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On demand food delivery has several major problems that were all very predictable 1) you can't predict how much food to make. On demand food companies were thr

On demand food delivery has several major problems that were all very predictable 1) you can't predict how much food to make. On demand food companies were throwing away 30% of the food they made every night drivers cost ~$25 an hour, and only do ~6 drop offs. 2) lots of idle driver time 3) routes can't be optimized (or only minor optimizations in real-time) 4) on average they are only dropping off 1.3 meals per delivery, making each meal very expensive to deliver I helped start http://Thistle.co http://Thistle.co (only in California) to fix these problems; people order their meals for the week (doesn't work for everyone obviously) and we drop off 3x/week, with optimal routes and many more meals per dropoff. The company has been really capital efficient in doing so, hardly raising any money but doing 10s of millions in revenues.

qhqgwoihqw 8y ago
All accurate and great points. To add a couple more: - Limited meal customization. Want to order an item minus the mushrooms? Too bad, since the meals are prepped ahead of time. - Limited inventory throughout the city. Have you ever not been able to order your favorite dish off Postmates because it was sold out? On demand apps have this problem every night. Source: Worked for an on demand food delivery company.
abalone 8y ago
> On demand food delivery has several major problems that were all very predictable Hold on now, Domino’s is doing just fine. On a tear actually.[1] [1] https://www.fool.com/investing/2018/07/19/dominos-pizza-extends-its-growth-streak.aspx https://www.fool.com/investing/2018/07/19/dominos-pizza-exte...
- stochastic_monk 8y ago
  It’s different when the food is standardized and limited in scope. It also helps that they have corresponding brick-and-mortar stores.
  - drankula3 8y ago
    They are also a nationally recognized band, increasing the perception of legitimacy.
    - abalone 8y ago
      Their brand was absolute trash for awhile. Actually made the pizza taste worse (in blind studies). They turned it around.
  - abalone 8y ago
    True, but OP claimed the entire category of on-demand food delivery has major problems. And 3 out of 4 of their concerns are about delivery logistics not menu standardization. Domino's turnaround shows that the food delivery model can work. (If that sounds funny, read up on how Domino's has improved customer sat regarding their pizza quality in the past few years. It's a great case study, incl. how to do marketing when your brand is in the dumps.)
- kristjansson 8y ago
  I’d imagine the waste factor for pizza ingredients is much lower than other (attempted) on-demand foods. If it didn’t get ordered, it doesn’t get made, and water, flour, pepperoni, tomato sauce, ... aren’t going to go bad in a day (or a week)
- manigandham 8y ago
  Pizza is incredibly high margin with low cost of goods and lots of upsell. It's fast and easy to make and delivery has been priced in over decades. In-store purchases also offset the cost because of the vertical integration. The model is sufficiently different enough to make it extremely viable, and perfectly scalable for the smartphone era.
- notyourday 8y ago
  The biggest product that Domino's sells is not pizza. It is a flag that says "Domino's" that is bought by the people who own the franchises. Domino's competitor is not mom&pop pizza. It is McDonalds/Subway/Arbys/etc So Domino's provides the backend support + marketing + development and for that it gets a hefty fee from whoever attaches Domino's flag to the location.
x0x0 8y ago
I don't see how munchery could possibly be throwing that much food away. 1 - ordering closes (closed?) at 2pm. 2 - I generally ordered Sunday night / Monday am for the coming week: 2 meals for 2 people each. 3 - with price increases over the last 18 months, they're pretty price comparable to delivery. I have a hard time believing there's no gains to having an industrial kitchen rather than a storefront, and from closing ordering at 2pm. Also, Munchery charged $7/delivery, and I tipped $5. So they should have been breaking even at 3.6 deliveries/hour, assuming your $25/hr number...
- lsc 8y ago
  is 30% waste a lot for a restaurant? What is the industry standard there?
  - vkou 8y ago
    30% waste on cheap side ingredients (lettuce) will kill your margins. 30% waste on meat will kill your business.
tnolet 8y ago
Wait, why are all pizza, Indian, Thai, Sushi etc. places in my city doing this and have been for ages if it is so difficult?
- watwut 8y ago
  They specialize on the kind of food that is favorable to this.
- inferiorhuman 8y ago
