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Doordash and Pizza Arbitrage

• dvduval 6y ago
  Lose a few 100 million today for a monopoly next year. I make the assumption here that these delivery services are intent on dominating the search results so that independent restaurants are not able to compete. They are forced into using the services, or rather having a large majority of other orders coming from these services.
  • MattGaiser 6y ago
    >rather having a large majority of other orders coming from these services. DoorDash has managed to change my behavior to the point that it is where I do when I am hungry, so I can see that being viable for a portion of the population.
    • mlthoughts2018 6y ago
      Until the prices inevitably rise back up to the level they require to make up for the massive losses. Then that’ll just drive your behavior right back, probably much much faster than it took for DoorDash to establish this, meaning the “monopoly mode” profit time will be so short-lived as to recover next to nothing of the losses.
      • MattGaiser 6y ago
        True, but then on to the next delivery startup :). I suppose the fact that I left UberEats for DoorDash as soon as there were coupons suits your point though.
      • spurdoman77 6y ago
        If prices rice on doordash the restaurant can just offer takeout cheaper.
      • jrockway 6y ago
        I am guessing that DoorDash will succeed in the very long term. Eventually they will not need independent restaurants, they can just start their own (and cut ingredient costs to whatever they need to make a profit). And eventually deliveries will be done by robots, so no workers to pay. I'm not saying this will happen tomorrow, but think 20 years out -- there is a lot of money to be made. I am not sure that making something a commodity is necessarily bad. You can go to the grocery store and get store brand macaroni & cheese, kraft dinner, or some organic brand. Kraft and Amy's stay in business, so people must be buying those despite the higher cost. But the lower quality / lower cost version is available for people that want money more than better cheese powder. I don't think that's a bad thing, and is the direction that food delivery is going. (Starbucks didn't kill independent coffee shops, McDonalds didn't kill fine dining. DoorDash seems like that kind of thing to me.)
        • AlexandrB 6y ago
          You’re describing a restaurant chain. Why isn’t Swiss Chalet valued at billions of dollars? They fit your description exactly.
          • jrockway 6y ago
            McDonalds is valued at billions of dollars. And this one doesn't rely on being located somewhere convenient; they bring the food to you. I think DoorDash will ultimately be profitable for its investors. I don't think it's good for society (gig economy, growth by getting people to eat more calories, etc.), but that doesn't mean they can't make a lot of money.
      • gorbachev 6y ago
        If anything, the market has shown that there's always a VC with too much money to spin up a new one of these every now and then. I'm not sure if it'll last forever, but I'd be willing to bet I will be dead before that cycle ends.
  • mlthoughts2018 6y ago
    The problem is all these businesses (ride share, food delivery), have extremely low margins and the tech to spin up a competitor is extremely cheap and commodity. Thus the “monopoly” you allegedly get later is deeply unsustainable at the profit level and scale required to recoup losses on any timescale that would work for investors, assuming you can even hold onto it in the face of constant reemergence of competitors. This is what Naked Capitalism has been point out about Uber for years and years. Uber just keeps changing the story. First rideshare itself would be profitable. Then logistics and trucking would be a sexy new profitable area. Then self-driving cars, then food delivery. It’s frankly just a Ponzi scheme at this point that was foisted onto unwitting retirement plan investors. GrubHub / DoorDash / etc., are just more of the same. You can’t take businesses like taxis or food delivery, with well understood economics, round trip costs, density requirements, low margins, etc., and just slap an app on top and make them somehow different than they really are. Artificially increasing the supply of something that’s fundamentally not sustainable at that price just will not work.
    • trixie_ 6y ago
      It works great. All those management middle men of thousands of delivery and taxi companies have been replaced with software. Razor thin margins are enough to keep the servers running and a small team of developers managing it - for the entire planet. It's difficult for any company to abuse their position as they're easily repalcable. So the margins will get lower, and more of the money paid by the customer will go directly to the supplier. Efficiency incarnate.
      • almost_usual 6y ago
        Uber is laying off 800 engineers tomorrow, they have thousands. All of them making salaries probably in the range of 250K-500k. Not really a small team of developers.
        • trixie_ 6y ago
          Numbers are relative? Compared to the management overhead of all the taxi companies in the world it is orders of magnitude smaller. And after today it is 800 people smaller on top of that. So yes, very small, very efficient.
