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Chicago will now require food delivery apps to disclose itemized cost breakdown

230 points by akersten 6y ago

troydavis 6y ago
Here's the official policy: https://www.chicago.gov/content/dam/city/depts/dol/rulesandregs/Third%20Party%20Delivery%20Services%20Rules.pdf https://www.chicago.gov/content/dam/city/depts/dol/rulesandr... More from Chicago Tribune: https://www.chicagotribune.com/coronavirus/ct-food-coronavirus-third-party-delivery-rules-20200512-c4aojule7fenbfb7n4hfpa7hiu-story.html https://www.chicagotribune.com/coronavirus/ct-food-coronavir...
imgabe 6y ago
> "Stop believing you are supporting your community by ordering from a 3rd party delivery company," Badalamenti wrote. "Out of almost $1,100 of orders. Your Restaurant you are trying to support receives not even $400. It is almost enough to pay for the food." Then why even have your restaurant on the app? More and more, it seems like "restaurant" is not a viable business. They already don't pay their employees, offloading that on to customers via tips. Where does all the money go? Rent, I guess.
- Spivak 6y ago
  So but really though. Why even list on these apps if they aren’t profitable? What leverage do delivery apps have if a restaurant tells them to go away? Like it would be quite the sales pitch “join our platform and lose money!”
  - hedora 6y ago
    If restaurants don’t pay up, the delivery services provide menus with incorrect, inflated prices to potential customers. They also often screw up orders and let the restaurant deal with the fallout. This law makes the first part of that illegal.
- awinter-py 6y ago
  https://medium.com/@joelleparenteau/why-are-restaurants-so-fucked-ca07c4624745 https://medium.com/@joelleparenteau/why-are-restaurants-so-f... > it wasn’t always this way — margins used to be double, if not triple, what they are now. But for the past couple decades, while menu prices should have been rising to keep up with things like inflation and rapidly increasing rent, price wars instead drove them down ($1 value meal anyone?). All this eroded margins til restaurants were left with nothing but bread crumbs. This failure to manage expectations has simultaneously obliterated margins, all the while skewing and reinforcing our perception of what food should cost.
  - deleted 6y ago
    [deleted]
  - chongli 6y ago
    reinforcing our perception of what food should cost It's supply and demand. Our perception of what food should cost has nothing to do with it (and this argument is an unhelpful culture war framing). Food is in extremely abundant supply. Same goes for cheap restaurant labour (which is often dodging labour laws). What is scarce in this equation is real estate in high traffic locations. That is why rent goes up and margins go down. During the virus lockdown, restaurants are trying to operate a low margin business (food service) while paying high rents for valuable real estate they aren't benefitting from, at all. You don't need a fancy restaurant in a high-traffic urban location to prepare orders for delivery. You'd do just as well with a commissary kitchen in a warehouse somewhere.
  - JAlexoid 6y ago
    Honestly? Common food has become so good that only a few restaurants can produce food and provide experience to justify paying what they ask for it. I can only count one restaurant that surprised me with quality, while a few Michelin star places disappointed here in NYC. But that's a result of food production becoming better and more efficient, while mid-range and high-end restaurants are standing mostly still. I still get the same service and same quality of food from Milos today as I got 20 years ago... and prices only went up. Meanwhile Popeyes and McDonalds have improved dramatically in the last 4 years alone! Unfortunately it took this pandemic for restaurants to start feeling the burn from their conservativism.
- fennecfoxen 6y ago
  Restaurants pay expensive rent, then pay their employees extra to pay expensive rents too (sometimes in the form of a higher minimum wage). To help with this+, big US cities have for the past several decades set about making building competitive housing stock more expensive. Because some hope to escape this through a commute, these cities have also been spending more and more money than ever to build increasingly less-effective transit systems! (+ To help make it worse) Some cities have mandatory health coverage too, and some restaurants cover that without a mandate, but the increasing cost of health care is a snafu that goes all the way up to the federal level, and discussing that will be far less productive.
- fzeroracer 6y ago
  Yes, that's about right. More and more of money in general (and not just restaurants) is being absorbed by rent seekers. That's partially a function of how our economy is functioned around housing and real estate as an investment rather than a place to live, which means said investments are being bought up by the hyper-wealthy and then sat on to earn money or sold at a premium. This is one of those free markets that is directly at odds with the freedom of other markets to operate. Unfortunately I don't see us fixing it any time soon.
  - malandrew 6y ago
    If you're providing a service (discovery+delivery), you're not exactly a rent seeker. Rent seeking implies charging rent on some asset. What's the asset in this instance?
    - fzeroracer 6y ago
      I was more explicitly referring to rent (which is what was mentioned in the comment chain), but I'll bite. Grubhub was known to list restaurants on their app without their permission, mark up the prices and then pocket the difference. Is this not the definition of rent seeking behavior? They're forcefully inserting themselves as a middle-man so that they can siphon money off the top. Regardless of how you define providing a service (landlords are 'providing locational support services') a lot of how Grubhub functions is by obfuscating costs and skimming off the top.