  Restaurants typically have a much smaller delivery area. Munchery delivered to a large chunk of the Bay Area from one kitchen. Most restaurants typically have a mostly fixed menu. Munchery varied the menu daily. I can't say what Munchery was paying its drivers, in a traditional restaurant or through the bullshit gig companies, driver typically make at or below minimum wage. Most traditional restaurants farm out their site (e.g. bullshit gig companies will handle the photography and pay the photographers a pittance) or have a minimal online presence. Munchery had the overhead of maintaining much more of their online presence. That said Munchery wasn't real-time delivery when I used it. There was an ordering window that closed by mid-afternoon. If I had to guess the constantly rotating menu created a ton of waste. Or maybe they were simply that bad at it.
  - jsemrau 8y ago
    >Munchery delivered to a large chunk of the Bay Area from one kitchen. That's your problem right there. The Bay Area is not dense enough to make this viable.
    - Shivetya 8y ago
      Close, but the real problem is trying to compete with an established business method while claiming an innovative web presence and giving back mean anything. People order food from places they have seen under the idea that being local means they get their food sooner and its fresher and hotter and so on. like the meal kit companies, anything you can do from a centralized site the local companies, home grown or franchise, can do as well. both restaurants and grocery chains co-opted the idea of meal kits and then had the built in neighborhood loyalty.
entity345 8y ago
> 1) you can't predict how much food to make. On demand food companies were throwing away 30% of the food they made every night I'd say that's just how the food business works. A big part of running a restaurant, a food stall, or even a supermarket is to forecast how much food you're going to sell on the day and thus how much supply you need to buy.
withhighprod 8y ago
They never reached 1/100 the scale of ele.me, no wonder they failed
lorenzobr 8y ago
What really kills meal-kit companies is just one thing: churn. If you look at some published data from a while ago, Blue Apron has 15% user retention after one year, Hello Fresh 11%. As a consumer, at first might sound a good idea and convenient to order pre-made food you don't have to cook but soon you realise it gets quite expensive compared to just get your groceries delivered and cook. I don't know in the US, but in Europe for an average family of 3/4 members using meal kit companies is bloody expensive in the long run and you can't even get meals for the entire week. Also if you get 2/3 meals a week, then you have to shop for the remaining days and you inevitably end up wasting food. Personally, I don't event think you can compare meal-kit companies with the likes of UberEats or Deliveroo. The latter can reach economies of scale far more easier than the former.
- vinay427 8y ago
  > I don't know in the US, but in Europe for an average family of 3/4 members using meal kit companies is bloody expensive in the long run and you can't even get meals for the entire week. This is definitely true in the US as well, even in areas with slightly higher prices for groceries in which meal-kit companies still charge their normal prices. You could eat out and get a main dish in one of a variety of restaurants in any city in the US for the price of the meal-kits I found.
- ssharp 8y ago
  There is a difference between meal kit companies like Hello Fresh, Blue Apron, and Plated and fully-prepared companies like Thistle or Freshly. The value-prop of not grocery shopping is there for both but one doesn't require cooking, which is important to some people and one takes the guesswork out of cooking to hopefully make you a better cook, which is important to some other group of people. There is also a difference between those companies and delivery services. Even though UberEats will deliver you freshly made food, you have to order it every day and need to wait for it to be delivered. With these other services, the packages are just delivered to your door in a box and you only need to place the order once a week. Delivery is expensive, so these services are out of reach for your average consumer. However, when you think about it, the people most likely to get a ton of value from prepared foods are people most likely to have a busy job where they make a higher wage than the average consumer. Additionally, user-retention metrics in weekly subscription services can be misleading. If you're still ordering 52 cycles after signing up, you're likely a whale for the service.
mehal 8y ago
Not everything applies to Munchery. Orders were closing ahead of time, so no waste. Drivers had a routes, because they've been delivering multiple orders at the same time. Munchery was a model for me when I tried to run "Dinner delivery" startup in Kyiv, Ukraine, but we were actually partnering with restaurants to prepare foods. - I think big leakage for a Muncher - was a stuff salaries and all the kitchen equipment/space costs

