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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

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 6y ago
I wonder how Instacart's business model compares to restaurant/hot food delivery.
- jschwartzi 6y 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 6y ago
    Or just ordering from the supermarket directly, for those that provide such a service!
    - Spivak 6y ago
      But you run into the same issues mostly because Kroger's delivery service is "just as 3rd-party" as Instacart. It's still an employee going through your store, grabbing stuff off the shelves and delivering them to you. There's basically zero first-party advantage.
      - Apocryphon 6y ago
        At least the in-house grocers are more familiar with the layout and product offerings. From a process perspective, couldn't supermarkets process the delivery orders during stocking?
      - jschwartzi 6y ago
        Yeah, this is exactly what it was. We used a Kroger store because they had a much better selection than Safeway and in the end didn't really get what we wanted. At the time I had guessed it was because the 3rd-party picker didn't know where some of the items were and didn't have time to go looking for them.
    - aendruk 6y ago
      Having been warned about Instacart I made a point of doing just that, only to have the grocery store run the order through them anyway. The whole experience felt fraudulent, from the bait-and-switch between service providers to the bait-and-switch from carefully chosen sale items to expensive and inappropriate "substitutes". Reportedly at least Instacart proper has a feedback mechanism. With the white labeled service you're out of luck.
  - PeterisP 6y ago
    Grocery delivery is not the same as grocery shoppers. For me, the two largest local grocery chains are offering grocery delivery and/or pickup, which always bypasses the shelves - IIRC one of them has the shelf-stocking people pack the deliveries before they go onto shelves; the other is packing the deliveries in the logistics centres alongside with the stuff that goes to restock the many smaller stores. Obviously, having someone go to a store just for your purchase and walk along all the isles to pick stuff up is horrendously inefficient.
    - Dylan16807 6y ago
      > bypasses the shelves It's obviously inefficient to send someone to a store to grab stuff, but "giant room with products on shelves" is a pretty efficient setup. They can do some of it in the back room, or a warehouse full of pallets, but to a large extent companies end up building "dark stores" that are almost the same as a normal store, but with no customers allowed in.
      - PeterisP 6y ago
        To a large extent store chains already have them, that's the (few) logistics/distribution centres out of which they supply the (many) stores. The store shelf is essentially just a short-term cache.
        Dylan16807 6y ago
        Are the preexisting logistics centers designed around picking up single items off the shelves? I would have expected them to be set up around bigger blocks of product.
        PeterisP 6y ago
        The preexisting logistics centers are designed to take a pallet of item X and allocate different amounts of it to different boxes each going to a different smallish shop; doing so in an multi-hour cycle (2-3 times a day?) to ensure that every type of product is distributed along these boxes. During this process they also put part of the product not in "delivery truck going to shop A" but to "delivery truck going to home deliveries". It does need some ripping of bigger blocks of procuct and repackaging to bags, but it happens at the same time as they're ripping even bigger blocks of product for supplying stores and shelves. But the essential difference is the "push vs pull" - instead of one delivery pulling items from everywhere (which is a new process that grocery chains did not have) you have the supply process pushing items to many delivery targets, which is a process that grocery chains already have and have optimized.
- code4tee 6y ago
  If Instacart was able to pivot to full end to end food delivery with their own distribution chain it could have long term viability. Their current model of just having people shop in normal stores is problematic for many reasons, not the least of which because normal stores are BY DESIGN slow and inefficient for picking up a list of items. Instacart had early advantage because full scale grocery delivery infrastructure was broadly in its infancy but if and when the likes of Amazon, Wal-Mart and others go full scale on their own offerings then structurally it would seem impossible for Instacart to compete with that.
  - Spivak 6y ago
    But Walmart and Amazon/Whole Foods are doing the same thing but just having their own pickers in their store. Until my Kroger delivery comes from the warehouse and not the the actual store Instacart will be fine. Amazon Fresh might be a real competitor but it seems like they're running into the same problems as grocery stores.
  - slfnflctd 6y ago
    > when the likes of Amazon, Wal-Mart and others go full scale on their own offerings then structurally it would seem impossible for Instacart to compete I agree completely. I signed up to be a shopper with Instacart, and the experience was awful. To get work, there was a 'first come, first serve' queue I had to check at a specific time several times a week. Not great, I thought, but okay, we'll see how it goes. Well, apparently people had set up bots or something, because all the orders worth taking were scooped up in less than a minute when the appointed time arrived. I couldn't even read the screen fast enough to see what was there before it was gone. I walked away in disgust immediately and never considered working with them again.
mountainofdeath 6y ago
Exactly. There is a small dev outfit in my second-tier US city that caters to precisely this market and is doing quite well considering many restaurants added this to their website or replaced their website outright. They assume their customer is the average mom-and-pop restaurant and set up their business accordingly. I am curious why Shopify doesn't lateral into this market. They already have the majority of the infrastructure for retail.
- bobthepanda 6y ago
  A gig platform for delivery drivers is a whole different thing to manage than a common web shopping workflow.
- goodmachine 6y ago
  I agree. But please, let us never use 'lateral' as a verb ever again.
  - chosenbreed37 6y ago
    LOL I didn't know it was a verb! lmao
- trynewideas 6y ago
  Square's been doing what Shopify hasn't, to be honest. I've seen a half-dozen restaurants who didn't do pickup/delivery before the pandemic who are doing their own delivery now — all have stood up square.site fronts. (Probably helps that a lot of them probably used Square for POS anyway.)
- blahbhthrow3748 6y ago
  Shopify will wait until a partner builds it on their platform, see if they're successful, then acquire them. They've done it a couple times, they have tons of cash and don't need to take huge risks.
WrkInProgress 6y ago
I'm curious as to how a basic app could replace the on demand delivery logistics / handle the volume that a platform like UberEats sends to restaurants ? Maybe my urban area is different but restaurants here are doing 10+ orders per hour across all delivery channels. The bottleneck becomes the # of delivery couriers available and smartly assigning them to deliveries.
- gricardo99 6y ago
  I agree with this. It's seems to me that it's much more than "hiring a few developers to build a basic app." There's the cost of delivery personnel, and having enough delivery windows to be practical for customers. It seems to me there are benefits from scale, and a large, aggregated platform that make delivery feasible for many restaurants.
  - mewpmewp2 6y ago
    Yeah definitely. I see tremendous value for such middle man services. I think all the hate is pretty irrational. This is the optimal way.
- draw_down 6y ago