      - JAlexoid 6y ago
        If your definition of rent-seeking is so low, then 90% to 100% of all businesses are rent seeking enterprises. PS: Forcefully inserting? Do they hire goons to force themselves onto the customer?
        fzeroracer 6y ago
        Is there another way you would define Grubhub hosting restaurants on their site without the restaurants permission so they can skim money off the top?
- haram_masala 6y ago
  Many restaurants are still "profitable" because the restaurateurs use the business as a tax shelter. For sure, this isn't the only type of small business that does so, but based on my observations, it's far more rampant in the food service industry than elsewhere.
- fragmede 6y ago
  It's unclear that restaurants are free to opt out. Grubhub "growth hacked" by listing restaurants that didn’t agree to be listed. It becomes a real problem when customers aren't aware, and complain about delivery problems and seek refunds from the restaurant, who didn't agree to do delivery with Grubhub. https://www.theverge.com/2020/1/29/21113876/grubhub-seamless.. https://www.theverge.com/2020/1/29/21113876/grubhub-seamless....
  - TylerE 6y ago
    Yes, but the restaurant can hardly complain if they're receiving full menu price. If they aren't - well, no sale.
    - r00fus 6y ago
      There is the issue of brand dilution. Grubhub screws up the order, pockets a large margin, and restaurant gets an angry call and maybe a bad review on Gmaps or Yelp. I believe DoorDash or Grubhub actually got sued for this and lost.
      - JAlexoid 6y ago
        Pretty sure that neither lawsuit was lost.
    - fzeroracer 6y ago
      That's not true because Grubhub can cause customers to actively lose interest in a restaurant by mucking around with prices. Let's say Grubhub lists a restaurant at 130% of normal menu prices so that they can earn their cut. The perception isn't of restaurant 100% + Grubhub 30%, it's restaurant 130%.
      - hedora 6y ago
        This. I’m pretty sure it’s illegal for businesses to create fake web sites for their competitors, and then post menus with inflated prices on those sites. I’m surprised they haven’t been successfully sued for libel.
- s_dev 6y ago
  >They already don't pay their employees, offloading that on to customers via tips. DoorDash got in trouble for even taking the tips recently enough!
  - hedora 6y ago
    DoorDash switched to a complicated bidding system that means they pay drivers less if you offer a tip. This is equivalent to stealing the tips, but they’re hoping it is complicated enough to confuse a judge into allowing it. Tip in cash if you must use DoorDash. I switched to carry out, or delivery direct from the restaurant. It saves a surprising amount of money and helps local businesses.
rickpmg 6y ago
Silly. Why stop there? I want to know how much of my chicken dinner was labor, the chicken itself, and the spices. The delivery companies aren't cheating anybody. It's not like they change the price after the fact on either the restaurant or the consumer. Lori is doing this to what... get people to bully the delivery companies? Suddenly delivery companies are getting accused of being greedy because... they're suddenly in demand?
awinter-py 6y ago
hooray supply chain transparency consumers are starting to care
- JAlexoid 6y ago
  And... Do you think that anyone will drop the commission rates? UberEats isn't profitable. GrubHub isn't profitable. What do you think is going to happen? They're going to charge less?
  - awinter-py 6y ago
    it's a long road transparency gives consumers the ability to shop on fairness 'we pay our workers better and don't stiff restaurants' isn't a line anyone has every used to sell a product but 'fair trade' has been a real thing for a few decades now without transparency if adding in the transparency justifies a higher price (big if), the luxury consumer economy changes for the better
mc32 6y ago
I hope more localities/jurisdictions do this. More price transparency in everything, plane tickets, medical care, these third party tack on services that shame people into tipping... Bring it on!
- deleted 6y ago
  [deleted]
- SilasX 6y ago
  What about regular retail stores? If you buy a box of cereal should Walmart have to say: Wholesale unit price: $1.40 Retail storage fee: $0.60 rather than Box of cereal: $2.00 ? (Not saying that's necessarily a bad idea, just a thought.) Note: This came up before and I made the same point: https://news.ycombinator.com/item?id=18677023 https://news.ycombinator.com/item?id=18677023
  - aaomidi 6y ago
    This sounds like a great thing
  - mc32 6y ago
    Most retail stores aren’t known for inflating prices while adding marginal convenience. They add a service to me and many. The relationship is more symbiotic than parasitic, as I see it. Looking at this recursively I don’t need the restaurants’ price breakdown, but I think I want to know what the restaurant gets from me if I buy direct vs when we use these services. Same with Uber vs a regular taxi. I want to know their vigorish. Same with hospitals and doctors. I want to know if I’ll be paying $100 for a Tylenol when I can go down to their own pharmacy and get one for pennies.
    - JAlexoid 6y ago
      Well I want to know exactly how much of the money I pay is paid to the waiter and the cook. Why do you get to choose what you want, but I get an FU? The problem with hospitals, is that you aren't even provided with an estimate beforehand. It's a completely different issue.
pkaye 6y ago
> Unfortunately, this unnecessary and overreaching regulation, issued under the guise of the current emergency, will only lead to confusion and hurt restaurants and delivery workers... How will this change lead to confusion?
- domador 6y ago
