29 ms·

America is stuck at home, but food-delivery companies still struggle to profit

• neonate 7y ago
  https://archive.md/o07Eq https://archive.md/o07Eq
• cm2187 7y ago
  On a similar topic, a lot of people anticipated that online retail would do great with the lockdown, but in the early days of the lockdown, outside of groceries, ecommerce has taken a noze dive (-40%-ish). Does anyone know if it is still the case now?
• djaque 7y ago
  I'm not surprised. In my region, delivery companies add on something like $10 (~$5 for the actual delivery, $2 for the company's cut, and another >$2 for the recommended tip). Compare that with "delivery native" companies. I pay like half that for pizza delivery for instance. I can't afford to get $20-$30 delivery food every week, so I've moved to doing takeout instead.
  • ketamine__ 7y ago
    Some delivery companies add an additional fee for smaller orders. A sandwich could end up costing $25-$30.
    • djaque 7y ago
      Yeah, and it might just be that there was a surge of hiring recently, but I've had a lot of bad luck. Two delivery drivers showed up at the wrong street and I had to guide them to my place. One managed to deliver it inside the next door apartment and not call me, so I had to wait an hour for my neighbor to get back from errands to give me my order. Another time delivery took like two hours. I think restaurants/delivery companies are having a hard time adapting to all of the new (different type of) demand while at the same time having a huge cut in profits.
    • xythian 7y ago
      So we've come full circle to at home 'room service'? :)
  • turtlebits 7y ago
    The only reason pizza delivery "works", is because it's a very high margin food. In no real world can <$5 on-demand delivery work out unless you have a very high volume of order and can pool the delivery.
    • germansolo 7y ago
      This exactly. Having been a former franchisee of one of the big three pizza companies, I can attest that this is true. On a typical evening there could be as many as 30 to 40 deliveries in the store per hour. With that kind of volume, it is easy to route drivers where I can send 2 or 3 orders together to the same geographic area. It's just logistically easier when there is a high volume of orders and the geographic area of the store's delivery zone is small.
      • scarface74 7y ago
        Did you have route optimization software to help?
        • germansolo 7y ago
          Yes we did, but most often you could just look at the delivery map and see what deliveries would go together. Optimization won't tell you which orders were not complete (waiting on an item that needed to be remade or was made wrong, etc.) and many times just eyeing the map and knowing the delivery area was all that was needed. Drivers also knew which shortcuts would be beneficial to use that the optimization would not know. The software at the time also would not be able to factor current traffic in the equation. It's been a while, maybe they do now, I don't know, I've left for greener pastures.
          • scarface74 7y ago
            Just curious. I wrote software for the old ruggedized Windows Mobile devices for field service workers over a decade ago. The holy grail was route/cost optimizations. Near the end of my time there we integrated with a third party route optimization service.
  • tomlagier 7y ago
    A recent $30 Thai dinner for myself and my wife came to $58 after delivery fee, service charge, and tip. Ridiculous for the convenience of saving 20 minutes (round trip) of drive time. Of course we didn't pay it did takeout instead. I feel bad because there's a tier of service workers that I'm not supporting anymore, but marking up ~100% prices us out.
    • blaser-waffle 7y ago
      Shoot, a McDonalds burger meal and some nuggets ran me damn near $33 CAD for Uber Eats. I don't have a car, otherwise I'd just hit the drive through myself.
  • cuddlybacon 7y ago
    Where I am pizza costs about the same as what an uber-eats purchase would once you factor everything in (eg the tip). I think the reason it has worked for pizza, is that pizza always had that extra cost baked into the product itself.
  • stronglikedan 7y ago
    Good on you for doing takeout instead. It's safe with a mask, gloves, and care. It nets you a nice break from the house, and it directly supports the restaurant staff. Also, IME, the order accuracy is vastly superior. In fact, a few people ordered lunch to our workplace yesterday, and they didn't have one of the non-meat items I ordered (intentionally), so they replaced it with a meat item, without even trying to contact us first. Just insane to think someone thought that was an acceptable substitute, let alone without even confirming.
  • kart23 7y ago
    I enjoy driving to get food because it's literally the only thing that actually makes me get out of the house now.
• 3fe9a03ccd14ca5 7y ago
  It's already expensive to eat out. Costs can be 2x or 3x versus making it at home (even for simple dishes, such as pastas). I doesn't seem like either the restaurant nor the delivery service has much power to increase prices. Besides, we mostly want to support the restaurant (who lose a cut), so I'd rather just pick it up myself. Anecdotally, I've seen more people learning how to prepare food at home, since they have much more time. Personally I've dived into bread making. We're also regularly preparing large dinners and freezing portions.
  • virmundi 7y ago
    My wife and I don’t. Both have our jobs. But we still work until 5-6.
    • tibbydudeza 7y ago
      Fortunately I have two teenage girls ... cooking problem is solved :).
      • deleted 7y ago
        [deleted]
  • DenisM 7y ago
    >Personally I've dived into bread making Why is it bread for everyone? Can't even buy flour these days to save your life...
    • starpilot 7y ago
      I've been getting into bread buying. I find a loaf at QFC from Essential Baking Company, one with a stiff crust so that I know it's fresh, then take it to the register to pay for it. It works really well.
    • 3fe9a03ccd14ca5 7y ago
      Fresh bread is so different and tastier than store bought. It's easy to make, and can be adopted into almost any meal. It was a fundamental cooking skill lost in the last few generations. Sorry to hear about your flour situation. Flour is much easier to get for us now. Most stores are restocked in this area (south bay). Even Costco has their mega bags back in stock.