  People on HN are constantly underestimating the effort involved in basically anything ("why does this company have so many employees?"), so yeah that's a dumb point. But GP is right that it's a bad business propped up by VC cash, I just don't see why that should bother me as an end consumer. HN often acts as if bad business models are offensive on a moral level, but personally, if I'm getting something that would have been even more expensive without the VC subsidy, I do not have a problem with that. The P&L is someone else's problem.
Non24Throw 6y ago
Bingo. Subsidized not only by VCs, but also by gig economy workers who genuinely don’t understand how little they’re being paid because their liabilities are complicated and often hidden/deferred. This seems to happen a lot especially with food service startups, because of how price-sensitive that market is. Selling anything below cost or undercutting the competition by even a little bit in that industry will give you exponential growth for as long as you can sustain it, but the instant you want to turn a profit the market will turn their back on you and go somewhere else.
- amelius 6y ago
  Good VCs don't support selling below cost. Only evil and stupid ones do. In some countries it is even illegal.
  - tengbretson 6y ago
    The line between being unprofitable and selling at a loss can be very blurry. What one might call "selling at a loss" another might consider "making upfront investments for ensuring and sustaining long term success".
    - amelius 6y ago
      > What one might call "selling at a loss" another might consider "making upfront investments for ensuring and sustaining long term success". Can you explain why this should not be viewed as anti-competitive behavior? How would you call it if it's not predatory pricing/undercutting?
      - WalterBright 6y ago
        There are 3 prices you can set: 1. above the competition - gouging, profiteering 2. below the competition - predatory pricing, unfair competition, dumping 3. same as the competition - price fixing, collusion All are illegal!
grawprog 6y ago
>Food delivery is hardly a new idea. Not only that, but honestly, most taxi companies, at least in my area, will go pick up food, liquor or other things and make deliveries. There's also a couple local delivery services that specialize in just that. They've been doing well here during the lockdown, especially with liquor deliveries, or so i've heard. Things like uber and just eat aren't really that popular or used here though. Just the few chain restaurants use them.
- toohotatopic 6y ago
  With taxis you don't share delivery routes. It is inherently more expensive. Food delivery is not new. The new thing are the web interfaces. Now people don't need to visit shops to learn about new things. People can shop delivered goods all the time. This allows to drive down delivery costs with scale. Additionally, online shops streamline the ordering process. No person is needed to note down orders. Additionally, self-driving cars and robots will eliminate the cost of the last mile. Like Uber, whoever owns the market when the robots will go life will rake in huge profits.
  - selimthegrim 6y ago
    Surely exclusivity/not sharing the route is a USP for the taxi service for this offering?
  - johannes1234321 6y ago
    > With taxis you don't share delivery routes. It is inherently more expensive. For large parts over here in Germany I don't see route sharing in food delivery as well. Some delivery drivers I can observe via GPS (could be faked, but looks plausible) and many are delivering via bike (Pedelec etc.) or scooter and have limited space to transport also when observing restaurants they often pass a single order ober as well. This of course can be different in areas with other order frequency and other amount of restaurants offering delivery and other distances. (Don't think many orders go further than 2km here)
  - chipotle_coyote 6y ago
    Food delivery doesn't necessarily let you share delivery routes, either. If you're paying for groceries, yes. If you're paying for two theoretically freshly-cooked dinners from a local restaurant, you want that food to come directly from the restaurant to you. The difference between ten minutes and forty minutes can substantially affect food quality and customer satisfaction. As for food delivery robots, I mean, sure, but building a business that only succeeds if other people deliver world-changing technology at scale before you run out of capital seems a wee bit on the risky side.
Thlom 6y ago
When restaurants where closed some local restaurants started creating food boxes you could order for the weekend with recipes and most of the ingredients based on their menu/style. No app, just send an e-mail and pick up on Friday.
andrewla 6y ago
The reality here is that the VC-backed monstrosities are incapable of showing any price sensitivity because they can massage out local market difference with vast amounts of capital. Local approaches can work and be sustainable, but they have to be able to charge a price that actually makes sense for the delivery. Right now that simply isn't possible because the VC-funded behemoths are capable of undercutting anything that moves in the space and attempts to be cash-flow positive in any sort of sustainable way.
puranjay 6y ago
I still don't understand why there is a single global (or rather, country-wide) app for food delivery. Unlike getting cabs, this is hardly something you do when you're away from your home city. If you had an app that only served, say, NYC, you can reduce burn drastically, not worry about scale issues too much, and run a business that's profitable without screwing over either the restaurant or the delivery person. This is absolutely a problem that can and should be solved at a local level. As a consumer, you gain nothing by using an app that serves 100+ cities.
- izolate 6y ago
  This is a somewhat myopic take on the subject. As a digital nomad, I like the fact that I can use Uber/Uber Eats in multiple cities/countries.
  - puranjay 6y ago
    As a digital nomad, you are in a small minority and there can be experiences created specifically for your needs.
- esoterica 6y ago
  There are substantial fixed costs around developing an app that are cheaper when amortized over a larger market. It’s more efficient to write one app to be used globally than 100 apps for 100 different cities. Also people definitely get food delivered while on vacation or traveling for work. Probably even more often than they do at home since they don’t have access to a kitchen to cook in.
  - johannes1234321 6y ago
    Also brand recognition. Over here pizza.de for a long time was the market leader. You can't beat that name and push it with a national merketing campaign. Wehreve in the country, go to pizza.de. (Meanwhile deliveryhero / Lieferheld acquired them using VC money (Rocket Internet and others))
- chapium 6y ago
joe_the_user 6y ago
It seems like another aspect of this is some combination of "aiming at regular customers, being willing/able to scale, educating consumers". The VC model is like a lot of models. They're aiming for the section of consumers that will give them a 25% cut for picture-delivery to the door. The opposite scaling model is a truck that delivers soup and vegetables from a central production facility to every house on a street once a week on a schedule flexible enough to keep costs low. The restaurant model has been selling prepared food at a premium in exchange for the experience (not that they don't have ultra-low margins but they are automatically following a model that doesn't scale).
vmception 6y ago
I was going to say that its nice to live in a dense city that always get the latest tech offerings, compared to the suburbs anywhere but then I remembered how many of the scooter offerings have already disappeared these food delivery courier services can disappear just as quick, to be replaced by smaller local networks and restuarant specific services just like they used to be
- frandroid 6y ago
  Foodora just walked out of Canada.
asveikau 6y ago
