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San Francisco Emergency Order Says Delivery Apps Must Cap Restaurant Fees at 15%

43 points by analyst74 7y ago

praveenperera 7y ago
I’m sure this will have no unintended consequences...
- lonelappde 7y ago
  It's fine. Just like with the freelancer's law, local restaurants and delivery services will be replaced by out of town ones. So you'll be able to get dinner delivered from Palo Alto instead. Plenty of time to preheat the oven for your cold delivery.
pertymcpert 7y ago
I don't understand how these apps get away with such high commissions. Some of these are 30% of the total order. For someone to deliver the food. And they already charge a service fee and a delivery fee to the customer. Double dipping bastards all of them. Their platform can't cost that much to run either, no need for such high margins.
- caseydm 7y ago
  I was thinking the same thing. I used Doordash a while back and figured they were making good money based on the fees they were adding in, such as delivery fee, service fee, tips to the driver, maybe a markup on menu items. But then I discovered they are also charging commission to the restaurant for up to 30%! I've been driving to restaurants for takeout more often because the apps seem shady to me.
  - JCharante 7y ago
    The restaurants could just offer delivery (in the US I've seen some Chinese and Thai restaurants do this). Where I live a lot of restaurants don't care enough about the commision to save by hiring a delivery driver (as in I've called because my friend was going to swing by to pick some up, and we got told to just order delivery off an app). On the other hand the more expensive western restaurants are more sensitive to delivery apps and offer their own delivery. It makes sense that they're sensitive to 20% or even 30%. English teacher asistants get paid around 25k/hr, and western places charge 100k-140k per dish. On the other hand you can get a meal for 40k at more local restaurants. Strangely enough, a lot of milk tea stores are cheaper through delivery... A drink might be 50k or 60k in store or pick up, but through delivery apps they offer them for 20k-30k.
    - freepor 7y ago
      You can make a milk tea in a rat infested hellhole if it’s being delivered.
      - uh_yikes 7y ago
        as long as its on a rapid boil then it sounds like every trip to India I’ve ever taken. This comment has no substance. Just a random thought.
      - JCharante 7y ago
        Although in this case the locations are the same. Just like in the US, the delivery drivers go inside to pick up the orders. Ghost restaurants aren't really a thing yet here.
- WWLink 7y ago
  All the prices are marked up, there's a service fee, a delivery fee, and oh yeah, you're definitely expected to tip lol. I admit though, it's pretty sweet and I've been using it for a few places while there's free delivery! For other places, haha. Pizza hut's $10 pizza costs $20 + tip when you order it for delivery, with all the fees. o_O
- deleted 7y ago
  [deleted]
- lonelappde 7y ago
  I agree. You should start a competing business with lower prices and and drive them out. Guess what? It costs more than $3 to drive a $10 order to your apartment.
  - Engineering-MD 7y ago
    Surely the delivery cost is independent of the order cost?
    - curryst 7y ago
      I think the order cost increases the variability of the delivery cost. Anecdata, but I have noticed for larger orders, the driver often spends more time at the restaurant waiting for the order to be ready. Ideally the delivery company would know when it will be ready; but that comes with a certain risk that they are late, which means cold food. And to add on to that, if customers complain about cold food, the larger the order means the larger the refund (hopefully).
gbronner 7y ago
This will be an interesting natural economics experiment. An economist would say that it shouldn't matter- that as long as restaurants can adjust prices, and consumers are price sensitive, that the total delivery cost should stay about the same. Curious what will happen.
- skybrian 7y ago
  If the restaurant raises menu prices then pick-up orders would be more expensive. Maybe they don't want to do that? Another possibility might be that delivery services charge more to consumers. Apparently some delivery services waived fees during the crisis? They could stop doing that, keeping their revenue per delivery the same. (But this would encourage consumers to switch to pick-up.)
  - chongli 7y ago
    They can raise menu prices and offer a pickup discount. Chinese restaurants near me have been doing this for as long as I can remember.
malandrew 7y ago
Seems like the restaurant industry should be super grateful. Without these delivery networks, most restaurants would have totally shutdown and have no hope of surviving.
tomatocracy 7y ago
Perhaps a better approach would be a combination of consumer price transparency and banning exclusivity agreements. That way a combination of public shame and competition ought to make this problem go away.
- lonelappde 7y ago
  The local curry house isn't the iOS app store. If they charge too much for delivery you can easily buy from someone else. Especially if it's delivery and you don't have to go to the shop.
lonelappde 7y ago
Why %? What is the correlation between cost of a food order and cost of delivery? There is none. This is absurd politician's syllogisming.

