Deliveroo, and really any gig-economy services, have a real problem — their largest markets are also the ones with significant cost-of-living issues affecting both riders and customers. Customers are spending less, especially in London, and riders need are being priced out of the market (reducing the supply of riders across a number of competing apps.)
There was a trending tiktok by economist Kyla Scanlon on the topic of "subsidizing affluence" and how these services were able to be offered so cheap because of incredibly low interest rates and investment. Rates have risen dramatically, affecting both the appetite of debt for start-ups and the spending power of consumers. Shareholders recognised this, and it showed through Deliveroo's historically bad IPO.
Ultimately, I suspect Deliveroo will continue to underpay (relative to the cost-of-living) because of the poverty trap — poor people don't have many options, and being underpaid as a Deliveroo rider may be the only option for survival in London and other similarly major cities.
The issue with companies like Deliveroo is more basic than that: It's plainly profitability of the business model, irrespective of interest rates (which are blamed for anything and everything lately)
At the moment the whole business model, and any plausible path to profitability, relies on squeezing riders as much as possible because (1) they are the main cost, (2) they have very low productivity (number of deliveries per hour), and (3) customers do not want to pay that much for delivery. Fees paid by customers have increased, and restaurants also often charge a different, higher price when ordering through Deliveroo and maybe this is getting to the limit of what the market will bear... So there is not much wiggle room.
If I'm having dinner in a quiet restaurant, I wouldn't accept to wait for the cooks to serve Deliveroo/Uber orders instead of taking care of mine.
In France, some restaurants give a 10% discount if you order take away. But I hope they don't do it for deliveries through these companies. This lowers the global quality level. You can't have the same quality with one cook and 10 tables than one cook, 10 tables and 50 deliveries per hour.
For a while, the solution seemed to be "ghost kitchens" - central commissary operations that pretend to be restaurants in their ads. The first Doordash Kitchen is in Redwood City, CA, near the intersection of Woodside Road and El Camino Real. It seems to be much less busy than it used to be. That industry has collapsed.[1]
More cooks = bigger kitchen which is impossible in tiny restaurants of city centers.
I also doubt it’s a good decision to invest in bigger real estate and more employees while the delivery companies are always on the edge of going bankrupt or being regulated.
Also, a restaurant is not an easy to scale business : most of their value is a mix between the location and the cooking team. You can’t easily change one (or both) without changing your restaurant uniqueness.
Sure, the alternative is to not accept online orders. There is no middle ground here. Either the business needs to expand to be able to service more customers or the business needs to refuse customers. Doing neither won't work.
>Restaurants will either handle this properly or quickly go out of business.
Whenever I read something like this on HN it makes me realise just how out of touch tech people are with the real world. Most of the people here work on companies that never were or never will be profitable or break even, it's just burning investors money or building your business on huge amounts of money until you get a monopoly on the market. Restaurants are working in the real world, where you don't get all that free money, you can't realistically scale, the margins are thin and the employees are hard to keep.
Which is why in the real world most resturants go out of business.
Money being tight doesn't mean you no longer have to provide good service to attract customers. Running a business is hard for a reason. If it was easy, everyone would do it.
I don’t understand the reasoning behind restaurants charging a tax on deliveries. Don’t deliveries increase sales by a multiple of what they likely make on tables? Why disincentivize that?
Interesting. I know they charge fees to restaurants, but I assumed even with those, the additional volume would still increase profits as the unit economics would improve. Cooks don't need to scale linearly to deliveries. But it seems the fees are too high and they risk becoming irrelevant if they don't pay, because everyone if now ordering from delivery services, especially since covid.
I support capitalism, but I feel like these are exactly the things where govt should regulate to create fairness. Let's just squeeze each other because markets.
The restaurant is (or should be able to be) capable of setting prices for delivery vs carryout vs dine in to keep their kitchen busy without falling behind.
I kind of doubt this will be effective. You can't get blood from a stone.
There isn't a whole lot of money to be had in the delivery business. Consumers already feel costs are too high. Its not like these companies are insanely profitable and taking it all for themselves.
Why is this a bad thing? Non-profitable companies are supposed to go under. And yet we have companies like DoorDash losing a billion dollars a year every year, we nod and tell each other "look at this great successful innovative business".