It wasn't so long ago that I was calling up restaurants directly for delivery. I don't do that anymore. There were difficulties ordering over the phone sometimes. People would mishear you. They would be overwhelmed with orders at busy times. A few places had online ordering directly, mitigating these issues. But some of the most interesting aspects in contrast to the apps is how they charged for delivery. It was common for, say, a pizza place to hire their own driver. But, and maybe this only works in cities, I ordered from some people who seemed to contract out. It seemed like some of those people were making it ok as a standalone business, though you wouldn't necessarily know that the restaurant wasn't employing them directly or that they did deliveries for multiple places. A lot of places seemed to eat some of the cost of delivery but not raise the menu prices. So they would only let you deliver above a minimum price or order size. And of course you were expected to tip the driver. But these apps take a hefty fee on top of the posted price, and they have a charge that goes to the courier, and you can tip above that. It seems like added consumer costs are higher than with the old way.
- ErikAugust 6y ago
  Let's have an app that provides a directory of restaurants in the area, and provides the menu and order form for a selected restaurant. And we remove all the delivery driver handling crap. Let the restaurant handle that. Sounds like a plan to me.
  - albntomat0 6y ago
    Is there enough demand for non-standard food types (I have to imagine more folks get pizza delivered, than say, sushi) for each restaurant to maintain their own group of drivers? Not saying the end result has to look like uber eats, etc, but there do seem to be efficiencies from having X drivers collectively cover Y restaurants, with X << Y
  - somethoughts 6y ago
    I think the biggest value add - from a user perspective only - is as follows: 1.) accessing a local directory of restaurants with their menus 2.) accessing a common user interface experience for ordering 3.) not having to enter credit card info 4.) common portal to receive updates from the restaurant on the delivery The actual dispatch of the driver and hiring of the driver is not a key component of the user experience and could easily be handled by the restaurant owner. I feel like Square is uniquely positioned to provide 1-4 given their existing access to restaurants via Square POS and Square websites (Weebly).
darepublic 6y ago
yea I like this idea... tech should be empowering people to cut out the middle man, not create services that rob them with 30% cuts of the profits on delivery
guevara 6y ago
One thing I don't understand with these "fake markets" (ride-sharing and food delivery) is what's the end game? It seems like there is no path to profitability.
- Barrin92 6y ago
  there is none. Look at bike-sharing in China. It's just a bubble fuelled by excess capital. https://qz.com/1235417/bluegogo-and-didi-what-happens-when-your-bike-share-company-goes-out-of-business-in-china/ https://qz.com/1235417/bluegogo-and-didi-what-happens-when-y...
  - hckr_news 6y ago
    It’s just a house of cards all the way up.
- ebzlo 6y ago
  I think for both of these companies, the path to profitability is eventually cutting out the human aspect for automated delivery. Self-driving cars is a good vision for the business and a very end-result. And for food delivery, I'm seeing more of those robotic carts that contain food driving around sidewalks in the Bay Area.
  - koolba 6y ago
    > And for food delivery, I'm seeing more of those robotic carts that contain food driving around sidewalks in the Bay Area. Got a link? I’ve never heard of this.
    - samatman 6y ago
      I presume they're referring to these: https://news.berkeley.edu/2018/05/31/those-four-wheeled-robots-on-campus-explained/ https://news.berkeley.edu/2018/05/31/those-four-wheeled-robo... It's pilot-scale, relies on human labor, and has some obvious problems which would break down immediately at scale. Plus they're annoying to navigate around. But they do exist.
Consultant32452 6y ago
Apparently Chipotle has white-labeled delivery through their app. You just choose order for delivery in the app and it looks like ordering off Pizza Hut or something. But once the order is placed and you get into tracking, you do see a thing that says it's "Powered By Door Dash." It will be interesting to see if any of the big chains can force the delivery suppliers to allow multiple integrations, and Chipotle lets the lowest bidder deliver your food. Ultimately I think that's the next step. It doesn't make sense that there's a super special delivery driver who works for Pizza Hut. A better solution is to have multiple delivery providers delivering food and other goods for everyone. I think people would be surprised to find out how much generic delivery work there is to be done. Like every car garage has one or more parts delivery services. And these are mostly people in regular cars delivering your particular car's brake pads from a warehouse to the auto shop. Why can't Uber, or Door Dash, or whatever deliver that too?
- Retric 6y ago
  The advantage to a Pizza Hut driver is they can pick up several deliveries at the same time without waiting. Any app allowing multiple restaurants from a wide area inherently increases delivery costs. There are edge cases where that’s ok, but it’s not a multi billion dollar company at that point.
  - mewpmewp2 6y ago
    Wouldn't that imply an algorithm weakness in this case? It seems like the wider the network and the more driver's you have the more optimal routes can be given algorithms good enough.
    - Retric 6y ago
      Pickup and delivery is not simply instantaneous events at the end of a route. For example, you need different processes for in house drivers vs 3rd party drivers. Many pizza places benefit from gathering orders into insulated containers for delivery which drivers then pickup an return. On the other hand someone showing up at potentially hundreds of restaurants is hardly going to know each of their systems very well or be recognized on sight.
dr_orpheus 6y ago
Where I live we have had a local delivery service that coordinated with places that normally deliver, but was still pretty extensive beyond just pizza. It started mostly geared towards late night food for college kids, but has expanded significantly. It was around long before GrubHub, Doordash, Uber Eats, etc. came to our area. The service is now a part of "LoDel". LoDel seems to run a multitude of delivery services in different locations under different names. I don't know how this business model plays with restaurants, but it seems to be a bit of a halfway house between calling up your local pizza place for delivery or ordering through UberEats and the like.
Melting_Harps 6y ago
> This whole industry is yet another example of “fake markets” that were created by just massively subsidizing something with VC cash. Agreed. > 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. Also agree, and this model also applies to the Food supply. I hope we see a record breaking year in CSA subscriptions and community gardens are overflowing with plants this year. My local one has already had all of its plots taken.
cactus2093 6y ago
Not only is all the VC subsidization questionable, but Doordash, Caviar, Uber Eats, etc. all strike me as just the shallow veneer of a delivery service. It's just about the leakiest abstraction of any major product that I can think of. You have the restaurant, which is physically optimized for in-person meals. Take-out on its own is already fairly clunky at many sit-down restaurants, there's no waiting area, pick up counter, no easy way to pick up at the curb, etc. Pickup is clearly not the focus of those physical spaces. Then you have the integration between the app and the restaurant. This is the one thing about the entire flow that is actually integrated in a meaningful way, but still it's only at the single point in time of placing the order. If anything goes wrong, if there's a delay in preparing the food, or anything is sold out, or if they end up giving you the wrong person's order, there's always a runaround of whether you should talk to the delivery support or the restaurant itself. Seeing as at least something goes wrong with probably 1 in every 3 or 4 orders I do, this loss is a probably a really big deal for profitability as I am always getting refunded for something that was missing or went wrong or getting a $10 credit for an unexpected 3 hour delay. And then you have the delivery handoff itself. I suspect this mostly works well in the suburbs, but