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It's nice that you've made this high effort post to dispute all the "haters" but I'm still confused as to how I can order food for a 5% markup, while some drive

by enlyth 7y ago

It's nice that you've made this high effort post to dispute all the "haters" but I'm still confused as to how I can order food for a 5% markup, while some driver gets paid for 45+ minutes of his time, gas and car maintenance to deliver it to me. Something doesn't add up here, and your uppity attitude just makes me think you're heavily invested.

oldmanhorton 7y ago
Devils advocate: they could keep charging a 5% total markup to the customer but once they're dominant they can start making deals with restaurants under the guise of "if it weren't for us, you'd never get this order to begin with" to get a percentage of the regular meal cost? Seems kinda shitty from a moral standpoint but I agree that the current up charge isn't sustainable.
- enlyth 7y ago
  I appreciate the devil's advocate. To be frank, I just made up the 5% figure, it's based on my observations looking at Uber Eats, Deliveroo, and similar apps. Though the theme seems to be the same, a lot of times you'll see they actually match the in store prices, which makes absolute no sense to me. I had an experience with a Deliveroo driver, who told me the restaurant took an hour to make the food despite saying it was ready and that's why the delivery was almost two hours late. He ended up waiting for one hour at the restaurant for them to make my order. He was asking me to make a complaint against the restaurant because there's not much he can do. My small order for a single person, costing £7.50, took two hours out of this person's life. Now I'll admit I don't know how the system works and whether the people get paid to wait around doing nothing but I very much doubt it, and actually felt bad that I made some person trying to make a living wait an hour at a restaurant so he could use his own vehicle to deliver a burrito to me, possibly at a loss. But yeah everything's fine, let's keep going
  - akho 7y ago
    Why doesn’t matching in-store prices make sense to you? You are not taking up valuable table space, so it ends up cheaper for the restaurant. The delivery service is certainly taking a share of that benefit.
- sid-kap 7y ago
  Yes, they already do this
- GVIrish 7y ago
  The problem with that is that the restaurant business is low margin in the first place. So Uber cutting into the restaurants' margins will quickly make it not worth it for the restaurants. Kind of like how Groupon and Living Social often made these money losing deals with small businesses. Many of those businesses figured out that the one time influx of customers was not at all worth it, which is why both Groupon and Living Social are shells of their former high-flying unicorn selves.
- djhn 7y ago
  The delivery companies charge the restaurant, up to 35% of the meal value. In addition to the delivery fee that is shown to the end user. The figure is probably about 30% on average, can be lowered to 25% or 20% for extremely desirable or high volume restaurants that have brand value and demand. This summary is a bit out of date on the competitive landscape, but gets the basics right: https://www.mckinsey.com/industries/high-tech/our-insights/the-changing-market-for-food-delivery https://www.mckinsey.com/industries/high-tech/our-insights/t...
asutekku 7y ago
Don’t know how it is with uber eats but most other delivery services bundle the meals so one driver can deliver to multiple addresses with one trip.
slewis 7y ago
Economies of scale might give the market owner such a huge advantage in food delivery logistics (coupled with ride logistics etc), that it’s worth losing a lot until inflection. The winner forces everyone out, and gets there by spending more up front.
- enlyth 7y ago
  Yes, if this happens, this is good, from a monetary point of view. If the end goal is that the multi-billion dollar corporation who forces everyone out from the market makes as much money as possible, then this is great, for them at least. I guess there's some praise to be given out because everyone wants to be like that, and wishes they were smart enough to be the first to dive into this burning pile of VC money. But what if the goal is something else like creating a profitable, sustainable and efficient service that benefits both consumers and producers? Too boring for shareholders I guess.
- GVIrish 7y ago
  What food delivery logistics? Ubereats is not tackling any part of the food preparation, food supply chain, or even the problem of keeping food hot. All they're doing is pick up and delivery. There's no moat there and there's not a lot of untapped profit margin there. Ubereats could win in this market tomorrow and it still wouldn't be worth billions.
aresant 7y ago
1 - I am not heavily invested. 2 - Misinformation poisons and I’m trying to surface facts that are being overrun by a narrative. 3 - Misunderstanding one of the largest entrepreneurial & capital efforts in our lifetime, especially on HN, will inevitably slow other entrepreneurs journeys who miss the real story and how to apply these lessons themselves. That’s why I wrote the parent comment. 4 - With your “uppity” comment let’s limit the ad hominem yes? 5 - Broaden your thinking around how “eats” eventually becomes a business worth having. Research “cloud kitchen” concepts - this is an amazing space with giant scale, an unnessesarily distributed supply side (most B+ quality delivery food is more or less the same), and massive loyalty / customer LTV
- enlyth 7y ago
  1 - Fair point, that was me creating a straw man, I got emotional and I apologise 2 - Depends on perspective, from my point of view the narrative on HN at the moment seems to be in your favour and you're not going against much, hence my antagonistic comment 3 - Misunderstanding implies there's merit, which you seem to be very sure of - I'm just saying be careful, this has all the signs of blowing up and if you're right it won't be because there's been writing on the wall 4 - Refer to 1), again, unfortunately I got emotional and my comment could have been written with more substance and less bullshit 5 - Talking about "cloud kitchens" just makes me feel like I'm talking to someone from a different planet.
  - aresant 7y ago
    Thank you for your response, aka why I love HN we can have discussions not pissing contests. You are probably right about my bs martyrdom on this topic, HN is better informed. I am on planet earth although head in clouds :). But really look through the cloud lens of: 1 - people order a lot of takeout, and mostly the same thing with same frequency (Thursday is Chinese night, etc) 2 - Uber owns a lot of data around who is ordering what and when. This data is similar to amazons general product info and how they can manage the insane logistics of same day stocking, not even to mention same day delivery. 3 - setting up a massive production line kitchen in a rent efficient space (aka not retail, industrial at 30% the costs) with the same predictive models amazon uses to stock “same day” is many times more efficient than mom and pop restaurants. 4 - Transport costs can be mitigated with an Uber pool like model or a heavily tip reliant model (like Amazons prime now) Fun fact - Travis K after leaving UBER is heavily investing time and money in cloud kitchen space. https://techcrunch.com/2019/06/28/a-rare-glimpse-into-the-sweeping-and-potentially-troubling-cloud-kitchens-trend/ https://techcrunch.com/2019/06/28/a-rare-glimpse-into-the-sw... https://thespoon.tech/former-uber-ceo-lands-in-the-cloud-kitchen-market/ https://thespoon.tech/former-uber-ceo-lands-in-the-cloud-kit...

