7 ms·

Why is this article dodging the question of whether the restaurants are making or losing money due to food delivery apps? > We didn’t have a choice, we caved.

by emtel 6y ago

Why is this article dodging the question of whether the restaurants are making or losing money due to food delivery apps? > We didn’t have a choice, we caved. Revenue from these platforms made a difference for our business Ok, I assume it's a positive difference... > even more aware of the amount of money that we get withdrawn from our account just to have our name on their site. Wait, so you're losing money? I don't get it. I hardly ever use any of these apps because the mark-up is insane, and it's rarely quicker than just picking the food up myself. I also don't trust any of them after the doordash tipping fiasco. And, I have no doubt that choosing to order from the restaurant directly means more money for the restaurant. But, either the apps are bringing in more sales than the restaurants can drum up on their own, and it's therefore mutually beneficial, OR the restaurants are losing money on every app sale, in which case they should pull out. Am I wrong?

yegle 6y ago
I read it as using these service providers will make them loss less money comparing to solely relying on phone orders. If the restaurant has enough cash, they might accept a temporary loss to ride out the pendamic.
chii 6y ago
> more sales than the restaurants can drum up on their own, and it's therefore mutually beneficial while mutually benefitial, i can understand how a restaurant don't want to become a commodity in a platform they don't control. The food delivery apps unify food delivery into a single platform from which the customer orders, and thus, every restaurant is now in heavy competition with every other restaurant directly. Customers comparing prices is the number one thing that decreases restaurant profits. Therefore, while the sales are up due to these apps, they cannot keep the same margins as before. Being commoditized in someone else's platform is not a great business strategy.
- paxys 6y ago
  I feel like the fact that prices are a lot higher across the board on delivery apps than at the restaurant itself disproves that theory.
  - cinquemb 6y ago
    At least in Jakarta, this is the opposite of the case. The big banks (and investors) have found out that its easier/safer to lend money to these delivery platforms who then pass on deals to people who buy from all the little shops (and big chains) on their platforms, than to all these little mom and pop shops, while still paying full price for the orders at pick up. Before corona, me and my wife would be at the mall and order thru grab or gojek for the store 10 feet away because it was cheaper lol
    - rahimnathwani 6y ago
      How long has this been going on? Perhaps the delivery platforms in Jakarta are still running in 'land grab' mode? The situation you've described (selling to you for less than their cost) obviously isn't sustainable forever.
      - cinquemb 6y ago
        For about a 2 years now, and yeah I know it isn't sustainable forever, but I know I'll be spending less if the prices go up.
- fredsanford 6y ago
  Well... they can wake up and smell the 90s by spending the cash to have a website. I'll bet that one month of paying grubdash costs more than getting a website up. Or just complain, like most of the places around me.
  - kelnos 6y ago
    Even if they have a nice, modern website, there's still credit card handling. Many customers will be put off by having to enter their CC details into yet another website. Things like Stripe alleviate this to some degree, but it's still a hurdle. And unfortunately people trust mobile apps more than they do websites, so unless you expect every local pizza shop to have its own mobile app (and expect customers to have enough brand loyalty to install it), that's not going to change.
    - jghn 6y ago
      This is why I use these services. I’d prefer to give my CC info to a single company and not trust it to who knows how many fly by night CC processing companies in use by individual restaurants
  - cinquemb 6y ago
    Funny thing is, if the website/app is crap, as a someone ordering, you will still want to use the food delivery service infrastructure from the app anyways because their system is likely to be better.
    - pdonis 6y ago
      > their system is likely to be better More than likely to be better IMO--if it's not better then the food delivery app is going to be out-competed by some other one that is better. Providing the app and its infrastructure is the app company's core business. It's not the restaurant's core business. And network effects mean the app has a strong incentive to be a centralized platform and to commoditize its complements, which are the individual restaurants.
WrtCdEvrydy 6y ago
Business side it's 30% cost... so you pay 30% to Grubhub for that hour and they nickel the customer too... Honestly I've worked with someone who basically would put a card in each Grubhub order saying 'Call us for a 10% discount, use code "PHONE"'
kelnos 6y ago
> But, either the apps are bringing in more sales than the restaurants can drum up on their own, and it's therefore mutually beneficial, OR the restaurants are losing money on every app sale, in which case they should pull out. Am I wrong? You're not wrong, but you're missing some of the nuance to how the relationship has evolved. Even if there's a benefit, a service like Grubhub can easily become parasitic as they grab more of the market. It's getting to the point that you'll get basically zero delivery orders if you try to go your own way and hire your own delivery drivers, and expect people to use your website or -- god forbid -- call you on the phone to place orders. People very often to use these apps to figure out what they want to order. The other way around ("hey, I really want Bob's Pizza tonight, lemme open up Grubhub and see if they're on there") is becoming less and less common. So restaurants are forced to be on these platforms to get any takeout business at all, but find that they have to work twice (or more) as hard to make up for all the fees the platform charges. And the platform can get away with it, because they've squeezed out the option of self-delivery for most places. > I hardly ever use any of these apps because the mark-up is insane, and it's rarely quicker than just picking the food up myself. I wish there were more people like you, but it seems like you're a dying breed.
- emtel 6y ago
  I'm open to the possibility that GrubHub and others are a net negative for the industry on balance. But I'd still like to know what the actual margins are for the restaurants on app orders before I make up my mind about that.
- satvikpendem 6y ago
  Exactly, think of these apps as more of a lead generation service, or a search engine even, and being on their platform, even losing money, is akin to taking out search engine ads. Sure, perhaps the first few times people you lose money, but you might gain more long term by having repeat customers, who may even order directly once they see how much they spend in service fees at the end of the receipt. I know I definitely have.

