solving a problem and you don’t have a right to exist, no matter how much money you got from SoftBank.
But this was far more interesting. The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen?
I'm not familiar with the reimbursement model. I'm assuming the driver pays with a credit card, and Doordash reimburses this amount. Regardless, there will now be database entries for a customer paying $160 and Doordash reimbursing $240.
What happens in a company that allows $80 to vanish like that? Unless this is an incentive (I'm doubtful this was deliberate). Wouldn't one of the first things you do is validate your financials? In which case, is the driver getting screwed here? (They charge the customer $160, and reimburse the driver for only that amount)
If not, this opens up a huge potential for fraud. There is a semi-popular YouTube video where some young British folks set up a 'restaurant' in their home kitchen and successfully list on a delivery app. They deliver several orders (reimbursing the customer of course). If it's trivial to get listed, and potentially with the wrong prices, then it's trivial to launder money this way.
Set up a fake restaurant, deliver little/nothing to a known party, profit. Now, maybe it would become obvious if you made the same orders or within the same time frame. But again, trivial to generate randomness.
What protection do these companies actually have against fraud? By nature, they're assuming trust, and this is exploitable.
Seen it done a number of times at campuses as the GPS helps the pizza guy find you. Although the pizza guy usually has a very good idea of where the residences are anyway.
In general, knowingly obtaining money, goods or services you know you are not entitled to is fraud/illegal.
Here's an example of someone going to jail for knowingly exploiting a glitch: https://www.inquirer.com/philly/hp/news_update/20071026_N_C_...
While the restaurant preparing "partial" pizzas to ship to coordinated orders is obviously fraud, I'm not so sure "Asking the restaurant owner about their costs, then independently ordering a large number of pizzas" qualifies.
It's not your responsibility if Doordash has shit code and auditing. And given VC-onomics, it's not even clear how you would be certain this isn't "operating as intended."
Does Doordash allow customer menu modification requests? "No cheese, no tomato sauce, no onion" etc. That would also then fall under shit code and auditing :)
How so? They're making the pizzas the way the customer wants them. The 'objective' tastiness is none of the delivery middleman's business. And there's nothing wrong with offering a bad pizza for $24, as long as the customer knows what they're getting.
Way around this: private owner places his own orders as customer, pockets profits as owner. That might be legitimate - but remember: if you take legal advice from the Internet, you get what you paid for.
One could place a personal order (or 100) innocently.
One looks substantially less innocent when coordinating with a third party to place orders and transfer money around.
While that speaks to the severity of the crime (if one were proven), as you noted, it doesn't in any way impact whether that behavior is a crime at all.
If anything, the one who's committing fraud is doordash, because they're putting in "takeout" orders with the restaurant and presenting them as "delivery" orders to the customer.
Now, if I order a dough pizza for $16, in coordination with the restaurant, and Doordash pays $24 to the restaurant, and the restaurant gives me a dough pizza, and then the restaurant makes it worth my while, what do we have?
Doordash has been paid $16, and spent $24 + (cost of delivery) = (-) SoftBank money
The restaurant has been paid $24 and spent ~$1 (cost of dough pizza [1]) = ~$23 profit (minus labor)
I paid $16 (let's ignore tip). The restaurant reimburses me for that (me: $0, restaurant: $7) to make it worth my while, and then splits profits with me (me: $3.50, restaurant: $3.50).
So at the end, Doordash: -$8 - delivery cost, restaurant: $3.50, me: $3.50.
It's the reimbursement of the customer that seems... suspect.
The way to ethically monetize this would be for restaurants to target Doordash misprices, and "sell" coupons (a food box, containing only a paper coupon), good for future food orders directly through the restaurants. Then encourage all their customers to buy as much as possible.
[1] We'll say we return and recycle the boxes, being environmentally conscious citizens
You have all those elements when backblaze was shucking drives en masse, but nobody would say that was fraud in any way. https://www.backblaze.com/blog/backblaze_drive_farming/
If you intentionally sell a product for cheaper than you buy it to build market share (I think it's fair to call this intentional when they process the payment and don't bother changing the listed price), and you're willing to sell a whole lot of that product to someone, you can't cry foul when someone profits off that.