• foepys 7y ago
  It's funny how something that has been working for decades on a small scale with mom and pop restaurants doesn't scale up even when you take 25-30% of each order. I guess that paying software developers $100,000+ each plus IT infrastructure plus worldwide marketing is just too expensive in comparison to a landline. Who would have guessed. The endgame has always been to monopolize the market with aggressive marketing and huge discounts for customers, financed by VC. People are not supposed to order at restaurants directly but use delivery services so the restaurants need to fire their delivery drivers due to low demand. I'm happy that this hasn't happened so far and I hope all those services die fast.
  • MattGaiser 7y ago
    Customers also tip less now that they don't need to stiff the driver to their face. I had an uncle who worked for a Chinese food place tips only, i.e. free for the store. You couldn't do that now as people don't tip through the app.
    • blaser-waffle 7y ago
      Tipping as a concept needs to die. I'm okay with these apps hastening its demise.
      • mewpmewp2 7y ago
        Agreed. Luckily it has never been a problem where I live, in Europe.
      • mumblemumble 7y ago
        Killing it in places with a strong tipping culture seems thorny, though. A restaurant that charges high enough prices to pay its servers well without tips is presumably going to have trouble attracting customers. Even if they say there's no need to tip, that's factored into the price, the psychological heuristics that people use around economic decisions like this are well-known to be irrational and generally crap. And if servers' actual pay is increased enough to make up for not making tips, I'm guessing that back-of-the-house staff will start demanding higher pay, too, because the unfairness of the pay disparity would be a lot more apparent if servers and bartenders got better overall pay and known, stable, transparent pay. And I'm guessing there are other problems that come into play that I don't even know about, since I haven't worked in a restaurant since I was a kid. But I'm guessing it all boils down to something akin to how car dealerships that price transparently can't make it, even though basically every consumer ostensibly wishes that car dealerships would price transparently, because it's too difficult to get your customer base to actually grok how this works when presented with it as a real option.
• squnch 7y ago
  A real testament to how many broken business models have been funded by VCs in the last decade... they can't even make money delivering food when the government has ordered everyone into their homes.
  • nabla9 7y ago
    Under and unemployed people staying in their homes are not going to order. They save money. People working from home could order but many of them feel insecure abut the future and also save money. Notice spike at the end: https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT (the Dec 2012 spike was due to accelerated payment of bonuses and compensation in anticipation of increase in tax rate) You can innovate and VC all you want, but it the demand decreases, so does the revenue.
    • vkou 7y ago
      Thank you for the chart - but I have one question. How much could that spike be attributed to Trump-bucks arriving in people's bank accounts?
      • ac29 7y ago
        I'm sure that's a factor, but I think its more about peoples monthly expenses going down since so many things are closed. No vacations, no sporting events, no weddings, etc.
  • ntsplnkv2 7y ago
    It's a complete failure. People don't want to pay outrageous prices, so they don't buy in. Restaurants don't want to pay fees. The companies want to make money so they have to squeeze somewhere - squeeze customers, you lose customers. Squeeze drivers, people no longer drive. Squeeze restaurants, they don't buy in. It's just a system where everyone loses.
    • psychometry 7y ago
      Owners of commercial real estate in urban markets are the ones who have been winning, seeing their property values skyrocket even as they put the squeeze on their tenants.
• hadlock 7y ago
  I am not sure what other people's experiences have been, but of the six food deliveries I've attempted via major food delivery apps, two were cancelled by the restaurant (ordered after 8pm, but before 10pm) and two did not go through because there were no drivers available (middle of day). I am in an urban area here in the bay area which normally has lots of uber drivers so I'm not sure what is going on. Perhaps I am an outlier. Of the few places in my neighborhood still open for to go, the line is so long that if you order in advance my food is cold before I can pick it up. We largely aren't ordering food at this point and just cooking at home. I did order a pizza the other day and it was really good and delivered on time piping hot, but it was a time of low demand.
  • savagepandabear 7y ago
    Yea, stopped using food delivery apps for this exact reason. As a New Yorker, https://www.eatnyc.org/ https://www.eatnyc.org/ has been pretty useful for finding what local restaurants are still reliably open for pickup and delivery. They also don't take any commission from restaurants, so I think my goto restaurants actually prefer me using it.
  • superimposition 7y ago
    I've had similar issues. Tried delivery services for first time recently through Chipotle with ETA of 15-20min. Doordash was fulfilling the order, which showed up after 1 hr. By the way, the Chipotle was 3 min drive from my place. Since then I've been picking food myself.
  • turtlebits 7y ago
    I've ordered at least 10 times through the Chipotle app (delivered via DoorDash) and never had problems. I was very surprised to get the food in under <20 minutes. A few times the estimate was off and from the status/tracking page, it looked like the driver was making another delivery before mine, but that didn't delay my order more than 10 minutes or so.
  • WORLD_ENDS_SOON 7y ago
    Not sure how all the services work, but I believe the drivers are given delivery job offers where they see information about the delivery location and payout estimate, and they're able to accept / reject jobs based on this info. Therefore it's not necessarily that there weren't drivers available just that the drivers chose different jobs. It might be that you're in an area that isn't particularly profitable for deliveries (homes or restaurants too spread out). I believe you can also tip more / tip upfront to make it more likely that drivers accept the job. Although these services present tipping as an optional gratuity, if you don't tip up front it could lead to your job sitting in the queue forever since it's not as appealing to drivers as other available delivery jobs with included tips.