  It will confuse customers as to the virtue these third-party delivery services. They might even question their own decency in using these services and may change their behavior as customers, possibly in restaurants' but not these middlemen's favor.
  - posguy 6y ago
    Is there any virtue in these third party services, or is concealing their fees allowing them to extract significantly more value than they would otherwise be able to in an honest marketplace?
    - chrisseaton 6y ago
      > Is there any virtue in these third party services If not, why do you think anyone uses them?
    - creddit 6y ago
      Who doesn't conceal their fees? What consumer industry gives you detailed cost break downs? I assume when you are looking at, say, getting a Netflix subscription, your first question is "what portion of my dollars are going to AWS, and of the dollars going to AWS, what go to Intel and of the dollars the go to Intel, what go to buying sand"?
      - dannyw 6y ago
        When I send a payment through my bank, PayPal, or even Western Union, I am always aware of how much the middleman charges and what their rent is. A Netflix subscription is a not a middleman. Food delivery is a middleman: it processes orders on behalf of restaurants. When I hire someone on Thumbtack, I'd LOVE to know how much of my % goes to the cleaner that actually comes and does the work. When I buy something from eBay, I'd LOVE to know how much of my $155 bid goes to the seller, and how much if it is taxed by eBay. When
vadym909 6y ago
Just not fair /s More important as Uber tries to monopolize the space by buying GrubHub. These delivery companies are going to encourage fly-by-night/cloud kitchen operators to increase their margins and reduce prices on the already hurting restaurants. Wish a not-for-profit platform for delivery existed that didn't squeeze the maker or the delivery driver.
- JAlexoid 6y ago
  LOL! Imagine this - a bunch of restaurants band together and scrape... $100k to pay how many developers for how long? To build an efficient competitor to DoorDash+UberEats+Postmates+GrubHub would cost upfront a few billion. The graveyard is littered with corpses of better funded ventures (Amazon had a delivery service, FYI)
- hedora 6y ago
  Yeah. It doesn’t seem hard for a few independently wealthy activists to make a “craigslist for restaurant delivery”, where the restaurants handled the delivery logistics directly, and the website took ~zero cut. I’d switch to that in a heartbeat.
Spivak 6y ago
This seems like such a weird law. Cool for supply chain transparency and all but it feels super political to target delivery apps when literally everyone does commissions for sales. Customers should also be confused that… * Paying $1.99 for an app doesn’t mean the developer receives $1.99. * Buying a product on Amazon when your browser has a referral cookie means the full cost doesn’t go to the seller. * Buying a pack of Oreos at Walmart doesn’t mean that Nabisco gets $3. * Paying $17 to see a movie doesn’t mean the theater gets all of it. * Buying a game on Steam… * Buying a flight on a Travelocity… * Getting a hotel through hotels.com * Renting an AirBnB… Like this list could almost literally go on forever.
- malandrew 6y ago
  I would go even further and suggest that a lot of the high standard of living we enjoyed post WWII can be attributed to all these inefficiencies of cost information. Due to the lack of transparency, pretty much every profession and industry was able to pad enough margin into their business that they could make a decent living. The acceleration of information diffusion means that no one's margin is safe anymore and why we have Bezos' favorite aphorism "Your margin is my opportunity". Historically, margin was not the opportunity except maybe between grocery stores or gas stations (businesses where discovery of two or more providers of the same good/service was trivial and all where easily accessible to the customer). Historically, simply providing the customer with the product or service they need was the opportunity. It was only when discovery became easy (first the yellow pages, later the internet) and competition ceased being local (first franchises, later the internet) that margins eroded across the board.
  - maxerickson 6y ago
    Your argument is that higher prices for goods increase standard of living? Isn't the standard argument based on increased productivity?
    - malandrew 6y ago
      My argument is that less price transparency (due to less competition and diffusion of information about prices) produced less aggressive competition based on margins. You only needed to provide a good or service people wanted and charge them a price they were willing to pay. There was far less need to worry about competing on price.
bit_logic 6y ago
What frustrates me with restaurants (especially the small business mom and pop ones) is that they are not adapting to this situation. When I go to their websites (sometimes they don't even have one), I want to see two things: * A way to order and pay online. * Details on their contactless pickup procedure if I drive there. I want them to bring it to my car, then I can unlock my trunk, and they can place it inside and close it. If they did this, my use of these food delivery apps would drop to almost zero. I don't mind driving to pickup my food, it's even good for my car which has been sitting idle for weeks. But I want it to be contactless pickup. If bringing it to my car is too hard, I might even be ok with waiting outside their restaurant, text them, and they bring it out and place it on a table. But these restaurants have no plan, put no effort into adapting, then complain about high fees for food delivery apps. I don't like these expensive apps either, please provide an alternative!
- BurningFrog 6y ago
