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"Restaurant loses money on the percentage." Do they? For delivery, FOH is out of the equation, so there is a very big cost of running a restaurant that is not

"Restaurant loses money on the percentage." Do they? For delivery, FOH is out of the equation, so there is a very big cost of running a restaurant that is not impacted. "The delivery company loses money on the delivery." They're a software/customer support service. At scale there has to be an inflection point. "I just don’t think a burger can be profitably delivered 15 minutes away for 1.99." It's way more than that... 1) the upfront cost the person pays (these services are sneaky about how this is calculated, often times the menu prices are adjusted for delivery + the hard fee) 2) the amount the restaurant pays 3) tip for the driver. The end user will end up paying $5 for say a $10 meal, and the restaurant might pay $2. I guess the question is - does a person want to spend 30 minutes driving + gas vs. pay $5 for the convenience of delivery for a $10 meal? I think quite a few people will pick the latter.

dehrmann 6y ago
Restaurants and delivery contractors should figure out very quickly if they come out positive on this. Maybe the restaurants won't figure out how much was cannibalization, but they'll know if it's a net loss. If you're losing money with, say Grubhub, you stop working with Grubhub. The only question is if delivery services can find scale and a price point where they're profitable.
fragmede 6y ago
Restaurants aren't software though. The FOH cost doesn't disappear like terminated EC2 instances. The sometimes-lavish furnishings and rent on a pricy, high-profile location with a lot of foot traffic remain, even after firing (human) servers/waiters and other FOH staff. Ghost restaurants, which are restaurants run out of commercial kitchens away from downtown areas, and with no physical presence to speak of, using the Internet to drive orders, are trying out running FOH-less operations, but for an existing restaurant that's a bit more difficult a move to make. (Since a restaurant with ~no FOH staff has no human servers/waiters, maybe we could call that model serverless.)

dehrmann 6y ago

Restaurants and delivery contractors should figure out very quickly if they come out positive on this. Maybe the restaurants won't figure out how much was cannibalization, but they'll know if it's a net loss. If you're losing money with, say Grubhub, you stop working with Grubhub. The only question is if delivery services can find scale and a price point where they're profitable.

fragmede 6y ago

Restaurants aren't software though. The FOH cost doesn't disappear like terminated EC2 instances. The sometimes-lavish furnishings and rent on a pricy, high-profile location with a lot of foot traffic remain, even after firing (human) servers/waiters and other FOH staff. Ghost restaurants, which are restaurants run out of commercial kitchens away from downtown areas, and with no physical presence to speak of, using the Internet to drive orders, are trying out running FOH-less operations, but for an existing restaurant that's a bit more difficult a move to make. (Since a restaurant with ~no FOH staff has no human servers/waiters, maybe we could call that model serverless.)