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> "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 Res

by 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.

by imgabe 6y ago

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.