  You may overestimate the tech skills of "mom and pop" restaurants. They're one of the shrinking segments where people without much education and language skills can make a decent living with some hard work. If they knew how to maintain the web site you want, they'd probably be in a better paying, more academic career. Disclaimer: This is just my impressions from the outside. I know nothing. But I doubt mom or pop will show up on HN to tell their story.
  - syshum 6y ago
    All they need to do is watch one of the endless youtube ads for squarespace or wix... No one needs web developers anymore, you just need to sign up for a wix account it will do everything /s
    - petre 6y ago
      Shopify rather than those two since they also need to sell a product. Or a new platform (opportunity) that also takes care of food delivery or connects couriers to restaurants.
runako 6y ago
This looks super confusing. So now in addition to presenting me an itemized breakdown of what I am paying, I have to also see an itemized breakdown of what the restaurant is paying? In the example invoice in TFA, how would they allocate the promotional fee without knowing in advance how many customers the fee will generate? How would a consumer know what a fair delivery commission is? Was my driver carrying multiple orders on this trip? If so, should I reduce my tip? Adding this kind of complexity to bills is silly when there are options like ChowNow out there that handle the website + app + booking part for a flat monthly fee. (And let the restauranteurs determine the difficulty of offering delivery themselves.)
- dannyw 6y ago
  I'd be happy with a rule saying... * Order total: $34.00 * Paid to restaurant: $16.20 * Paid to Uber Eats: $12.30 * Paid to driver: $5.50
  - runako 6y ago
    Sounds simple, but there are at least two obvious problems with this approach: 1) It does not take into account that driver comp and Uber Eats commissions may both well be on a sliding scale, where the percentages depend on order volume on prior days/weeks. This will make it difficult for consumers to compare these fees across orders, making the actual numbers less meaningful. Did the driver earn less on this order because it's her first order this month, or because the restaurant doesn't do much volume, or because the driver was carrying 3 orders at the same time and delivery fees scale with mileage or time or some other metric, etc. The calculations may involve more context than is reasonable for a consumer to process. 2) This may reward the richer restaurants. Big restaurants & chains may negotiate better deals and get a bigger "Paid to restaurant" number. Choosing to display information to consumers in this fashion might incentivize people to choose bigger restaurant owners at the expense of small shops like those highlighted in TFA. 3) Doesn't address the invoice shared in TFA, where ~20% of the fee to GrubHub was for a promotion that could be CTA or the like and not directly tied to specific deliveries. So you could implement your suggestion and the restaurant could still post the same invoice & complaint.
badfrog 6y ago
It's not obvious that this well help anything, but at least it's better than Jersey City. They put a cap on how much apps can charge restaurants, so obviously the apps just added more fees for the customer. https://www.nj.com/hudson/2020/05/uber-eats-slaps-surcharge-on-customers-of-jersey-city-eateries-in-response-to-10-commission-cap.html https://www.nj.com/hudson/2020/05/uber-eats-slaps-surcharge-...
- creddit 6y ago
  SF did this as well.
- bogomipz 6y ago
  NYC put forth legislation today to cap at 20%: https://ny.eater.com/2020/5/12/21256244/food-delivery-fee-cap-legislation-nyc https://ny.eater.com/2020/5/12/21256244/food-delivery-fee-ca...
  - JAlexoid 6y ago
    And what is that going to achieve?
- Dylan16807 6y ago
  Making the customers aware of how much they're paying in fees is a good thing. Now delivery services have to compete directly on the fee they charge customers. Before, the customer had no idea if one service was charging a restaurant 20% and another was charging 30%, which is effectively one service subsidizing another.
tzs 6y ago
It says they were announced today (May 12th) and go into effect May 22nd, and applies to "all websites, phone apps and other internet services that offer the sale of food or beverages by a dining establishment". Has this been in the works a while, and the app and site makers knew it was coming, or do the app and site makers really only have 10 days to design and implement this?
cordite 6y ago
Why not healthcare while we are at it? It’s been in the complaint list for over a decade now.
fnord77 6y ago
> including: the menu price of the food, does this mean the apps have to disclose the amount they're marking up the food from the menu prices in the restaurant?
- hedora 6y ago
  That’s my reading of the article. If so, this is huge. I prepared a few DoorDash orders in the past, and noticed that what was normally about $60 for dine in was somehow $110 after a $10 delivery fee and a “50% off delivery” coupon. At that point I started spot checking prices from menus on yelp. I don’t appreciate gaslighting, and haven’t used DoorDash since.
zhoujianfu 6y ago
I ordered kfc on grubhub, one item didn’t come. I marked it as such and they refunded me the cost of the item and the sales tax. They did NOT refund me the pro-rata share of their 12.5% fee or “20%” tip though.
- ikiris 6y ago
  This is why i stopped using grubhub. If they screw up in any way, they try not to make the user whole, or offer any incentive for their time wasted. Doordash is much better
rootsudo 6y ago
Seattle also has locked the price of delivery which is good.
ryansmccoy 6y ago
Are hospitals next?
ebalit 6y ago
It would be a great way to make this market clearer. There is 3 visible actors in each order on these apps. The restaurant, the app and the delivery man are all independent and are putting their reputation on the line. Knowing how much each received is the only way for me to decide if I received the value I expected from each of those actors.