living in an apartment building this is yet another opportunity for things to go wrong. I would prefer not to have to come downstairs outside the building to pick it up when I'm paying ~$20 for this delivery to my door, but very often the delivery people complain they can't find the building (it's clearly marked on google maps), or that there's no parking (I live in a very dense area, why are all these apps so car-centered in their delivery crew? Why can't I request someone on a bike that wouldn't have this problem?). Basically, delivery could be done very efficiently, and profitably if we made some bigger changes. There should clearly be specific restaurants, maybe even some that have no seats at all and are just a pickup kitchen, that are optimized for efficient pick-up and marked as such. Cities need to change their street design to accomodate how many more deliveries are happening today, vs when these streets were designed many years ago (this is not just a problem for food, look how many rideshares drop people off in the middle of the road because there's no space to pull over to a curb, or how many Amazon or UPS trucks block streets and bike lanes because there are no dedicated 5-minute stopping zones). It reminds me of Marc Andreeson's recent "It's time to build" essay. Our whole world is structured around how things used to work 40 years ago, and nothing significant can ever be changed. So we have to have these crazy, expensive hacks like Doordash to try to shoehorn in new services that people want, instead of making deeper adaptations as residents' needs and preferences change.
s1artibartfast 6y ago
>This whole industry is yet another example of “fake markets” that were created by just massively subsidizing something with VC cash. How do you reconcile this narrative with the fact that Grubhub turned a net profit every available year until 2019 per their SEC filings. [1] All told, they only took about 85 million between founding in 2004 and IPO in 2014, and they were already net profitable when they took the last 50.[2] [1] https://investors.grubhub.com/investors/sec-filings/default.aspx https://investors.grubhub.com/investors/sec-filings/default.... [2] https://en.wikipedia.org/wiki/Grubhub#Grubhub_history https://en.wikipedia.org/wiki/Grubhub#Grubhub_history
- aripickar 6y ago
  Most people railing against "fake markets" haven't considered the fact. Grubhub has long been profitable, same with Seamless. People still think that their uber rides are being subsidized on every ride, but uber now makes profit on every ride (at least in the us, not sure about abroad). For some reason, theres this streak on HN of people that think that VC's are just complete idiots, and are completely just pissing away money.
  - Skunkleton 6y ago
    I personally don't have the data to support or refute the "fake market" claim. I would point out however that it is not enough to be cash-flow positive for individual transactions. Sure Uber now makes money on every ride, is the business as a whole poised to make money? Will that be stable in light of likely regulations? Like I said, I don't know. I don't think the questions can be dismissed just by assuming that VCs know what they are doing. Edit: I went and looked at GrubHubs 2019 Q4 results [1]. They operated at a $30M loss. Most of the expenses were "operations" related. I'm not sure if that includes engineering, but I guess it doesn't. [1] https://investors.grubhub.com/investors/press-releases/press-release-details/2020/Grubhub-Reports-Fourth-Quarter-And-Full-Year-2019-Results/default.aspx https://investors.grubhub.com/investors/press-releases/press...
    - s1artibartfast 6y ago
SkyMarshal 6y ago
> This whole industry is yet another example of “fake markets” that were created by just massively subsidizing something with VC cash. Yes, we saw this back in the dot com bust when similar delivery companies like Kozmo went under. These companies margins are thin with little room for error or ability to survive recessions. Some like Instacart may work as a subsidiary of a larger business like Costco with other stable revenue streams, as a value-add. But not independently indefinitely. I hope Instacart, etc. have been searching for a buyer, it may be their only possible exit. > 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. It may be happening in Silicon Valley now. Some food service companies like Coupa Cafe have created their own apps and delivery services to cut out Uber Eats, etc. Not sure if they will merge their apps and delivery services though. Will be interesting to see.
- projektfu 6y ago
  In many places, like Pittsburgh (Wheel Deliver), there was a company that did restaurant delivery for a reasonable fee. Everyone had a stack of takeout menus and you just called up and asked for whatever you wanted. I don’t see what the apps bring to the table except discounts.
smsm42 6y ago
> just getting their act together and hiring a few developers to build a basic app. Developing a new app each time sounds like a very expensive way to go. If that allows them to beat Uber then Uber is in trouble in this market. Because the next step is to create a service that any restaurant can join for fixed payment. Even with customization marginal cost for such thing should be quite low, surely lower than everybody building their own apps from scratch and maintaining them over time. And that's pretty much what delivery companies offer? So how developing your own app would be more effective than just using already developed app and adding a couple of menu items to it?
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x3blah 6y ago
"This whole industry is yet another example of "fake markets" that were created by just massively subsidizing something with VC cash." To what extent has America (and its followers) been led to believe these types of companies, who always seem to have a non-sensical name, and the narratives they construct ("fake markets") are the future of the American economy. While these middlemen may be a part of the future and play a role, are they receiving a disproportionate amount of attention relative to their true importance.
wdb 6y ago
Since this week Uber Eats is charging a 10% service fee and distance depending delivery free. That's roughly 25% of my food order. It's getting expensive. Luckily, I found out the restaurant does delivery by itself too and then it's free instead of the £7 I got charged by Uber so next time :)
indymike 6y ago
Even when PCs were new (we're talking late 80s), and not really networked there were a ton of small businesses that would buy a business system like TakeOutTaxi and make a go at delivering local restaurant food to homes and businesses. You called a dispatch center on the phone, put in your order, and 20-30 minutes, and greasy magic... BIG MAC! These businesses would often do well if the operator/owner/manager was a 10x hustler. I helped a couple of these get started in the late 80s, and they both did well until the hustler slowed down. Two-sided markets are hard, and two-sided hyperlocal markets are uber-difficult.
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hogFeast 6y ago
Their business isn't food delivery but food distribution. The restaurants are paying for a spot on their webpage (some of these companies don't deliver, and charge the same price i.e. Just Eat). I think this idea does apply to any model where the distribution/search costs are minimal i.e. Uber/Lyft. I think Lyft is a great business btw but their costs are totally wrong (i.e. they don't really need hundreds of software engineers milking the company dry).
neighbour 6y ago
>local markets that basically out-competed Uber etc by just getting their act together and hiring a few developers to build a basic app. There is the sweet spot. A wix/squarespace style service which offers businesses a boilerplate white-label app which they can use to offer delivery to local customers.
ryuukk_ 6y ago
market exists, the problem is price and for buisnesses they need to pay people for delivery unless we use robots for delivery, this industry has no future
joncrane 6y ago
Not only that, but in the 50s through the 70s, it was very common for grocery stores to deliver groceries. This is not a new idea by any stretch of the imagination.

