consumers get it cheaper than it should actually cost? restaurants get to sell more volume during covid, otherwise there's no way they'd have the volume to support staying open, and drivers are getting paid for something that normally wouldn't be a viable thing, I don't think many are leaving better opportunities, otherwise, they wouldn't do it...
Have you used any of these apps? Delivery Fee + Servicing Fees + Driver Tip is usually minimum +20% on your order total. How is that cheaper? Restaurants have to pay a flat % to the Apps and this usually crushes their profit even with volume. Do we even need to argue that Uber drivers are getting a good deal? Car maintenance + lack of benefits usually leaves them making minimum wage or worse. It's A job but I don't think anyone is saying its a Good one.
> Capitalism evolved into socialism. The free market started subsidizing meels-on-wheels.
More like: VC's headlong approach to funding everything under the sun in order to maintain some semblance of ROI is what led to this. The fact that they squander so much fiat is with nearly no repercussions, and little change to the order of things is the real astonishing part [1] as Misra lost $18 billion last year (a Historical record for Softbank) and still got a pay raise! VC's are operating just like Banks did in 2008, which helps re-enforce my argument that they too have become banks. Misra is former Deutsche Bank Debt trader and their wasteful and parasitic models are being deployed in this space and creating the forth that leads to bubbles and busts that distort the real innovation happening and often ignotring those smaller but valuable venture worth funding in exchange for short-term gains that seem to only generate losses.
The real winners are Companies like Square who sold their (obsolete) products to companies like Doordash flush with VC money and use it to invest into Bitcoin and its related infrastructure as well as studies for UBI as its clear the World will need it moving forward.
There is nothing humane about what any of these food delivery apps does or represents (just go look at their subreddits) which perhaps does align with socialist theories when put into practice--I've lived in and worked in what was former Yugoslavia and former Soviet satellites nations to realize what it really looks like and its usually the same paradigm of an overworked, underpaid and exploited underclass. That work culture never changed. Anyone wanting to revert to that is welcome to do so in my opinion, and that usually looks like what you see working in a warehouse for Amazon.
Caviar was/is obsolete in a race to the bottom type approach for Marketshare so getting nearly Half a billion for it in cash to invest into Bitcoin based business development was shrewd and pragmatic, I hope they bought the 3k dip we had earlier this year with most of the cash flow they had. I'm a big fan of Square/Cash and Jack Dorsey in general, as can be seen given a quick look of my post History.
Even if they did shut down my early-adopter Cash account for no reason or explanation.
UberEats is a real head-scratcher as almost all of the key players, from my perspective, have expressed dissatisfaction to some extent:
1. Restaurants as UberEats charges a fee often greater than the restaurant's own profitability
2. Restaurants as there is a real fear that Uber is gathering data for customer tastes/habits to then give priority to CloudKitchens™ or some other variant on commissary kitchen/virtual restaurants
3. Customers who are shocked by the fully-loaded cost (menu, fee, delivery, tip)
4. Drivers as they barely earn a living wage and put considerable wear and tear on their vehicles
5. Potential investors due to heavy losses generated by subsidizing this entire operation
6. White collar Employees as they are baited/strung along with generous RSU grants to then be overworked at a pace which would make a full vesting impossible
This is really strange because the Indian Dabbawala[0] industry has been operating continuously for 100+ years and one would think that across-the-board PPP/COL adjustments would allow for similar sustainability.
Is there any other industry where almost 100% of everyone involved is currently miserable or are at risk of being disappointed by long-run results?
On the other hand a friend of mine loves driving for Uber Eats, his friends who drive also love the company, and he thinks he has been especially well treated by the company during COVID. As soon as deliveries were allowed to resume in New Zealand Uber gave drivers a significant temporary increase in earnings to help them make up for lost earnings during our lockdown when food delivery was banned.
As far as I know customers were not charged more so I guess VCs were funding New Zealand drivers.
The detractors might argue friend is being taken advantage of and just doesn't realise it. He thinks otherwise.
You're not wrong about VCs funding the New Zealand drivers; the fact that there's an "excess driver incentives" line item in the Uber 10-K is proof enough!
My flatmate is an Uber Eats driver and didn't receive anything extra from Uber during or after the lockdown. Do you have any further info about the "significant temporary increase in earnings" that Uber provided?
Delivery services work very well in places with very high income inequality. You need to pay a small amount to the courier and then sell an expensive service to someone that's price insensitive. Simply adjusting by PPP doesn't guarantee the model works elsewhere. You need to adjust by demographics of who is buying and who is providing the service in each country to figure out if you can balance it out. So far it seems most Western countries can't make that work and investment money is filling in the gap.