qhqgwoihqw 8y ago

All accurate and great points. To add a couple more: - Limited meal customization. Want to order an item minus the mushrooms? Too bad, since the meals are prepped ahead of time. - Limited inventory throughout the city. Have you ever not been able to order your favorite dish off Postmates because it was sold out? On demand apps have this problem every night. Source: Worked for an on demand food delivery company.

abalone 8y ago

> On demand food delivery has several major problems that were all very predictable Hold on now, Domino’s is doing just fine. On a tear actually.[1] [1] https://www.fool.com/investing/2018/07/19/dominos-pizza-extends-its-growth-streak.aspx https://www.fool.com/investing/2018/07/19/dominos-pizza-exte...

stochastic_monk 8y ago
It’s different when the food is standardized and limited in scope. It also helps that they have corresponding brick-and-mortar stores.
- drankula3 8y ago
  They are also a nationally recognized band, increasing the perception of legitimacy.
  - abalone 8y ago
    Their brand was absolute trash for awhile. Actually made the pizza taste worse (in blind studies). They turned it around.
- abalone 8y ago
  True, but OP claimed the entire category of on-demand food delivery has major problems. And 3 out of 4 of their concerns are about delivery logistics not menu standardization. Domino's turnaround shows that the food delivery model can work. (If that sounds funny, read up on how Domino's has improved customer sat regarding their pizza quality in the past few years. It's a great case study, incl. how to do marketing when your brand is in the dumps.)
kristjansson 8y ago
I’d imagine the waste factor for pizza ingredients is much lower than other (attempted) on-demand foods. If it didn’t get ordered, it doesn’t get made, and water, flour, pepperoni, tomato sauce, ... aren’t going to go bad in a day (or a week)
manigandham 8y ago
Pizza is incredibly high margin with low cost of goods and lots of upsell. It's fast and easy to make and delivery has been priced in over decades. In-store purchases also offset the cost because of the vertical integration. The model is sufficiently different enough to make it extremely viable, and perfectly scalable for the smartphone era.
notyourday 8y ago
The biggest product that Domino's sells is not pizza. It is a flag that says "Domino's" that is bought by the people who own the franchises. Domino's competitor is not mom&pop pizza. It is McDonalds/Subway/Arbys/etc So Domino's provides the backend support + marketing + development and for that it gets a hefty fee from whoever attaches Domino's flag to the location.

x0x0 8y ago

I don't see how munchery could possibly be throwing that much food away. 1 - ordering closes (closed?) at 2pm. 2 - I generally ordered Sunday night / Monday am for the coming week: 2 meals for 2 people each. 3 - with price increases over the last 18 months, they're pretty price comparable to delivery. I have a hard time believing there's no gains to having an industrial kitchen rather than a storefront, and from closing ordering at 2pm. Also, Munchery charged $7/delivery, and I tipped $5. So they should have been breaking even at 3.6 deliveries/hour, assuming your $25/hr number...

lsc 8y ago
is 30% waste a lot for a restaurant? What is the industry standard there?
- vkou 8y ago
  30% waste on cheap side ingredients (lettuce) will kill your margins. 30% waste on meat will kill your business.

tnolet 8y ago

Wait, why are all pizza, Indian, Thai, Sushi etc. places in my city doing this and have been for ages if it is so difficult?