• code4tee 7y ago
  This whole industry is yet another example of “fake markets” that were created by just massively subsidizing something with VC cash. Food delivery is hardly a new idea. By basically just having VC’s pay for everyone’s food delivery you can create this great market and app ecosystem that people use. Is this a remotely sustainable business model that could stand on its own? That appears very unlikely at scale. Hyper-local collaboration between restaurants in delivery that kicks out the app company “middle man” could become a thing. I’ve already seen this sort of thing work well in local markets that basically out-competed Uber etc by just getting their act together and hiring a few developers to build a basic app.
  • Apocryphon 7y ago
    I wonder how Instacart's business model compares to restaurant/hot food delivery.
    • jschwartzi 7y ago
      The biggest problem with grocery delivery is lack of control. We tried doing in-store pickup but the shopper did not pick a lot of the things we asked for, and the substitutions they made were awful. You're completely at their mercy and they're exhausted and don't want to take the same level of care as you would yourself(I don't blame them). The grocery store is not designed for the level of efficiency a system like this needs. It's designed to make you walk from one end of the store to the other slowly looking at all the products to gather each individual item on your list. It's great for marketing but terrible for efficiency and for social distancing. As long as the delivery and pickup is done from the same stock the grocery shoppers pick from it'll never be as reliable as just going in yourself.
      • Apocryphon 7y ago
        Or just ordering from the supermarket directly, for those that provide such a service!
        • 7y ago
• tibbydudeza 7y ago
  I ordered once when the fast food places opened for deliveries after our lockdown ended and it was bloody expensive. The prices as listed in the app was definitely more than the in store price and there was admin fee and a 10% driver tip (not mandatory).
• starpilot 7y ago
  And the restaurants themselves don't make money from this. Is food delivery just a shell game?
  • poutine 7y ago
    Food delivery the traditional way (the pizza delivery guy) is profitable for restaurants and provides a wage for the delivery person. If there's a problem with things it's the model of the delivery apps and sharing economy, not the economics of food delivery itself.
    • starpilot 7y ago
      I think it was obvious from context what I was referring to.
• Apocryphon 7y ago
  So while Uber, Lyft, and Airbnb are getting killed by lack of business, the food delivery companies are getting killed by too much? So much for the gig economy. It's almost as if there's something structurally unsustainable about these companies.
  • mc32 7y ago
    The ULA triumvirate is different from the others. There are few businesses that can survive prolonged quarantines without outside help. The fact that delivery business is having trouble in the most fecund business state is a testament to the (non) viability of the business as structured. In other places food delivery is assisted not by expensive four-wheeled vehicles but by cheap two and three-wheelers.
    • bsder 7y ago
      Yes, the ULA triumvirate were profitable because they simply ignored those pesky laws that cut into their margins. Food delivery doesn't have any laws you can break in order to make your service more profitable.
• DenisM 7y ago
  Startup idea: A service for collective food ordering for you and your neighbors. The night before you all vote on the restaurant to order from and the time, then everyone orders their own favorite dish, then the restaurant delivers it to one of the houses. Benefits: Cheap food! Meet your neighbors! Downsides: Cheap food... Meet your neighbors... EDIT: some prior art https://www.restaurantdive.com/news/uber-eats-launches-group-ordering/568540/ https://www.restaurantdive.com/news/uber-eats-launches-group...
  • toomuchtodo 7y ago
    An example of a service along these lines (although not the coop model you mention): https://www.wedeliverdouglascounty.com/ https://www.wedeliverdouglascounty.com/ ~100 restaurants teamed up, have salaried drivers, and an app. I've been told it works well by locals.
  • Guest42 7y ago
    That would require practicality, the toughest thing to sell
  • MattGaiser 7y ago
    DoorDash and UberEats should just have a discount for people who can piggy back their order off another.
    • smt88 7y ago
      UberEats already does
      • DenisM 7y ago
        I don't see how it helps with voting on a restaurant. Also it seems that the instigator is picking up the bill. I wouldn't want to bicker with my neighbors over them forgetting to pay. The workflow should be brainless, else people will start thinking and that's the end of it. Most importantly, I've never heard anyone using it, so it wasn't done right.
• deleted 7y ago
  [deleted]
• MattGaiser 7y ago
  This is because they are handing out discounts like crazy. I haven't paid for a delivery during this entire crisis and usually get $5 coupon to go with it. DoorDash gave me 30% off the other day and it was on a $100 order. How can that make sense?
  • londons_explore 7y ago
    Because they still got $70, and all they had to do was drop 10 bucks of stuff in a fryer?
    • MattGaiser 7y ago
      I would normally pay $100 for this food with their typical delivery service. I am getting a large discount on the regular takeout price through DoorDash.
      • chrisseaton 7y ago
        > How can that make sense? If you discount something but you're still making money, and your discount gets more people to buy the product, then you can make more money than you would have without the discount. That's how it can make sense.
        • foepys 7y ago
          No, in reality VCs are eating the loss (real loss, not less profit) in hopes of higher returns later when everybody needs to order via this food-delivery service due to the rest being bankrupt.
          • almost_usual 7y ago
            If prices are going that high people will stop using it. Also the employees will eventually want more benefits higher pay etc as the company grows. Companies whose efficiency relies on humans can not be that profitable no matter how much money you throw at them. Computers are more efficient than people. Simply using computers to coordinate people isn’t as efficient as no people. You see hyper growth and large profits specifically from tech companies whose product could run for awhile if every human left. Food delivery would exist for 0 time if every human left.