Doesn't this create a perverse incentive to increase income inequality? And more so it is self reinforcing: if the entire economy was built on ubereats there would be an inescapable difference between the service provider and consumer. Maybe this is at odds with the idea that these schemes can scale.
I don’t know. I think it’s saying that personal delivery services are not viable in more equal societies. The US would be one of those, where every party is losing money from the transaction.
Densities help for deliveries because they're more efficient in denser areas. But there are a lot of personal services that aren't all that dependent on density.
Density helps if you're delivering a bunch of small things that you can easily batch together. The kinds of things being tried by these VC funded attempts are not where density helps the most as you either have a delivery that requires too much interaction (e.g., groceries with a fixed time slot) or are aiming for speed (e.g., hot food quick delivery). So there's no reason you can't have a postal service in a very equal society as delivering mail and small packages in urban areas is efficient and you can cross-subsidize nationally. Once you get into multi-temperature deliveries in fixed slots and very fast fulfillment and delivery really cheap labor in comparison to the service price is needed to balance the books. Some of that could be fixed by cutting an order of magnitude from the delivery time by use of lockers and other unattended delivery methods but then you have a chicken-and-egg infrastructure problem.
Maybe the gig economy is just "too early". Like maybe the whole industry is actually a giant bet on income inequality getting worse :(
That seems incredibly grim, and I hope most investors are just waiting to see if anyone can pull a rabbit out of a hat somewhere (bootstrapping economies of scale, automation, etc).
The whole industry was a bet on automation -- self driving cars -- and broke-ass uber drivers are just a way to grab market share until that happens. Uber is explicitly betting on self-driving cars, and it's why they're okay hemorrhaging money in the short-to-middle term.
>Delivery services work very well in places with very high income inequality.
This is true of any personal services that depend on relatively low-skill labor. Being able to "timeshare" (e.g. Uber/private cars vs. full-time driver) helps to a degree. But, in general, until you get to quite high wealth levels, relatively few people can really afford to constantly shell out for cooks, cleaners, handymen, nannies, etc. on a day-to-day basis in the West.
I agree with that. But the market expectation is very different. In businesses like groceries there is a general expectation that deliveries will continue to grow even though there's no reasonable expectation that the unit economics will improve dramatically. The market keeps growing though, with all those deliveries subsidized by the regular store sales.
>The market keeps growing though, with all those deliveries subsidized by the regular store sales.
You can only grow subsidies so far. I expect as things hopefully get back to come semblance of normal and VC subsidies evaporate, a lot of these delivery options evaporate as most people decide they'd just as soon keep their money and spend a few minutes picking up their own groceries or their own takeout.
Given the failure of businesses like Webvan--and the fairly limited growth of Peapod--I'm not sure I see the continuing growth.
Not so much startups only but, yeah, I was thinking primarily of fast local deliveries of perishables of various types.
For delivery more broadly I agree outside of some categories. While online shopping is still a fairly low percentage, it's growing. One also suspects that many will come out of the current situation thinking "That delivery stuff worked pretty well. Maybe I don't need to run some of those errands I normally do."
- The person making the food in the case of Dabbawala, is usually someone's wife. That's basically unpaid labor. Its not fair for the wife, but that's a different discussion, staying on topic.
- Delivery routes are pre-determined so routes can be planned efficiently.
- There's established routines such as the Dabbawala arriving around the same time to pick up food.
- The dabbawalas usually use trains and bicycles. So they don't pay for the cost of a car, fuel, insurance and maintenance.
- Dabbawalas, AFAIK, only exist in Mumbai, which has very high population density and enough economies of scale to sustain the business.
- Dabbawalas don't have a middle man tech company which pays expensive software engineers, and tech executives.
So these factors make dabbawalas profitable while food delivery services don't make a profit.
We recently started calling restaurants and asking if they have in-house delivery, and avoid UberEats/Doordash/OtherDeliveryService. The other day we ordered Thai food, and the owner of the restaurant delivered the food personally and she was truly grateful that we called them instead of ordering online.
This made me wonder, what if restaurants in a city formed Co-op, and started a food delivery service ?
- Multiple co-ops across different cities could form a LLC and hire Software engineers to build an App & maintain backend services.
- The same app would work across many cities
- Each co-op is responsible for hiring its own delivery drivers in the city.
This would eliminate a profit-seeking middle man, and keep costs low.
I sense that there would be many obstacles, but I think its still possible, and potentially be even better for the consumer and the restaurants.