  • _bxg1 6y ago
    What's amazing to me is that they can all so brazenly pursue a strategy of "monopoly or bust" without any fear of regulatory action once they reach that endgame. I'm not sure whether it speaks more to the foolishness of VCs, or to the corruption of regulatory institutions.
    • legolas2412 6y ago
      I'm afraid that soon any regulation action will be seen as a death knell for the stock market, and all the monopolies will be judged "too big to fail". Then we'll have regulations not controlling, but cementing these monopolies
• zeckalpha 6y ago
  In another form of arbitrage with “substitute goods”, we’ve noticed restaurants with completely different menus on delivery sites than directly. We ordered anyway and the packaging was totally different. Someone is fulfilling orders for a fancier restaurant with generic food. I ended up throwing it out because I wasn’t comfortable with it.
• ed312 6y ago
  Do businesses have any recourse here? E.g. for the pizza situation - can a business ban DoorDash and its ilk?
  • WrtCdEvrydy 6y ago
    It probably can't since people don't have to be honest about being DoorDash.
    • gberger 6y ago
      But how can DoorDash advertise and impersonate someone else's restaurant without their consent?
      • deleted 6y ago
        [deleted]
      • asah 6y ago
        https://www.google.com/search?q=in+n+out+doordash+lawsuit https://www.google.com/search?q=in+n+out+doordash+lawsuit
  • deleted 6y ago
    [deleted]
  • coderholic 6y ago
    The pizza business is the one making the profit here, at doordash's expense. It'd presumably be trivial for doordash to fix this, by checking the order amount against the cost. The article explains why they might not be doing that ("growth")
    • xuki 6y ago
      The problem is some customers received the pizza cold, and instead of blaming DoorDash, they blamed the restaurant. It's very misleading when DoorDash resell a product and pretend like the restaurant is actively participating in that process. I personally would not hesitate to ramp up the "self ordering", just to f* with DoorDash.
• 5revive 6y ago
  it will be interesting to see the impact of SoftBank withdrawing on consumption patterns of city-dwelling professionals. So much of their daily life is subsidized courtesy of Son
• exacube 6y ago
  I'm curious to hear how restaurant delivery services are meant to make profit; is it really through service fees (or a monthly subscription model), and tips? Cost per meal seems way too high for people to use it often. Maybe it make economical sense for larger party orders, but how often do those kinds of orders happen during considering the COVID situation?
  • MattGaiser 6y ago
    I assume it is the 30% they take from the restaurant.
    • dannyw 6y ago
      30-40% from restaurant + up to 35% in promotional fees from restaurant + delivery fees + service fees from the customer.
      • MattGaiser 6y ago
        The promotional fees are on top of the 30-40% for the order?
        • dannyw 6y ago
          Yep - this is optional though, it's essentially an ad service.
  • secabeen 6y ago
    I'm not an expert in this, but I think that the evil VC game plan is to try to make their portal the default first stop when ordering food. If they can get to that point, then they can start transferring the profit from the restaurateurs to themselves. This is more likely if people are indifferent to the specific place they order from after they've selected a dish or cuisine; less likely if people want specific restaurants. Essentially, they've looked at the food delivery market as thousands of individual orders all going through individual phone calls or web orders and said, if I could take a percentage of all that, I'd have a great business.
• noad 6y ago
  This is so asburd it feels like a story in bad movie. We have pushed finance & capital so far into the realm of fiction that it doesn't really make sense anymore. Artificial growth for the sake of artificial growth, just so you can get to your exit and leave someone else holding the bag. Ponzi schemes at massive scale. How did the startup/VC world become so entangled in all this bullshit capitalism?
  • Spooky23 6y ago
    Same way they did in the 90s, lots and lots of dumb money. My son and i have a tradition when my wife attends a nonprofit board meeting every other month. She leaves and we order some five guys on doordash while we play a PlayStation game. I use a new email every time and usually get free delivery and a coupon. Doordash loses, Five Guys loses, and we get some dude to deliver a burger.
    • spurdoman77 6y ago
      Though according to the article only doordash loses here, not fove guys. Doordash pays the difference netween menu and paid price.