Nobody's lying to anybody, no price fixing is happening, or anything. Doordash agreed to sell a product at a price to any of their users, and they are fulfilling the promise they made, end of story.
You could make a good argument that this was the case. The restaurant sells to doordash, who paid for a pizza with toppings.
Though none of this matters if there's a 'special instructions' box. Have a code word for bread pizza.
Of course, no one would order it. But in this situation, an aggregator could offer it and the restaurant owner could take advantage of that.
It smells like fraud, except that every individual step seems legitimate (albeit weird). I'm pretty sure you're allowed to charge ridiculous prices for common goods if you so choose...
"I want a supreme pizza, hold the pepperoni, sausage, peppers, onions, olives, sauce, and cheese".
It kind of happens by default if your goal is "growth at any cost".
The video you mention is likely this one, and it's actually even more extreme: https://www.youtube.com/watch?v=bqPARIKHbN8
The fake restaurant in their garden shed, which never took customers or delivered any food, climbed up to #1 best restaurant in London (!) in TripAdvisor's rankings, purely on the strength of fake reviews and fake photos (artfully arranged closeups of bleach tablets etc). For kicks and video gold, they did open for their last night, serving 1-pound microwave meals from the supermarket.
This video features (a) delivery and (b) reimbursement, both mentioned in the original comment but not present in your video.
To this day it is one of my favorites.
Youtube videos have reputation for being fake, I wonder if this is actually true.
I do. I find the app to be a much nicer experience. I see all the available coupons/deals in a list instead of the 1-2 deals the phone person wants to guide me towards. With an app I can start and order and my family/friends can have an extended conversation to figure out exactly what we want on our pizza, what sides/drinks/etc. And in a pinch, we can completely start the order over from scratch if we change our plan mid-way. It would be rude to hold someone on the phone for that. Plus the app gives better real-time update on the status of my order. I know when it leaves the oven, when it gets picked up by the driver, etc.
I would be confused why anyone would buy a chain pizza like this through DoorDash (or a similar service). Beyond the one tenuous benefit of not having to install another app; is it really worth the extra surcharge? Are they even listed in these apps?
I don't know why but I am saddened by this. I mean, even in the UK they are the biggest?
Outside of a few odd situations now and then, most big chain apps (if they typically take mobile type orders) .. offer a competent experience.
Other benefit is if you sing up for some "club" or email list you'll often get a coupon or etc.
Papa Johns is listed on Deliveroo. I often order PJs through Deliveroo when I'm hungry and don't want to think too much.
It costs more in money, it costs less in cognitive load. I know what I'm getting as far as the food is concerned, PJs is remarkably consistent, and I don't need to bother signing up for a new account with someone, working out payment details, etc.
You'd be surprised how many people like myself exist. Not everyone has every aspect of their financial life fully optimised. This is one area where I definitely have room for improvement.
In the mean time, Deliveroo ensures that when I'm exhausted at the end of a long week, I'm only a few clicks away from repeating my last PJs order and my Friday lunch pizza will arrive with minimal effort.
In the article they say:
> We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform.
I'm totally guessing, but I would bet they do an audit of the numbers after the trial period and would have caught it then.
source: http://www.livemint.com/Companies/rYKC6HjnShogjE62jO5lpK/The...
Yes, this causes a significant amount of driver support issues where they have to live chat in because their red card is declining.
The driver is instructed to not give the restaurant receipt to the diner.
Since this was part of a “demand test” door dash is more interested in capturing a large number of orders than per order profitability. Once their digital marketing muscle has doordash originating 10%+ of orders to the restaurant they have the leverage to negotiate a per order fee from the restaurant along with an agreement to force the restaurant to manage their prices on door dash, shifting liability to the restaurant for incorrect pricing online.
How would they know what percentage of orders isc coming through them?
Doordash's are debit mastercard, iirc.
If it's trivial to launder money this way then it is a really good idea to build your own food delivery service and start doing all sorts of money laundering through it.
DoorDash has managed to change my behavior to the point that it is where I do when I am hungry, so I can see that being viable for a portion of the population.
I suppose the fact that I left UberEats for DoorDash as soon as there were coupons suits your point though.