Also, the US doesn't have enough poor people to make most human-staffed service businesses viable. In India someone earning a Top 5% income can have a domestic staff of 10. That's just not true in the US.
yes, the logistics problem--delivering cost-effectively at-scale--is the one-and-only big hurdle in any delivery service, not technology or even marketing, although those things can help solve the core logistics problem.
having fixed routes & schedules sounds like it solves the logistics problem for dabbawalas, insofar as it becomes cost-effective that way.
with that said, i'll repeat my strategic positioning argument about ubereats: it's a flanking product meant to maintain supplier power (power over drivers), so it does not need to be profitable by itself. combined with the additional revenue, ubereats just needs to lower supplier costs enough via lock-in to make its existance worth it.
That's why the standard comparison in the US would be something like Domino's Pizza, which makes money on delivery while being cheap. I think the answer is somewhere along the lines of route/logistic efficiency.
Well, i think the main factor is Ubers cost of operation.
Why does Uber need 20k employees (this does not inlude drivers!) to keep the platform running? Even if you want your fancy data science team, have 100 people PR team and the usual nonsense i don't see how you need 20k people to make this work
Global operations, global deployments. Plus a host of marketing, legal, and other folks that need to be tailored to each environment.
And Uber's big play is to automation and self-driving cars. That's a long range goal and involves building totally new technologies while they hemorrhage cash in the meantime.
I think the main problem to solve here is that the drivers and kitchen staff barely earn a living wage. Personally, I would be very happy to pay much more for a service that uses reusable containers and pays everyone involved a living wage, plus a decent profit margin for the restaurant owner. So I think this might need to be a very niche service for relatively wealthy people.
Unfortunately, I think history shows that there isn't way to convince the average consumer and restaurant owner to take part in a system like this. It might work in Australia or New Zealand, where they already have a reasonable minimum wage. But these countries generally have a very low population density, and also a very different attitude towards food delivery. (Most people cook most meals at home, so it's not something you order 2-3 times a day.)
Is part of the problem not reading the mythical man month, and trying to hire your way out of problems that don't work that way. I honestly don't get why there would be more than around 25-30 software developers working for Uber, generally speaking. I mean other resources around them, sure...
Many companies will be stuck needing things done, hire teams and teams of new developers and things will only fall farther behind as a result.
Instead of more designers, ux, management, leadership, review, marketing ahead of development so a clear experience is defined for a given project, they try to divide into more developer teams each bottle-necked more than if there were just fewer dev teams.
Meanwhile, so much money is spent trying to get the smallest uplift in efficiencies when the problems tend to be systematic.
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I mean to exclude certain things like self-driving cars that should be a separate sub-company.
Also, a bit off... since a team of 4-5 developer per device category or platform interest.
api, web-ui, ios-ui, android-ui, 2x data-services, driver-devices, restaurant-devices, support-apps, 2x admin-apps/reporting (still talking well under 100).
Are they still working on self driving cars? That will push the headcount up. For each developer you have project managers, product owners, database admins, techs, ba/technical ba, qa. Not to mention probably a big legal team. Nevermind marketing / ui/ux guys or guys doing reporting or people internal tools.
imo, self-driving cars should probably be a separate company owned by the parent... and likely is, and doesn't even apply to the thousands of developers alone they are stafing.
And for each developer there is probably 1:1 for other staff... in my experience for a team of 4 devs, you usually get 1/2 time for a PM, 1/2 time for an owner, a QA, 1/3-1/4 dba and a BA and maybe 1/4 time of a designer.
The primary application could probably do very well with 3-5 dedicated teams to portions of the application with less general conflict and bottlenecking... The support staff would need to scale to meet the larger demands though.
Given their funding, even top-tier engineers at $250-300k (Northern California) base would still be less expensive than hundreds or thousands of developers. Putting the self-driving car research into a separate company.
The site is not THAT complex, and they are, or should be leveraging a number of existing tools. They probably have a byzantine codebase that takes days to make what should be a 15 minute change at this point because of the shear numbers.
How much of the overall investment was done in the hopes that some level of autonomy would turn all these minuses into pluses within a couple years? I get investing in a loser if there’s key enabling tech like this “in the pipeline” but it sounds like even then the math is a bit backward.
Quote from the article:
> “At some point, delivery drones and robots may reduce the cost of fulfillment, but it will be a long time before the capital costs and ongoing operating expenses are less than the cost of paying someone for 30-45 minutes of their time.”
> “Bottom line is that you need to pay someone enough money to drive to the restaurant, pick up food and drive it to a diner. . . ,” the company wrote. “At some point, delivery drones and robots may reduce the cost of fulfillment, but it will be a long time before the capital costs and ongoing operating expenses are less than the cost of paying someone for 30-45 minutes of their time.”