Apocryphon 6y ago

I wonder how Instacart's business model compares to restaurant/hot food delivery.

jschwartzi 6y 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 6y ago
  Or just ordering from the supermarket directly, for those that provide such a service!
  - Spivak 6y ago
    But you run into the same issues mostly because Kroger's delivery service is "just as 3rd-party" as Instacart. It's still an employee going through your store, grabbing stuff off the shelves and delivering them to you. There's basically zero first-party advantage.
    - Apocryphon 6y ago
      At least the in-house grocers are more familiar with the layout and product offerings. From a process perspective, couldn't supermarkets process the delivery orders during stocking?
    - jschwartzi 6y ago
      Yeah, this is exactly what it was. We used a Kroger store because they had a much better selection than Safeway and in the end didn't really get what we wanted. At the time I had guessed it was because the 3rd-party picker didn't know where some of the items were and didn't have time to go looking for them.
  - aendruk 6y ago
    Having been warned about Instacart I made a point of doing just that, only to have the grocery store run the order through them anyway. The whole experience felt fraudulent, from the bait-and-switch between service providers to the bait-and-switch from carefully chosen sale items to expensive and inappropriate "substitutes". Reportedly at least Instacart proper has a feedback mechanism. With the white labeled service you're out of luck.
- PeterisP 6y ago
  Grocery delivery is not the same as grocery shoppers. For me, the two largest local grocery chains are offering grocery delivery and/or pickup, which always bypasses the shelves - IIRC one of them has the shelf-stocking people pack the deliveries before they go onto shelves; the other is packing the deliveries in the logistics centres alongside with the stuff that goes to restock the many smaller stores. Obviously, having someone go to a store just for your purchase and walk along all the isles to pick stuff up is horrendously inefficient.
  - Dylan16807 6y ago
    > bypasses the shelves It's obviously inefficient to send someone to a store to grab stuff, but "giant room with products on shelves" is a pretty efficient setup. They can do some of it in the back room, or a warehouse full of pallets, but to a large extent companies end up building "dark stores" that are almost the same as a normal store, but with no customers allowed in.
    - PeterisP 6y ago
      To a large extent store chains already have them, that's the (few) logistics/distribution centres out of which they supply the (many) stores. The store shelf is essentially just a short-term cache.
      - Dylan16807 6y ago
        Are the preexisting logistics centers designed around picking up single items off the shelves? I would have expected them to be set up around bigger blocks of product.
        PeterisP 6y ago
        The preexisting logistics centers are designed to take a pallet of item X and allocate different amounts of it to different boxes each going to a different smallish shop; doing so in an multi-hour cycle (2-3 times a day?) to ensure that every type of product is distributed along these boxes. During this process they also put part of the product not in "delivery truck going to shop A" but to "delivery truck going to home deliveries". It does need some ripping of bigger blocks of procuct and repackaging to bags, but it happens at the same time as they're ripping even bigger blocks of product for supplying stores and shelves. But the essential difference is the "push vs pull" - instead of one delivery pulling items from everywhere (which is a new process that grocery chains did not have) you have the supply process pushing items to many delivery targets, which is a process that grocery chains already have and have optimized.
code4tee 6y ago
If Instacart was able to pivot to full end to end food delivery with their own distribution chain it could have long term viability. Their current model of just having people shop in normal stores is problematic for many reasons, not the least of which because normal stores are BY DESIGN slow and inefficient for picking up a list of items. Instacart had early advantage because full scale grocery delivery infrastructure was broadly in its infancy but if and when the likes of Amazon, Wal-Mart and others go full scale on their own offerings then structurally it would seem impossible for Instacart to compete with that.
- Spivak 6y ago
  But Walmart and Amazon/Whole Foods are doing the same thing but just having their own pickers in their store. Until my Kroger delivery comes from the warehouse and not the the actual store Instacart will be fine. Amazon Fresh might be a real competitor but it seems like they're running into the same problems as grocery stores.
- slfnflctd 6y ago
  > when the likes of Amazon, Wal-Mart and others go full scale on their own offerings then structurally it would seem impossible for Instacart to compete I agree completely. I signed up to be a shopper with Instacart, and the experience was awful. To get work, there was a 'first come, first serve' queue I had to check at a specific time several times a week. Not great, I thought, but okay, we'll see how it goes. Well, apparently people had set up bots or something, because all the orders worth taking were scooped up in less than a minute when the appointed time arrived. I couldn't even read the screen fast enough to see what was there before it was gone. I walked away in disgust immediately and never considered working with them again.

mountainofdeath 6y ago

Exactly. There is a small dev outfit in my second-tier US city that caters to precisely this market and is doing quite well considering many restaurants added this to their website or replaced their website outright. They assume their customer is the average mom-and-pop restaurant and set up their business accordingly. I am curious why Shopify doesn't lateral into this market. They already have the majority of the infrastructure for retail.

bobthepanda 6y ago
A gig platform for delivery drivers is a whole different thing to manage than a common web shopping workflow.
goodmachine 6y ago
I agree. But please, let us never use 'lateral' as a verb ever again.
- chosenbreed37 6y ago
  LOL I didn't know it was a verb! lmao
trynewideas 6y ago
Square's been doing what Shopify hasn't, to be honest. I've seen a half-dozen restaurants who didn't do pickup/delivery before the pandemic who are doing their own delivery now — all have stood up square.site fronts. (Probably helps that a lot of them probably used Square for POS anyway.)
blahbhthrow3748 6y ago
Shopify will wait until a partner builds it on their platform, see if they're successful, then acquire them. They've done it a couple times, they have tons of cash and don't need to take huge risks.

WrkInProgress 6y ago

I'm curious as to how a basic app could replace the on demand delivery logistics / handle the volume that a platform like UberEats sends to restaurants ? Maybe my urban area is different but restaurants here are doing 10+ orders per hour across all delivery channels. The bottleneck becomes the # of delivery couriers available and smartly assigning them to deliveries.

gricardo99 6y ago
I agree with this. It's seems to me that it's much more than "hiring a few developers to build a basic app." There's the cost of delivery personnel, and having enough delivery windows to be practical for customers. It seems to me there are benefits from scale, and a large, aggregated platform that make delivery feasible for many restaurants.
- mewpmewp2 6y ago
  Yeah definitely. I see tremendous value for such middle man services. I think all the hate is pretty irrational. This is the optimal way.
draw_down 6y ago
People on HN are constantly underestimating the effort involved in basically anything ("why does this company have so many employees?"), so yeah that's a dumb point. But GP is right that it's a bad business propped up by VC cash, I just don't see why that should bother me as an end consumer. HN often acts as if bad business models are offensive on a moral level, but personally, if I'm getting something that would have been even more expensive without the VC subsidy, I do not have a problem with that. The P&L is someone else's problem.