I am not sure that making something a commodity is necessarily bad. You can go to the grocery store and get store brand macaroni & cheese, kraft dinner, or some organic brand. Kraft and Amy's stay in business, so people must be buying those despite the higher cost. But the lower quality / lower cost version is available for people that want money more than better cheese powder. I don't think that's a bad thing, and is the direction that food delivery is going. (Starbucks didn't kill independent coffee shops, McDonalds didn't kill fine dining. DoorDash seems like that kind of thing to me.)
I think DoorDash will ultimately be profitable for its investors. I don't think it's good for society (gig economy, growth by getting people to eat more calories, etc.), but that doesn't mean they can't make a lot of money.
I'm not sure if it'll last forever, but I'd be willing to bet I will be dead before that cycle ends.
Thus the “monopoly” you allegedly get later is deeply unsustainable at the profit level and scale required to recoup losses on any timescale that would work for investors, assuming you can even hold onto it in the face of constant reemergence of competitors.
This is what Naked Capitalism has been point out about Uber for years and years. Uber just keeps changing the story. First rideshare itself would be profitable. Then logistics and trucking would be a sexy new profitable area. Then self-driving cars, then food delivery.
It’s frankly just a Ponzi scheme at this point that was foisted onto unwitting retirement plan investors.
GrubHub / DoorDash / etc., are just more of the same.
You can’t take businesses like taxis or food delivery, with well understood economics, round trip costs, density requirements, low margins, etc., and just slap an app on top and make them somehow different than they really are.
Artificially increasing the supply of something that’s fundamentally not sustainable at that price just will not work.
It's difficult for any company to abuse their position as they're easily repalcable. So the margins will get lower, and more of the money paid by the customer will go directly to the supplier. Efficiency incarnate.
This is the part that makes me the most mad. The delivery companies have almost no value as business entities, all of their value is in the technology, and the technology is not complicated at all.
The job that's being done by doordash and grubhub and all of them would be accomplished much more affordably, sustainably, and ethically with a marketing co-op, which is already pretty common in the food industry in America (Blue Diamond, Land o Lakes, Ocean Spray, Sunkist, Sun-maid, Tillamook, Welch's, etc). There's no need for a separate VC-backed for-profit here, a simple confederation of restauranteurs would work fine and be just as effective and way better for the whole marketplace.
I also find this really weird: its like load balancing between https://server1.example.com and https://server2.example.com instead of using a proper load balancer under the hood to get https://example.com
Disclosing who’s powering it is the opposite of white labelling.
But being a courier company is not near as good of a business model. The aggregation element means that they own the end customer and payment flow, which among other things increases spend since you discover new restaurants via the platform and can transact seamlessly with any restaurant on DoorDash vs giving your card info to each new place
More importantly, as a two-sided marketplace DoorDash enjoys network effects which are the source of its defensibility. If they were just a courier company, restaurants could just switch over when they found the next company that could deliver marginally faster or undercut them with VC funding. As a two-sided marketplace, the restaurants can't turn them off without losing all the demand coming through the platform, demand which is captured by DoorDash is because they have tons of restaurants on the platform, creating a feedback loop.
> Note 1: We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform.
As article pointed out it picked up full-toppings pizza as plain cheese.
"Hey in the last month we delivered X amount of your food! If we don't list you then you'll lose those sales."
If you're the director, which would you go for?
Table Column A, menu items, lowest to highest in cost.
Table Column B, prices, highest to lowest in cost.
Naive scraper associates rows as menu item and cost.
You use CSS, etc., to rearrange things correctly. People looking at your site get info as intended, scrapers have problems, and it's only a dark pattern to them.
Like DD, GrubHub, or whatever aren't pretending to be the restaurant (shady website bullshit notwithstanding). They're just saying that they can buy and drive the food to you on your behalf.
Charge restaurants no fee for the platform, if they provide their own drivers. Charge restaurants money through Google Ads to promote their restaurants for higher results.
In a few years, get Waymo's driverless cars on the game.
Platforms like grubhub and doordash could and should still exist, but they shouldn't be separate VC-backed for-profits, they should be restaurant-owned.
Edit: I have also both read about & seen firsthand food delivery drivers with someone else in the car. It's almost certainly someone from the same household, but still, that's potentially yet another unknown, potentially untraceable person in the loop.