Key point here. Even if you are expecting that these drivers are making minimum wage and your operating costs are zero and they have to maintain their bikes/vehicles out of their own pocket, that's still 7.50-11.25$ per order. Which is not something people would be willing to pay for a 20-30$ food order. Hell, I'd say even for a 100$ order people would balk at because they're used to it being free.
We are approaching a reckoning as a society where we need to understand the "true cost" of our choices.
I think the only way you can make door-to-door food delivery financially viable is with A) delivery drones, and B) massive centralized kitchens.
>We are approaching a reckoning as a society where we need to understand the "true cost" of our choices.
the much scarier question is why investors apparently don't understand this rather simple fact and keep pumping ungodly sums of money into these ventures
says a lot about the level of general innovation in our society
Right, then you can optimize the delivery with routes to several customers as well. And they can make food that handles delivery better etc. But that is not what is happening now.
> Right, then you can optimize the delivery with routes to several customers as well. And they can make food that handles delivery better etc. But that is not what is happening now.
Its no doubt that the Culinary Industry is going to morph into something else (seemingly undesirable to me) than it what it was in a Post COVID World, but given that the only ones that will survive this massive disruption will be those that either optimized their curb-side/take out menus to meet the demands, or those that simply have a ton of outside investment I can totally see that happening.
Dine-in will be few and far between with limited seating and dining options being the norm, where as everything else will just be delivered. I hope this spurs on more people to learn to cook at home and lose dependency on fast food and in turn support their local farmers and join CSA and community gardens along with it to offset the pains of a broken Global Food supply chain. We're already seeing that now, as many B2C farms are recording ATHs all over the US and selling out this early in the growing season.
As a former cook/chef and farmer, restaurants were always horrible business ventures in the best of times that relies on horrible work conditions, long hours, low wages and pervasive and culturally accepted substance abuse that often leads to severe mental health issues.
Hopefully, this gives young cooks the opportunity to take some of the Marketshare from the established players doing what they love (low wages are irrelevant then) and working from commissary Kitchens with low overhead business models. I'd rather they try an experimental business, even with failure being a real possibility, than see them waste 2-3 years of their lives and 40K+ in student debt as that model, much like 'University as an imperative to financial success,' is dead.
My primary question, as always with Uber, is with ridiculously easy switching costs, and almost no lock-in, why will Uber be the one that benefits when the profit making $EPOCH happens?
Why wouldnt another well capitalized business that hasn't lost tens of billions of dollars not be able to do better, since for $EPOCH + x years, that other business can actually afford to lose dollars while Uber needs to maintain its profit margin to recover the billions it lost in the pre $EPOCH era.
Because then Uber becomes more of a food search engine and maintains dominance in the same way that Google does, simply by being the biggest and having the most content.
But how would they ever have the most content? There isn't a single restaurant that is not being paid millions by Uber that is specific to Uber. Nearly every cab driver will also drive for Lyft, Via, etc.
Additionally, Google actually competes and wins on content. It's rare that Google offers a worse search result than any of its competitors. However, my food tastes just as good if ordered through Uber Eats or Grubhub or through the restaurant's own website, and my taxi service is likely gonna be the same whether I use Lyft or Uber.
Finally, unlike Google, Uber is actually renting its location from its competitors. Apple and Google could sign deals with Lyft/Seamless to make them the default provider in Maps, Google search, Apple Search or an Apple Restaurants app.
I'm curious is there an example of this? Burgers and lots of fast food seem already highly commoditized, McDonald's makes a lot of them pretty cheaply and centralisation would imply longer delivery and probably your food being cold which sounds inefficient if anything
I suspect most people still think "I want a McDonald's burger."
The win is in moving people to think "I want a burger."
DoorDash has already trained me this way on Chinese food. I get Chinese food once a week. I don't know the name of the place I get it from. As long as they didn't change the food too much, I could easily migrate to a cloud kitchen.
I think the key point is similar but slightly different. Traditional restaurants are not a good model for making food for delivery. The dishes are not created to be stored before eaten, it is higher cost because it is an experience to eat in the restaurant, and they are spread all over the place with customers also all over the place.
Traditional delivery services have optimized for all these things for a long time, for example pizza delivery.
> I think the only way you can make door-to-door food delivery financially viable is with A) delivery drones, and B) massive centralized kitchens.
The tech driving Dominoes would discredit your entire argument. Most are privately owned franchises that use the delivery software and Human based drivers. I personally prefer to make my own pizza as I have a stone, a kitchenaid and a decent oven, but when I do order out I prefer to pick it up and tip the cook staff not the driver as I think its an ancillary service that bares no relation to the end product I'm consuming.