Non24Throw 6y ago

Bingo. Subsidized not only by VCs, but also by gig economy workers who genuinely don’t understand how little they’re being paid because their liabilities are complicated and often hidden/deferred. This seems to happen a lot especially with food service startups, because of how price-sensitive that market is. Selling anything below cost or undercutting the competition by even a little bit in that industry will give you exponential growth for as long as you can sustain it, but the instant you want to turn a profit the market will turn their back on you and go somewhere else.

amelius 6y ago
Good VCs don't support selling below cost. Only evil and stupid ones do. In some countries it is even illegal.
- tengbretson 6y ago
  The line between being unprofitable and selling at a loss can be very blurry. What one might call "selling at a loss" another might consider "making upfront investments for ensuring and sustaining long term success".
  - amelius 6y ago
    > What one might call "selling at a loss" another might consider "making upfront investments for ensuring and sustaining long term success". Can you explain why this should not be viewed as anti-competitive behavior? How would you call it if it's not predatory pricing/undercutting?
    - WalterBright 6y ago
      There are 3 prices you can set: 1. above the competition - gouging, profiteering 2. below the competition - predatory pricing, unfair competition, dumping 3. same as the competition - price fixing, collusion All are illegal!

grawprog 6y ago

>Food delivery is hardly a new idea. Not only that, but honestly, most taxi companies, at least in my area, will go pick up food, liquor or other things and make deliveries. There's also a couple local delivery services that specialize in just that. They've been doing well here during the lockdown, especially with liquor deliveries, or so i've heard. Things like uber and just eat aren't really that popular or used here though. Just the few chain restaurants use them.

toohotatopic 6y ago
With taxis you don't share delivery routes. It is inherently more expensive. Food delivery is not new. The new thing are the web interfaces. Now people don't need to visit shops to learn about new things. People can shop delivered goods all the time. This allows to drive down delivery costs with scale. Additionally, online shops streamline the ordering process. No person is needed to note down orders. Additionally, self-driving cars and robots will eliminate the cost of the last mile. Like Uber, whoever owns the market when the robots will go life will rake in huge profits.
- selimthegrim 6y ago
  Surely exclusivity/not sharing the route is a USP for the taxi service for this offering?
- johannes1234321 6y ago
  > With taxis you don't share delivery routes. It is inherently more expensive. For large parts over here in Germany I don't see route sharing in food delivery as well. Some delivery drivers I can observe via GPS (could be faked, but looks plausible) and many are delivering via bike (Pedelec etc.) or scooter and have limited space to transport also when observing restaurants they often pass a single order ober as well. This of course can be different in areas with other order frequency and other amount of restaurants offering delivery and other distances. (Don't think many orders go further than 2km here)
- chipotle_coyote 6y ago
  Food delivery doesn't necessarily let you share delivery routes, either. If you're paying for groceries, yes. If you're paying for two theoretically freshly-cooked dinners from a local restaurant, you want that food to come directly from the restaurant to you. The difference between ten minutes and forty minutes can substantially affect food quality and customer satisfaction. As for food delivery robots, I mean, sure, but building a business that only succeeds if other people deliver world-changing technology at scale before you run out of capital seems a wee bit on the risky side.

Thlom 6y ago

When restaurants where closed some local restaurants started creating food boxes you could order for the weekend with recipes and most of the ingredients based on their menu/style. No app, just send an e-mail and pick up on Friday.

andrewla 6y ago

The reality here is that the VC-backed monstrosities are incapable of showing any price sensitivity because they can massage out local market difference with vast amounts of capital. Local approaches can work and be sustainable, but they have to be able to charge a price that actually makes sense for the delivery. Right now that simply isn't possible because the VC-funded behemoths are capable of undercutting anything that moves in the space and attempts to be cash-flow positive in any sort of sustainable way.

puranjay 6y ago

I still don't understand why there is a single global (or rather, country-wide) app for food delivery. Unlike getting cabs, this is hardly something you do when you're away from your home city. If you had an app that only served, say, NYC, you can reduce burn drastically, not worry about scale issues too much, and run a business that's profitable without screwing over either the restaurant or the delivery person. This is absolutely a problem that can and should be solved at a local level. As a consumer, you gain nothing by using an app that serves 100+ cities.

izolate 6y ago
This is a somewhat myopic take on the subject. As a digital nomad, I like the fact that I can use Uber/Uber Eats in multiple cities/countries.
- puranjay 6y ago
  As a digital nomad, you are in a small minority and there can be experiences created specifically for your needs.
esoterica 6y ago
There are substantial fixed costs around developing an app that are cheaper when amortized over a larger market. It’s more efficient to write one app to be used globally than 100 apps for 100 different cities. Also people definitely get food delivered while on vacation or traveling for work. Probably even more often than they do at home since they don’t have access to a kitchen to cook in.
- johannes1234321 6y ago
  Also brand recognition. Over here pizza.de for a long time was the market leader. You can't beat that name and push it with a national merketing campaign. Wehreve in the country, go to pizza.de. (Meanwhile deliveryhero / Lieferheld acquired them using VC money (Rocket Internet and others))
chapium 6y ago

joe_the_user 6y ago

It seems like another aspect of this is some combination of "aiming at regular customers, being willing/able to scale, educating consumers". The VC model is like a lot of models. They're aiming for the section of consumers that will give them a 25% cut for picture-delivery to the door. The opposite scaling model is a truck that delivers soup and vegetables from a central production facility to every house on a street once a week on a schedule flexible enough to keep costs low. The restaurant model has been selling prepared food at a premium in exchange for the experience (not that they don't have ultra-low margins but they are automatically following a model that doesn't scale).

vmception 6y ago

I was going to say that its nice to live in a dense city that always get the latest tech offerings, compared to the suburbs anywhere but then I remembered how many of the scooter offerings have already disappeared these food delivery courier services can disappear just as quick, to be replaced by smaller local networks and restuarant specific services just like they used to be

frandroid 6y ago
Foodora just walked out of Canada.

asveikau 6y ago

It wasn't so long ago that I was calling up restaurants directly for delivery. I don't do that anymore. There were difficulties ordering over the phone sometimes. People would mishear you. They would be overwhelmed with orders at busy times. A few places had online ordering directly, mitigating these issues. But some of the most interesting aspects in contrast to the apps is how they charged for delivery. It was common for, say, a pizza place to hire their own driver. But, and maybe this only works in cities, I ordered from some people who seemed to contract out. It seemed like some of those people were making it ok as a standalone business, though you wouldn't necessarily know that the restaurant wasn't employing them directly or that they did deliveries for multiple places. A lot of places seemed to eat some of the cost of delivery but not raise the menu prices. So they would only let you deliver above a minimum price or order size. And of course you were expected to tip the driver. But these apps take a hefty fee on top of the posted price, and they have a charge that goes to the courier, and you can tip above that. It seems like added consumer costs are higher than with the old way.

