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In Beijing, it’s often cheaper to have food delivered than to get it yourself
- jatsign 8y agoOff topic, sorry, but curious: Does China still consider itself communist?
- dschn_dstryr 8y agoYes. More specifically, the Communist Party of China is very proud of its ideological roots going back to Marx, Lenin and Mao. They call their economic system socialism with chinese characteristics. But they don't see the current stage to be the full realization of socialism, but as being in the beginning stage of building socialism.
- soperj 8y agoThat's like asking whether the USA considers itself capitalist, when it has all sorts of socialized things, like police, fire dept, sewage, roads, etc.
- tantalor 8y agoNot surprising. It's also cheaper than growing food for yourself. Specialization increases efficiency.
- heisenbit 8y agoBloomberg discovered major secret: When labor is cheap, untaxed and abundant you can provide amazing services.
- thatfrenchguy 8y agoYou mean VC spending here I think
- djanogo 8y agoIt's traded publicly, so it's regular peoples money. ~20% insiders, ~20% institutions, 60% regular investors?.
- b_tterc_p 8y agoHow does this work? If the food costs 80% less on the app than at the register, either the restaurant is losing the lion share of its massive margins (unrealistic) or they’re just subsidizing it with investor money. But that would seem to be impossibly high subsidizing. Is it simply that in China you can quadruple down on Amazons strategy of promising profitability later? The article doesn’t explain this well and even goes to say that this guy is the conservative spender with founding money. If it is the latter... this feels like a terrible strategy.
- gringoDan 8y agoI wonder if these are everyday prices or promotional ones. You could conceivably discount food items for someone's first few orders in order to acquire users (rather than offering a discount, free delivery, etc.). At the end of the day, though, many of those users will churn. I'm happy to pay when VCs subsidize my orders...sounds like a cooked meal + delivery costs less than what the restaurant is paying in food costs. The unit economics of that model are not sustainable.
- deleted 8y ago[deleted]
- dvh 8y agoIf you have restaurant or takeout place you need to pay for pest control, cleaning. You have to be in accessible part of the town. With delivery you don't need those.
- b_tterc_p 8y agoNo, because they already have a restaurant. That’s a sunk fixed cost.
- dragonwriter 8y ago> If the food costs 80% less on the app than at the register, either the restaurant is losing the lion share of its massive margins (unrealistic) or they’re just subsidizing it with investor money. Or the materials cost is low, the unit labor cost of prep is low, but the unit labor cost of handling in house transactions and service is high, and in-house service and takeout are charged similar prices because having separate prices posted in the restaurant depresses in-house service volume and takeout unit profit without improving takeout volume to match. (I suspect it's a little of this plus some investor business-building subsidy.)
- abhinai 8y agoIf robotics matures to a point where food delivery could be fully automated, could we see similar price inversion in the US?
- vamos_davai 8y ago> A deliveryman who would give only his surname, Yang, says he generally makes $15 to $30 a day, and as little as 75¢ for a short trip. Honestly this makes me skeptical of an AI delivery person unless it starts in high cost of labor countries like the USA. It would be silly to try to beat the low human labor costs of China or Southeast Asia.
- arcticfox 8y agoI wonder if this will be some small type of advantage for Western companies going forward. Surely an AI delivery will eventually win in all markets, but who's going to risk trying to build it when the max theoretical benefit is a few dollars per day per worker replaced? In the US the benefit might be 20x that much [1], making the risk worth investing in. [1] assuming a hypothetical hyper efficient drone deliverer costs $15 / day and a SE Asian delivery worker costs $20 / day, that's $5 / day potential. An American delivery worker that costs $100 / day leaves $85 / day potential, or almost 20x as much.
- roystonvassey 8y agoIt is the case in India too with a bunch of food-delivery startups that have mushroomed in the last few years. Lot of discounts, cash-backs and what not. This will not last long but a great time for consumers, for now.
- grawprog 8y agoA friend of mine in Indonesia started something similar. They had 3 people. Their food delivery business basically existed on instagram. Their menu and everything was on there, they took orders over the phone or through instagram, they cooked everything up at home and delivered it themselves by motorcycle. Apparently they were making decent money, but because of local customs regarding women working and such, were not able to continue.
- smn1234 8y agothey had no issues with food regulations, food safety standards, in this model?
- sosborn 8y ago> Indonesia Is my guess.
- grawprog 8y agoI'm guessing there were no such things. I asked about rules, my friend was just kind of confused why there would be rules like that. Apparently it was fairly common to sell food grown and cooked in your home to people, At least the town my friend lived in. There was another group of their friends they competed with that ran a similar business, apparently my friend's chicken was better though, at least she said so. Their food always looked delicious. She'd send pictures. It looked better than most takeout or delivery available to me.
- matz1 8y agoWhile you can sell food cooked from your own kitchen, but you can't just do whatever you want, you will for example get in trouble if you sell something that make people sick.