I really don’t get this argument that it’s impossible to do delivery without losing money. Takeaway restaurants have been doing delivery for decades now, and don’t seem to have any problem making that work, the problem here is the middleman, and the unrealistic approach of having every order individually delivered.
Actual takeaway shops don’t do that, they have one guy go run round 10 orders at a time then come back for more. You have to wait longer for your food to arrive, but people seem to have coped with that in the past.
Optimizing for rapidly growing the customer base (both restaurants and diners) over short term profitability.
It's understandable, if a terrible actual plan. I guess they feel they have to grow fast enough that people don't just ignore them and order directly like we used to and probably will again soon.
Some restaurants won't do delivery anymore, just like it was until recently, and if they want to get into it then the smart people with actual local experience can decide if it makes sense or not.
That's not the right conclusion. The model is fine - you just jack up the price by 5 bucks and you're done. Lose some customers, but remainder is likely break even.
That -3.36 is a result of VC money pushing to companies to go head to head in a race to the bottom that isn't capped to zero. That simple fact distorts everything.
It's _NOT_ a problem with the model of sticking a burger on a bicycle. Look at the bike couriers in NYC - physically this can work and there are probably a fair number of people willing to pay +5.
I've said this before but I really don't see any reason whatsoever why UberEats has to be a nationwide, or heck, even a statewide thing.
This market can benefit a great deal from local players who serve just one or a handful of cities. Keep the tech simple to keep costs low. Don't need to invest in any $250k/year data scientists since you won't have a great deal of data to work with anyway (given the small scale).
Lower costs means you can give restaurants and drivers a bigger cut as well.
Most people who will use your app will be local residents. They don't need an app that can help them order in 500 cities across the world - they need an app that can help them order in just their city.
Local services like that have existed for decades. They usually have poor websites or even phone ordering, often don't have an app, and the payment methods can be behind the times. But they have always worked fine. The new wave of VC-funded services are trying to grab away the market with both much better UX and subsidizing the deliveries. It's just that no one seems to have a viable plan to exit that phase and be profitable. Meanwhile the traditional services are being edged out of the market. I don't know how this doesn't trip up more fair competition laws because of that.
We've come to a point where the tech and UX has been commoditized enough that putting together a functional app with rock solid payment infrastructure isn't technically challenging.
VC money might have pushed smaller players out of the market, but I suspect they might make a comeback soon enough
If those better and cheaper products are not covering their costs and just buying market share then yes. In well functioning consumer markets you get fined for selling below cost.
Yes, dumping prevention regulations are quite common. In the area I work in they're applied at the SKU level even, not even at the aggregate of the transaction.
For sure this is going to happen. It's already happening with ridehailing in Europe. Small local players have minimal expenses, still stay afloat, and keep the international player in check.
I'm really surprised that UberEats doesn't try and pull a cruise line type thing, where they have a massive central kitchen and just churn out vast quantities fairly standard food.
Also, the title isn't even factually correct. The sentence from the article is "In August 2019, analysts from the investment firm Cowen estimated that Uber Eats was losing $3.36 on every order and would continue to lose money on every order for the next five years". It's an estimation from a third-party, not official numbers.
The thesis that you can grab market share and then use it to make profits doesn't work in this case.
There's no reason why the customer needs your particular delivery service. Even in a last-man-standing scenario, that last service is competing with a note delivered with every meal that says "please order direct".
I looked into starting a restuarant and it made no sense to me to pay 30% of the meal price to a third party. The breakdown I got from my friend who runs a sushi delivery service in central London is roughly 25% fish, 25% rent / utilities, 30-40% labor. And that's when things are going well, you die if the chefs waste a few % more fish, or if a few people less a day come to order your food. So there's no space for a 30% cut.
Why anyone does it, I'm not sure. Perhaps it is to do with maintaining market share, or making sure your ingredients are used. Of course it's also true that the fish is the only part of that budget that is roughly linear with the number of orders, so maybe the restaurants also fall into a trap of saying they'll try to boost the 45% remaining with volume.
It's always great seeing tons of HN commenters never really realising the potential completely valid reasons a VC would fund a business like this. It feels in part fueled by the media and general anti-VC thing that's going on.