To be fair, I guess, the days of random people driving junky old compact sedans filled to the roof with Amazon packages seems to be gone in my area. All the Amazon deliveries are now done by a guy driving a large Sprinter van painted glossy gray with Prime written on the side.
Yes, obviously that will solve the problem that family faces.
https://www.eater.com/2019/8/6/20756799/yelp-grubhub-phone-n...
If amazon, a "real" business with a reputation built on ruthlessly cutting margin can't get it to work why would anyone else?
Grubhub has been operating in the space forever, is public, and generally had been profitable until VCs came to town. How is DoorDash doing anything than Grubhub? Wouldn't this capital do better in other investments?
From the outside it seems like they've duped investors into burning hundreds of millions of dollars to hopefully build a monopoly in a structurally iffy market.
https://www.cnbc.com/2020/01/17/doordash-took-the-lead-in-th...
I bet a big thing for DoorDash is DashPass. That would lead to people ordering food for anything as the price is basically the same as in restaurant then.
DashPass is definitely keeping me a DoorDash user, it's benefits are significantly better than Uber Eats pass, but idk if that's sustainable for DoorDash.
DoorDash came along (after Postmates btw) and offered the same marketplace, but with delivery drivers too (a three-sided marketplace) - so that a restaurant didn't need to employ delivery drivers. This meant a higher cost base for DoorDash, lower for the restaurant, but similar commission fees. The simplicity of offering online marketplace ordering and delivery was very enticing for restaurants not wishing to manage this themselves, hence DoorDash's huge rise in market share, at the cost of Grubhub's over the last 2 years.
Grubhub has now for the past 3 years been busy spinning up delivery in its markets but is way behind DoorDash and Uber Eats. They have also admitted to falling behind in their Q3 2019 announcement[1] to the new competition (their late admission caused their stock to drop 43% in 1 day on the earnings announcement), and started also spinning up the non-partner side of the marketplace (adding restaurants without an agreement in place) to give customers more to order from (this is what Postmates then DoorDash pioneered). This is why they've started hemorrhaging cash and became loss making.
[1] https://s2.q4cdn.com/772508021/files/doc_financials/2019/q3/...
Tech is all about inserting yourself in previously untransactable business opportunities via the leveraging of near universal connectivity to the Net, and the ease of electronic transaction settling.
Sometimes, this means taking a momentary haircut to get the right signatures in place, but fee taking and leveraging economies of scale does the rest.
The big head scratcher for me personally is how long it'll take until most people catch on to the pattern, and say "no more".
Let's say you hire drivers as employees and pay them $15/hr plus tips and reimburse them for mileage. You charge a $4.99 delivery fee. Drivers work set shifts and are paid hourly whether they are making deliveries or not.
That means each driver needs to be making at least 4 deliveries an hour or you're losing money. That's not even really counting for mileage or any other benefits like health insurance or retirement (not that jobs like this usually provide this, but people seem to think that they should).
When I lived in DC, driving anywhere could take at least 15 minutes. Getting 4 different trips from a restaurant to somewhere reliably every hour would be difficult. Obviously, drivers can pick up multiple orders and take them in one round trip, but you're at the mercy of what orders happen to come in and where they happen to be located. It seems like it would be very hard to make that sustainable.
Of course, Domino's and lots of other places do it, but they probably aren't paying $15/hour and they also have one central location and more predictable demand. It's more feasible if drivers always go back to one central hub rather than having to get orders from random different restaurants all over the city.
One thing to note about Dominos is that people pay at the door, so they would need to look the delivery guy in the face as they stiff him on the tip. Not required for the delivery apps and fewer people tip there.Because people tip, you can pay lower wages.
I had a relative who worked as a Chinese food delivery guy for a while and he did it exclusively for tips. The restaurant did not pay him at all.
For you it might be.
I tip delivery drivers and I received tips when I worked. Tips made up >20% of my pay.
Rich people generally would not tip, poor people would.
It's hard for a local pizza shop to compete with this kind of thing and the sheer scale of Uber Eats.
The argument is not that these people shouldn’t be able to find work, but that they should get paid fairly for the work they do.