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- duado 8y agoOne cost advantage to delivery is that you can prepare the food in conditions so horrifying that nobody would eat it if they saw it in person. Some of the Deliveroo-exclusive restaurants in London are like this, inside shipping containers.
- dragonwriter 8y ago> One cost advantage to delivery is that you can prepare the food in conditions so horrifying that nobody would eat it if they saw it in person. That's not a same-restaurant advantage. It's not even really an advantage; restaurants usually don't have open kitchens.
- NullPrefix 8y agoSlightly related, but a downtown restaurant can't have it's kitchen in the outskirts.
- dragonwriter 8y ago> Slightly related, but a downtown restaurant can't have it's kitchen in the outskirts. That seems intuitively obviously true...but it's not, entirely; food needs to be finished on site, of course, but central kitchens for restaurant chains (or groups, where the individual restaurants are branded differently) are a common thing, and very often are located in lower rent outskirts than where many of the supported restaurants are.
- reaperducer 8y agoIf your dinner comes out of the kitchen faster than you think it should, there's a chance it, or is ingredients, were bulk cooked in a central kitchen somewhere else during lunch, then shipped to the restaurant and just assembled or spruced up before being presented to you. Another sign of this is if the building doesn't seem to have enough space for a kitchen of a size needed to serve the number of seats in the dining room.
- La-ang 8y agoThis article made me hungry :D
- La-ang 8y agoWell, Meituan is still losing money according to this article. I am guessing they're still branding and building loyalty before they defer to increasing their costs and generating money through other ventures?
- mrunkel 8y agoNo need to guess. The article states this explicitly.
- billfruit 8y agoI think that has been the promise of "cloud kitchens" everywhere.
- oilin 8y agoNone of that is worth the suffering of having to live in Beijing.
- duxup 8y agoI just want to say it is really hard to read an article with this horrible add flashing next to the text: https://www.bloomberg.com/bbg-gfx/video_loops/2019-meituan/meituan_cover.gif https://www.bloomberg.com/bbg-gfx/video_loops/2019-meituan/m...
- nkozyra 8y agoFor some reason these retro vaporware (aesthetic, not software) graphics are something Bloomberg thinks are good but are almost always just little vanity projects that provide no value and end up being distracting. I really don't know who thought it was a good idea but I'm sure it's fun work for the artists.
- cepp 8y agoJust an anecdote on the price and quality of delivery in China -- I've lived in China for a total of 1.5 years on and off. I've yet, to date, cook a meal myself. 饿了么 and 美团 are so convenient that you can order just about any meal and have it delivered in 20 minutes. Unlike the massive fees and wait time in the US, you'll normally get the meal still hot for less than 5RMB (less than 1USD) for the delivery.
- Treegarden 8y agoI second this. I lived for a semester in shanghai and one of my Chinese friends owned a small restaurant (not a proper fancy one, but also no fast food, idk how to call it) in the shopping mall on the peoples square. Besides the occasional customer, almost everyone ordered by app, resulting in a constant flow of delivery scooter drivers coming and going. She told me that restaurant owners lower prices on the app because app orders are more convenient to them. This is all made possible by the low wage costs of those delivery drivers, which, as a side effect, also 'pollute' scooter lanes in shanghai (something locals complain about). I hope this will be more widespread globally in the future, and then probably done by delivery robots
- throwawaybeij 8y agoReasons why these kind of stuff works in China - People prefer to stay indoors. Air pollution that reduces your lifespan exists in cities like Beijing and Hebei - even Shanghai (certain months during winter time). Extreme heatwaves during summer time that has the city cooking in 40-50C....it gets so hot that people sleep outdoors on sidewalks! (Shanghai will supposedly be unlivable in 30 years due to extreme heatwaves) - cheap(-ish) labor, although now labor costs matches that of Mexico - shitty food sanitary conditions, now with no storefront. Have fun figure out whether your cheap delivered food was cooked with gutter oil or not. - questionable food ingredient quality. tons of fake stuff abounds.
- baybal2 8y agoFood is cheap in China to begin with. The place in an underground garage nearby sells CNY 18 meals - a bow of rice + some stew. Downside? Completely full during lunch hours. In a company I worked before, before the food delivery craze, we were regularly ordering fancy restaurant quality catering into office for like CNY 200 for 20 people. And that in Shanghai. Nowadays, everybody just orders whatever they want themselves.
- analyst74 8y agoI'm curious why those shadow kitchen, or maybe cloud kitchen sound better.. haven't spun up in US. Is it regulatory? Is it restaurateurs here are less quickly at responding to changing markets? not enough cost savings?
