7 ms·

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 orde

by foepys 6y 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 6y 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 6y ago
  Tipping as a concept needs to die. I'm okay with these apps hastening its demise.
  - mewpmewp2 6y ago
    Agreed. Luckily it has never been a problem where I live, in Europe.
  - mumblemumble 6y 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.
    - ineedasername 6y ago
      Many places pool tips and there's a split with the back of the house for this reaso.
    - gambiting 6y ago
      Again, restaurants can only get away with paying the wages they do because of tips. If tips disappeared overnight I'd hope that vast majority of waiters and drivers would just leave as it doesn't make any sense any more. It works like this in literally every other industry, yet Americans always explain this as if restaurants are some super special snowflake industry where this cannot possibly work. I'm yet to see a reason why it wouldn't.
      - mumblemumble 6y ago
        I'm not saying it's impossible, so much as I'm suggesting that the people who have the greatest ability to make the change (restaurant owners) have more reasons not to change it than they do reasons to change it.
wolfgang000 6y ago
You could make it work if you let the restaurant handle the delivery, domicilios.com (a Colombian company) used to do this, they were basically online restaurants Telephone directory with a nice UI, The restaurants pay a monthly fee to be in the site. It worked really well until rappi(Latam equivalent of doordash) came in with a billion of dollars from softbank.
- deleted 6y ago
  [deleted]
- nemothekid 6y ago
  GrubHub originally did this as well (maybe they still do this). I think they realized they could better justify a 30% cut if they handles delivery as well - before that they were a glorified fax machine.
- JeremyNT 6y ago
  There's also US company that offers this service, some of my local restaurants use it: https://en.wikipedia.org/wiki/ChowNow https://en.wikipedia.org/wiki/ChowNow The order is placed on the SaaS site, but the restaurant does everything from then on.
rayiner 6y 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. How many of the mom-and-pop places provide delivery using family/teenagers that get paid less than minimum wage?
- ogre_codes 6y ago
  Lots of local pizza and Chinese food places have done delivery profitably for years without intermediaries. Also, not local, but Jimmy Johns does delivery as well and makes it work. On whole, these places don't rely on sub-minimum wage help any more than other small businesses do.
johannes1234321 6y ago
For a small restaurant which does a few deliveries only it's hard to be profitable. They could do that for brand awareness or attracting new customers. On a small margin profitable are the ones who specialize in cooking for delivery (mostly for pizza) but with tough competition. For the UberEat, Foodora, deliveroo, ... style delivery coordinators it is tough - their game is to cover each and every restaurant they can get to offer wide variety on offerings, but little optimisation potential in the delivery routes. Playing for the endgame where there is no alternative and they can raise prices.
analog31 6y ago
I wonder if restaurant meal delivery is a problem that has been solved, that is waiting to be solved again. Something that I tend to think about, coming from working for a manufacturing business, is that quality problems are often rooted in manufacturability, which is rooted in design. A unique meal, that is made by hand from a bunch of variable ingredients, is a design waiting for scale-up problems, unless you change the design to support higher volume production methods. People figured this out a long time ago, how to manufacture foods that could be scaled way up, and even delivered. A supermarket is such a solution. The food might be less exciting, but the quality level (i.e., reproducibility) is very high. The industry is trying to solve a design problem with delivery technology.
vorpalhex 6y ago
This does open up an opportunity to offer an easy self-driven delivery services for restaurants. You probably can't take a % cut, but you can probably treat it like a SAAS and offer to own the delivery software and hardware so that restaurants can keep their own delivery staff, take orders online and handle issues. That entire value proposition is predicated on offering the customers a good experience and offering the restaurant staff a good experience with no hassles. But as you say, that's not what the VCs want - they want to lock the restaurants in and profit as a middleman.
- foepys 6y ago
  Yes, that works of be something that could work. Like a Shopify just for restaurants. Pay $25/no, get a basic ordering interface for your customers and options to let customers pay via CC or to pay the driver. Maybe add bonus add-ons like a very basic CRM and marketing newsletters for a few bucks. Only that this is not sexy for VCs because that's something everybody could do. Although Shopify is also something everybody can do and already did very often.
  - scarface74 6y ago
    This already exists. I can’t for the life of me remember the name of it. I did some free IT work to help a local pizza shop. The vendor built the custom website and the POS system.
leetcrew 6y ago
I would argue it doesn't really work at any scale outside of extremely dense areas. where I live, there used to be good take-out joints and mediocre delivery joints. none of the good places offered delivery, but the price for a meal was pretty similar. with grubhub and friends, a lot of the better places do offer delivery now, but it ends up being a bit more expensive. I'm pretty sure the places that do their own delivery have to cut corners on ingredients to be able to do it while matching the prices of their take-out only peers. that is, the delivery fee they add to the order doesn't actually cover the cost of delivery, so they make it up by cutting costs elsewhere. when the cost of delivery is transparent, most people just aren't willing to pay what it takes to employ even the most downtrodden citizens of a developed country to drive around delivering food.
jypepin 6y ago
do we have any data showing that local deliveries handled by mom and pop restaurants were profitable in the first place? We surely have a lot of data at scale now to show uber eats and co loose a ton of money, but I'm not conviced the local restaurant paying a salary to a driver etc were many a lot of money either? I really dont know
- hogFeast 6y ago
  Yes. How do you think food got delivered before GrubHub? And yes, they were making money doing it. If they weren't, they would just stop doing it. These sales were also far more profitable than UberEats or whatever...which is kind of obvious given that they weren't paying their drivers a 30% cut. The real value of these companies is the marketing (which is why the companies that have been doing this for years, like Just Eat, didn't provide delivery at all until recently). ...but yeah, people really underestimate how bad a deal some of these places are for small businesses. Most large restaurants (i.e. McDonalds on UberEats) are actually paid to be on the service. The small businesses get reamed (Just Eat is opening dark kitchens, whenever they see someone making money...they move in and kill the business).

