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Apps are doing well because they are solving a real problem — translating restaurants’ abysmal web sites, PDF menus, and awful online ordering experiences to ap

by orev 6y ago

Apps are doing well because they are solving a real problem — translating restaurants’ abysmal web sites, PDF menus, and awful online ordering experiences to apps that “just work”. If restaurants put any effort at all into fixing those things, there would not be such a strong demand for apps. Obviously this is different for different restaurants, and the skill set needed to run a restaurant is vastly different from running an e-commerce site, but just like they need to figure out how to do taxes and read lease agreements, online presence is a necessary thing in 2020.

basch 6y ago
Theres a nice friction removal for the customer. One account, only typing your credit card number in once, a consistent place to make a complaint or get a refund. Visa, Amazon, Apple, Google, or Paypal sort of provide that function, but being able to shop many restaurants with a single identity has its benefits. Something that wouldnt be fixed just by restaurants with nice websites.
- slfnflctd 6y ago
  One nice theory I've seen floated - which I believe has happened in some places - is for several local restaurants to split the cost of building & running a combined web store and/or app. If word gets around enough that this is a faster or cheaper overall experience, people will migrate. The only catch there is if the stores want to also continue taking GH/DD/UE orders, in which case the menus and branding might have to be different. In the long run, I honestly think kitchen-only setups optimized for efficiency & food safety will grab a big share of the market. They can experiment with vertical integration, and avoid all the hassles & limitations of sit-down dining. They will be able to more, better, faster and cheaper. It might be hard to copy & paste the entire thing from one city to another, but the core functions should be quite portable.
  - ethbro 6y ago
    It would be insane for restaurants to build their own platforms. It would be crazy smart for someone to standardize an interface (e.g. REST API), let restaurants implement glue to their systems, and then allow a plurality of delivery services to consume and order through the standard interface.
    - basch 6y ago
      The POS systems need this natively. So an order from any system is ingested the same as any other ticket typed by an employee on prem. It needs to be a protocol like email or http, not another company with a proprietary aggregator.
      - cozzyd 6y ago
        I recently ordered a pickup order that seemed to just be using the restaurant's POS system. For delivery it's harder because you actually need someone to deliver the food and the logistics are really hard (they have to get there when the food is ready but not too late and not too early, etc.). But... there are like 80 restaurants in a 10 minute walk radius from me, so I can just deal with pickup for now.
- Falkon1313 6y ago
  The downside is that that one middleman often has incorrect menus, and if there are any issues it then becomes a he-said she-said they-said juggling act with the service, the restaurant, and the driver blaming each other for any problems. The drawbacks balance out the benefits of having one central service, in that way. But that's not everything. The best part is actually just having a variety to order from. Before these delivery services, there were only a couple of pizza places and a couple of Chinese restaurants and nothing else delivered. For a lot of restaurants, it never made business sense to deliver, and still wouldn't. But when the delivery service is spread out over many restaurants, it works rather well. That's good for both the businesses and the customers, despite the friction added by the middlemen. It's a real win for people who couldn't as easily go out to eat, due to health or disability or whatever, but also for everyone else.
- amaccuish 6y ago
  And for that, Visa ask for about 1.5% of the transaction, not 20/30%
ramraj07 6y ago
Apps are doing well because this is another one of those protective moat ideas where once they have established themselves they have no need to innovate further. Sites like grubhub have no physical reason to gouge 20-30% commission on top of charging both sides delivery fees (further on top of guilting customers into tipping more). In the end it's an app serving a few web pages and APIs (these filthy companies don't even deal with the credit card mess). But because they have an insurmountable most (not earned via any sheer technical breakthrough, just through cunningness and being ruthless) they don't need to care if they have too many engineers,whether these engineers are any good, or if their nodejs ec2 instances serve 100 queries a minute. So they just keep it like that. Companies like IBM needed decades to get into such a rot, modern VC funding and cloud computing have just accelerated this phenomenon.
- john_minsk 6y ago
  I kind of agree, but on the other side - if 20-30% is too much there will be competitors which offer 2-3% and theoretically all restaurants will move there as well as customers to pay 20-30% less. And tbh this should happen. UBER had to spend billions on marketing and getting their model "right". But now it is clear that such platform is essential for modern city. At some point UBER will have to get this money back with ride fees. Next competitor that can replicate UX of UBER, but raises less capital will be very well positioned to offer competitive pricing. And switching between these platforms is much easier compared to something like Facebook/Apple.
  - haltingproblem 6y ago