- smn1234 8y agodo you mean something similar to UberEats' "Virtual Restaurants" - https://www.bloomberg.com/news/articles/2018-10-24/uber-s-secret-empire-of-virtual-restaurants https://www.bloomberg.com/news/articles/2018-10-24/uber-s-se... and an older article on "ghost restaurants" - https://www.fastcompany.com/3064075/hold-the-storefront-how-delivery-only-ghost-restaurants-are-changing-take-out https://www.fastcompany.com/3064075/hold-the-storefront-how-...?
- kingbirdy 8y agoAnecdotally, I have seen a handful of restaurants that are only set up for delivery, including a Waffle House in the Atlanta area
- rajeshp1986 8y agoThe reason this would work in Beijing or for that matter anywhere in Asia is how the delivery itself works. The delivery guys use scooters or motorcycles in a densely populated area which reduces the cost of delivery. Food delivery startups are not able to scale up in markets like US where delivery guys are expected to use their own cars, pay for gas and high insurance while delivering you $10 dollar food. How are these companies supposed to make profits?
- jdfellow 8y agoIs there some reason that much of the US you couldn't deliver food by bicycle or a small motorcycle like a Honda Super Cub?
- Glyptodon 8y agoPopulation density and delivery demand. But you probably need deliveries/hour/employee higher than is sustainable to make pricing palatable with "free shipping syndrome" and all.
- imgabe 8y agoI live in DC and there are definitely delivery places that use scooters.
- noobermin 8y agoThe US is pretty sprawled and completely disallows it.
- calvinbhai 8y agopopulation density, speeds (in suburbs near the big metro areas, you are still going to be at a much higher speed) which mean not so safe riding speeds, weather (main reason why car is needed for delivery), lack of low cost 2-wheelers are the supporting infra (for maintenance or sales). I think e-bikes + delivery can make a dent, but only in the super dense cities where ebikes/escooters are popular/available.
- 8y ago
- devy 8y ago> Alibaba is betting it can undercut Meituan to death. Both companies are spending billions in an escalating war of subsidies that might persuade even Jeff Bezos to cut his losses. To me, that's the major reason. Meituan is loosing HUGE each month due to subsidies. Don't forget the food delivery giants in Chinese markets with highly concentrated population with billions of subsidies. It only works in selective Chinese Megacities with very cheap human labor and relative cheap and convenient of electric vehicles. It won't work in anywhere else in the world (probably not even in India).
- aznpwnzor 8y agothis is true in SF. further stratification of eating out as a luxury into premium of being at the restaurant and cheaper version of getting it delivered
- purplezooey 8y agoCooking for yourself is an underrated skill. Many young people can't cook an ordinary meal. Just think of how many dust bunnies and ass hairs are in the average take-out.
- foobarbazetc 8y agoCooking for yourself is a good skill but extremely wasteful in terms of lost time and generated waste products.
- apatters 8y agoWith good planning and recipe selection this doesn't have to be true. Soups, stews, pasta, beans, chili etc. can all be cooked in bulk and frozen with no waste. They can incorporate leftover ingredients from other cooking and can be quite cheap.
- deleted 8y ago[deleted]
- Spivak 8y agoI think the point is that if you the median American and you value your non-working time at your hourly wage of $27/hr then you're better off not spending, say 4hr a week, cooking/meal-prepping since you can get a months worth of food for way less than $432. You should really only cook your own meals if: * You enjoy it. * You value/need your money more than your time. * It's difficult to meet your dietary goals with purchased food.
- xnyan 8y agoMy costs are less than 200 a month cooking for myself and family (buy in bulk friends), also I spend time with my family, listen to podcasts and clean while cooking, so directly assigning my wage to the cost per hour of cooking does not tell the whole story. Another factor is health. Maybe in a large city is there is healthy, cost effective take-out but where I live the options are pizza and Chinese food after 8pm.
- combatentropy 8y agoMeituan's head, Wang Xing, "calls Facebook Inc. a copycat for imitating other online services." But then the article goes through his past work: 1. "...in 2003, he dropped out, inspired by Friendster, a Facebook precursor, to create a social network for China." 2. "Their 2007 effort, a popular Twitter look-alike called Fanfou..." 3. "In 2010 he created Meituan in the mold of Groupon..." 4. "...he plans to introduce an Amazon Prime-like subscription service." I myself don't care if you copy an idea. In fact it seems unavoidable, because "there is nothing new under the sun," "everything is a remix," and "ideas are just multipliers." What differentiates your business is your execution. Apple did not come up with new ideas. They took old ideas and did them really, really, really well. They didn't invent the graphical user interface. The iPod was not the first MP3 player. The iPhone was not the first smartphone. The iPad was not the first tablet computer.
- tapirl 8y agoWang Xing holds the same opinions as you. He doesn't criticize Facebook.
- unlimit 8y agoSame thing is happening in India. But I have noticed that sometimes you will get cheaper food by calling the food joints. One side affect of this whole food delivery is that we are eating more from restaurants compared to before when we used to go and eat maybe once in 15 days. Add to it there are always deals going on from the delivery companies. Zomato and Swiggy rule here.