  • jabbany 6y ago
    I have a vague sense that this exact scenario with pizza was covered in the Silicon Valley sitcom...
    • imgabe 6y ago
      It was, they use it to bankrupt another startup so they can acquire them (and their employees). I'm wondering now which one happened first...
  • deleted 6y ago
    [deleted]
  • perseusmandate 6y ago
    For a period of time when Uber was in China, a huge amount of revenue was from fraudulent rides that weren't actually happening. There were smart investors who saw through the facade and didn't invest and there were smarter ones who saw through it and invested despite that.
• jaboutboul 6y ago
  Honestly at times it seems like all these Uber for this or that, DoorDash and whatever other logistical services were created with the premise of just keeping people busy and making them feel like they have a job (one that often costs them money to work at). Once upon a time you started something and hoped to figure out how to scale and find product/market fit. These days with the cloud it’s become trivial to scale almost anything that’s not building cars or spaceships. All these other BS startups have no hope for profit and no end game in sight. It’s kind of pathetic.
  • MattGaiser 6y ago
    > Honestly at times it seems like all these Uber for this or that, DoorDash and whatever other logistical services were created with the premise of just keeping people busy and making them feel like they have a job (one that often costs them money to work at). Are you referring to customers or restaurants or drivers?
    • jaboutboul 6y ago
      I’m referring mostly to drivers, but programmers and basically everyone else in the chain as well. Let’s throw a stupid amount of (not our own) money and manpower at programming a solution to a well defined problem and then grab a bunch of low wage workers and milk them. We will keep everyone, engineers, drivers, restaurants busy all the time to make it seem like we are making progress but in reality we are just burning time, money, oil and the last mile workers to the ground. With all this money being thrown around you would think they would be able to engineer a solution wherein instead of committing identity theft (which is essentially what the author describes) and exploiting workers, they are actually solving the problem in an honest way which also provides an equitable wage. Enough with the unethical bullshit. If you have to pose as the business to “help” a business all while exploiting cheap labor you aren’t solving a problem and you don’t have a right to exist, no matter how much money you got from SoftBank.
• bransonf 6y ago
  Reading the title, I anticipated this was going to be something along the lines of getting Domino's delivered for less than their delivery fee. (Side note, does anyone actually order franchise pizza on an app? They all already deliver for far less) But this was far more interesting. The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen? I'm not familiar with the reimbursement model. I'm assuming the driver pays with a credit card, and Doordash reimburses this amount. Regardless, there will now be database entries for a customer paying $160 and Doordash reimbursing $240. What happens in a company that allows $80 to vanish like that? Unless this is an incentive (I'm doubtful this was deliberate). Wouldn't one of the first things you do is validate your financials? In which case, is the driver getting screwed here? (They charge the customer $160, and reimburse the driver for only that amount) If not, this opens up a huge potential for fraud. There is a semi-popular YouTube video where some young British folks set up a 'restaurant' in their home kitchen and successfully list on a delivery app. They deliver several orders (reimbursing the customer of course). If it's trivial to get listed, and potentially with the wrong prices, then it's trivial to launder money this way. Set up a fake restaurant, deliver little/nothing to a known party, profit. Now, maybe it would become obvious if you made the same orders or within the same time frame. But again, trivial to generate randomness. What protection do these companies actually have against fraud? By nature, they're assuming trust, and this is exploitable.
  • MattGaiser 6y ago
    > Side note, does anyone actually order franchise pizza on an app? They all already deliver for far less Seen it done a number of times at campuses as the GPS helps the pizza guy find you. Although the pizza guy usually has a very good idea of where the residences are anyway.
  • bostonsre 6y ago
    Anyone know if it would be considered fraud and/or illegal to exploit this? I would consider doordash and grubhubs tactics of falsely representing themselves as restaurants to be more unethical. It would be great if someone could scale a solution that would take those arbitrage opportunities and pass them on to the drivers and the restaurants.