    Good point. But Yes and no ;) Grub-less et.al are as much about ordering and checkout as they are about discovery. I can rank and view all restaurants offering Sushi in my delivery radius. This is what makes them powerful. Uber et.al are a marketplace. You are absolutely right in that they have zero switching costs but they have a two sided pool of supply (drivers) and riders (demand). This is hard to replicate.
    - hrpnk 6y ago
eplanit 6y ago
Exactly. It's been a necessary thing since for a while now, in fact. This was an issue before C-19 -- it's just more obvious now.
dehrmann 6y ago
Not just that, but it's expensive to build and maintain a website, and no one's going to install and app for a restaurant with a handful of locations. These apps built a marketplace, and people say "they're just middlemen," there's absolutely a value-add to what they do.
lefrancaiz 6y ago
Yes and no. There are services out there that make it easy for restaurants to have a great online presence, including online ordering (here is an example www.getbento.com). And generally I think restaurant websites have been getting better and better. Restaurant owners are much more aware of the importance of online presence. That's only half the battle though, food delivery marketplaces like Grubhub are very entrenched and changing consumer behavior back to using the restaurant's website takes time and effort. Marketplaces also spend a ton on marketing to make sure consumers go through them and not directly via the restaurant's website. It's an uphill battle for the restaurants.
lotsofpulp 6y ago
I wish restaurant websites were just PDFs of the menu, with a link to the ordering page.
haltingproblem 6y ago
With Google/Apple pay, I can order on most restaurant websites as easily as ordering on grub-less. Restaurant apps have a similar experience. Restaurants use third party services for apps/websites that provide experiences comparable to grub-less without the discovery platform. These services have a fixed price (<$100/mo) and reasonable card processing fees.
JustSomeNobody 6y ago
A menu (pdf is just fine) and a phone number and I’m good. I am baffled what the friction is.
petra 6y ago
>> If restaurants put any effort at all into fixing those things, there would not be such a strong demand for apps. In such a world, Some model of Ghost kitchens will thrive anyway, not small restaurants. Why ? The area a kitchen serves will become much larger - distance matters less when you don't need to go pick the food. And even when food freshness matters, there are some solutions like parcooking and finishing the cooking in ovens inside delivery vans. The type of food a kitchen serves becomes much more varied - today your Chinese restaurant has one kitchen, and the Mexican place has a different one. But with delivery-only, a single kitchen can open many virtual restaurants. This also helps with delivery - a single family who likes different food, can order from the same kitchen, and get the order delivered in one go. And this is now an internet business - since customers prefer all the restaurants in a single app, single search - and those add new complexities. And usually, small business(in aggregate) often had the benefit of agility over large businesses. But a virtual restaurant is very agile, conducting business experiments is rather cheap. And personal service and deep relationships don't exist in food delivery - and that was a weakness for big businesses over small ones. So long term i don't think delivery a good place for restaurants to be.
- ethbro 6y ago
  This sounds like a future that ends in the Amazon of food... bland, lowest-priced facsimiles of actual product. Which only seems compelling in a future in which people are literally unable to cook for themselves.
  - nicesave 6y ago
    That's because it is. What makes restaurants different is their specialization in an area, and excelling at that along with atmosphere. Without that there's no value add. I have worked with these large kitchens that can make different types of cuisines depending on your want, but they all turn out mediocre. My family completely stopped ordering out during this pandemic because most restaurants have lost the key employees who make their food special, there is no atmosphere, and GrubHub et al add no value.
m463 6y ago
This sounds plausible, but it's basically wrong. As an example, most people buy from amazon even though other retailers have very good websites, without inline advertisements and many times with lower prices. another interesting example is tow truck services.
- tdhoot 6y ago
  I buy from Amazon instead of other retailers because Amazon has almost-always free shipping for Prime members, a consistent (and fast) website experience I know how to use, and great customer service. Some retailers have good websites (most don't), but I've always found issues like: slow shipping, having to create an account, spam from the retailer, poor customer service, etc.
  - m463 6y ago
    ...And now amazon is a habit, and you probably won't even consider going direct to a retailer.
    - deleted 6y ago
      [deleted]
pankajdoharey 6y ago
If you look at the numbers delivery apps are not doing well they are yet to make a profit, its a failing business. They are burning investor money for instance in UK Deliveroo Lost $244 Million in 2017, $284 Million in 2018 perhaps the same in 2019. Delivery is at current rate an unsustainable profitability problem. And I dont think it would change unless we have drone deliveries.
NovemberWhiskey 6y ago
> If restaurants put any effort at all into fixing those things, there would not be such a strong demand for apps What about the delivery part of the problem? Everyone does realize that Seamless etc. actually provide the delivery staff for many of the restaurants on the platform, right?