This article is so frustrating on data presentation:
> To make the minimum national wage we have to make at least four deliveries, which is not as easy as it seems.
On what timeline? Per hour? Per day?
> Delivery Job UK claimed its delivery riders were braving the "cold, rain and absurd distances" for deliveries paying "ridiculous values", ranging from £2.80 to £3.15.
On what distance? "Absurd" is not a quantity.
> ...striking Deliveroo riders wanted an increase to a minimum of £5.
Per delivery? Per hour? Per kilometer? Per mile?
> On a Friday night you could make £100 over 4-5 hours, now that's gone
First data point that actually makes some sense. But what do they make now? Why leave an obvious question unanswered and hanging?
> With a minimum fee of £2.80, most might only be making three orders an hour, and then they have to subtract their costs too. Some are making £7 an hour, which in London is barely liveable
Very dependent on traffic and city, and I don't know what local conditions are like. In Bangalore, for example, making 2 deliveries in a radius of 4 km in an hour will be an achievement and 1 is likely to be the norm. So when the article says 4 deliveries, I have no context without googling for traffic conditions in London or Bermingham or whatever.
Similarly for wage, I don't know what the national minimum wage is in the UK or how it's defined. It's not like they're cutting a whole lot of print by adding a /hr to those numbers.
As a general rule I would suspect that making four deliveries per hour in a settlement of any size is difficult, because the size of the delivery pitch is going to vary with demand.
National minimum wage in the UK is not enough to remotely live on, most places that have an established deliveroo market.
This is an article on British events on a British website. Those "4 deliveries" did make it obvious they meant minimum wage "per hour" (and it's implied that's it's not easy), even without British context. [traffic, radius only matter wrt. making it hard or easier, but again in context it is implied that 4 deliveries an hour are not easy]
But, anyway, this is all details. The big picture is that food delivery is very low productivity so it is very hard to earn much.
> This is an article on British events on a British website.
Of course. But it was posted on HN with an international audience. Perhaps BBC needs to geofence and make their articles unavailable globally.
> Those "4 deliveries" did make it obvious
No, it did not, and I explained why. 8 deliveries a day would be hard in Bangalore in a 4 km radius. Besides, it is still unclear what the delivery radius is in the article.
“Perhaps BBC needs to geofence and make their articles unavailable globally.“
I live in the US and had no problem following along with the article. Why should everyone else be denied access to the BBC because of your reading comprehension issues? Perhaps, in the future you should just ignore HN posts based on BBC articles.
It makes no sense to talk about this as per hour though when it's gig jobs that are worked sporadically. 4 deliveries per hour isn't realistic either, so there really is no way to know what they are talking about.
Surely a pinch of critical thinking answers this? 4 deliveries a day isn't going to pay a daily minimum wage. If it did, then we wouldn't have this situation - surely most riders manage more than one delivery every 2 hours and make more than the minimum wage!
When numbers are being presented being clear never hurts. Critical thinking isn’t a key skill a lot of the population has.
I’d assume this was per hour or possibly per shift. If they did a 4-5 hour shift in an evening etc. Best never to make assumptions in these cases though…
Critical thinking will hopefully both let you reject 4/day and the idea that one of the other answers is obvious and unambiguous. If the data is incomplete, treat it as incomplete.
Mainstream journalism is a game of 'say what you see'. Journalists almost always have no deeper understanding of an issue than what they present in their articles, except in political stories, in which case they have pretty good knowledge of the factional relationships between politicians but know little of the policy detail.
I drive Uber (non-food delivery) weeknight evenings and it was super busy shuttling couples to and from restaurants, easily the busiest night of the year. That was what I was basing my comment on.
Maybe there's enough couples out there where we can both be right?
Interesting, I as a non-food delivery Uber driver was super busy all night shuttling couples to and from restaurants. Biggest night of the year thus far.
Keep in mind maybe you were so busy because your fellow delivery drivers were striking and you just picked up their slack.
I left the company last April, but was there 5 years. It is definitely one of the busiest days on the calendar, along with New Year's Day, in the UK anyway.