• sherlock_h 6y ago
  What if you strip out the entire 'aggregation' and customer facing side of DoorDash/GrubHub/UberEats and rebuild them as complete back-end logistics services to the restaurants? You charge lower percentage of orders or just a monthly fee to help procure and pay the labor and route deliveries. Seems like that's the actual challenge for restaurants
  • prostoalex 6y ago
    ChowNow https://get.chownow.com/demo/ https://get.chownow.com/demo/ and Toast https://pos.toasttab.com/ https://pos.toasttab.com/ do that
  • sdan 6y ago
    CloudKitchens fixes this. I also find this really weird: its like load balancing between https://server1.example.com https://server1.example.com and https://server2.example.com https://server2.example.com instead of using a proper load balancer under the hood to get https://example.com https://example.com
    • perseusmandate 6y ago
      CloudKitchens is more the kitchen infrastructure for restaurants who only have a presence on delivery apps. They are trying to facilitate a restaurant model that is optimized for the delivery apps'supply chains rather than starting their own
  • Consultant32452 6y ago
    Chipotle has white labeled DoorDash for delivery in my area. If I open the Chipotle app and make a delivery order, the "track your order" screen says it's "Powered by DoorDash."
    • chrisseaton 6y ago
      > Chipotle has white labeled DoorDash ... it's "Powered by DoorDash." Disclosing who’s powering it is the opposite of white labelling.
• kevindong 6y ago
  Very important note (near the bottom of the post) on why Doordash did what they did: > Note 1: We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform.
  • bb611 6y ago
    It doesn't fully explain why they priced a $24 pizza at $16. I wouldn't be surprised if they're subsidizing purchases, but just skipping fees doesn't explain that.
    • vkou 6y ago
      They are taking a loss on every order, but they are hoping to make up for it with volume.
      • nelaboras 6y ago
        You can't make up for it in volume if each order makes a loss and you get no benefit from having more orders (they still pay each time the full price to the restaurant!)
        • shawabawa3 6y ago
          (that's the joke)
    • MattGaiser 6y ago
      Lets them inflate the order count for the pitch.
    • Talanes 6y ago
      "My second thought: I knew Doordash scraped restaurant websites. After we discussed it more, it was clear that the way his menu was set up on his website, Doordash had mistakenly taken the price for a plain cheese pizza and applied it to a 'specialty' pizza with a bunch of toppings."
• dvduval 6y ago
  The restaurants need to work through their own trade organization where they band together and push out the delivery businesses that are costing them money, and then allow delivery companies to bid for their business.
  • MattGaiser 6y ago
    I suspect the larger restaurants have negotiated deals already, so they would not be amenable to this.
  • spurdoman77 6y ago
    In the end the customer needs some single easy interface where to order food from. It is kind of difficult to see how this could work in a way where restaurants would dictate how customers prefer to order.
    • dannyw 6y ago
      Why doesn't Google build this as an extension of Google Maps? Charge restaurants no fee for the platform, if they provide their own drivers. Charge restaurants money through Google Ads to promote their restaurants for higher results. In a few years, get Waymo's driverless cars on the game.
      • icebraining 6y ago
        Google is already facing antitrust lawsuits from the EU, DOJ and US states, and you want them to add more fuel to the fire?
    • thewebcount 6y ago
      Why? All I want is for each restaurant to have their own website (which most already do), and to have a menu, a way to place an order, and a way to enter a credit card online, or for the person who comes to my door to be able to take a credit card. I don't care about an app or centralization, or having it be the same for every business. I just want to give them my money for their food in my house. So long as it works, doesn't get in my way, and doesn't cost me 30% extra, I don't have too many preferences on how it's done.
• rootusrootus 6y ago
  After reading more about how these delivery companies function, we stopped using Door Dash a few days ago. We found it very convenient during the pandemic, but we like our local restaurants and we thought we were helping them out by ordering delivery pretty often. So now we just order it as take-out and then we go pick it up ourselves. Screw Door Dash.
  • slfnflctd 6y ago
    We came to the same conclusion a couple weeks ago. As a bonus, you're eliminating a person/environment from the loop (the delivery driver & their car), thereby reducing your Covid-19 attack surface. Edit: I have also both read about & seen firsthand food delivery drivers with someone else in the car. It's almost certainly someone from the same household, but still, that's potentially yet another unknown, potentially untraceable person in the loop.
    • giarc 6y ago
      I've had amazon deliveries where it appears the whole family was in the car. Kind of heart breaking to think that a family of 4 has to drive around so I can get my AA batteries same day. We need drone deliveries.