• legohead 7y ago
  We are using Instacart and have been very happy with it. The article doesn't specifically mention Instacart, which seems to actually be doing very well thanks to the pandemic [1] And as for the other services, from the article it sounds like a lot of the issues are directly related to the pandemic. I think there will be a golden period for them after the pandemic, or perhaps sooner. I would have never used a grocery delivery service before -- the idea of someone choosing & touching my food is unappealing to me. But now that I've used it several times, I am loving it and want to continue using it. [1] https://www.foxbusiness.com/lifestyle/coronavirus-instacart-profitable-first-time-april https://www.foxbusiness.com/lifestyle/coronavirus-instacart-...
• markbnj 7y ago
  When we get take-out, which is admittedly not very often in these times, we go straight to the restaurant. I'd much rather do the driving and let them keep the overhead of the delivery service fees. We live in a suburban area west of NYC and most of the local places that are still doing takeout are struggling with low demand, so lines and cold food have not been the problem.
• Deimorz 7y ago
  Here in Calgary, Alberta, Canada, we've had these food delivery services competing for the last few years, with their own apps, exclusive agreements with restaurants, and so on: - Uber Eats - DoorDash - SkipTheDishes - Foodora - Fantuan - HungryEats Foodora just shut down two days ago: https://www.globenewswire.com/news-release/2020/04/27/2022709/0/en/foodora-Canada-announces-plans-to-close-business-while-assuring-support-for-employees.html https://www.globenewswire.com/news-release/2020/04/27/202270... And there were at least two more that were previously available but seem to have been acquired: Just Eat (by SkipTheDishes), and Nomme (by DoorDash). It's ridiculous how many companies are fighting over a market that doesn't even seem to be close to profitable for anyone.
  • foepys 7y ago
    In Germany consolidation already happened and the only player left worth mentioning is Lieferando, operated by Takeaway.com, a Dutch company focused on food delivery. Lieferando is only profitable since 2019 after acquiring literally all serious competitors and creating a de-facto monopoly.
• aejnsn 7y ago
  I think the business model is solid. I think the implementation of said model is to be blamed. However I am having difficulty in logically pinpointing why my kneejerk reaction is to the implementation. Contrast gig economy (I cannot believe I am using that term) workers of today with milk delivery workers of the past. What's different? A schedule? A subscription?
  • acheron9383 7y ago
    Probably the efficiency of a milk route, you can do more of a traveling salesman walk. Rather than a one order to one driver, which is probably substantially less efficient. Amazon/Wholefoods doing more of a scheduled delivery might be a money maker in the long run, it is less gig like though than Uber Eats, Grubhub, etc.
  • nerdponx 7y ago
    Forget the gig economy stuff. You're blaming the implementation because fundamentally the service makes sense. Let's say I am a restaurant owner. I want to take orders online. I don't know anything about payment processing, making a website, etc. Grubhub makes a ton of sense to me because they handle all of that stuff, as long as the price is right. Maybe it's impossible to offer such a service profitably. But that seems weird to me.
• nerdponx 7y ago
  They charge super-high fees to restaurants and their service doesn't seem that complicated or expensive to run. What do these companies spend so much money on that they struggle to break even?
• roland35 7y ago
  I tried instacart for the first time this year because of the stay at home order and while we've had a couple good orders for the most part it has been a frustrating experience and we will change over to a different grocery store which offers their own app and pick up instead of delivery. A few problems with instacart and other deliveries for me: - uncertain delivery times. Even when the shopper marks the order as completed it can take up to an hour to get to my door. It seems they bundle orders but this isn't clear and makes me worry about cold or hot food - inaccurate orders. I have gotten 3 extra ranch dressings which I have never ordered! - constant changes to orders due to items being out of stock. Not instacarts fault but it is still a bad user experience - I am tempted to leave a poor review of a shopper but then I think they know where I live! Less than ideal. Overall I would rather interface directly with the stores and restaurants. There are just too many things which can't be generalized across a platform. New restaurant discovery isn't something I need either.
• deleted 7y ago
  [deleted]
• troughway 7y ago
  We have been saying for years, posting financial statements, showing hard bottom line figures, that these SV unicorns are unprofitable, trying to undercut the existing markets by funneling in VC money to make up for the lack of an actual profit. Take Uber, for example. You cannot, in all seriousness, charge a piss poor amount for a 30-minute taxi ride, and then take a cut from it, and expect people to somehow be okay with it. It doesn't work and it's disrespectful to people involved. It ruins the economy and no amount of handwavyness about market forces will make things better. The same thing here applies to their food delivery businesses. There is a reason why what they are doing is illegal - predatory pricing. But they think they are too big to fail.
  • nradov 7y ago
    In most circumstances predatory pricing is perfectly legal. We're not talking about monopolies here.
• gravitas 7y ago
  American tipping culture ruins it for me - the social anxiety of "do I tip them? how much? what if I don't tip enough? word of mouth is I'm a bad tipper? what if my tip insults them?" and any possible repercussions of getting it wrong loom. I am not at all against delivery drivers getting their due, but the whole tipping culture is a pressure I can just avoid if I don't have things delivered which I can go get myself. I envy the countries which lack this automatic tipping culture.
  • simongray 7y ago
    Having to tip delivery people does indeed sound like it would suck. That's a bit like tipping the postman.