I think that's a really good point, even if unintentional. You're not inconveniencing most of the end users, but you're definitely inconveniencing the delivery apps who might have been counting on some uptick due to the celebration.
Gig work in general and food delivery specifically is the poster child for the tragedy of ZIRP. These companies somehow took what pizza shops and Chinese restaurants have been doing profitably for decades and with the power of unlimited free money… made it a losing proposition for restaurants, couriers, customers, governments, and even themselves.
Food delivery isn’t a technology problem. It’s a trivial hiring and logistics problem. One that can literally be solved successfully by teenagers. There might have been a market for an ultra-lean driver-as-a-service with an SLA suitable for pizza delivery but I’m not even sure that’s viable.
Pizza shops are vertically integrated, staffed by entry level workers, and still have razor thin margins. It’s not a career, it’s a way to build skills and get a better job.
I have had all kinds of food delivered but the quality really suffers. Pho, BBQ, burgers, teriyaki, burritos, none of it really works for delivery. I have never had great delivery food. It’s always inferior to the restaurant, even from take-out places. Delivery pizza and Chinese places offer dishes specifically suited to survive the rigors of delivery. That’s why their food is mediocre in person. It’s optimized for delivery.
Big food delivery is a fundamentally doomed business because the existing companies are treating this like a logistics problem to be solved by technology when really it’s a product problem. To make this business work you need to sell cheap, simple food that’s still satisfying. That means delivery-specific dishes.
I still don't understand though why people do delivery pizza when decent-quality frozen pizza is often far cheaper than delivery, and it comes out of one's oven piping hot. Unless we're considering folks without ovens.
It’s an immediate convenience when you don’t already have something easy. Something comes up and spoils your plans, you have a bad day, you order some pizza. It’s not something you do all the time.
Delivery pizza is a sustainable business when it’s the only place around that will deliver you hot and ready food right now. Everyone else wins on quality.
Perhaps I've been buying the wrong brands (though I've certainly tried several expensive ones. Frozen and fresh), but I've never been able to cook pizza in my own oven that's as good as even Domino's, let alone somewhere better
I don't think I've ever gotten delivery pizza that also wasn't piping hot, and it didn't require me to pre-buy pizzas ahead of time and the quality is much better from delivery than frozen. I have a local brand of frozen that I really like but they are essentially $10+ now and still aren't actually as good as fresh.
I've not had a frozen pizza that was as good as a mid-quality pizza place.
Even the better ones cheap out on toppings, size and you don't get as much choice in what you have.
I like frozen pizza well enough, and I'll get it from time-to-time, but if I'm going to get pizza, it's more likely to be takeout, because it just tends to be better and take a similar amount of time. It really is expensive though, so it's not something I have often.
The food delivery businesses like Deliveroo and Uber Eat have been fantastic for consumers.
Suddenly we have access to a whole range of restaurants, and even convenience stores, instead of only the dodgy takeaway pizzas, kebabs, and 'Chinese' for what is a very cheap price.
This may not be viable long term because of the low productivity of riders but it's great while the VC money lasts.
Sure it’s nice when the VCs are buying market share but there’s not a profitable business here. Best case you still have some legacy delivery shops when the VCs get tired of burning cash.
In my area both DoorDash and UberEats are ridiculously expensive. GrubHub seems to be the most reasonably, fairly, and transparently priced, but even then it’s a significant premium for a worse experience.
I could just have Amazon, Safeway, or WalMart deliver me frozen microwaveable or stovetop dinner with the rest of my groceries. I would get better food for less money with similar effort at the price of a little planning ahead. When delivery apps charge what it actually costs alternatives become far more appealing.
Food delivery existed long before these companies. They’re literally spending money to buy market share in the hope they can then increase prices and turn a profit. This is exactly what Uber did to cabs. And what these companies have already done in existing markets.
Agreed, and even for those that did offer delivery before, Deliveroo/UE is a significant improvement. My experience of restaurant-led delivery is longer dispatch times, while they wait to build up a significant batch for delivery, and then them struggling to find your address half the time and having you come hunt for them while on the phone. Deliveroo is fast and to my door, with much better choice and UX. Though the charges they add on at the checkout screen are a bit unexpected sometimes
I really didn't notice much difference as a consumer tbh. The restaurants I wanted to eat at ended up a wash since the food didn't do well via delivery, and the rest of them are the regular pizza, kebabs, indian and chinese takeaways that were always there anyway. There's just more of them now, but they're all pretty much the same.