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[ 4.5 ms ] story [ 138 ms ] threadMore like: VC's headlong approach to funding everything under the sun in order to maintain some semblance of ROI is what led to this. The fact that they squander so much fiat is with nearly no repercussions, and little change to the order of things is the real astonishing part [1] as Misra lost $18 billion last year (a Historical record for Softbank) and still got a pay raise! VC's are operating just like Banks did in 2008, which helps re-enforce my argument that they too have become banks. Misra is former Deutsche Bank Debt trader and their wasteful and parasitic models are being deployed in this space and creating the forth that leads to bubbles and busts that distort the real innovation happening and often ignotring those smaller but valuable venture worth funding in exchange for short-term gains that seem to only generate losses.
The real winners are Companies like Square who sold their (obsolete) products to companies like Doordash flush with VC money and use it to invest into Bitcoin and its related infrastructure as well as studies for UBI as its clear the World will need it moving forward.
There is nothing humane about what any of these food delivery apps does or represents (just go look at their subreddits) which perhaps does align with socialist theories when put into practice--I've lived in and worked in what was former Yugoslavia and former Soviet satellites nations to realize what it really looks like and its usually the same paradigm of an overworked, underpaid and exploited underclass. That work culture never changed. Anyone wanting to revert to that is welcome to do so in my opinion, and that usually looks like what you see working in a warehouse for Amazon.
1: https://www.forbes.com/sites/sergeiklebnikov/2020/05/29/soft...
Even if they did shut down my early-adopter Cash account for no reason or explanation.
1. Restaurants as UberEats charges a fee often greater than the restaurant's own profitability
2. Restaurants as there is a real fear that Uber is gathering data for customer tastes/habits to then give priority to CloudKitchens™ or some other variant on commissary kitchen/virtual restaurants
3. Customers who are shocked by the fully-loaded cost (menu, fee, delivery, tip)
4. Drivers as they barely earn a living wage and put considerable wear and tear on their vehicles
5. Potential investors due to heavy losses generated by subsidizing this entire operation
6. White collar Employees as they are baited/strung along with generous RSU grants to then be overworked at a pace which would make a full vesting impossible
This is really strange because the Indian Dabbawala[0] industry has been operating continuously for 100+ years and one would think that across-the-board PPP/COL adjustments would allow for similar sustainability.
Is there any other industry where almost 100% of everyone involved is currently miserable or are at risk of being disappointed by long-run results?
[0] https://en.wikipedia.org/wiki/Dabbawala
As far as I know customers were not charged more so I guess VCs were funding New Zealand drivers.
The detractors might argue friend is being taken advantage of and just doesn't realise it. He thinks otherwise.
My flatmate is an Uber Eats driver and didn't receive anything extra from Uber during or after the lockdown. Do you have any further info about the "significant temporary increase in earnings" that Uber provided?
It needs density more than inequality. This is true for many professional services.
That seems incredibly grim, and I hope most investors are just waiting to see if anyone can pull a rabbit out of a hat somewhere (bootstrapping economies of scale, automation, etc).
This is true of any personal services that depend on relatively low-skill labor. Being able to "timeshare" (e.g. Uber/private cars vs. full-time driver) helps to a degree. But, in general, until you get to quite high wealth levels, relatively few people can really afford to constantly shell out for cooks, cleaners, handymen, nannies, etc. on a day-to-day basis in the West.
You can only grow subsidies so far. I expect as things hopefully get back to come semblance of normal and VC subsidies evaporate, a lot of these delivery options evaporate as most people decide they'd just as soon keep their money and spend a few minutes picking up their own groceries or their own takeout.
Given the failure of businesses like Webvan--and the fairly limited growth of Peapod--I'm not sure I see the continuing growth.
You're probably thinking of startups only. Traditional retailers are growing their delivery services pretty much everywhere in the world.
For delivery more broadly I agree outside of some categories. While online shopping is still a fairly low percentage, it's growing. One also suspects that many will come out of the current situation thinking "That delivery stuff worked pretty well. Maybe I don't need to run some of those errands I normally do."
- The person making the food in the case of Dabbawala, is usually someone's wife. That's basically unpaid labor. Its not fair for the wife, but that's a different discussion, staying on topic.
- Delivery routes are pre-determined so routes can be planned efficiently.
- There's established routines such as the Dabbawala arriving around the same time to pick up food.
- The dabbawalas usually use trains and bicycles. So they don't pay for the cost of a car, fuel, insurance and maintenance.
- Dabbawalas, AFAIK, only exist in Mumbai, which has very high population density and enough economies of scale to sustain the business.
- Dabbawalas don't have a middle man tech company which pays expensive software engineers, and tech executives.
So these factors make dabbawalas profitable while food delivery services don't make a profit.