230 points by akersten 6y ago

Here's the official policy: https://www.chicago.gov/content/dam/city/depts/dol/rulesandregs/Third%20Party%20Delivery%20Services%20Rules.pdf https://www.chicago.gov/content/dam/city/depts/dol/rulesandr... More from Chicago Tribune: https://www.chicagotribune.com/coronavirus/ct-food-coronavirus-third-party-delivery-rules-20200512-c4aojule7fenbfb7n4hfpa7hiu-story.html https://www.chicagotribune.com/coronavirus/ct-food-coronavir...

imgabe 6y ago

> "Stop believing you are supporting your community by ordering from a 3rd party delivery company," Badalamenti wrote. "Out of almost $1,100 of orders. Your Restaurant you are trying to support receives not even $400. It is almost enough to pay for the food." Then why even have your restaurant on the app? More and more, it seems like "restaurant" is not a viable business. They already don't pay their employees, offloading that on to customers via tips. Where does all the money go? Rent, I guess.

Spivak 6y ago
So but really though. Why even list on these apps if they aren’t profitable? What leverage do delivery apps have if a restaurant tells them to go away? Like it would be quite the sales pitch “join our platform and lose money!”
- hedora 6y ago
  If restaurants don’t pay up, the delivery services provide menus with incorrect, inflated prices to potential customers. They also often screw up orders and let the restaurant deal with the fallout. This law makes the first part of that illegal.
awinter-py 6y ago
https://medium.com/@joelleparenteau/why-are-restaurants-so-fucked-ca07c4624745 https://medium.com/@joelleparenteau/why-are-restaurants-so-f... > it wasn’t always this way — margins used to be double, if not triple, what they are now. But for the past couple decades, while menu prices should have been rising to keep up with things like inflation and rapidly increasing rent, price wars instead drove them down ($1 value meal anyone?). All this eroded margins til restaurants were left with nothing but bread crumbs. This failure to manage expectations has simultaneously obliterated margins, all the while skewing and reinforcing our perception of what food should cost.
- deleted 6y ago
  [deleted]
- chongli 6y ago
  reinforcing our perception of what food should cost It's supply and demand. Our perception of what food should cost has nothing to do with it (and this argument is an unhelpful culture war framing). Food is in extremely abundant supply. Same goes for cheap restaurant labour (which is often dodging labour laws). What is scarce in this equation is real estate in high traffic locations. That is why rent goes up and margins go down. During the virus lockdown, restaurants are trying to operate a low margin business (food service) while paying high rents for valuable real estate they aren't benefitting from, at all. You don't need a fancy restaurant in a high-traffic urban location to prepare orders for delivery. You'd do just as well with a commissary kitchen in a warehouse somewhere.
- JAlexoid 6y ago
  Honestly? Common food has become so good that only a few restaurants can produce food and provide experience to justify paying what they ask for it. I can only count one restaurant that surprised me with quality, while a few Michelin star places disappointed here in NYC. But that's a result of food production becoming better and more efficient, while mid-range and high-end restaurants are standing mostly still. I still get the same service and same quality of food from Milos today as I got 20 years ago... and prices only went up. Meanwhile Popeyes and McDonalds have improved dramatically in the last 4 years alone! Unfortunately it took this pandemic for restaurants to start feeling the burn from their conservativism.
fennecfoxen 6y ago
Restaurants pay expensive rent, then pay their employees extra to pay expensive rents too (sometimes in the form of a higher minimum wage). To help with this+, big US cities have for the past several decades set about making building competitive housing stock more expensive. Because some hope to escape this through a commute, these cities have also been spending more and more money than ever to build increasingly less-effective transit systems! (+ To help make it worse) Some cities have mandatory health coverage too, and some restaurants cover that without a mandate, but the increasing cost of health care is a snafu that goes all the way up to the federal level, and discussing that will be far less productive.
fzeroracer 6y ago
Yes, that's about right. More and more of money in general (and not just restaurants) is being absorbed by rent seekers. That's partially a function of how our economy is functioned around housing and real estate as an investment rather than a place to live, which means said investments are being bought up by the hyper-wealthy and then sat on to earn money or sold at a premium. This is one of those free markets that is directly at odds with the freedom of other markets to operate. Unfortunately I don't see us fixing it any time soon.
- malandrew 6y ago
  If you're providing a service (discovery+delivery), you're not exactly a rent seeker. Rent seeking implies charging rent on some asset. What's the asset in this instance?
  - fzeroracer 6y ago
    I was more explicitly referring to rent (which is what was mentioned in the comment chain), but I'll bite. Grubhub was known to list restaurants on their app without their permission, mark up the prices and then pocket the difference. Is this not the definition of rent seeking behavior? They're forcefully inserting themselves as a middle-man so that they can siphon money off the top. Regardless of how you define providing a service (landlords are 'providing locational support services') a lot of how Grubhub functions is by obfuscating costs and skimming off the top.
    - JAlexoid 6y ago
      If your definition of rent-seeking is so low, then 90% to 100% of all businesses are rent seeking enterprises. PS: Forcefully inserting? Do they hire goons to force themselves onto the customer?
      - fzeroracer 6y ago
        Is there another way you would define Grubhub hosting restaurants on their site without the restaurants permission so they can skim money off the top?
haram_masala 6y ago
Many restaurants are still "profitable" because the restaurateurs use the business as a tax shelter. For sure, this isn't the only type of small business that does so, but based on my observations, it's far more rampant in the food service industry than elsewhere.
fragmede 6y ago
It's unclear that restaurants are free to opt out. Grubhub "growth hacked" by listing restaurants that didn’t agree to be listed. It becomes a real problem when customers aren't aware, and complain about delivery problems and seek refunds from the restaurant, who didn't agree to do delivery with Grubhub. https://www.theverge.com/2020/1/29/21113876/grubhub-seamless.. https://www.theverge.com/2020/1/29/21113876/grubhub-seamless....
- TylerE 6y ago
  Yes, but the restaurant can hardly complain if they're receiving full menu price. If they aren't - well, no sale.
  - r00fus 6y ago
    There is the issue of brand dilution. Grubhub screws up the order, pockets a large margin, and restaurant gets an angry call and maybe a bad review on Gmaps or Yelp. I believe DoorDash or Grubhub actually got sued for this and lost.
    - JAlexoid 6y ago
      Pretty sure that neither lawsuit was lost.
  - fzeroracer 6y ago
    That's not true because Grubhub can cause customers to actively lose interest in a restaurant by mucking around with prices. Let's say Grubhub lists a restaurant at 130% of normal menu prices so that they can earn their cut. The perception isn't of restaurant 100% + Grubhub 30%, it's restaurant 130%.
    - hedora 6y ago
      This. I’m pretty sure it’s illegal for businesses to create fake web sites for their competitors, and then post menus with inflated prices on those sites. I’m surprised they haven’t been successfully sued for libel.
s_dev 6y ago
>They already don't pay their employees, offloading that on to customers via tips. DoorDash got in trouble for even taking the tips recently enough!
- hedora 6y ago
  DoorDash switched to a complicated bidding system that means they pay drivers less if you offer a tip. This is equivalent to stealing the tips, but they’re hoping it is complicated enough to confuse a judge into allowing it. Tip in cash if you must use DoorDash. I switched to carry out, or delivery direct from the restaurant. It saves a surprising amount of money and helps local businesses.