    • rudiv 7y ago
      In places in India, it is customary to tip the postman whenever you receive something important - particularly, government documents like a passport, driving licence etc. because those are specially tracked and it's easy for the postal worker to recognize the envelope/packaging too.
      • mcpeepants 7y ago
        interesting - is it because of the implication that, since they can easily recognize the package, they could also easily "lose" the package? Are people tipping as a sort of implied form of racketeering, or is it just genuine gratefulness for delivering an important item?
        • jldugger 7y ago
          As I understand it -- primarily from TED Talks -- corruption in India is endemic and somewhat expected. Sure, it's a form of racketeering, in the sense that many government employees have to give their boss a cut, and if they don't, they will be replaced by someone who does. It's typically presented as an "expiditing" fee. And the cause there, as presented by Wikipedia[1] is fascinating to contemplate. The abnormally high tax rate (especially compared to the services provided) increases the demand for corruption to avoid taxation. Taxation avoided reduces money available for bureaucrat salaries, to where they are almost reliant on the bribery system to make ends meet. And hence the pressure on line staff to kick back money up -- a promotion would separate you from direct contact with the public and represent a loss of income that must be replaced somehow. It's kind of a weird Laffer curve phenomenon where higher tax rates yields less revenue. [1]: https://en.wikipedia.org/wiki/Corruption_in_India#Factors_contributing_to_corruption_in_India https://en.wikipedia.org/wiki/Corruption_in_India#Factors_co...
• blawson 7y ago
  I'm surprised OpenTable or something similar doesn't yet allow restaurants to include delivery as an option yet. For restaurants that already offer delivery (pizza places), avoiding the food-delivery middleman seems like a win?
• jedberg 7y ago
  Not entirely surprising. We've gotten a bunch of takeout during this time, but never using those services. We're getting takeout to support our local businesses. The delivery companies take such a big cut that the local business barely breaks even or loses money on the deal. Most of them have asked people to call in directly and pick up if they possibly can, and some even have re-employed their workers as delivery drivers for direct call-ins. I go out with my mask and goggles and pick it up. There is so little traffic it doesn't even matter. I get there super quick and park right in front. Then I stand in line with all the poor Grubhub/Ubereats contractors who I know aren't getting a great deal either and we all get our food. I usually let them cut me in line because I know their tip may depend on their speed.
  • ghaff 7y ago
    There's traffic where I live but the couple of places I pick up from have zero lines, contractors or otherwise. So it's not a big deal to get a takeout pizza/sub once a week or so.
• poulsbohemian 7y ago
  I've given this a whopping 5 minutes of thought, so maybe someone else who actually knows the economics can weigh in on a thoughtful discussion... Seems to me like this would be a very hard business to scale quickly. Consumers don't want to pay a delivery charge and don't care about the middle man - their relationship is with the restaurant, not uberGrubCart. The restaurants want to control their costs too... so feels like the only way this whole delivery business can work is if it's a third party, white-label service serving local restaurants, getting paid by the restaurants, and it is then up to the restaurants to figure out how to burry the costs into their pricing so the consumer doesn't see it.
  • jeffdavis 7y ago
    This white-label service would be B2B rather than B2C (like doordash), which wouldn't get the same buzz or VC valuation. Great idea though. If I'm buying from a restaurant, I want them in control of the experience. Even for pizza.
    • Apocryphon 7y ago
      It almost reminds me of how Flywheel is an attempt to compete with ridesharing by providing a better UX frontend for traditional taxi cab companies. I wonder how they're doing.
      • umeshunni 7y ago
        Well, here’s their incredible journey blog post: https://www.flywheel.com/single-post/2017/04/11/Hello-from-the-Flywheel-Team https://www.flywheel.com/single-post/2017/04/11/Hello-from-t...
    • luckylion 7y ago
      On a per-restaurant-basis, it'll likely not work. The attractive part of an aggregator is that you don't need to keep a few people per restaurant to make deliveries. And you need to have them available whether people order or not, because predicting demand is hard, and if you disappoint once, you might not get another chance. If you have the drivers work for an aggregator, it gets much easier. That doesn't have to be a for-profit corporation though, it could be restaurants getting together and cooperating.
• roland35 7y ago
  I think focussing on creating a shopify-type tool to allow places to make their own apps is probably better than trying to take on the entire process yourself. There are just too many variables across different venues and geographies.
• atsjie 7y ago
  Couldn't read the article; but might this business model make more sense in Europe or Asia (scooter, cyclist delivery by young people)? Not sure how food-delivery works in the USA, but I'd think the low density, car-focused infrastructure might make it less competitive compared to cyclist/scooter deliveries elsewhere.
• mancerayder 7y ago
  Having tried (extensively) Instacart, Amazon WF and Freshdirect, Freshdirect is my absolute favorite. The fruit and vegetables are in stock, they're either almost ripe or just ripe, and there's a bunch of organic stuff. Instacart is hit or miss, the shoppers miss a third of the items and you feel guilty making them work harder. Also the constant alerts on the app that (50%+) items aren't available and to accept a substitution or a refund is a huge hassle when you're working and get interrupted once every 5 minutes about 15 to 20 times to make a decision. Amazon WF was the worst for me, items unavailable and the worst part is all the fruit and vegetables were so ripe as to be inedible almost immediately. I'm not sure what happened there. Amazon also screwed up because they were letting people put things in carts while no delivery was available, and auto magically removing items. Back to the topic here. Fresh Direct has the most experience and has the best customer experience, so I really really hope they don't go out of business or get bought by Amazon!