by foepys 6y ago

MattGaiser 6y 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 6y ago
Tipping as a concept needs to die. I'm okay with these apps hastening its demise.
- mewpmewp2 6y ago
  Agreed. Luckily it has never been a problem where I live, in Europe.
- mumblemumble 6y 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.
  - ineedasername 6y ago
    Many places pool tips and there's a split with the back of the house for this reaso.
  - gambiting 6y ago
    Again, restaurants can only get away with paying the wages they do because of tips. If tips disappeared overnight I'd hope that vast majority of waiters and drivers would just leave as it doesn't make any sense any more. It works like this in literally every other industry, yet Americans always explain this as if restaurants are some super special snowflake industry where this cannot possibly work. I'm yet to see a reason why it wouldn't.
    - mumblemumble 6y ago
      I'm not saying it's impossible, so much as I'm suggesting that the people who have the greatest ability to make the change (restaurant owners) have more reasons not to change it than they do reasons to change it.

wolfgang000 6y ago

You could make it work if you let the restaurant handle the delivery, domicilios.com (a Colombian company) used to do this, they were basically online restaurants Telephone directory with a nice UI, The restaurants pay a monthly fee to be in the site. It worked really well until rappi(Latam equivalent of doordash) came in with a billion of dollars from softbank.

deleted 6y ago
[deleted]
nemothekid 6y ago
GrubHub originally did this as well (maybe they still do this). I think they realized they could better justify a 30% cut if they handles delivery as well - before that they were a glorified fax machine.
JeremyNT 6y ago
There's also US company that offers this service, some of my local restaurants use it: https://en.wikipedia.org/wiki/ChowNow https://en.wikipedia.org/wiki/ChowNow The order is placed on the SaaS site, but the restaurant does everything from then on.

rayiner 6y 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. How many of the mom-and-pop places provide delivery using family/teenagers that get paid less than minimum wage?