rickpmg 6y ago

Silly. Why stop there? I want to know how much of my chicken dinner was labor, the chicken itself, and the spices. The delivery companies aren't cheating anybody. It's not like they change the price after the fact on either the restaurant or the consumer. Lori is doing this to what... get people to bully the delivery companies? Suddenly delivery companies are getting accused of being greedy because... they're suddenly in demand?

awinter-py 6y ago

hooray supply chain transparency consumers are starting to care

JAlexoid 6y ago
And... Do you think that anyone will drop the commission rates? UberEats isn't profitable. GrubHub isn't profitable. What do you think is going to happen? They're going to charge less?
- awinter-py 6y ago
  it's a long road transparency gives consumers the ability to shop on fairness 'we pay our workers better and don't stiff restaurants' isn't a line anyone has every used to sell a product but 'fair trade' has been a real thing for a few decades now without transparency if adding in the transparency justifies a higher price (big if), the luxury consumer economy changes for the better

mc32 6y ago

I hope more localities/jurisdictions do this. More price transparency in everything, plane tickets, medical care, these third party tack on services that shame people into tipping... Bring it on!

deleted 6y ago
[deleted]
SilasX 6y ago
What about regular retail stores? If you buy a box of cereal should Walmart have to say: Wholesale unit price: $1.40 Retail storage fee: $0.60 rather than Box of cereal: $2.00 ? (Not saying that's necessarily a bad idea, just a thought.) Note: This came up before and I made the same point: https://news.ycombinator.com/item?id=18677023 https://news.ycombinator.com/item?id=18677023
- aaomidi 6y ago
  This sounds like a great thing
- mc32 6y ago
  Most retail stores aren’t known for inflating prices while adding marginal convenience. They add a service to me and many. The relationship is more symbiotic than parasitic, as I see it. Looking at this recursively I don’t need the restaurants’ price breakdown, but I think I want to know what the restaurant gets from me if I buy direct vs when we use these services. Same with Uber vs a regular taxi. I want to know their vigorish. Same with hospitals and doctors. I want to know if I’ll be paying $100 for a Tylenol when I can go down to their own pharmacy and get one for pennies.
  - JAlexoid 6y ago
    Well I want to know exactly how much of the money I pay is paid to the waiter and the cook. Why do you get to choose what you want, but I get an FU? The problem with hospitals, is that you aren't even provided with an estimate beforehand. It's a completely different issue.

pkaye 6y ago

> Unfortunately, this unnecessary and overreaching regulation, issued under the guise of the current emergency, will only lead to confusion and hurt restaurants and delivery workers... How will this change lead to confusion?