watwut 8y ago
They specialize on the kind of food that is favorable to this.
inferiorhuman 8y ago
Restaurants typically have a much smaller delivery area. Munchery delivered to a large chunk of the Bay Area from one kitchen. Most restaurants typically have a mostly fixed menu. Munchery varied the menu daily. I can't say what Munchery was paying its drivers, in a traditional restaurant or through the bullshit gig companies, driver typically make at or below minimum wage. Most traditional restaurants farm out their site (e.g. bullshit gig companies will handle the photography and pay the photographers a pittance) or have a minimal online presence. Munchery had the overhead of maintaining much more of their online presence. That said Munchery wasn't real-time delivery when I used it. There was an ordering window that closed by mid-afternoon. If I had to guess the constantly rotating menu created a ton of waste. Or maybe they were simply that bad at it.
- jsemrau 8y ago
  >Munchery delivered to a large chunk of the Bay Area from one kitchen. That's your problem right there. The Bay Area is not dense enough to make this viable.
  - Shivetya 8y ago
    Close, but the real problem is trying to compete with an established business method while claiming an innovative web presence and giving back mean anything. People order food from places they have seen under the idea that being local means they get their food sooner and its fresher and hotter and so on. like the meal kit companies, anything you can do from a centralized site the local companies, home grown or franchise, can do as well. both restaurants and grocery chains co-opted the idea of meal kits and then had the built in neighborhood loyalty.

entity345 8y ago

> 1) you can't predict how much food to make. On demand food companies were throwing away 30% of the food they made every night I'd say that's just how the food business works. A big part of running a restaurant, a food stall, or even a supermarket is to forecast how much food you're going to sell on the day and thus how much supply you need to buy.

withhighprod 8y ago

They never reached 1/100 the scale of ele.me, no wonder they failed

lorenzobr 8y ago

What really kills meal-kit companies is just one thing: churn. If you look at some published data from a while ago, Blue Apron has 15% user retention after one year, Hello Fresh 11%. As a consumer, at first might sound a good idea and convenient to order pre-made food you don't have to cook but soon you realise it gets quite expensive compared to just get your groceries delivered and cook. I don't know in the US, but in Europe for an average family of 3/4 members using meal kit companies is bloody expensive in the long run and you can't even get meals for the entire week. Also if you get 2/3 meals a week, then you have to shop for the remaining days and you inevitably end up wasting food. Personally, I don't event think you can compare meal-kit companies with the likes of UberEats or Deliveroo. The latter can reach economies of scale far more easier than the former.

vinay427 8y ago
> I don't know in the US, but in Europe for an average family of 3/4 members using meal kit companies is bloody expensive in the long run and you can't even get meals for the entire week. This is definitely true in the US as well, even in areas with slightly higher prices for groceries in which meal-kit companies still charge their normal prices. You could eat out and get a main dish in one of a variety of restaurants in any city in the US for the price of the meal-kits I found.
ssharp 8y ago
There is a difference between meal kit companies like Hello Fresh, Blue Apron, and Plated and fully-prepared companies like Thistle or Freshly. The value-prop of not grocery shopping is there for both but one doesn't require cooking, which is important to some people and one takes the guesswork out of cooking to hopefully make you a better cook, which is important to some other group of people. There is also a difference between those companies and delivery services. Even though UberEats will deliver you freshly made food, you have to order it every day and need to wait for it to be delivered. With these other services, the packages are just delivered to your door in a box and you only need to place the order once a week. Delivery is expensive, so these services are out of reach for your average consumer. However, when you think about it, the people most likely to get a ton of value from prepared foods are people most likely to have a busy job where they make a higher wage than the average consumer. Additionally, user-retention metrics in weekly subscription services can be misleading. If you're still ordering 52 cycles after signing up, you're likely a whale for the service.

mehal 8y ago

Not everything applies to Munchery. Orders were closing ahead of time, so no waste. Drivers had a routes, because they've been delivering multiple orders at the same time. Munchery was a model for me when I tried to run "Dinner delivery" startup in Kyiv, Ukraine, but we were actually partnering with restaurants to prepare foods. - I think big leakage for a Muncher - was a stuff salaries and all the kitchen equipment/space costs