We recently started calling restaurants and asking if they have in-house delivery, and avoid UberEats/Doordash/OtherDeliveryService. The other day we ordered Thai food, and the owner of the restaurant delivered the food personally and she was truly grateful that we called them instead of ordering online.
This made me wonder, what if restaurants in a city formed Co-op, and started a food delivery service ?
- Multiple co-ops across different cities could form a LLC and hire Software engineers to build an App & maintain backend services.
- The same app would work across many cities
- Each co-op is responsible for hiring its own delivery drivers in the city.
This would eliminate a profit-seeking middle man, and keep costs low. I sense that there would be many obstacles, but I think its still possible, and potentially be even better for the consumer and the restaurants.
Sounds like Deliveroo here in the UK.
having fixed routes & schedules sounds like it solves the logistics problem for dabbawalas, insofar as it becomes cost-effective that way.
with that said, i'll repeat my strategic positioning argument about ubereats: it's a flanking product meant to maintain supplier power (power over drivers), so it does not need to be profitable by itself. combined with the additional revenue, ubereats just needs to lower supplier costs enough via lock-in to make its existance worth it.
Why does Uber need 20k employees (this does not inlude drivers!) to keep the platform running? Even if you want your fancy data science team, have 100 people PR team and the usual nonsense i don't see how you need 20k people to make this work
And Uber's big play is to automation and self-driving cars. That's a long range goal and involves building totally new technologies while they hemorrhage cash in the meantime.
I think the main problem to solve here is that the drivers and kitchen staff barely earn a living wage. Personally, I would be very happy to pay much more for a service that uses reusable containers and pays everyone involved a living wage, plus a decent profit margin for the restaurant owner. So I think this might need to be a very niche service for relatively wealthy people.
Unfortunately, I think history shows that there isn't way to convince the average consumer and restaurant owner to take part in a system like this. It might work in Australia or New Zealand, where they already have a reasonable minimum wage. But these countries generally have a very low population density, and also a very different attitude towards food delivery. (Most people cook most meals at home, so it's not something you order 2-3 times a day.)
Many companies will be stuck needing things done, hire teams and teams of new developers and things will only fall farther behind as a result.
Instead of more designers, ux, management, leadership, review, marketing ahead of development so a clear experience is defined for a given project, they try to divide into more developer teams each bottle-necked more than if there were just fewer dev teams.
Meanwhile, so much money is spent trying to get the smallest uplift in efficiencies when the problems tend to be systematic.
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I mean to exclude certain things like self-driving cars that should be a separate sub-company.
Also, a bit off... since a team of 4-5 developer per device category or platform interest.
api, web-ui, ios-ui, android-ui, 2x data-services, driver-devices, restaurant-devices, support-apps, 2x admin-apps/reporting (still talking well under 100).
And for each developer there is probably 1:1 for other staff... in my experience for a team of 4 devs, you usually get 1/2 time for a PM, 1/2 time for an owner, a QA, 1/3-1/4 dba and a BA and maybe 1/4 time of a designer.
The primary application could probably do very well with 3-5 dedicated teams to portions of the application with less general conflict and bottlenecking... The support staff would need to scale to meet the larger demands though.
Given their funding, even top-tier engineers at $250-300k (Northern California) base would still be less expensive than hundreds or thousands of developers. Putting the self-driving car research into a separate company.
The site is not THAT complex, and they are, or should be leveraging a number of existing tools. They probably have a byzantine codebase that takes days to make what should be a 15 minute change at this point because of the shear numbers.
Quote from the article: > “At some point, delivery drones and robots may reduce the cost of fulfillment, but it will be a long time before the capital costs and ongoing operating expenses are less than the cost of paying someone for 30-45 minutes of their time.”
Key point here. Even if you are expecting that these drivers are making minimum wage and your operating costs are zero and they have to maintain their bikes/vehicles out of their own pocket, that's still 7.50-11.25$ per order. Which is not something people would be willing to pay for a 20-30$ food order. Hell, I'd say even for a 100$ order people would balk at because they're used to it being free.
We are approaching a reckoning as a society where we need to understand the "true cost" of our choices.
I think the only way you can make door-to-door food delivery financially viable is with A) delivery drones, and B) massive centralized kitchens.
the much scarier question is why investors apparently don't understand this rather simple fact and keep pumping ungodly sums of money into these ventures
says a lot about the level of general innovation in our society
Its no doubt that the Culinary Industry is going to morph into something else (seemingly undesirable to me) than it what it was in a Post COVID World, but given that the only ones that will survive this massive disruption will be those that either optimized their curb-side/take out menus to meet the demands, or those that simply have a ton of outside investment I can totally see that happening.