by orev 6y ago

basch 6y ago

Theres a nice friction removal for the customer. One account, only typing your credit card number in once, a consistent place to make a complaint or get a refund. Visa, Amazon, Apple, Google, or Paypal sort of provide that function, but being able to shop many restaurants with a single identity has its benefits. Something that wouldnt be fixed just by restaurants with nice websites.

slfnflctd 6y ago
One nice theory I've seen floated - which I believe has happened in some places - is for several local restaurants to split the cost of building & running a combined web store and/or app. If word gets around enough that this is a faster or cheaper overall experience, people will migrate. The only catch there is if the stores want to also continue taking GH/DD/UE orders, in which case the menus and branding might have to be different. In the long run, I honestly think kitchen-only setups optimized for efficiency & food safety will grab a big share of the market. They can experiment with vertical integration, and avoid all the hassles & limitations of sit-down dining. They will be able to more, better, faster and cheaper. It might be hard to copy & paste the entire thing from one city to another, but the core functions should be quite portable.
- ethbro 6y ago
  It would be insane for restaurants to build their own platforms. It would be crazy smart for someone to standardize an interface (e.g. REST API), let restaurants implement glue to their systems, and then allow a plurality of delivery services to consume and order through the standard interface.
  - basch 6y ago
    The POS systems need this natively. So an order from any system is ingested the same as any other ticket typed by an employee on prem. It needs to be a protocol like email or http, not another company with a proprietary aggregator.
    - cozzyd 6y ago
      I recently ordered a pickup order that seemed to just be using the restaurant's POS system. For delivery it's harder because you actually need someone to deliver the food and the logistics are really hard (they have to get there when the food is ready but not too late and not too early, etc.). But... there are like 80 restaurants in a 10 minute walk radius from me, so I can just deal with pickup for now.
Falkon1313 6y ago
The downside is that that one middleman often has incorrect menus, and if there are any issues it then becomes a he-said she-said they-said juggling act with the service, the restaurant, and the driver blaming each other for any problems. The drawbacks balance out the benefits of having one central service, in that way. But that's not everything. The best part is actually just having a variety to order from. Before these delivery services, there were only a couple of pizza places and a couple of Chinese restaurants and nothing else delivered. For a lot of restaurants, it never made business sense to deliver, and still wouldn't. But when the delivery service is spread out over many restaurants, it works rather well. That's good for both the businesses and the customers, despite the friction added by the middlemen. It's a real win for people who couldn't as easily go out to eat, due to health or disability or whatever, but also for everyone else.
amaccuish 6y ago
And for that, Visa ask for about 1.5% of the transaction, not 20/30%

ramraj07 6y ago

Apps are doing well because this is another one of those protective moat ideas where once they have established themselves they have no need to innovate further. Sites like grubhub have no physical reason to gouge 20-30% commission on top of charging both sides delivery fees (further on top of guilting customers into tipping more). In the end it's an app serving a few web pages and APIs (these filthy companies don't even deal with the credit card mess). But because they have an insurmountable most (not earned via any sheer technical breakthrough, just through cunningness and being ruthless) they don't need to care if they have too many engineers,whether these engineers are any good, or if their nodejs ec2 instances serve 100 queries a minute. So they just keep it like that. Companies like IBM needed decades to get into such a rot, modern VC funding and cloud computing have just accelerated this phenomenon.

john_minsk 6y ago
I kind of agree, but on the other side - if 20-30% is too much there will be competitors which offer 2-3% and theoretically all restaurants will move there as well as customers to pay 20-30% less. And tbh this should happen. UBER had to spend billions on marketing and getting their model "right". But now it is clear that such platform is essential for modern city. At some point UBER will have to get this money back with ride fees. Next competitor that can replicate UX of UBER, but raises less capital will be very well positioned to offer competitive pricing. And switching between these platforms is much easier compared to something like Facebook/Apple.
- haltingproblem 6y ago
  Good point. But Yes and no ;) Grub-less et.al are as much about ordering and checkout as they are about discovery. I can rank and view all restaurants offering Sushi in my delivery radius. This is what makes them powerful. Uber et.al are a marketplace. You are absolutely right in that they have zero switching costs but they have a two sided pool of supply (drivers) and riders (demand). This is hard to replicate.
  - hrpnk 6y ago

eplanit 6y ago

Exactly. It's been a necessary thing since for a while now, in fact. This was an issue before C-19 -- it's just more obvious now.