What I did notice, was the prices going up if looking at the delivery company websites, so now I just go to the restaurants sites again so I'm not paying additional markups.
The biggest "win" is that they all have some form of delivery tracking, so I at least know if they've delivered to someone down the road by accident and I don't have to call up after an hour to find out I'm not getting my food ¯\_(ツ)_/¯
On paper it's attractive; there were still loads of restaurants that didn't do delivery, because they didn't want to do the hiring and admin of taking them. These companies came and offered them the logistics, tech, vehicles, staff, apps (= discoverability), etc, without the risk of hiring people themselves but not having enough work for them. It was very attractive for restaurants that didn't do delivery yet.
And on paper it was attractive for delivery people, who in theory have jobs all the time instead of only a few hours at the busiest time of night, to be sent home when it went quiet.
But that was all on paper. In practice the intermediary company creamed off the money that would otherwise go entirely to the restaurant and the delivery person. And it wasn't enough.
Who would've thought that cramming a whole team of developers and expensive cloud resources on top of the notoriously thin margin food business could have failed?
I remember when Silicon Valley made fun of the concept 10 years ago and I have made a point of never installing any such apps on my phone.
> Food delivery isn’t a technology problem. It’s a trivial hiring and logistics problem.
It doesn't matter how you classify the problem; food delivery apps have a ton of advanced logistics going on behind the scenes that the basic "pizza shop delivery" of decades past don't have.
Consider route optimization with multiple restaurants and multiple stops, area incentives for drivers, recommendation algorithms for consumers that take into account time of day + location, etc.
It does if you care about building a viable business.
> food delivery apps have a ton of advanced logistics going on behind the scenes that the basic "pizza shop delivery" of decades past don't have.
Pizza shops don’t have advanced logistics because they don’t need it. A pizza shop can already saturate multiple drivers.
> Consider route optimization with multiple restaurants and multiple stops, area incentives for drivers, recommendation algorithms for consumers that take into account time of day + location, etc.
But this complexity isn’t necessary and the tiny increase in efficiency is less than the cost of the algorithms and systems to run them.
I really hope these services become unviable and disappear. They all but ruin the in restaurant experience by having half a dozen couriers sat around. They all seem like very nice people just trying to make a living so it’s not their fault but a restaurant isn’t a take-away.
A rider posted on Reddit yesterday how much they made by not striking on valentine's day. They made ~£70 from 10 deliveries. In their area at least that strike seemed to more than double the amount they got on average per delivery.
77 comments
[ 4.1 ms ] story [ 146 ms ] threadThere was a trending tiktok by economist Kyla Scanlon on the topic of "subsidizing affluence" and how these services were able to be offered so cheap because of incredibly low interest rates and investment. Rates have risen dramatically, affecting both the appetite of debt for start-ups and the spending power of consumers. Shareholders recognised this, and it showed through Deliveroo's historically bad IPO.
Ultimately, I suspect Deliveroo will continue to underpay (relative to the cost-of-living) because of the poverty trap — poor people don't have many options, and being underpaid as a Deliveroo rider may be the only option for survival in London and other similarly major cities.
At the moment the whole business model, and any plausible path to profitability, relies on squeezing riders as much as possible because (1) they are the main cost, (2) they have very low productivity (number of deliveries per hour), and (3) customers do not want to pay that much for delivery. Fees paid by customers have increased, and restaurants also often charge a different, higher price when ordering through Deliveroo and maybe this is getting to the limit of what the market will bear... So there is not much wiggle room.
In France, some restaurants give a 10% discount if you order take away. But I hope they don't do it for deliveries through these companies. This lowers the global quality level. You can't have the same quality with one cook and 10 tables than one cook, 10 tables and 50 deliveries per hour.
I mean, the solution is fairly obvious - hire more cooks if you are serving more food.
Resturants will either handle this properly or quickly go out of business.