ErikAugust 6y ago
Let's have an app that provides a directory of restaurants in the area, and provides the menu and order form for a selected restaurant. And we remove all the delivery driver handling crap. Let the restaurant handle that. Sounds like a plan to me.
- albntomat0 6y ago
  Is there enough demand for non-standard food types (I have to imagine more folks get pizza delivered, than say, sushi) for each restaurant to maintain their own group of drivers? Not saying the end result has to look like uber eats, etc, but there do seem to be efficiencies from having X drivers collectively cover Y restaurants, with X << Y
- somethoughts 6y ago
  I think the biggest value add - from a user perspective only - is as follows: 1.) accessing a local directory of restaurants with their menus 2.) accessing a common user interface experience for ordering 3.) not having to enter credit card info 4.) common portal to receive updates from the restaurant on the delivery The actual dispatch of the driver and hiring of the driver is not a key component of the user experience and could easily be handled by the restaurant owner. I feel like Square is uniquely positioned to provide 1-4 given their existing access to restaurants via Square POS and Square websites (Weebly).

darepublic 6y ago

yea I like this idea... tech should be empowering people to cut out the middle man, not create services that rob them with 30% cuts of the profits on delivery

guevara 6y ago

One thing I don't understand with these "fake markets" (ride-sharing and food delivery) is what's the end game? It seems like there is no path to profitability.

Barrin92 6y ago
there is none. Look at bike-sharing in China. It's just a bubble fuelled by excess capital. https://qz.com/1235417/bluegogo-and-didi-what-happens-when-your-bike-share-company-goes-out-of-business-in-china/ https://qz.com/1235417/bluegogo-and-didi-what-happens-when-y...
- hckr_news 6y ago
  It’s just a house of cards all the way up.
ebzlo 6y ago
I think for both of these companies, the path to profitability is eventually cutting out the human aspect for automated delivery. Self-driving cars is a good vision for the business and a very end-result. And for food delivery, I'm seeing more of those robotic carts that contain food driving around sidewalks in the Bay Area.
- koolba 6y ago
  > And for food delivery, I'm seeing more of those robotic carts that contain food driving around sidewalks in the Bay Area. Got a link? I’ve never heard of this.
  - samatman 6y ago
    I presume they're referring to these: https://news.berkeley.edu/2018/05/31/those-four-wheeled-robots-on-campus-explained/ https://news.berkeley.edu/2018/05/31/those-four-wheeled-robo... It's pilot-scale, relies on human labor, and has some obvious problems which would break down immediately at scale. Plus they're annoying to navigate around. But they do exist.

Consultant32452 6y ago

Apparently Chipotle has white-labeled delivery through their app. You just choose order for delivery in the app and it looks like ordering off Pizza Hut or something. But once the order is placed and you get into tracking, you do see a thing that says it's "Powered By Door Dash." It will be interesting to see if any of the big chains can force the delivery suppliers to allow multiple integrations, and Chipotle lets the lowest bidder deliver your food. Ultimately I think that's the next step. It doesn't make sense that there's a super special delivery driver who works for Pizza Hut. A better solution is to have multiple delivery providers delivering food and other goods for everyone. I think people would be surprised to find out how much generic delivery work there is to be done. Like every car garage has one or more parts delivery services. And these are mostly people in regular cars delivering your particular car's brake pads from a warehouse to the auto shop. Why can't Uber, or Door Dash, or whatever deliver that too?

Retric 6y ago
The advantage to a Pizza Hut driver is they can pick up several deliveries at the same time without waiting. Any app allowing multiple restaurants from a wide area inherently increases delivery costs. There are edge cases where that’s ok, but it’s not a multi billion dollar company at that point.
- mewpmewp2 6y ago
  Wouldn't that imply an algorithm weakness in this case? It seems like the wider the network and the more driver's you have the more optimal routes can be given algorithms good enough.
  - Retric 6y ago
    Pickup and delivery is not simply instantaneous events at the end of a route. For example, you need different processes for in house drivers vs 3rd party drivers. Many pizza places benefit from gathering orders into insulated containers for delivery which drivers then pickup an return. On the other hand someone showing up at potentially hundreds of restaurants is hardly going to know each of their systems very well or be recognized on sight.

dr_orpheus 6y ago

Where I live we have had a local delivery service that coordinated with places that normally deliver, but was still pretty extensive beyond just pizza. It started mostly geared towards late night food for college kids, but has expanded significantly. It was around long before GrubHub, Doordash, Uber Eats, etc. came to our area. The service is now a part of "LoDel". LoDel seems to run a multitude of delivery services in different locations under different names. I don't know how this business model plays with restaurants, but it seems to be a bit of a halfway house between calling up your local pizza place for delivery or ordering through UberEats and the like.

Melting_Harps 6y ago

> This whole industry is yet another example of “fake markets” that were created by just massively subsidizing something with VC cash. Agreed. > 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. Also agree, and this model also applies to the Food supply. I hope we see a record breaking year in CSA subscriptions and community gardens are overflowing with plants this year. My local one has already had all of its plots taken.