      • rootusrootus 6y ago
        Can I choose option C? :). I don't want drones buzzing around my neighborhood. I am 100% willing to pay for professional delivery drivers. To be fair, I guess, the days of random people driving junky old compact sedans filled to the roof with Amazon packages seems to be gone in my area. All the Amazon deliveries are now done by a guy driving a large Sprinter van painted glossy gray with Prime written on the side.
        • giarc 6y ago
          I'm in Canada so we don't yet have the Amazon branded delivery drivers. In my city, many Amazon packages are delivered by a company called Intelcom. It's people driving around their own cars, delivering packages.
• dangoldin 6y ago
  This quote summarizes it all for me: "Amazon just bailed on restaurant delivery in the U.S." If amazon, a "real" business with a reputation built on ruthlessly cutting margin can't get it to work why would anyone else?
  • LudwigNagasena 6y ago
    There are many businesses Amazon doesn’t enter. I personally don’t see how Amazon’s strengths can help them compete against other food delivery services. After all, same day delivery is the norm there.
    • dangoldin 6y ago
      I do suspect their focus on logistics and having an existing network would make it easier for them than others. They are doing food delivery through Amazon Fresh and also have been hiring contractors to do package delivery. Food, of course, has it's own constraints but compared to many they would be in a decent spot.
  • wmeredith 6y ago
    I mean, they canceled their phone program too, you don't see Apple packing it up.
    • dangoldin 6y ago
      True. But that industry already has a duopoly with very strong network effects. Food delivery is extremely fragmented and it looks as if there's no one actually doing it profitably.
  • thewebcount 6y ago
    I mean, think about it – Amazon can't run it like their current delivery service. They can't mark it as delivered, but then not deliver it until the next day. They can't drive up to the curb, throw it over your fence and then drive off. They can't claim to have delivered it but just not bothered. They can't say they're giving you a pizza from Pizza Hut and then actually give you a pizza some guy made in his basement. In other words, they can't run it like their current business.
• CloudHelix 6y ago
  DoorDash has been an excellent transfer of wealth to me from stupid Arabs with too much money and restaurants that want introverted me to call their phone to order.
• alteria 6y ago
  This is absurd. Can someone explain to me why DoorDash exists? They're #1 in share, but I get the impression that they basically bought their spot. Grubhub has been operating in the space forever, is public, and generally had been profitable until VCs came to town. How is DoorDash doing anything than Grubhub? Wouldn't this capital do better in other investments? From the outside it seems like they've duped investors into burning hundreds of millions of dollars to hopefully build a monopoly in a structurally iffy market.
  • MattGaiser 6y ago
    DoorDash is winning in terms of market share for one thing. https://www.cnbc.com/2020/01/17/doordash-took-the-lead-in-the-food-delivery-wars-in-2019.html https://www.cnbc.com/2020/01/17/doordash-took-the-lead-in-th... I bet a big thing for DoorDash is DashPass. That would lead to people ordering food for anything as the price is basically the same as in restaurant then.
    • alteria 6y ago
      Definitely agree that they're winning (the Second Measure blog is fascinating), it just seems like they bought their way to the top at a very high cost. DashPass is definitely keeping me a DoorDash user, it's benefits are significantly better than Uber Eats pass, but idk if that's sustainable for DoorDash.
    • perseusmandate 6y ago
      The thing that really allowed DoorDash (and UberEats) to pull ahead was investing in partnerships with chain restaurants vs focusing on independent restaurants. Which hasn't necessarily resulted int he best product
    • adrr 6y ago
      I have Dashpass free from my credit card. Its not the same as ordering from directly from restaurant as Doordash marks up the prices 10% to 25%. I always thought Doordash was a terrible deal without it, you're paying marked up prices, delivery fee and a tip. Doordash is winning because they have the widest selection of restaurants since they are using their own drivers compared to Grubhub. Not sure why Postmates and UberEats failed to capture more market share since they offer the same service.