A backpacker who just wants to make enough money to get to their next destination probably doesn't want to deal with the overhead of taking on a full-time job and is happy to have the flexibility in exchange for less money.
Fair is determined by the two people who are party to the transaction. If they both agree to it, then they consider it to be fair. If it is unfair, they are free to decline. The opinions of unrelated third-parties about whether a transaction is "fair" are irrelevant.
Then we can deduce that if we remove the option they have chosen by making it illegal they will necessarily be left with a worse option. Since if there had been a better one, they would have taken it.
If we feel that the best option they have is not good enough because it makes us feel bad or whatever, then the question we should ask is "How can we make better options available?", not "How can we take away the best of the available options?"
Legislating a price floor does not magically change the underlying economics of a business. It just makes the jobs below that floor go away.
That's a big assumption to make, especially on the lower end of the socioeconomic spectrum; desperation often leads to suboptimal decisions:
https://www.pbs.org/newshour/economy/poverty-makes-financial...
https://www.theatlantic.com/business/archive/2017/01/underba...
https://news.ycombinator.com/item?id=16461773
It may make some of those jobs go away. The price of the product/service will go up a bit, which will reduce a demand a bit, so the market will get oversaturated supply-side until some of the companies in it scale down or close up. Those who lose jobs will be worse off, those who will keep jobs will be better off. Yes, it sucks for those who lost jobs, but we can cater to them elsewhere in the system (e.g. different industry).
Competition will happily push the salary floor to as low as legally possible, so it's up to the legal system to ensure that floor doesn't go too low; in fact, I'd argue laws should be always set up in a way so that doing unsustainable business off unlivable wages should not be possible. The market is good at figuring out solutions to multifaceted problems, so let it deal with that constraint.
No, it doesn't _just_ do that. It also makes the jobs that are viable above that floor pay at least that floor.
Lots of people with a 200k salary, entitlement, keyboard, and some time, itching yo have a say on how people making min wage should be able to transact.
Nothing new under soviet-harvard education. Please move along.
Economist Thomas Sowell has argued that point and more about how the minimum wage enables racism, so, potentially?
https://www.aei.org/economics/thomas-sowell-on-the-cruelty-o...
I mean, Uber Eats is losing cash at a phenomenal rate. So, more accurately:
>It's hard for a local pizza shop to compete with obscene amounts of venture capital subsidised delivery
I did this in lieu of going to the gym daily a while back ago. Adds a bit of gamification and social interaction, although takes a bit longer for the same intensity. I can't imagine having to live off that wage though.
1) Drivers can do other work during down time (wash dishes, clean, etc.). I think some places don't even hire drivers, they just have whoever is free deliver the order.
2) They can eat the loss because it will be less than the 20-30% that delivery platforms take from the restaurant.
- Takeaway/delivery food costs less to produce than dining in - no cleaning, no turning away customers who want to eat in because the place is full, no hiring wait staff, less fixed rental space cost, etc.
- Delivery reaches people who are too lazy to come to the restaurant. Ask most businesses if they will take a dollar or two profit less and make the sale, compared to losing it. Most will say yes.
- Delivery/convenience puts the brand top of mind for people feeling lazy (plus others see the car driving around). This is marketing.
- People are usually willing to wait for deliveries. At least here in Australia, if I order pickup it's ready in 15 minutes or up to an hour for delivery. This allows some flexibility with scheduling in the kitchen around the driver's schedule.
I think it is a lot more expensive than a lot of us give credit for (I visited Canberra and was aghast at the $9 delivery fees), but there are some benefits and savings to offset this.
If I was previously paying $6-7 in fee+tip for a limited selection of restaurants, I'd be okay paying $10 for places that don't normally have delivery.
If that means two trips per hour, and you're not in one of the ten worst cities for traffic in the entire country, then that actually sounds pretty viable.
They kind of go into this in the article -- that since Domino's has made delivery work for decades now, it must be possible to do it sustainably; and that although most of the author's restaurant friends considered it "not worth the effort", individuals had managed to make the economics work for their very specific circumstances.
BUT -- that the fact that it can be made to work in specific circumstances sort of undermines the whole idea of DoorDash, which is a generic "food delivery wrapper" around any restaurant. DoorDash by definition can't do the kind of integration that Domino's does.