by enlyth 7y ago

oldmanhorton 7y ago

Devils advocate: they could keep charging a 5% total markup to the customer but once they're dominant they can start making deals with restaurants under the guise of "if it weren't for us, you'd never get this order to begin with" to get a percentage of the regular meal cost? Seems kinda shitty from a moral standpoint but I agree that the current up charge isn't sustainable.

enlyth 7y ago
I appreciate the devil's advocate. To be frank, I just made up the 5% figure, it's based on my observations looking at Uber Eats, Deliveroo, and similar apps. Though the theme seems to be the same, a lot of times you'll see they actually match the in store prices, which makes absolute no sense to me. I had an experience with a Deliveroo driver, who told me the restaurant took an hour to make the food despite saying it was ready and that's why the delivery was almost two hours late. He ended up waiting for one hour at the restaurant for them to make my order. He was asking me to make a complaint against the restaurant because there's not much he can do. My small order for a single person, costing £7.50, took two hours out of this person's life. Now I'll admit I don't know how the system works and whether the people get paid to wait around doing nothing but I very much doubt it, and actually felt bad that I made some person trying to make a living wait an hour at a restaurant so he could use his own vehicle to deliver a burrito to me, possibly at a loss. But yeah everything's fine, let's keep going
- akho 7y ago
  Why doesn’t matching in-store prices make sense to you? You are not taking up valuable table space, so it ends up cheaper for the restaurant. The delivery service is certainly taking a share of that benefit.
sid-kap 7y ago
Yes, they already do this
GVIrish 7y ago
The problem with that is that the restaurant business is low margin in the first place. So Uber cutting into the restaurants' margins will quickly make it not worth it for the restaurants. Kind of like how Groupon and Living Social often made these money losing deals with small businesses. Many of those businesses figured out that the one time influx of customers was not at all worth it, which is why both Groupon and Living Social are shells of their former high-flying unicorn selves.
djhn 7y ago
The delivery companies charge the restaurant, up to 35% of the meal value. In addition to the delivery fee that is shown to the end user. The figure is probably about 30% on average, can be lowered to 25% or 20% for extremely desirable or high volume restaurants that have brand value and demand. This summary is a bit out of date on the competitive landscape, but gets the basics right: https://www.mckinsey.com/industries/high-tech/our-insights/the-changing-market-for-food-delivery https://www.mckinsey.com/industries/high-tech/our-insights/t...