cactus2093 6y ago

Not only is all the VC subsidization questionable, but Doordash, Caviar, Uber Eats, etc. all strike me as just the shallow veneer of a delivery service. It's just about the leakiest abstraction of any major product that I can think of. You have the restaurant, which is physically optimized for in-person meals. Take-out on its own is already fairly clunky at many sit-down restaurants, there's no waiting area, pick up counter, no easy way to pick up at the curb, etc. Pickup is clearly not the focus of those physical spaces. Then you have the integration between the app and the restaurant. This is the one thing about the entire flow that is actually integrated in a meaningful way, but still it's only at the single point in time of placing the order. If anything goes wrong, if there's a delay in preparing the food, or anything is sold out, or if they end up giving you the wrong person's order, there's always a runaround of whether you should talk to the delivery support or the restaurant itself. Seeing as at least something goes wrong with probably 1 in every 3 or 4 orders I do, this loss is a probably a really big deal for profitability as I am always getting refunded for something that was missing or went wrong or getting a $10 credit for an unexpected 3 hour delay. And then you have the delivery handoff itself. I suspect this mostly works well in the suburbs, but living in an apartment building this is yet another opportunity for things to go wrong. I would prefer not to have to come downstairs outside the building to pick it up when I'm paying ~$20 for this delivery to my door, but very often the delivery people complain they can't find the building (it's clearly marked on google maps), or that there's no parking (I live in a very dense area, why are all these apps so car-centered in their delivery crew? Why can't I request someone on a bike that wouldn't have this problem?). Basically, delivery could be done very efficiently, and profitably if we made some bigger changes. There should clearly be specific restaurants, maybe even some that have no seats at all and are just a pickup kitchen, that are optimized for efficient pick-up and marked as such. Cities need to change their street design to accomodate how many more deliveries are happening today, vs when these streets were designed many years ago (this is not just a problem for food, look how many rideshares drop people off in the middle of the road because there's no space to pull over to a curb, or how many Amazon or UPS trucks block streets and bike lanes because there are no dedicated 5-minute stopping zones). It reminds me of Marc Andreeson's recent "It's time to build" essay. Our whole world is structured around how things used to work 40 years ago, and nothing significant can ever be changed. So we have to have these crazy, expensive hacks like Doordash to try to shoehorn in new services that people want, instead of making deeper adaptations as residents' needs and preferences change.

s1artibartfast 6y ago

>This whole industry is yet another example of “fake markets” that were created by just massively subsidizing something with VC cash. How do you reconcile this narrative with the fact that Grubhub turned a net profit every available year until 2019 per their SEC filings. [1] All told, they only took about 85 million between founding in 2004 and IPO in 2014, and they were already net profitable when they took the last 50.[2] [1] https://investors.grubhub.com/investors/sec-filings/default.aspx https://investors.grubhub.com/investors/sec-filings/default.... [2] https://en.wikipedia.org/wiki/Grubhub#Grubhub_history https://en.wikipedia.org/wiki/Grubhub#Grubhub_history

aripickar 6y ago
Most people railing against "fake markets" haven't considered the fact. Grubhub has long been profitable, same with Seamless. People still think that their uber rides are being subsidized on every ride, but uber now makes profit on every ride (at least in the us, not sure about abroad). For some reason, theres this streak on HN of people that think that VC's are just complete idiots, and are completely just pissing away money.
- Skunkleton 6y ago
  I personally don't have the data to support or refute the "fake market" claim. I would point out however that it is not enough to be cash-flow positive for individual transactions. Sure Uber now makes money on every ride, is the business as a whole poised to make money? Will that be stable in light of likely regulations? Like I said, I don't know. I don't think the questions can be dismissed just by assuming that VCs know what they are doing. Edit: I went and looked at GrubHubs 2019 Q4 results [1]. They operated at a $30M loss. Most of the expenses were "operations" related. I'm not sure if that includes engineering, but I guess it doesn't. [1] https://investors.grubhub.com/investors/press-releases/press-release-details/2020/Grubhub-Reports-Fourth-Quarter-And-Full-Year-2019-Results/default.aspx https://investors.grubhub.com/investors/press-releases/press...
  - s1artibartfast 6y ago

SkyMarshal 6y ago

> This whole industry is yet another example of “fake markets” that were created by just massively subsidizing something with VC cash. Yes, we saw this back in the dot com bust when similar delivery companies like Kozmo went under. These companies margins are thin with little room for error or ability to survive recessions. Some like Instacart may work as a subsidiary of a larger business like Costco with other stable revenue streams, as a value-add. But not independently indefinitely. I hope Instacart, etc. have been searching for a buyer, it may be their only possible exit. > 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. It may be happening in Silicon Valley now. Some food service companies like Coupa Cafe have created their own apps and delivery services to cut out Uber Eats, etc. Not sure if they will merge their apps and delivery services though. Will be interesting to see.

projektfu 6y ago
In many places, like Pittsburgh (Wheel Deliver), there was a company that did restaurant delivery for a reasonable fee. Everyone had a stack of takeout menus and you just called up and asked for whatever you wanted. I don’t see what the apps bring to the table except discounts.

smsm42 6y ago

> just getting their act together and hiring a few developers to build a basic app. Developing a new app each time sounds like a very expensive way to go. If that allows them to beat Uber then Uber is in trouble in this market. Because the next step is to create a service that any restaurant can join for fixed payment. Even with customization marginal cost for such thing should be quite low, surely lower than everybody building their own apps from scratch and maintaining them over time. And that's pretty much what delivery companies offer? So how developing your own app would be more effective than just using already developed app and adding a couple of menu items to it?

deleted 6y ago

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x3blah 6y ago

"This whole industry is yet another example of "fake markets" that were created by just massively subsidizing something with VC cash." To what extent has America (and its followers) been led to believe these types of companies, who always seem to have a non-sensical name, and the narratives they construct ("fake markets") are the future of the American economy. While these middlemen may be a part of the future and play a role, are they receiving a disproportionate amount of attention relative to their true importance.

wdb 6y ago

Since this week Uber Eats is charging a 10% service fee and distance depending delivery free. That's roughly 25% of my food order. It's getting expensive. Luckily, I found out the restaurant does delivery by itself too and then it's free instead of the £7 I got charged by Uber so next time :)

indymike 6y ago

Even when PCs were new (we're talking late 80s), and not really networked there were a ton of small businesses that would buy a business system like TakeOutTaxi and make a go at delivering local restaurant food to homes and businesses. You called a dispatch center on the phone, put in your order, and 20-30 minutes, and greasy magic... BIG MAC! These businesses would often do well if the operator/owner/manager was a 10x hustler. I helped a couple of these get started in the late 80s, and they both did well until the hustler slowed down. Two-sided markets are hard, and two-sided hyperlocal markets are uber-difficult.

deleted 6y ago

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hogFeast 6y ago

Their business isn't food delivery but food distribution. The restaurants are paying for a spot on their webpage (some of these companies don't deliver, and charge the same price i.e. Just Eat). I think this idea does apply to any model where the distribution/search costs are minimal i.e. Uber/Lyft. I think Lyft is a great business btw but their costs are totally wrong (i.e. they don't really need hundreds of software engineers milking the company dry).

neighbour 6y ago

>local markets that basically out-competed Uber etc by just getting their act together and hiring a few developers to build a basic app. There is the sweet spot. A wix/squarespace style service which offers businesses a boilerplate white-label app which they can use to offer delivery to local customers.

ryuukk_ 6y ago

market exists, the problem is price and for buisnesses they need to pay people for delivery unless we use robots for delivery, this industry has no future

joncrane 6y ago

Not only that, but in the 50s through the 70s, it was very common for grocery stores to deliver groceries. This is not a new idea by any stretch of the imagination.