  • deleted 7y ago
    [deleted]
  • jobu 7y ago
    Item availability has been really random at most grocery stores lately. It's something I took for granted most of my life and has been difficult to adjust to. Usually we make meal plans for the week, then go buy what we need. Now I have to go to several stores, assess what meat or produce is available and figure out on the fly what meals we can make out of it (hopefully remembering all of what I bought at the last store). I can't imagine how hard it is for services like Instacart to handle. Same chain of grocery stores a few miles away from each other often have wildly different items in or out of stock on the same day.
    • ghaff 7y ago
      It's one reason I haven't been using delivery services. I only go in once a week or two--earlyish on a weekday. But I pretty much have to plan on the fly (while also having pretty good freezer stock at home). I do mostly just go into one store. But e.g. today went into a small meat farm store and they had nothing I was looking for. Bought a couple of different things that will be fine. But TBH I used grocery delivery previously once because of a broken foot. And missing/poorly substituted items were a pain and often led to me having to go to the store personally anyway.
• partiallypro 7y ago
  This is what surprised me about Uber wanting to buy Grubhub. I am near willing to bet that Uber (or Lyft) will never turn a lifetime profit. So Grubhub, is in a model that is even harder to break into. The only way this will ever work is for there to be a monopoly with one company doing all deliveries. The problem is obviously that they aren't just competing against all the other national food delivery services...but they are competing with the restaurants themselves. When people want delivery they order pizza, the delivery fee is virtually nothing. The only time I use something like Uber Eats is when I am under intense time constraints and can't leave...or I just can't leave for other reasons. Otherwise I'm not going to pay $25 just to have a delivery of food. I can go to Domino's and pay $3 for the same service. I just don't see how the model is sustainable. It works great in our current easy money society but eventually it will not be able to escape the idea that you need to actually make money. One model I do think is interesting is something like Goldbelly. It's not instant food, but you can get food from any participating restaurant in the nation and have it mailed to you and you then cook/reheat it. That eliminates so much overhead, and you're using an existing logistics provider. Obviously that isn't quite the same market, but it's similar and seems much more sustainable.
  • mkolodny 7y ago
    I think the main reason services like Uber Eats aren't profitable right now are because of competition. They have to out-market and under-price their competitors. Buying GrubHub may make Uber Eats profitable in places where GrubHub is their main competition.
    • almost_usual 7y ago
      So they’re only profitable as a monopoly because they can charge high prices? Seems like a bad business model.
• egypturnash 7y ago
  Gee, maybe this is a thing that should be part of what a restaurant does, with costs baked into their operating budget! Nah, I’m sure there’s enough money in this for it to be worth an entire publicly-traded corporation with stockholders to keep happy and immense amounts of VC to pay back. Oh, no, they can’t? Well. Bye, I guess. Good luck collapsing the company behind you to avoid being on the hook for all that VC you blew through, guys! Enjoy your market correction.
• Izkata 7y ago
  It took years before I was willing to try out Peapod, and then in February this year they just completely left the Midwest. Looking for alternatives, they seem to make extensive use of gig workers picking up things from public stores (Peapod had employees and private warehouses), so I said fuck it, I'm just making my own trips to the grocery store again.
  • ghaff 7y ago
    The only time I used Peapod, I had a broken foot and was on crutches for a few months so it was difficult for me to go to the store and do a full grocery shopping. It was... OK. Invariably there were items missing and substitutions I didn't care for. But it got me most of my groceries and it wasn't really hard for me to go to the store to pickup another item or two. But I haven't used them since I was off crutches that time.
• cs702 7y ago
  The list of companies that have tried and failed to build a sustainable business in this space is large -- from Kozmo.com (1998-2001)[a], Webvan (1996-2001)[b], and UrbanFetch (1999-2000)[c] during the "dotcom bubble" to the likes of Grubhub, Instacart, and Uber Eats in recent years. So far, it seems that only tightly integrated operations with highly standardized food products for which the source/freshness/ripeness of ingredients is not an issue (e.g., boxed pizzas made from frozen manufactured components) have been able to make local on-demand delivery sustainable at a national or global scale. The only "exceptions" would appear to be FreshDirect (founded by an owner of NYC's Fairway Market) and Peapod (operated by Giant supermarkets)... BUT both have grown more slowly and deliberately than the latest crop of startups, while maintaining tight/integrated control over all aspects of operations. Moreover, neither allows consumers to order on-demand -- consumers have to choose a predefined delivery window in advance, sometimes days in advance.[d] [a] https://en.wikipedia.org/wiki/Kozmo.com https://en.wikipedia.org/wiki/Kozmo.com [b] https://en.wikipedia.org/wiki/Webvan https://en.wikipedia.org/wiki/Webvan [c] https://en.wikipedia.org/wiki/Urbanfetch https://en.wikipedia.org/wiki/Urbanfetch [d] https://nypost.com/2020/03/15/nyc-freshdirect-delivery-times-are-vanishing-amid-coronavirus-panic/ https://nypost.com/2020/03/15/nyc-freshdirect-delivery-times...
  • slowmovintarget 7y ago
    My family has been depending on InstaCart for groceries. Two deliveries a week has kept us in fresh food (mostly) and household necessities without us having to venture to the markets. For us, it's been vital. (We're in the risk profile for bad COVID-19 outcomes, so we've been extremely careful).
    • cs702 7y ago
      Without a doubt, these food delivery services have been a godsend for many during these crazy times. Whether these services can become sustainable businesses or not, we should feel grateful for their current existence -- and for the willingness of their backers to subsidize the cost of delivering food to our door. These services and their backers deserve a big THANK YOU!