• imgabe 6y ago
  Just some back-of-the-napkin math if you wanted to do this "right". Let's say you hire drivers as employees and pay them $15/hr plus tips and reimburse them for mileage. You charge a $4.99 delivery fee. Drivers work set shifts and are paid hourly whether they are making deliveries or not. That means each driver needs to be making at least 4 deliveries an hour or you're losing money. That's not even really counting for mileage or any other benefits like health insurance or retirement (not that jobs like this usually provide this, but people seem to think that they should). When I lived in DC, driving anywhere could take at least 15 minutes. Getting 4 different trips from a restaurant to somewhere reliably every hour would be difficult. Obviously, drivers can pick up multiple orders and take them in one round trip, but you're at the mercy of what orders happen to come in and where they happen to be located. It seems like it would be very hard to make that sustainable. Of course, Domino's and lots of other places do it, but they probably aren't paying $15/hour and they also have one central location and more predictable demand. It's more feasible if drivers always go back to one central hub rather than having to get orders from random different restaurants all over the city.
  • MattGaiser 6y ago
    > Domino's and lots of other places do it, but they probably aren't paying $15/hour and they also have one central location and more predictable demand. One thing to note about Dominos is that people pay at the door, so they would need to look the delivery guy in the face as they stiff him on the tip. Not required for the delivery apps and fewer people tip there.Because people tip, you can pay lower wages. I had a relative who worked as a Chinese food delivery guy for a while and he did it exclusively for tips. The restaurant did not pay him at all.
    • colejohnson66 6y ago
      When ordering with the app, a lot of pizza places now (since social distancing started) allow adding the tip (or lack of) when placing the order.
      • oefrha 6y ago
• inquiryaccount 6y ago
  This reminds me of a post I submitted a few weeks ago on HN. A friend of mine works for a restaurant group in NYC and they like many they have had to respond by offering delivery to folks in order to keep some revenue flowing. He and I were chatting and he mentioned that lately, a large majority of high value ($500+) orders were fraudulent with the fraudster ordering things that can be resold such as high-value wine, liquor, etc that isn't necessarily perishable. He says that the scams work like this: 1. The order comes in via Caviar usually with a ridiculous amount of booze. It is usually a courier delivery but he says looking back, some have been picked up by 'customers'. 2. There are some instances where the order gets canceled either by the scammer within the 2 min grace period post ordering of from the actual customer who had their account phished/received some sort of alert/and stopped the transaction. I am intrigued by this because there is obviously someone on the receiving end that's ending up with a boatload of high-end booze and then offloading it somehow while Caviar eats the dispute later on and still pays the restaurant out. Literally, thousands of dollars a week of fraudulent booze orders are being fulfilled to people fraudsters using phished accounts with valid cc's. The consumer eventually realizes the charge, disputes it, and gets their money back leaving Caviar with the bill.
  • slimsag 6y ago
    Consumers often don't realize the charge, I believe, until it's too late. Tech-illiterate old folk getting hit by the latest leak of information from <take your pick of large company>.
  • kbaker 6y ago
    Well, since DoorDash is listed as the copyright holder on the bottom of www trycaviar com it looks like DoorDash is just bleeding their $400mm series F out under a different name. Maybe have them try the arbitrage themselves per the article and put the profit _and_ the booze directly in their pockets... (/s?)
    • martey 6y ago
      DoorDash purchased Caviar from Square last August: https://techcrunch.com/2019/08/01/doordash-is-buying-caviar-from-square/ https://techcrunch.com/2019/08/01/doordash-is-buying-caviar-... I assume DoorDash doesn't want to alienate loyal Caviar customers and so is continuing to operate it independently, similar to how Grubhub and Seamless merged seven years ago but still run two different websites (albeit with identical design).
• bvandewalle 6y ago
  I said this in another post about Grubhub but similarly to this article I really don't get it. Those apps are all 25%+ expensive than ordering take out directly with the restaurant, they screw the restaurants and all those delivery companies lose millions. Did everyone really become THAT lazy that driving 10 minutes to get your meal is that much trouble?
  • adenta 6y ago
    Not everyone has a car.
  • com2kid 6y ago
    > Did everyone really become THAT lazy that driving 10 minutes to get your meal is that much trouble? Depends on density, and traffic. Getting to a nearby restaurant to pick up dinner, even a close by one, would easily take 30 minutes+ round trip. If I want food from someplace more than a couple miles away, make that 45 minutes or more round trip for dinner. Or I can order from an app and have food delivered. The question then becomes, is saving almost an hour of time worth $20?