A friend of mine works for a restaurant group in NYC and they like many they have had to respond by offering delivery to folks in order to keep some revenue flowing. He and I were chatting and he mentioned that lately, a large majority of high value ($500+) orders were fraudulent with the fraudster ordering things that can be resold such as high-value wine, liquor, etc that isn't necessarily perishable. He says that the scams work like this:
1. The order comes in via Caviar usually with a ridiculous amount of booze. It is usually a courier delivery but he says looking back, some have been picked up by 'customers'.
2. There are some instances where the order gets canceled either by the scammer within the 2 min grace period post ordering of from the actual customer who had their account phished/received some sort of alert/and stopped the transaction.
I am intrigued by this because there is obviously someone on the receiving end that's ending up with a boatload of high-end booze and then offloading it somehow while Caviar eats the dispute later on and still pays the restaurant out.
Literally, thousands of dollars a week of fraudulent booze orders are being fulfilled to people fraudsters using phished accounts with valid cc's. The consumer eventually realizes the charge, disputes it, and gets their money back leaving Caviar with the bill.
Maybe have them try the arbitrage themselves per the article and put the profit _and_ the booze directly in their pockets... (/s?)
I assume DoorDash doesn't want to alienate loyal Caviar customers and so is continuing to operate it independently, similar to how Grubhub and Seamless merged seven years ago but still run two different websites (albeit with identical design).
It's like the 419 emails where they are trying to "recruit a remote working employee in our finance department" where your job is actually to receive fraudulent ACH wire transfers and send the money to some overseas destinations, go to a bitcoin ATM and buy bitcoin to send to the scammer, etc.
If the scammers are reasonably intelligent and have put a degree of thought into how to not get caught doing this, they'll introduce multiple layers of abstraction between the physical delivery of $450 bottles of liquor, and the point at which that booze is turned into (gift cards, bitcoin, ethereum, etc) and ultimately in their hands. They're probably calculating on taking at least a 20-35% haircut on the revenue before the somewhat-cleaned-up cryptocurrency or gift cards makes it to them.
https://www.google.com/maps/place/101+bowery+st/@40.7176021,...
The reviews are incredible.
https://www.tripadvisor.ca/Hotel_Review-g60763-d267183-Revie...
https://news.ycombinator.com/item?id=23222004
“Not only is this hotel horrible, our guests had their credit card stolen and $500 worth of purchases made on it!!! Reporting this place to the police. Do not even go near this hotel. Total crooks, denied everything when confronted but they were caught red handed” [1]
...makes you wonder what is really going on.
[1] https://www.tripadvisor.ca/Hotel_Review-g60763-d267183-Revie...
The scammers just need to find a fence which is pretty easy if you know where to look. They’ll even tell you what is the best stuff to get.
And because it's the pandemic, i'm sure lots of people wouldn't notice those extra charges to their credit card right away because they already order through those apps. I haven't used UberEats in a year so it was easy for me to notice.
Did everyone really become THAT lazy that driving 10 minutes to get your meal is that much trouble?
Depends on density, and traffic.
Getting to a nearby restaurant to pick up dinner, even a close by one, would easily take 30 minutes+ round trip. If I want food from someplace more than a couple miles away, make that 45 minutes or more round trip for dinner.
Or I can order from an app and have food delivered.
The question then becomes, is saving almost an hour of time worth $20?
1. We had a child
2. We had multiple children
3. We realized getting children (who may be sleeping) into a car for even a 10minute drive becomes a big production
4. We got rid of our car
Also, other reasons:
A. It is 8:30pm, you're at the office, have another 3hrs of work to do and cant spare even 10min to get away. Very common in my Junior Analyst days. In fact, we had a company sponsored SeamlessWeb account that we could use anytime.
B. You are on a business trip at a random city/hotel w/o a car
C. Your car is in street parking and you dont want to lose the spot (wicked, i know...)
Also the fact that they can afford the premiums in the first place implies that they're not lazy ;)
1.) Skip doesn't allow the restaurant to jack up the price, so to the customer the total cost is the same 2.) These companies toss out tons of coupon codes and referral codes that bring the overall cost down (sometimes even cheaper than ordering directly from the restaurant) 3.) In dense urban centers, a ten minute "drive" is way more challenging/time consuming/effort than it would be somewhere else. In fact, these services use bicycle couriers in these areas.