43 points by analyst74 7y ago

praveenperera 7y ago

I’m sure this will have no unintended consequences...

lonelappde 7y ago
It's fine. Just like with the freelancer's law, local restaurants and delivery services will be replaced by out of town ones. So you'll be able to get dinner delivered from Palo Alto instead. Plenty of time to preheat the oven for your cold delivery.

pertymcpert 7y ago

I don't understand how these apps get away with such high commissions. Some of these are 30% of the total order. For someone to deliver the food. And they already charge a service fee and a delivery fee to the customer. Double dipping bastards all of them. Their platform can't cost that much to run either, no need for such high margins.

caseydm 7y ago
I was thinking the same thing. I used Doordash a while back and figured they were making good money based on the fees they were adding in, such as delivery fee, service fee, tips to the driver, maybe a markup on menu items. But then I discovered they are also charging commission to the restaurant for up to 30%! I've been driving to restaurants for takeout more often because the apps seem shady to me.
- JCharante 7y ago
  The restaurants could just offer delivery (in the US I've seen some Chinese and Thai restaurants do this). Where I live a lot of restaurants don't care enough about the commision to save by hiring a delivery driver (as in I've called because my friend was going to swing by to pick some up, and we got told to just order delivery off an app). On the other hand the more expensive western restaurants are more sensitive to delivery apps and offer their own delivery. It makes sense that they're sensitive to 20% or even 30%. English teacher asistants get paid around 25k/hr, and western places charge 100k-140k per dish. On the other hand you can get a meal for 40k at more local restaurants. Strangely enough, a lot of milk tea stores are cheaper through delivery... A drink might be 50k or 60k in store or pick up, but through delivery apps they offer them for 20k-30k.
  - freepor 7y ago
    You can make a milk tea in a rat infested hellhole if it’s being delivered.
    - uh_yikes 7y ago
      as long as its on a rapid boil then it sounds like every trip to India I’ve ever taken. This comment has no substance. Just a random thought.
    - JCharante 7y ago
      Although in this case the locations are the same. Just like in the US, the delivery drivers go inside to pick up the orders. Ghost restaurants aren't really a thing yet here.
WWLink 7y ago
All the prices are marked up, there's a service fee, a delivery fee, and oh yeah, you're definitely expected to tip lol. I admit though, it's pretty sweet and I've been using it for a few places while there's free delivery! For other places, haha. Pizza hut's $10 pizza costs $20 + tip when you order it for delivery, with all the fees. o_O
deleted 7y ago
[deleted]
lonelappde 7y ago
I agree. You should start a competing business with lower prices and and drive them out. Guess what? It costs more than $3 to drive a $10 order to your apartment.
- Engineering-MD 7y ago
  Surely the delivery cost is independent of the order cost?
  - curryst 7y ago
    I think the order cost increases the variability of the delivery cost. Anecdata, but I have noticed for larger orders, the driver often spends more time at the restaurant waiting for the order to be ready. Ideally the delivery company would know when it will be ready; but that comes with a certain risk that they are late, which means cold food. And to add on to that, if customers complain about cold food, the larger the order means the larger the refund (hopefully).

gbronner 7y ago

This will be an interesting natural economics experiment. An economist would say that it shouldn't matter- that as long as restaurants can adjust prices, and consumers are price sensitive, that the total delivery cost should stay about the same. Curious what will happen.

skybrian 7y ago
If the restaurant raises menu prices then pick-up orders would be more expensive. Maybe they don't want to do that? Another possibility might be that delivery services charge more to consumers. Apparently some delivery services waived fees during the crisis? They could stop doing that, keeping their revenue per delivery the same. (But this would encourage consumers to switch to pick-up.)
- chongli 7y ago
  They can raise menu prices and offer a pickup discount. Chinese restaurants near me have been doing this for as long as I can remember.

malandrew 7y ago

Seems like the restaurant industry should be super grateful. Without these delivery networks, most restaurants would have totally shutdown and have no hope of surviving.

tomatocracy 7y ago

Perhaps a better approach would be a combination of consumer price transparency and banning exclusivity agreements. That way a combination of public shame and competition ought to make this problem go away.

lonelappde 7y ago
The local curry house isn't the iOS app store. If they charge too much for delivery you can easily buy from someone else. Especially if it's delivery and you don't have to go to the shop.

lonelappde 7y ago

Why %? What is the correlation between cost of a food order and cost of delivery? There is none. This is absurd politician's syllogisming.