[1] https://www.cnn.com/2023/12/05/business/ghost-kitchens-were-...
I also doubt it’s a good decision to invest in bigger real estate and more employees while the delivery companies are always on the edge of going bankrupt or being regulated.
Also, a restaurant is not an easy to scale business : most of their value is a mix between the location and the cooking team. You can’t easily change one (or both) without changing your restaurant uniqueness.
Whenever I read something like this on HN it makes me realise just how out of touch tech people are with the real world. Most of the people here work on companies that never were or never will be profitable or break even, it's just burning investors money or building your business on huge amounts of money until you get a monopoly on the market. Restaurants are working in the real world, where you don't get all that free money, you can't realistically scale, the margins are thin and the employees are hard to keep.
Money being tight doesn't mean you no longer have to provide good service to attract customers. Running a business is hard for a reason. If it was easy, everyone would do it.
I support capitalism, but I feel like these are exactly the things where govt should regulate to create fairness. Let's just squeeze each other because markets.
There isn't a whole lot of money to be had in the delivery business. Consumers already feel costs are too high. Its not like these companies are insanely profitable and taking it all for themselves.
> To make the minimum national wage we have to make at least four deliveries, which is not as easy as it seems.
On what timeline? Per hour? Per day?
> Delivery Job UK claimed its delivery riders were braving the "cold, rain and absurd distances" for deliveries paying "ridiculous values", ranging from £2.80 to £3.15.
On what distance? "Absurd" is not a quantity.
> ...striking Deliveroo riders wanted an increase to a minimum of £5.
Per delivery? Per hour? Per kilometer? Per mile?
> On a Friday night you could make £100 over 4-5 hours, now that's gone
First data point that actually makes some sense. But what do they make now? Why leave an obvious question unanswered and hanging?
> With a minimum fee of £2.80, most might only be making three orders an hour, and then they have to subtract their costs too. Some are making £7 an hour, which in London is barely liveable
Ah, finally!
Why do news organizations do this?
When discussing wages, wage conditions are commonly understood to mean "per hour" since wages are hourly.
Per delivery? Per hour? Per kilometer? Per mile?
This was actually discussed in the article. Per delivery.
https://www.oxfordlearnersdictionaries.com/definition/englis...
https://www.gov.uk/national-minimum-wage-rates
https://www.gov.uk/government/publications/minimum-wage-rate...
That's the whole issue with delivering food: It takes time and is extremely low productivity.
Similarly for wage, I don't know what the national minimum wage is in the UK or how it's defined. It's not like they're cutting a whole lot of print by adding a /hr to those numbers.
National minimum wage in the UK is not enough to remotely live on, most places that have an established deliveroo market.
This is an article on British events on a British website. Those "4 deliveries" did make it obvious they meant minimum wage "per hour" (and it's implied that's it's not easy), even without British context. [traffic, radius only matter wrt. making it hard or easier, but again in context it is implied that 4 deliveries an hour are not easy]
But, anyway, this is all details. The big picture is that food delivery is very low productivity so it is very hard to earn much.
No. It's what I felt as I first read the article.
> This is an article on British events on a British website.
Of course. But it was posted on HN with an international audience. Perhaps BBC needs to geofence and make their articles unavailable globally.
> Those "4 deliveries" did make it obvious
No, it did not, and I explained why. 8 deliveries a day would be hard in Bangalore in a 4 km radius. Besides, it is still unclear what the delivery radius is in the article.
I live in the US and had no problem following along with the article. Why should everyone else be denied access to the BBC because of your reading comprehension issues? Perhaps, in the future you should just ignore HN posts based on BBC articles.
Surely a pinch of critical thinking answers this? 4 deliveries a day isn't going to pay a daily minimum wage. If it did, then we wouldn't have this situation - surely most riders manage more than one delivery every 2 hours and make more than the minimum wage!
I’d assume this was per hour or possibly per shift. If they did a 4-5 hour shift in an evening etc. Best never to make assumptions in these cases though…
https://news.ycombinator.com/item?id=39394839
TLDR: 4 deliveries does not make the "per hour" derivable by critical thinking without further data.
They have terrible editors.
