6 ms·

There are multiple competing delivery services and at least some of them have a history of charging below cost. It would initially appear that this is a good pr

There are multiple competing delivery services and at least some of them have a history of charging below cost. It would initially appear that this is a good problem to leave to the free market: in the absence of regulation, the price charged will get pretty close to the delivery company's cost of doing business. Why did the market fail here?

jarjoura 7y ago
I guess because it's a double sided market with exclusivity deals. Consumers aren't going to have multiple service accounts just to get access to delivery. So if you want to reach the most people, you need to make deals with the devil. In this case, DoorDash, Caviar, or GrubHub. It made sense from a brand/marketing cost back when things were normal, but now that it's the primary way to fund your operation, the cost-benefit doesn't make sense anymore, but you're still locked in.
- nerfhammer 7y ago
  > Consumers aren't going to have multiple service accounts just to get access to delivery I think that's a pretty questionable assumption
downerending 7y ago
Did it? Markets don't reach equilibrium instantly, and as most people have noticed, we live in unpredictable and high-risk times, from a business perspective. Arguably some of the first sellers of security certificates were wildly overpricing their product. Should the government really have stepped in? [I don't have a dog in this fight, as I think having strangers prepare your food during a pandemic is unwise.]
diebeforei485 7y ago
Stay-at-home orders (dine-in not allowed, takeout discouraged) gave the delivery apps way too much buying power over restaurants. The market isn't free because restaurants can't really choose their customers anymore, so it makes sense to have safeguards.
NovemberWhiskey 7y ago
It's really not clear it did. The market, as such, changed overnight: tables in restaurants are worthless (for some period) and internet delivery is presumably a roaring trade. Restaurants have unexpected imbalances in their revenue streams; presumably if this was expected to go on a long time, they'd be renegotiating their contracts with GrubHub et al on the new basis. This is an emergency order, for the period until restaurants can re-open for dining in. The mayor has apparently decided that local, small businesses need to be saved from the terms of their contracts with the third-party aggregators due to the suddenness of the change. I'm a little surprised that the mayor has the authority to tear up those contracts, in any case.
xt00 7y ago
Not sure if anybody knows: 1) some restaurants want to have their own employee's deliver food as a way to avoid paying these costs to the delivery services like uber eats, door dash, etc -- is that something that is "against the rules" if you have one of these services? 2) if you have one service like uber eats at your restaurant, can you have more than one? 3) are there monthly minimums that restaurants have to pay? A lot of these delivery service fees make sense when its a portion of the business that sort of "grows the restaurants footprint" -- sort of everybody wins mentality -- but in this case if by mandate you can't have people in your restaurant, then these delivery services essentially are granted temporary monopolies on a restaurants entire business -- so makes sense that something has to be done when such a dramatic change has occurred.
- NovemberWhiskey 7y ago
  > something has to be done Unfortunately I think that is the single premise on the back of which most really terrible public policy gets created.

jarjoura 7y ago

I guess because it's a double sided market with exclusivity deals. Consumers aren't going to have multiple service accounts just to get access to delivery. So if you want to reach the most people, you need to make deals with the devil. In this case, DoorDash, Caviar, or GrubHub. It made sense from a brand/marketing cost back when things were normal, but now that it's the primary way to fund your operation, the cost-benefit doesn't make sense anymore, but you're still locked in.

nerfhammer 7y ago
> Consumers aren't going to have multiple service accounts just to get access to delivery I think that's a pretty questionable assumption

downerending 7y ago

Did it? Markets don't reach equilibrium instantly, and as most people have noticed, we live in unpredictable and high-risk times, from a business perspective. Arguably some of the first sellers of security certificates were wildly overpricing their product. Should the government really have stepped in? [I don't have a dog in this fight, as I think having strangers prepare your food during a pandemic is unwise.]

diebeforei485 7y ago

Stay-at-home orders (dine-in not allowed, takeout discouraged) gave the delivery apps way too much buying power over restaurants. The market isn't free because restaurants can't really choose their customers anymore, so it makes sense to have safeguards.

NovemberWhiskey 7y ago

It's really not clear it did. The market, as such, changed overnight: tables in restaurants are worthless (for some period) and internet delivery is presumably a roaring trade. Restaurants have unexpected imbalances in their revenue streams; presumably if this was expected to go on a long time, they'd be renegotiating their contracts with GrubHub et al on the new basis. This is an emergency order, for the period until restaurants can re-open for dining in. The mayor has apparently decided that local, small businesses need to be saved from the terms of their contracts with the third-party aggregators due to the suddenness of the change. I'm a little surprised that the mayor has the authority to tear up those contracts, in any case.

xt00 7y ago

Not sure if anybody knows: 1) some restaurants want to have their own employee's deliver food as a way to avoid paying these costs to the delivery services like uber eats, door dash, etc -- is that something that is "against the rules" if you have one of these services? 2) if you have one service like uber eats at your restaurant, can you have more than one? 3) are there monthly minimums that restaurants have to pay? A lot of these delivery service fees make sense when its a portion of the business that sort of "grows the restaurants footprint" -- sort of everybody wins mentality -- but in this case if by mandate you can't have people in your restaurant, then these delivery services essentially are granted temporary monopolies on a restaurants entire business -- so makes sense that something has to be done when such a dramatic change has occurred.

NovemberWhiskey 7y ago
> something has to be done Unfortunately I think that is the single premise on the back of which most really terrible public policy gets created.