  • 7y ago
• HumblyTossed 7y ago
  How much of the cost of a Dominos pizza, for example, is the cost of delivery? That number is how much you can charge for delivering food. Nothing more. People just won't go for it.
• parasubvert 7y ago
  Everyone is acting like this is a failed industry or business model. It’s not, it’s under strain from COVID, but clearly it is growing. It is a far better experience than calling local taxi companies. The same reason people use Uber.
• beefield 7y ago
  For me it is one of the more amazing market failures that restaurants can't come up with a food delivery/online order coop. Owned by restaurants and offering services to the owners at cost. (same applies to e.g. hotel booking sites who are able to rack in outrageous fees while producing outright disgusting dark patterns to the end customers)
  • deminature 7y ago
    Running a three-sided marketplace at city-scale is a complex software and operations problem. I'm not really surprised restaurants haven't figured it out as their expertise is in creating great food, rather than solving problems like these. It also doesn't make sense for them to focus their efforts here if you subscribe to the idea of comparative advantage https://en.wikipedia.org/wiki/Comparative_advantage https://en.wikipedia.org/wiki/Comparative_advantage
    • beefield 7y ago
      I subscribe to the idea of comparative advantage, but I also subscribe to the idea of welfare losses of abusive monopolistic behaviour, which all of these platforms quite openly and obviously aim for. And being a member of a coop does not require expertise in the core competence of the coop itself. It requires understanding that the existence of the coop is beneficial for you. Heck, I am a member of a major food market coop, and I have zero knowledge (and interest) of food supply chain management.
• eggie5 7y ago
  why does everyone say Grubhub is not profitable?
• WalterBright 7y ago
  Most companies struggle to make a profit. It's an endemic characteristic of the free market.
• yalogin 7y ago
  I still don't think that sector can make money the way its currently structured. Unless the customer pays for the delivery themselves and the delivery stops taking a cut from the restaurant money, I don't see it really making sense. Sure there is a boom right now but it will zag the other way as soon as the shelter in place guidelines are lifted or when the vaccine comes out. Then, people would want to go out. This is the time for these companies to change user expectations and behavior.
• almost_usual 7y ago
  Tech companies whose efficiency depend heavily on the physical world (outside of servers) are not tech companies. How long could the product run in theory if every human left? If it’s days/weeks then you have a tech company. If it’s not you don’t. True tech companies should have a high GAAP margin.
  • RivieraKid 7y ago
    Profit margin is determined by market power (monopoly on one extreme, perfect competition on the other), not by being a tech company.
    • almost_usual 7y ago
      People are harder to control than servers. The government also cares more about monopolies and people than servers. Uber and Lyft wouldn’t be investing billions in self driving otherwise. The markets will demonstrate how profitable these companies are in the long term I suppose.
• travisporter 7y ago
  How/do the robot delivery companies change this?
• devit 7y ago
  Isn't this just a problem due to money-losing competitors selling at low prices? Getting restaurant food delivered is a waste of money compared to getting bulk food delivered from supermarkets, so those who order it are probably not very price sensitive, and thus simply raising prices until the company is profitable should work without losing so much customers that economies of scale are lost, assuming there are no money-losing competitors.
• julienchastang 7y ago
  I saw a show once a while back about tiffin (lunchboxes) carrier networks in India. The show was making an analogy with how packets are delivered over the internet. These networks are extremely efficient and have very few errors. Could this model be replicated in the US or Europe for a more economically sustainable food delivery business model? Edit: the tiffin containers are made of metal and therefore are reusable instead of all the Styrofoam and plastic that ends up in the landfill for US food delivery so they seem far more environmental too.
  • subpixel 7y ago
    Under different circumstances I believe you could make this work in NYC as a sort of "so uncool it's cool" business. I've even thought about it. But when the office buildings that should allow you to deliver 100+ meals to a single address are empty (everyone is working from home), the logistical hurdle is insurmountable. Of course the hurdle of collecting tiffins in the first place from New Yorkers who are used to throwing away plastic is also daunting.
• chipotle_coyote 7y ago
  I wasn't sure that Doordash et. al. weren't profitable, but I'm not surprised. When I thought about it, it seemed really hard to figure out a way that the economics of most third-party delivery food services can work over the long run: the restaurant has to make a profit; the delivery company has to make a profit; the delivery driver has to earn enough income to feel like the gig's worthwhile. The delivery company doesn't want to charge the customer so much they feel like the service fees are untenable, so they need to also charge the restaurant, yet there isn't enough margin in the restaurant's normal pricing model to let them pay the delivery fees and turn a profit. The current system has balanced this in a way that's left a lot of restaurants feeling like they're being charged usurious amounts, yet the delivery company still isn't making money -- and customers who notice that that $16 pulled pork plate at Armadillo Willy's is a $19 plate from Doordash not including any added delivery or "service" fees may be less enthused about making those orders regular things if the restaurant's within comfortable pickup range.