domador 6y ago
It will confuse customers as to the virtue these third-party delivery services. They might even question their own decency in using these services and may change their behavior as customers, possibly in restaurants' but not these middlemen's favor.
- posguy 6y ago
  Is there any virtue in these third party services, or is concealing their fees allowing them to extract significantly more value than they would otherwise be able to in an honest marketplace?
  - chrisseaton 6y ago
    > Is there any virtue in these third party services If not, why do you think anyone uses them?
  - creddit 6y ago
    Who doesn't conceal their fees? What consumer industry gives you detailed cost break downs? I assume when you are looking at, say, getting a Netflix subscription, your first question is "what portion of my dollars are going to AWS, and of the dollars going to AWS, what go to Intel and of the dollars the go to Intel, what go to buying sand"?
    - dannyw 6y ago
      When I send a payment through my bank, PayPal, or even Western Union, I am always aware of how much the middleman charges and what their rent is. A Netflix subscription is a not a middleman. Food delivery is a middleman: it processes orders on behalf of restaurants. When I hire someone on Thumbtack, I'd LOVE to know how much of my % goes to the cleaner that actually comes and does the work. When I buy something from eBay, I'd LOVE to know how much of my $155 bid goes to the seller, and how much if it is taxed by eBay. When

vadym909 6y ago

Just not fair /s More important as Uber tries to monopolize the space by buying GrubHub. These delivery companies are going to encourage fly-by-night/cloud kitchen operators to increase their margins and reduce prices on the already hurting restaurants. Wish a not-for-profit platform for delivery existed that didn't squeeze the maker or the delivery driver.

JAlexoid 6y ago
LOL! Imagine this - a bunch of restaurants band together and scrape... $100k to pay how many developers for how long? To build an efficient competitor to DoorDash+UberEats+Postmates+GrubHub would cost upfront a few billion. The graveyard is littered with corpses of better funded ventures (Amazon had a delivery service, FYI)
hedora 6y ago
Yeah. It doesn’t seem hard for a few independently wealthy activists to make a “craigslist for restaurant delivery”, where the restaurants handled the delivery logistics directly, and the website took ~zero cut. I’d switch to that in a heartbeat.

Spivak 6y ago

This seems like such a weird law. Cool for supply chain transparency and all but it feels super political to target delivery apps when literally everyone does commissions for sales. Customers should also be confused that… * Paying $1.99 for an app doesn’t mean the developer receives $1.99. * Buying a product on Amazon when your browser has a referral cookie means the full cost doesn’t go to the seller. * Buying a pack of Oreos at Walmart doesn’t mean that Nabisco gets $3. * Paying $17 to see a movie doesn’t mean the theater gets all of it. * Buying a game on Steam… * Buying a flight on a Travelocity… * Getting a hotel through hotels.com * Renting an AirBnB… Like this list could almost literally go on forever.

malandrew 6y ago
I would go even further and suggest that a lot of the high standard of living we enjoyed post WWII can be attributed to all these inefficiencies of cost information. Due to the lack of transparency, pretty much every profession and industry was able to pad enough margin into their business that they could make a decent living. The acceleration of information diffusion means that no one's margin is safe anymore and why we have Bezos' favorite aphorism "Your margin is my opportunity". Historically, margin was not the opportunity except maybe between grocery stores or gas stations (businesses where discovery of two or more providers of the same good/service was trivial and all where easily accessible to the customer). Historically, simply providing the customer with the product or service they need was the opportunity. It was only when discovery became easy (first the yellow pages, later the internet) and competition ceased being local (first franchises, later the internet) that margins eroded across the board.
- maxerickson 6y ago
  Your argument is that higher prices for goods increase standard of living? Isn't the standard argument based on increased productivity?
  - malandrew 6y ago
    My argument is that less price transparency (due to less competition and diffusion of information about prices) produced less aggressive competition based on margins. You only needed to provide a good or service people wanted and charge them a price they were willing to pay. There was far less need to worry about competing on price.

bit_logic 6y ago

What frustrates me with restaurants (especially the small business mom and pop ones) is that they are not adapting to this situation. When I go to their websites (sometimes they don't even have one), I want to see two things: * A way to order and pay online. * Details on their contactless pickup procedure if I drive there. I want them to bring it to my car, then I can unlock my trunk, and they can place it inside and close it. If they did this, my use of these food delivery apps would drop to almost zero. I don't mind driving to pickup my food, it's even good for my car which has been sitting idle for weeks. But I want it to be contactless pickup. If bringing it to my car is too hard, I might even be ok with waiting outside their restaurant, text them, and they bring it out and place it on a table. But these restaurants have no plan, put no effort into adapting, then complain about high fees for food delivery apps. I don't like these expensive apps either, please provide an alternative!