  • mumblemumble 6y ago
    For me, it's sometimes laziness, but usually not. The long and short of it is that delivery only happens when it's hard to leave the house for whatever reason. If getting myself to the restaurant is an easy option, then dining in generally is, too. Takeout only happens when I've been tasked with picking up burritos on the way home from work.
  • 0xffff2 6y ago
    I've probably only used each of the major delivery apps once or twice, so I'm not representative of their customer base, but yeah, every now and then I'm having a specific day where I'm feeling that lazy (and of course driving anywhere in the bay area around dinner time is likely to take a lot longer than 10 minutes round trip). Then again I'm living in the bay area and not making anywhere near FAANG money. I can definitely see the delivery fees being negligible compared to the value of my time if I was making 2-3x my current salary.
  • 6y ago
• ngngngng 6y ago
  I don't understand why doordash, uber eats, deliveroo, and similar business are starting to exist. Restaurants have been running successful delivery operations independently for ages. And there are many software offerings to help businesses get set up with delivering food. Why do we need a centralized on? Is it just the benefit of being able to browse in one app/website everything available for be delivered to you?
  • chrisseaton 6y ago
    > Is it just the benefit of being able to browse in one app/website everything available for be delivered to you? Yes I think that’s a big part of it. That’s a big part of Uber as well - I can fly into a city not knowing anything about how they do taxi and get an Uber.
    • masonic 6y ago
      I can fly into a city not knowing anything about how they do taxi What airports are you flying into where you could avoid signage/references to local taxis/buses/transit if you wanted to? Heck, most have taxi stands right outside baggage claim, if not all exits.
      • MattGaiser 6y ago
        Not the where, the how. How much do they cost? Do they know where my hotel is or do I need to provide a specific address for their GPS? Are specific taxis limited to specific jurisdictions? Can I get a van if I have 6 people or do I need two vehicles? Do they go out as far as the somewhat rural university? How about to the manufacturing plant 20 km outside the city?
      • lars512 6y ago
        The cost for a taxi is way less reliable, and harder to dispute. It's a common but unpleasant way to arrive to a new city to realise you've been shafted on the taxi fare.
        • 6y ago
• smabie 6y ago
  It's funny that liberals complain about delivery services and VCs. Isn't this exactly what they want: a massive transfer of wealth from those who have a lot of it to those that don't? Because that's what Uber, DoorDash, etc all are.
• craigc 6y ago
  This is the sad state of VC funding in this day and age. I can’t help but wonder if movie theaters could have exploited a similar loophole with MoviePass before they went bankrupt. Something like this: 1. Movie theaters buy up MoviePass subscriptions 2. They use those subscriptions to pick different movies to see every day at their location If they picked 30 movies a month that would be approximately $450 a month in revenue (at $15/ticket), $440 of which would have been pure profit.
  • slg 6y ago
    Theaters still have to report tickets sold and kick back roughly 50% of the ticket price, so you would need to cut that revenue number in half. Also I don't remember the exact timeline for Moviepass's various restrictions, but there was a limit on the upside at various times due to policies like preventing users from watching movies multiple times (which would generally cap the max tickets below 30 since most theaters don't get 30 new movies a month), limits on how many tickets can be purchased for a single theater that would lock users out from using that theater for the rest of the day, and users being suspended for "fraud" that was often reported to be just heavy use.
• ww520 6y ago
  Perverse incentive drives odd behaviors. People would have shipped bricks to themselves if the arbitrage warrants it.
• deleted 6y ago
  [deleted]
• xwdv 6y ago
  Initially I thought this may have gone the other way, setup a business with no physical location, get on Doordash, and when you get orders you place orders at other restaurants not on the platform, then pick up and deliver their food, while charging some kind of markup on their prices.
• inquiryaccount 6y ago
  Oh, one other interesting thing I've heard happens regularly. Couriers have multiple cellular devices. The second account usually get batched orders from the same restaurant they are already at which leads to a host of problems for the customer and restaurant. This leads to the order that was ready first to just sit and die in the courier bag while they work to maximize their earnings. Couriers sometimes leave before the second-order is ready and return well AFTER it's been ready to retrieve it because they are out and about delivering other orders.