ogre_codes 6y ago
Lots of local pizza and Chinese food places have done delivery profitably for years without intermediaries. Also, not local, but Jimmy Johns does delivery as well and makes it work. On whole, these places don't rely on sub-minimum wage help any more than other small businesses do.

johannes1234321 6y ago

For a small restaurant which does a few deliveries only it's hard to be profitable. They could do that for brand awareness or attracting new customers. On a small margin profitable are the ones who specialize in cooking for delivery (mostly for pizza) but with tough competition. For the UberEat, Foodora, deliveroo, ... style delivery coordinators it is tough - their game is to cover each and every restaurant they can get to offer wide variety on offerings, but little optimisation potential in the delivery routes. Playing for the endgame where there is no alternative and they can raise prices.

analog31 6y ago

I wonder if restaurant meal delivery is a problem that has been solved, that is waiting to be solved again. Something that I tend to think about, coming from working for a manufacturing business, is that quality problems are often rooted in manufacturability, which is rooted in design. A unique meal, that is made by hand from a bunch of variable ingredients, is a design waiting for scale-up problems, unless you change the design to support higher volume production methods. People figured this out a long time ago, how to manufacture foods that could be scaled way up, and even delivered. A supermarket is such a solution. The food might be less exciting, but the quality level (i.e., reproducibility) is very high. The industry is trying to solve a design problem with delivery technology.

vorpalhex 6y ago

This does open up an opportunity to offer an easy self-driven delivery services for restaurants. You probably can't take a % cut, but you can probably treat it like a SAAS and offer to own the delivery software and hardware so that restaurants can keep their own delivery staff, take orders online and handle issues. That entire value proposition is predicated on offering the customers a good experience and offering the restaurant staff a good experience with no hassles. But as you say, that's not what the VCs want - they want to lock the restaurants in and profit as a middleman.

foepys 6y ago
Yes, that works of be something that could work. Like a Shopify just for restaurants. Pay $25/no, get a basic ordering interface for your customers and options to let customers pay via CC or to pay the driver. Maybe add bonus add-ons like a very basic CRM and marketing newsletters for a few bucks. Only that this is not sexy for VCs because that's something everybody could do. Although Shopify is also something everybody can do and already did very often.
- scarface74 6y ago
  This already exists. I can’t for the life of me remember the name of it. I did some free IT work to help a local pizza shop. The vendor built the custom website and the POS system.

leetcrew 6y ago

I would argue it doesn't really work at any scale outside of extremely dense areas. where I live, there used to be good take-out joints and mediocre delivery joints. none of the good places offered delivery, but the price for a meal was pretty similar. with grubhub and friends, a lot of the better places do offer delivery now, but it ends up being a bit more expensive. I'm pretty sure the places that do their own delivery have to cut corners on ingredients to be able to do it while matching the prices of their take-out only peers. that is, the delivery fee they add to the order doesn't actually cover the cost of delivery, so they make it up by cutting costs elsewhere. when the cost of delivery is transparent, most people just aren't willing to pay what it takes to employ even the most downtrodden citizens of a developed country to drive around delivering food.

jypepin 6y ago

do we have any data showing that local deliveries handled by mom and pop restaurants were profitable in the first place? We surely have a lot of data at scale now to show uber eats and co loose a ton of money, but I'm not conviced the local restaurant paying a salary to a driver etc were many a lot of money either? I really dont know

hogFeast 6y ago
Yes. How do you think food got delivered before GrubHub? And yes, they were making money doing it. If they weren't, they would just stop doing it. These sales were also far more profitable than UberEats or whatever...which is kind of obvious given that they weren't paying their drivers a 30% cut. The real value of these companies is the marketing (which is why the companies that have been doing this for years, like Just Eat, didn't provide delivery at all until recently). ...but yeah, people really underestimate how bad a deal some of these places are for small businesses. Most large restaurants (i.e. McDonalds on UberEats) are actually paid to be on the service. The small businesses get reamed (Just Eat is opening dark kitchens, whenever they see someone making money...they move in and kill the business).