So many couples went out for dinner, the effects from striking delivery workers was probably minimized a bit at least.
Maybe there's enough couples out there where we can both be right?
Keep in mind maybe you were so busy because your fellow delivery drivers were striking and you just picked up their slack.
Food delivery isn’t a technology problem. It’s a trivial hiring and logistics problem. One that can literally be solved successfully by teenagers. There might have been a market for an ultra-lean driver-as-a-service with an SLA suitable for pizza delivery but I’m not even sure that’s viable.
Pizza shops are vertically integrated, staffed by entry level workers, and still have razor thin margins. It’s not a career, it’s a way to build skills and get a better job.
What an incredible blunder.
Big food delivery is a fundamentally doomed business because the existing companies are treating this like a logistics problem to be solved by technology when really it’s a product problem. To make this business work you need to sell cheap, simple food that’s still satisfying. That means delivery-specific dishes.
Delivery pizza is a sustainable business when it’s the only place around that will deliver you hot and ready food right now. Everyone else wins on quality.
Pizza delivery is rarely done for one or two eaters. Only makes sense at >5
Even the better ones cheap out on toppings, size and you don't get as much choice in what you have.
I like frozen pizza well enough, and I'll get it from time-to-time, but if I'm going to get pizza, it's more likely to be takeout, because it just tends to be better and take a similar amount of time. It really is expensive though, so it's not something I have often.
Suddenly we have access to a whole range of restaurants, and even convenience stores, instead of only the dodgy takeaway pizzas, kebabs, and 'Chinese' for what is a very cheap price.
This may not be viable long term because of the low productivity of riders but it's great while the VC money lasts.
In my area both DoorDash and UberEats are ridiculously expensive. GrubHub seems to be the most reasonably, fairly, and transparently priced, but even then it’s a significant premium for a worse experience.
I could just have Amazon, Safeway, or WalMart deliver me frozen microwaveable or stovetop dinner with the rest of my groceries. I would get better food for less money with similar effort at the price of a little planning ahead. When delivery apps charge what it actually costs alternatives become far more appealing.
I would say that in the UK it was really only pizza places that offered delivery.
Now with these apps you can get virtually any type of cuisine delivered from a wide range of restaurants.
The issue really is only profitability: a single delivery is expensive in labour cost while consumers do not want to pay a lot for it.
What I did notice, was the prices going up if looking at the delivery company websites, so now I just go to the restaurants sites again so I'm not paying additional markups.
The biggest "win" is that they all have some form of delivery tracking, so I at least know if they've delivered to someone down the road by accident and I don't have to call up after an hour to find out I'm not getting my food ¯\_(ツ)_/¯
And on paper it was attractive for delivery people, who in theory have jobs all the time instead of only a few hours at the busiest time of night, to be sent home when it went quiet.
But that was all on paper. In practice the intermediary company creamed off the money that would otherwise go entirely to the restaurant and the delivery person. And it wasn't enough.
I remember when Silicon Valley made fun of the concept 10 years ago and I have made a point of never installing any such apps on my phone.
It doesn't matter how you classify the problem; food delivery apps have a ton of advanced logistics going on behind the scenes that the basic "pizza shop delivery" of decades past don't have.
Consider route optimization with multiple restaurants and multiple stops, area incentives for drivers, recommendation algorithms for consumers that take into account time of day + location, etc.
It does if you care about building a viable business.
> food delivery apps have a ton of advanced logistics going on behind the scenes that the basic "pizza shop delivery" of decades past don't have.
Pizza shops don’t have advanced logistics because they don’t need it. A pizza shop can already saturate multiple drivers.
> Consider route optimization with multiple restaurants and multiple stops, area incentives for drivers, recommendation algorithms for consumers that take into account time of day + location, etc.
But this complexity isn’t necessary and the tiny increase in efficiency is less than the cost of the algorithms and systems to run them.
That's obviously not true, since those companies would simply stop doing it if it cost them more than it was earning them.
> It does if you care about building a viable business.
A business is either viable or not viable. It doesn't matter how it's classified.
https://www.reddit.com/r/deliveroos/s/1axFkcCP8J
Strike ? But they are not employees. /s