asutekku 7y ago

Don’t know how it is with uber eats but most other delivery services bundle the meals so one driver can deliver to multiple addresses with one trip.

slewis 7y ago

Economies of scale might give the market owner such a huge advantage in food delivery logistics (coupled with ride logistics etc), that it’s worth losing a lot until inflection. The winner forces everyone out, and gets there by spending more up front.

enlyth 7y ago
Yes, if this happens, this is good, from a monetary point of view. If the end goal is that the multi-billion dollar corporation who forces everyone out from the market makes as much money as possible, then this is great, for them at least. I guess there's some praise to be given out because everyone wants to be like that, and wishes they were smart enough to be the first to dive into this burning pile of VC money. But what if the goal is something else like creating a profitable, sustainable and efficient service that benefits both consumers and producers? Too boring for shareholders I guess.
GVIrish 7y ago
What food delivery logistics? Ubereats is not tackling any part of the food preparation, food supply chain, or even the problem of keeping food hot. All they're doing is pick up and delivery. There's no moat there and there's not a lot of untapped profit margin there. Ubereats could win in this market tomorrow and it still wouldn't be worth billions.

aresant 7y ago

1 - I am not heavily invested. 2 - Misinformation poisons and I’m trying to surface facts that are being overrun by a narrative. 3 - Misunderstanding one of the largest entrepreneurial & capital efforts in our lifetime, especially on HN, will inevitably slow other entrepreneurs journeys who miss the real story and how to apply these lessons themselves. That’s why I wrote the parent comment. 4 - With your “uppity” comment let’s limit the ad hominem yes? 5 - Broaden your thinking around how “eats” eventually becomes a business worth having. Research “cloud kitchen” concepts - this is an amazing space with giant scale, an unnessesarily distributed supply side (most B+ quality delivery food is more or less the same), and massive loyalty / customer LTV

enlyth 7y ago
1 - Fair point, that was me creating a straw man, I got emotional and I apologise 2 - Depends on perspective, from my point of view the narrative on HN at the moment seems to be in your favour and you're not going against much, hence my antagonistic comment 3 - Misunderstanding implies there's merit, which you seem to be very sure of - I'm just saying be careful, this has all the signs of blowing up and if you're right it won't be because there's been writing on the wall 4 - Refer to 1), again, unfortunately I got emotional and my comment could have been written with more substance and less bullshit 5 - Talking about "cloud kitchens" just makes me feel like I'm talking to someone from a different planet.
- aresant 7y ago
  Thank you for your response, aka why I love HN we can have discussions not pissing contests. You are probably right about my bs martyrdom on this topic, HN is better informed. I am on planet earth although head in clouds :). But really look through the cloud lens of: 1 - people order a lot of takeout, and mostly the same thing with same frequency (Thursday is Chinese night, etc) 2 - Uber owns a lot of data around who is ordering what and when. This data is similar to amazons general product info and how they can manage the insane logistics of same day stocking, not even to mention same day delivery. 3 - setting up a massive production line kitchen in a rent efficient space (aka not retail, industrial at 30% the costs) with the same predictive models amazon uses to stock “same day” is many times more efficient than mom and pop restaurants. 4 - Transport costs can be mitigated with an Uber pool like model or a heavily tip reliant model (like Amazons prime now) Fun fact - Travis K after leaving UBER is heavily investing time and money in cloud kitchen space. https://techcrunch.com/2019/06/28/a-rare-glimpse-into-the-sweeping-and-potentially-troubling-cloud-kitchens-trend/ https://techcrunch.com/2019/06/28/a-rare-glimpse-into-the-sw... https://thespoon.tech/former-uber-ceo-lands-in-the-cloud-kitchen-market/ https://thespoon.tech/former-uber-ceo-lands-in-the-cloud-kit...