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You keep missing the point. The delivery apps are “stealing” the demand, so you have no choice as a single restaurant because your customers are moving to the a

You keep missing the point. The delivery apps are “stealing” the demand, so you have no choice as a single restaurant because your customers are moving to the app regardless. Saying “well, the restaurants are staying on the platforms, so it must be valuable to them” misses the entire context of the market structure before these demand aggregators arose.

bhupy 6y ago
I'm not "missing" anything, I'm well aware that the delivery apps are "stealing" the demand. The value proposition to restaurants is two-fold: 1) delivery-as-a-service without having to manage that last mile delivery themselves 2) easy access to aggregated demand without having to reach customers directly and commensurate marketing costs In return for that, they pay a transaction fee and lose some leverage. If restaurants find letting go of (1) or (2) to be "too difficult", then that means that the apps in question are indeed providing value and convenience to the restaurants. If the restaurants don't want to have to deal with the downsides of being on a platform, they will also have to forego the upsides that come with it. There is no free lunch (heh).
- ryanwaggoner 6y ago
  The apps are “providing value” to the restaurants only in the most narrow sense, to the point of being meaningless. Obviously restaurants find it “worth it” in some sense or they wouldn’t do it. But that ignores how we got here, which is totally disingenuous. If someone legally robs you of 30% instead of 100% and you reluctantly agree on the principle that something is better than nothing, that doesn’t mean they “provided value” to you, or that you weren’t a victim of injustice. Sometimes you take the settlement even if you know you’re in the right but you can’t prove it in court, or worse, you can’t afford to prove it. The value to the customer here is indisputable, and even the delivery logistics value proposition is clear (although at least here in NYC almost all seamless delivery people work for the restaurants), the “stolen” demand is completely shitty for restaurants. I don’t want to regulate these apps out of existence, just think we can find a better way to do this.
  - ericd 6y ago
    You're right that they're sort of structurally forced into using these, so it seems a bit weird to say they're adding value. But maybe these delivery services have grown aggregate demand for restaurant food by making it more convenient for customers? Anecdotal, but I used Uber/Lyft probably >50x more than I ever used taxis outside of NYC, and I've gotten a lot more takeout than I used to since these delivery apps became available. If I still lived in NYC, the differential would've been much smaller, but most of the country is waaaay behind NYC in taxi/delivery usage per capita, many people are coming from near 0 in those categories.
    - ryanwaggoner 6y ago
      I do think they’re growing the overall pie by increasing total takeout and delivery spend, but restaurant margins were always razor thin, so losing 30% off the top will just drive many restaurants out of business. I think the long-term here is probably just different, not worse. Many restaurants will go under, but new ones will arise that optimize for this. See the ghost kitchen phenomenon. And hopefully a combination of restaurant and user revolt, the threat of regulation, and competitive pressure from other delivery services will drive fees down to something more reasonable like 10-15%.
  - bhupy 6y ago
    Oh no you’re perfectly right about the “stolen demand”. I just think it’s a feature and not a bug. The “stolen” demand is a function of the fact that other restaurants refuse to stop using the platform, ostensibly because they also see value in continuing to use it. Consumers will only use the app if there is sufficient supply on the other end. Some restaurants have seen more value than others since the inception of these platforms. There is a spectrum of outcomes, which you would expect in a competitive market. The “structural change” here is that restaurants have become commoditized and are now competing with each other. There will be some restaurants that emerge as winners, and some as losers. I don’t personally care about the losers if, in the aggregate, the restaurant industry is made more efficient, and consumers are better off. I’m not being disingenuous, I’m being rhetorical.

bhupy 6y ago

I'm not "missing" anything, I'm well aware that the delivery apps are "stealing" the demand. The value proposition to restaurants is two-fold: 1) delivery-as-a-service without having to manage that last mile delivery themselves 2) easy access to aggregated demand without having to reach customers directly and commensurate marketing costs In return for that, they pay a transaction fee and lose some leverage. If restaurants find letting go of (1) or (2) to be "too difficult", then that means that the apps in question are indeed providing value and convenience to the restaurants. If the restaurants don't want to have to deal with the downsides of being on a platform, they will also have to forego the upsides that come with it. There is no free lunch (heh).

ryanwaggoner 6y ago
The apps are “providing value” to the restaurants only in the most narrow sense, to the point of being meaningless. Obviously restaurants find it “worth it” in some sense or they wouldn’t do it. But that ignores how we got here, which is totally disingenuous. If someone legally robs you of 30% instead of 100% and you reluctantly agree on the principle that something is better than nothing, that doesn’t mean they “provided value” to you, or that you weren’t a victim of injustice. Sometimes you take the settlement even if you know you’re in the right but you can’t prove it in court, or worse, you can’t afford to prove it. The value to the customer here is indisputable, and even the delivery logistics value proposition is clear (although at least here in NYC almost all seamless delivery people work for the restaurants), the “stolen” demand is completely shitty for restaurants. I don’t want to regulate these apps out of existence, just think we can find a better way to do this.
- ericd 6y ago
  You're right that they're sort of structurally forced into using these, so it seems a bit weird to say they're adding value. But maybe these delivery services have grown aggregate demand for restaurant food by making it more convenient for customers? Anecdotal, but I used Uber/Lyft probably >50x more than I ever used taxis outside of NYC, and I've gotten a lot more takeout than I used to since these delivery apps became available. If I still lived in NYC, the differential would've been much smaller, but most of the country is waaaay behind NYC in taxi/delivery usage per capita, many people are coming from near 0 in those categories.
  - ryanwaggoner 6y ago
    I do think they’re growing the overall pie by increasing total takeout and delivery spend, but restaurant margins were always razor thin, so losing 30% off the top will just drive many restaurants out of business. I think the long-term here is probably just different, not worse. Many restaurants will go under, but new ones will arise that optimize for this. See the ghost kitchen phenomenon. And hopefully a combination of restaurant and user revolt, the threat of regulation, and competitive pressure from other delivery services will drive fees down to something more reasonable like 10-15%.
- bhupy 6y ago
  Oh no you’re perfectly right about the “stolen demand”. I just think it’s a feature and not a bug. The “stolen” demand is a function of the fact that other restaurants refuse to stop using the platform, ostensibly because they also see value in continuing to use it. Consumers will only use the app if there is sufficient supply on the other end. Some restaurants have seen more value than others since the inception of these platforms. There is a spectrum of outcomes, which you would expect in a competitive market. The “structural change” here is that restaurants have become commoditized and are now competing with each other. There will be some restaurants that emerge as winners, and some as losers. I don’t personally care about the losers if, in the aggregate, the restaurant industry is made more efficient, and consumers are better off. I’m not being disingenuous, I’m being rhetorical.