Why do we need a centralized on? Is it just the benefit of being able to browse in one app/website everything available for be delivered to you?
Yes I think that’s a big part of it.
That’s a big part of Uber as well - I can fly into a city not knowing anything about how they do taxi and get an Uber.
How much do they cost? Do they know where my hotel is or do I need to provide a specific address for their GPS? Are specific taxis limited to specific jurisdictions? Can I get a van if I have 6 people or do I need two vehicles? Do they go out as far as the somewhat rural university? How about to the manufacturing plant 20 km outside the city?
If taxis just had upfront pricing and followed Google Maps it wouldn’t be a problem. I’d my happy to give them my business. I don’t really care too much about the app or whatever.
Like it could be super informal like $1/minute for whatever it says on Google Maps at the start and it would be fine.
I had a friend whose taxi would drop her off to a certain part of the city she was in in Malaysia. She liked him and wanted him to bring her back home later because she felt safe. He couldn't. Apparently there were taxi gangs controlling territory and he could only drop off and GTFO.
Or there's what I saw in Peru where a guy was selling TAXI signs at a traffic light. That's all it takes in some countries, whack that on top and you're good to go. Nice to get a tourist halfway down the freeway then "renegotiate".
This is literally what Uber/Lyft are doing. You don’t even need to leave the house.
Edit: Just noticed lower in the comments that this is exactly what GrubHub was doing before Doordash showed up.
Then you get an inconsistent experience.
- GPS tracking of the driver, and helpful notifications
- Discovery of new restaurants
- Detailed menu (and occasionally useful suggestions of menu items)
- I don't have to create a new account or fuck around with giving some restaurant my credit card
- I don't have to speak to a human
I'm hungry right now. I can pick up my phone, and in 30s, without needing to do anything other than click on the food I want to eat, in 25m I will have a human with food at my building's lobby.
In case you need to in the future, i'd recommend privacy.com for merchant-locked cards.
It's not just that, it's also a centralized payment system. You set up your account and you can order from any restaurant on the app without having to give them your address+payment info. Couple that with very simple, centralized dispute resolution and refunds as well as notifications of special offers. It's very, very convenient.
The economy of scale for the drivers is also much better with a centralized model. Instead of every mom and pop restaurant having to hire their own delivery staff there is one centralized pool of drivers available to everyone. A lot of restaurants just don't get consistent enough demand to hire a full-time driver.
Crappy phone call driven ones with few checks for information accuracy.
> Is it just the benefit of being able to browse in one app/website everything available for be delivered to you?
Yes, that is a large part of it. I can be hungry and just pick up the DoorDash app and browse for food. I also have a single point of complaint for any issues with the food, can be confident that DoorDash got my address correct do not need to deal with a credit card at the door, and when I am in a new city, can instantly know what is available.
That can backfire, as with the article here...
McDonald's is now partnering with Uber Eats, but in the wild west days there were a few apps which let you order from pretty much anywhere.
Uber Eats vastly expanded the range of cuisines available, if they simultaneously lowered the quality (since these restaurants had no experience preparing food for delivery, and the delivery was usually slower since they didn't have in-house drivers).
I’m more than happy to cut out the middleman and order direct but they turned me down when I offered to pay more to deliver to my address. I’m literally 50 ft outside their posted delivery area.
Have they? Because in my experience delivery from anything but major chains like dominos, mcdonalds etc. has always been awful everywhere in the world.
With delivery services I can get my favorite dish from my favorite small shop hassle and cash free.
I can’t help but wonder if movie theaters could have exploited a similar loophole with MoviePass before they went bankrupt. Something like this:
1. Movie theaters buy up MoviePass subscriptions
2. They use those subscriptions to pick different movies to see every day at their location
If they picked 30 movies a month that would be approximately $450 a month in revenue (at $15/ticket), $440 of which would have been pure profit.
Yeesh.
I recall blowback when it was uncovered that DoorDash was not providing 1:1 amount of tips to their dashers.