dehrmann 6y ago

Not just that, but it's expensive to build and maintain a website, and no one's going to install and app for a restaurant with a handful of locations. These apps built a marketplace, and people say "they're just middlemen," there's absolutely a value-add to what they do.

lefrancaiz 6y ago

Yes and no. There are services out there that make it easy for restaurants to have a great online presence, including online ordering (here is an example www.getbento.com). And generally I think restaurant websites have been getting better and better. Restaurant owners are much more aware of the importance of online presence. That's only half the battle though, food delivery marketplaces like Grubhub are very entrenched and changing consumer behavior back to using the restaurant's website takes time and effort. Marketplaces also spend a ton on marketing to make sure consumers go through them and not directly via the restaurant's website. It's an uphill battle for the restaurants.

lotsofpulp 6y ago

I wish restaurant websites were just PDFs of the menu, with a link to the ordering page.

haltingproblem 6y ago

With Google/Apple pay, I can order on most restaurant websites as easily as ordering on grub-less. Restaurant apps have a similar experience. Restaurants use third party services for apps/websites that provide experiences comparable to grub-less without the discovery platform. These services have a fixed price (<$100/mo) and reasonable card processing fees.

JustSomeNobody 6y ago

A menu (pdf is just fine) and a phone number and I’m good. I am baffled what the friction is.

petra 6y ago

>> If restaurants put any effort at all into fixing those things, there would not be such a strong demand for apps. In such a world, Some model of Ghost kitchens will thrive anyway, not small restaurants. Why ? The area a kitchen serves will become much larger - distance matters less when you don't need to go pick the food. And even when food freshness matters, there are some solutions like parcooking and finishing the cooking in ovens inside delivery vans. The type of food a kitchen serves becomes much more varied - today your Chinese restaurant has one kitchen, and the Mexican place has a different one. But with delivery-only, a single kitchen can open many virtual restaurants. This also helps with delivery - a single family who likes different food, can order from the same kitchen, and get the order delivered in one go. And this is now an internet business - since customers prefer all the restaurants in a single app, single search - and those add new complexities. And usually, small business(in aggregate) often had the benefit of agility over large businesses. But a virtual restaurant is very agile, conducting business experiments is rather cheap. And personal service and deep relationships don't exist in food delivery - and that was a weakness for big businesses over small ones. So long term i don't think delivery a good place for restaurants to be.

ethbro 6y ago
This sounds like a future that ends in the Amazon of food... bland, lowest-priced facsimiles of actual product. Which only seems compelling in a future in which people are literally unable to cook for themselves.
- nicesave 6y ago
  That's because it is. What makes restaurants different is their specialization in an area, and excelling at that along with atmosphere. Without that there's no value add. I have worked with these large kitchens that can make different types of cuisines depending on your want, but they all turn out mediocre. My family completely stopped ordering out during this pandemic because most restaurants have lost the key employees who make their food special, there is no atmosphere, and GrubHub et al add no value.

m463 6y ago

This sounds plausible, but it's basically wrong. As an example, most people buy from amazon even though other retailers have very good websites, without inline advertisements and many times with lower prices. another interesting example is tow truck services.

tdhoot 6y ago
I buy from Amazon instead of other retailers because Amazon has almost-always free shipping for Prime members, a consistent (and fast) website experience I know how to use, and great customer service. Some retailers have good websites (most don't), but I've always found issues like: slow shipping, having to create an account, spam from the retailer, poor customer service, etc.
- m463 6y ago
  ...And now amazon is a habit, and you probably won't even consider going direct to a retailer.
  - deleted 6y ago
    [deleted]

pankajdoharey 6y ago

If you look at the numbers delivery apps are not doing well they are yet to make a profit, its a failing business. They are burning investor money for instance in UK Deliveroo Lost $244 Million in 2017, $284 Million in 2018 perhaps the same in 2019. Delivery is at current rate an unsustainable profitability problem. And I dont think it would change unless we have drone deliveries.

NovemberWhiskey 6y ago

> If restaurants put any effort at all into fixing those things, there would not be such a strong demand for apps What about the delivery part of the problem? Everyone does realize that Seamless etc. actually provide the delivery staff for many of the restaurants on the platform, right?