• GauntletWizard 7y ago
  Food delivery companies should be a lifestyle business, not a megacorp. There's definitely room for a dozen companies of a few dozen people working on delivery apps, and for a few thousand integrators across the country helping businesses install - And that's it. The amount of margin you can squeeze out of these companies, sustainably, is 5-10%. 5-10% of gross restaurant profits is still a very big market. But it's not a winner-take-all Look to Dominos as a model - I've been following their reinvention as a "tech company". Dominos corporate doesn't own many stores. Local affiliates do that. What Dominos corporate does is half logistics (Getting shipments of pizza products to stores, negotiating bulk rates) and half tech (Running the ordering systems, website, and marketing apparatus). In some ways, they've long dealt with the "uber" model problems of employee/contractor divide. Stores are mostly owned not by corporate but by small local companies. Those small companies do actually employ their workers, but don't have the same problems that giant business do, because they are "small businesses". In return they are a lot more autonomous than Uber city-managers, and the "corporate" entity takes a smaller cut of the profits than Uber does.
• sequoia 7y ago
  * Courier wants to get paid as much as possible * Restaurant wants to get paid as much as possible * Platform wants to get paid as much as possible * Customer wants to pay as little as possible And the customer's baseline is "pay for the cost of the food only, and 100% goes to the restaurant" like an old fashioned, called-in take-out order. This allows (at baseline) $0 for courier or platform, and every dollar increase in price (for courier & platform) seems unfair, i.e. "why does it cost more." So some platforms hide the extra cost & extract it from the restaurant, which upsets the restaurant, and often upsets the customer when they find out. Really I see no way "food delivered hot to your door from all over the city, selected & ordered with no human interaction" (and lets not forget "with returns, customer service, refunds" etc.!) can be an "inexpensive" service, unless the costs of the courier or the food itself go way down. Restaurants already charge $14 for a hamburger & $7 for fries, that doesn't leave a lot of wiggle room. I'm very curious to see how it all shakes out, because this covid situation (which changed delivery from "luxury" to "necessity") is going to be going on for the next 12mo at least.
  • rossdavidh 7y ago
    In my state (and several others), it's already receding. I ate my lunch at a restaurant, dine-in, today. Obviously, lots of places aren't like that, but more are every week. If they haven't gotten to solidly profitable yet, I think they're in trouble.
• deleted 7y ago
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• bbarn 7y ago
  Anecdotally, for the first few weeks, everyone I knew was all about supporting their local restaurants. Now that it's been over a month, over 2 in some places, with companies laying people off left and right, and the only place you're legitimately supposed to go is the grocery store, as infrequently as possible, I'm getting cooking advice questions from those same friends. People are starting to realize just how extravagant eating out really is. A broke nation isn't one that orders delivery every night. Add that to all of the general "food delivery is a fool's game" arguments, and none of this should be a surprise to anyone.
• fnord77 7y ago
  somehow, ubereats added 12 bucks to my $30 order for delivery. how can they be struggling with that much markup?
• rsuelzer 7y ago
  Paywalled so I couldn't read the article. But, I am surprised that they cannot turn a profit. I generally pay about a 10-15 percent charge on my order before I tip the driver. They don't pay their drivers (maybe a few dollars an hour?), provie any benefits, pay rent. Look through my fees, I have paid doordash about $100 over the course of 17 deliveries, and $120 in tips to drivers. That's a lot of money for doordash to basically route my order to a restaurant and driver. What exactly is the overhead? Maybe it's because I work for a small company where five developers have been able to compete with teams with 100 plus engineers, but I don't see these apps as super complicated or requiring a huge engineering team.
  • profunctor 7y ago
    I'm pretty sure they pay their drivers or have I been completely misled?
• m3kw9 7y ago
  I’m still in awe the cost of delivery can be quite cheap. The margins are probably super thin because of competition. No wonder Uber wants to buy Grubhub to get more bargaining power
• z3ncyberpunk 7y ago
  Duh, the "gig economy" is nothing but unstable and exploitative work for "employees". They are designed to be shit for employees and basically just pay out pocket change
• dzonga 7y ago
  all vc funded delivery apps, should die a hard slow death. death by 1000 cuts of bleeding cash. not only do they treat drivers like crap. mess up orders. n take advantage of local restaurants tryna survive. fake markets indeed. few commentators pointing grubhub profit, without noticing grubhub is taking a 50% cut from restaurants. i.e mafia style
• ccktlmazeltov 7y ago
  Delivery food always taste bad, and it's always expensive, and you're always getting slow deliveries if you don't tip. Honestly I just don't see why would anyone spend the money, the guilt trip (from not tipping), and the bad food.
• ryandrake 7y ago
  I guess I'm just not in the demographic here, but I don't get all this food delivery that's going on. I think 5% of the articles here are about restaurant delivery. I can't believe this is such a big thing! Did you people eat at restaurants this much before the coronavirus? Why is it, all of a sudden, that the only way to eat is to get delivery from Chipotle? I guess I was never much of a restaurant guy before all this stay-at-home, and ever since stay-at-home, I've gotten food delivered exactly zero times. It's not even something I'd consider, given that there is a global pandemic and I have no idea whether anyone in the pipeline between cook and driver is sick. Food delivery is the business I'd have predicted would go to 0% in a viral outbreak, but here we are with it flourishing. Totally astounding. Maybe I'm the only one surprised, I don't know.
• Scea91 7y ago
  I live in Prague and my feeling is that both food delivery and grocery delivery works quite well here and hopefully the delivery companies are thriving. We order quite often (multiple times a week) for the past 3 years and I could count negative experiences on the fingers of one hand probably. Grocery delivery is, of course, easier because there is no strict time limit usually and the orders can be pooled together.
• phendrenad2 7y ago
  I wonder if this is a hint at the true inflation rate to come. I pay $60 on average on a food delivery app for lunch for two people in the bay area, which already seems higher than what I paid pre-pandemic.