by emtel 6y ago

yegle 6y ago

I read it as using these service providers will make them loss less money comparing to solely relying on phone orders. If the restaurant has enough cash, they might accept a temporary loss to ride out the pendamic.

chii 6y ago

> more sales than the restaurants can drum up on their own, and it's therefore mutually beneficial while mutually benefitial, i can understand how a restaurant don't want to become a commodity in a platform they don't control. The food delivery apps unify food delivery into a single platform from which the customer orders, and thus, every restaurant is now in heavy competition with every other restaurant directly. Customers comparing prices is the number one thing that decreases restaurant profits. Therefore, while the sales are up due to these apps, they cannot keep the same margins as before. Being commoditized in someone else's platform is not a great business strategy.

paxys 6y ago
I feel like the fact that prices are a lot higher across the board on delivery apps than at the restaurant itself disproves that theory.
- cinquemb 6y ago
  At least in Jakarta, this is the opposite of the case. The big banks (and investors) have found out that its easier/safer to lend money to these delivery platforms who then pass on deals to people who buy from all the little shops (and big chains) on their platforms, than to all these little mom and pop shops, while still paying full price for the orders at pick up. Before corona, me and my wife would be at the mall and order thru grab or gojek for the store 10 feet away because it was cheaper lol
  - rahimnathwani 6y ago
    How long has this been going on? Perhaps the delivery platforms in Jakarta are still running in 'land grab' mode? The situation you've described (selling to you for less than their cost) obviously isn't sustainable forever.
    - cinquemb 6y ago
      For about a 2 years now, and yeah I know it isn't sustainable forever, but I know I'll be spending less if the prices go up.
fredsanford 6y ago
Well... they can wake up and smell the 90s by spending the cash to have a website. I'll bet that one month of paying grubdash costs more than getting a website up. Or just complain, like most of the places around me.
- kelnos 6y ago
  Even if they have a nice, modern website, there's still credit card handling. Many customers will be put off by having to enter their CC details into yet another website. Things like Stripe alleviate this to some degree, but it's still a hurdle. And unfortunately people trust mobile apps more than they do websites, so unless you expect every local pizza shop to have its own mobile app (and expect customers to have enough brand loyalty to install it), that's not going to change.
  - jghn 6y ago
    This is why I use these services. I’d prefer to give my CC info to a single company and not trust it to who knows how many fly by night CC processing companies in use by individual restaurants
- cinquemb 6y ago
  Funny thing is, if the website/app is crap, as a someone ordering, you will still want to use the food delivery service infrastructure from the app anyways because their system is likely to be better.
  - pdonis 6y ago
    > their system is likely to be better More than likely to be better IMO--if it's not better then the food delivery app is going to be out-competed by some other one that is better. Providing the app and its infrastructure is the app company's core business. It's not the restaurant's core business. And network effects mean the app has a strong incentive to be a centralized platform and to commoditize its complements, which are the individual restaurants.

WrtCdEvrydy 6y ago

Business side it's 30% cost... so you pay 30% to Grubhub for that hour and they nickel the customer too... Honestly I've worked with someone who basically would put a card in each Grubhub order saying 'Call us for a 10% discount, use code "PHONE"'

kelnos 6y ago

> But, either the apps are bringing in more sales than the restaurants can drum up on their own, and it's therefore mutually beneficial, OR the restaurants are losing money on every app sale, in which case they should pull out. Am I wrong? You're not wrong, but you're missing some of the nuance to how the relationship has evolved. Even if there's a benefit, a service like Grubhub can easily become parasitic as they grab more of the market. It's getting to the point that you'll get basically zero delivery orders if you try to go your own way and hire your own delivery drivers, and expect people to use your website or -- god forbid -- call you on the phone to place orders. People very often to use these apps to figure out what they want to order. The other way around ("hey, I really want Bob's Pizza tonight, lemme open up Grubhub and see if they're on there") is becoming less and less common. So restaurants are forced to be on these platforms to get any takeout business at all, but find that they have to work twice (or more) as hard to make up for all the fees the platform charges. And the platform can get away with it, because they've squeezed out the option of self-delivery for most places. > I hardly ever use any of these apps because the mark-up is insane, and it's rarely quicker than just picking the food up myself. I wish there were more people like you, but it seems like you're a dying breed.

emtel 6y ago
I'm open to the possibility that GrubHub and others are a net negative for the industry on balance. But I'd still like to know what the actual margins are for the restaurants on app orders before I make up my mind about that.
satvikpendem 6y ago
Exactly, think of these apps as more of a lead generation service, or a search engine even, and being on their platform, even losing money, is akin to taking out search engine ads. Sure, perhaps the first few times people you lose money, but you might gain more long term by having repeat customers, who may even order directly once they see how much they spend in service fees at the end of the receipt. I know I definitely have.