5 ms·

The OP is calling this a 'fake market'. That is inaccurate in that of course a certain number of people will pay for food to be delivered. Pizza delivery has

The OP is calling this a 'fake market'. That is inaccurate in that of course a certain number of people will pay for food to be delivered. Pizza delivery has been a thing for a long time. Grubhub has taken a profitable share of the market which makes sense. Some people believe that new entrants are using private funding to subsidize the price of delivery to gain market share. By doing so, they are expanding the market beyond what the economics of the market support. Those new entrants would argue that they are doing so because once they lock in customers and restaurants, they can raise their prices or lower their costs and turn a profit. Where this all ends up is an interesting thought exercise , but it certainly isn't an easy question to answer.

s1artibartfast 6y ago
I totally agree with your assessment. Given that, it really makes me wonder how UBER and their ilk skirt predatory pricing laws. UBER is running a loss, tanking the profit of grubhub, and now considering buying it out.
unreal37 6y ago
The pizza delivery operation is typically part of the pizza chain, and not outsourced to a third party that takes a hefty fee from the restaurant and the customer. Easier to pay a kid $7.50 per hour to drive around than to pay $12 per order to a third-party.
- hiram112 6y ago
  > not outsourced to a third party that takes a hefty fee from the restaurant and the customer. I delivered pizza for years before and during college. Looking back, I sometimes think the drivers were the ones who were subsidizing the big chains. This was very early 2000s. I was paid about $6/hour and $0.70 per delivery plus tips which averaged $2 per delivery @ 3 deliveries per hour, 90% tax free as credit cards weren't used much then. I would walk home with $14 / hour, after taxes, which seemed like a great deal back then when the only other option for an introverted average looking guy who wasn't gonna make it as a waiter / bartender would have been $12/hour working awful data entry jobs or $8/hour doing retail. It helped that gas was $1/gallon then, though within the next 8 years it would rise to almost $5/gallon. But in those few years, I put on tons of miles of the worst kind of stop-and-go driving. I had a relatively decent 5 year old Honda, but after 4 years of delivering pies, it needed replacing. So essentially, I thought I was making $14/hour in a pretty cool job (driving around, listening to CDs, eating free pizza), but I'm guessing it was more like $10/hour after accounting for the wear and tear on my car. I'd imagine most Uber, Lyft, Grub Hub, etc. drivers are all gonna see similar costs of doing business when they tally up their profits & losses over the lifetime of their car.

s1artibartfast 6y ago

I totally agree with your assessment. Given that, it really makes me wonder how UBER and their ilk skirt predatory pricing laws. UBER is running a loss, tanking the profit of grubhub, and now considering buying it out.

unreal37 6y ago

The pizza delivery operation is typically part of the pizza chain, and not outsourced to a third party that takes a hefty fee from the restaurant and the customer. Easier to pay a kid $7.50 per hour to drive around than to pay $12 per order to a third-party.

hiram112 6y ago
> not outsourced to a third party that takes a hefty fee from the restaurant and the customer. I delivered pizza for years before and during college. Looking back, I sometimes think the drivers were the ones who were subsidizing the big chains. This was very early 2000s. I was paid about $6/hour and $0.70 per delivery plus tips which averaged $2 per delivery @ 3 deliveries per hour, 90% tax free as credit cards weren't used much then. I would walk home with $14 / hour, after taxes, which seemed like a great deal back then when the only other option for an introverted average looking guy who wasn't gonna make it as a waiter / bartender would have been $12/hour working awful data entry jobs or $8/hour doing retail. It helped that gas was $1/gallon then, though within the next 8 years it would rise to almost $5/gallon. But in those few years, I put on tons of miles of the worst kind of stop-and-go driving. I had a relatively decent 5 year old Honda, but after 4 years of delivering pies, it needed replacing. So essentially, I thought I was making $14/hour in a pretty cool job (driving around, listening to CDs, eating free pizza), but I'm guessing it was more like $10/hour after accounting for the wear and tear on my car. I'd imagine most Uber, Lyft, Grub Hub, etc. drivers are all gonna see similar costs of doing business when they tally up their profits & losses over the lifetime of their car.