BurningFrog 6y ago
You may overestimate the tech skills of "mom and pop" restaurants. They're one of the shrinking segments where people without much education and language skills can make a decent living with some hard work. If they knew how to maintain the web site you want, they'd probably be in a better paying, more academic career. Disclaimer: This is just my impressions from the outside. I know nothing. But I doubt mom or pop will show up on HN to tell their story.
- syshum 6y ago
  All they need to do is watch one of the endless youtube ads for squarespace or wix... No one needs web developers anymore, you just need to sign up for a wix account it will do everything /s
  - petre 6y ago
    Shopify rather than those two since they also need to sell a product. Or a new platform (opportunity) that also takes care of food delivery or connects couriers to restaurants.

runako 6y ago

This looks super confusing. So now in addition to presenting me an itemized breakdown of what I am paying, I have to also see an itemized breakdown of what the restaurant is paying? In the example invoice in TFA, how would they allocate the promotional fee without knowing in advance how many customers the fee will generate? How would a consumer know what a fair delivery commission is? Was my driver carrying multiple orders on this trip? If so, should I reduce my tip? Adding this kind of complexity to bills is silly when there are options like ChowNow out there that handle the website + app + booking part for a flat monthly fee. (And let the restauranteurs determine the difficulty of offering delivery themselves.)

dannyw 6y ago
I'd be happy with a rule saying... * Order total: $34.00 * Paid to restaurant: $16.20 * Paid to Uber Eats: $12.30 * Paid to driver: $5.50
- runako 6y ago
  Sounds simple, but there are at least two obvious problems with this approach: 1) It does not take into account that driver comp and Uber Eats commissions may both well be on a sliding scale, where the percentages depend on order volume on prior days/weeks. This will make it difficult for consumers to compare these fees across orders, making the actual numbers less meaningful. Did the driver earn less on this order because it's her first order this month, or because the restaurant doesn't do much volume, or because the driver was carrying 3 orders at the same time and delivery fees scale with mileage or time or some other metric, etc. The calculations may involve more context than is reasonable for a consumer to process. 2) This may reward the richer restaurants. Big restaurants & chains may negotiate better deals and get a bigger "Paid to restaurant" number. Choosing to display information to consumers in this fashion might incentivize people to choose bigger restaurant owners at the expense of small shops like those highlighted in TFA. 3) Doesn't address the invoice shared in TFA, where ~20% of the fee to GrubHub was for a promotion that could be CTA or the like and not directly tied to specific deliveries. So you could implement your suggestion and the restaurant could still post the same invoice & complaint.

badfrog 6y ago

It's not obvious that this well help anything, but at least it's better than Jersey City. They put a cap on how much apps can charge restaurants, so obviously the apps just added more fees for the customer. https://www.nj.com/hudson/2020/05/uber-eats-slaps-surcharge-on-customers-of-jersey-city-eateries-in-response-to-10-commission-cap.html https://www.nj.com/hudson/2020/05/uber-eats-slaps-surcharge-...

creddit 6y ago
SF did this as well.
bogomipz 6y ago
NYC put forth legislation today to cap at 20%: https://ny.eater.com/2020/5/12/21256244/food-delivery-fee-cap-legislation-nyc https://ny.eater.com/2020/5/12/21256244/food-delivery-fee-ca...
- JAlexoid 6y ago
  And what is that going to achieve?
Dylan16807 6y ago
Making the customers aware of how much they're paying in fees is a good thing. Now delivery services have to compete directly on the fee they charge customers. Before, the customer had no idea if one service was charging a restaurant 20% and another was charging 30%, which is effectively one service subsidizing another.

tzs 6y ago

It says they were announced today (May 12th) and go into effect May 22nd, and applies to "all websites, phone apps and other internet services that offer the sale of food or beverages by a dining establishment". Has this been in the works a while, and the app and site makers knew it was coming, or do the app and site makers really only have 10 days to design and implement this?

cordite 6y ago

Why not healthcare while we are at it? It’s been in the complaint list for over a decade now.

fnord77 6y ago

> including: the menu price of the food, does this mean the apps have to disclose the amount they're marking up the food from the menu prices in the restaurant?

hedora 6y ago
That’s my reading of the article. If so, this is huge. I prepared a few DoorDash orders in the past, and noticed that what was normally about $60 for dine in was somehow $110 after a $10 delivery fee and a “50% off delivery” coupon. At that point I started spot checking prices from menus on yelp. I don’t appreciate gaslighting, and haven’t used DoorDash since.

zhoujianfu 6y ago

I ordered kfc on grubhub, one item didn’t come. I marked it as such and they refunded me the cost of the item and the sales tax. They did NOT refund me the pro-rata share of their 12.5% fee or “20%” tip though.

ikiris 6y ago
This is why i stopped using grubhub. If they screw up in any way, they try not to make the user whole, or offer any incentive for their time wasted. Doordash is much better

rootsudo 6y ago

Seattle also has locked the price of delivery which is good.

ryansmccoy 6y ago

Are hospitals next?

ebalit 6y ago

It would be a great way to make this market clearer. There is 3 visible actors in each order on these apps. The restaurant, the app and the delivery man are all independent and are putting their reputation on the line. Knowing how much each received is the only way for me to decide if I received the value I expected from each of those actors.