Dine-in will be few and far between with limited seating and dining options being the norm, where as everything else will just be delivered. I hope this spurs on more people to learn to cook at home and lose dependency on fast food and in turn support their local farmers and join CSA and community gardens along with it to offset the pains of a broken Global Food supply chain. We're already seeing that now, as many B2C farms are recording ATHs all over the US and selling out this early in the growing season.
As a former cook/chef and farmer, restaurants were always horrible business ventures in the best of times that relies on horrible work conditions, long hours, low wages and pervasive and culturally accepted substance abuse that often leads to severe mental health issues.
Hopefully, this gives young cooks the opportunity to take some of the Marketshare from the established players doing what they love (low wages are irrelevant then) and working from commissary Kitchens with low overhead business models. I'd rather they try an experimental business, even with failure being a real possibility, than see them waste 2-3 years of their lives and 40K+ in student debt as that model, much like 'University as an imperative to financial success,' is dead.
Why wouldnt another well capitalized business that hasn't lost tens of billions of dollars not be able to do better, since for $EPOCH + x years, that other business can actually afford to lose dollars while Uber needs to maintain its profit margin to recover the billions it lost in the pre $EPOCH era.
Additionally, Google actually competes and wins on content. It's rare that Google offers a worse search result than any of its competitors. However, my food tastes just as good if ordered through Uber Eats or Grubhub or through the restaurant's own website, and my taxi service is likely gonna be the same whether I use Lyft or Uber.
Finally, unlike Google, Uber is actually renting its location from its competitors. Apple and Google could sign deals with Lyft/Seamless to make them the default provider in Maps, Google search, Apple Search or an Apple Restaurants app.
The win is in moving people to think "I want a burger."
DoorDash has already trained me this way on Chinese food. I get Chinese food once a week. I don't know the name of the place I get it from. As long as they didn't change the food too much, I could easily migrate to a cloud kitchen.
Traditional delivery services have optimized for all these things for a long time, for example pizza delivery.
The tech driving Dominoes would discredit your entire argument. Most are privately owned franchises that use the delivery software and Human based drivers. I personally prefer to make my own pizza as I have a stone, a kitchenaid and a decent oven, but when I do order out I prefer to pick it up and tip the cook staff not the driver as I think its an ancillary service that bares no relation to the end product I'm consuming.
Actual takeaway shops don’t do that, they have one guy go run round 10 orders at a time then come back for more. You have to wait longer for your food to arrive, but people seem to have coped with that in the past.
It's understandable, if a terrible actual plan. I guess they feel they have to grow fast enough that people don't just ignore them and order directly like we used to and probably will again soon.
Some restaurants won't do delivery anymore, just like it was until recently, and if they want to get into it then the smart people with actual local experience can decide if it makes sense or not.
That's not the right conclusion. The model is fine - you just jack up the price by 5 bucks and you're done. Lose some customers, but remainder is likely break even.
That -3.36 is a result of VC money pushing to companies to go head to head in a race to the bottom that isn't capped to zero. That simple fact distorts everything.
It's _NOT_ a problem with the model of sticking a burger on a bicycle. Look at the bike couriers in NYC - physically this can work and there are probably a fair number of people willing to pay +5.
This market can benefit a great deal from local players who serve just one or a handful of cities. Keep the tech simple to keep costs low. Don't need to invest in any $250k/year data scientists since you won't have a great deal of data to work with anyway (given the small scale).
Lower costs means you can give restaurants and drivers a bigger cut as well.
Most people who will use your app will be local residents. They don't need an app that can help them order in 500 cities across the world - they need an app that can help them order in just their city.
VC money might have pushed smaller players out of the market, but I suspect they might make a comeback soon enough
https://news.ycombinator.com/newsguidelines.html
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu....
There's no reason why the customer needs your particular delivery service. Even in a last-man-standing scenario, that last service is competing with a note delivered with every meal that says "please order direct".
I looked into starting a restuarant and it made no sense to me to pay 30% of the meal price to a third party. The breakdown I got from my friend who runs a sushi delivery service in central London is roughly 25% fish, 25% rent / utilities, 30-40% labor. And that's when things are going well, you die if the chefs waste a few % more fish, or if a few people less a day come to order your food. So there's no space for a 30% cut.
Why anyone does it, I'm not sure. Perhaps it is to do with maintaining market share, or making sure your ingredients are used. Of course it's also true that the fish is the only part of that budget that is roughly linear with the number of orders, so maybe the restaurants also fall into a trap of saying they'll try to boost the 45% remaining with volume.
Maybe you could just have larger kitchens, preparing different types of food under different brands.