  • JMTQp8lwXL 6y ago
    With location services, should be simple to detect this occurring. The apps could do something about it, if they wanted.
• balls187 6y ago
  Keep reading the level of skullduggery these companies go through and keep saying to yourself "Tech is a meritocracy." Yeesh.
  • MattGaiser 6y ago
    Merit for businesses is defined by consumer acceptance and consumers love these apps.
    • balls187 6y ago
      Perhaps because ignorance is bliss. I recall blowback when it was uncovered that DoorDash was not providing 1:1 amount of tips to their dashers.
    • _bxg1 6y ago
      It's because the consumer experience is so subsidized. Consumers would also love an app that sends them $1.10 for every $1.00 they spend in it.
    • Apocryphon 6y ago
      That's equating merit with user acquisition, which is the very thing that's fueling the (hyper-)growth of unsustainable unicorns!
  • pkaye 6y ago
    We have extended a tech company to mean any company that uses computers.
• karagenit 6y ago
  One thing I'll point out is that we don't actually know if delivery services (for restaurants such as pizza places that the article mentions) are profitable period. It's entirely possible that businesses offer delivery at a loss (i.e. cost of delivery is more than the delivery fee, so it hurts their overall profit margin) because they expect the increase in revenue due to added convenience for customers to offset the lower profit margin.
  • MattGaiser 6y ago
    Companies like Dominos are mostly delivery, so I would imagine they must profit.
• x3blah 6y ago
  "Which brings us to the question - what is the point of all this? These platforms are all losing money. Just think of all the meetings and lines of code and phone calls to make all of these nefarious things happen which just continue to bleed money. Why go through all this trouble? How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners? My co-host Can and my restaurant friend both defaulted to the notion "delivery is a shitty margin business" when discussing this post. You have insanely large pools of capital creating an incredibly inefficient money-losing business model. It's used to subsidize an untenable customer expectation. Third-party delivery platforms, as they've been built, just seem like the wrong model, but instead of testing, failing, and evolving, they've been subsidized into market dominance. The more I learn about food delivery platforms, as they exist today, I wonder if we've managed to watch an entire industry evolve artificially and incorrectly." A contrary view, from 4 days ago, arguing third party food delivery market is not created by VC, the startups are not over-funded and that they are delivering splendid returns to investors. https://news.ycombinator.com/item?id=23171915 https://news.ycombinator.com/item?id=23171915
• crazygringo 6y ago
  > That’s what is so odd to me about third-party delivery platforms. The business of food delivery clearly is not intrinsically a loser. Domino’s figured it out. Every Chinese restaurant in New York City seemed to have it figured out long before any platform came along. My friend is figuring it out. Domino's and Chinese are very specific high-margin businesses. Basically the highest-margin restaurant businesses. That doesn't, in any way, prove that food delivery in general is not a loser. In fact, if you have to specifically pick the two highest-margin examples as your examples... maybe the industry in general isn't all that sustainable.
• ChuckMcM 6y ago
  I love this story, especially about ordering dough pizzas. It reminded me of this twitter thread: https://twitter.com/meslin/status/1225834920611848192?lang=en https://twitter.com/meslin/status/1225834920611848192?lang=e... In which the author tries to order the Uline "box of boxes", a box of twenty-five (25) 6" x 9" x 6" boxes, only to have Amazon deliver a 6" x 9" x 6" box containing some random product. The collection product from Uline has the same bar code as the box itself, so the pick up robot would scan the shelf for the box, find something that SOME OTHER VENDOR had put into a 6x9x6 Uline box, and pick that to satisfy the query. Adding automation to a process that any human with visibility to the whole process would say, "Wait, that can't be right." ends up in misbehavior.
  • joshvm 6y ago
    The automated system should say "weight, that can't be right". Works fairly reliably in supermarkets, especially if you allow a bigger margin of uncertainty on sku weight. Or verify the volume/shape - or both, like volumetric weight that shipping companies use. I'm guessing amazon has some system to automatically assign boxes based on the dimensions of stuff that's being picked.
    • beart 6y ago
      Not all distribution centers validate weight, don't recall if Amazon does but I would be surprised if they don't. High speed scales are expensive.
      • lumberingjack 6y ago
        A few people got a box of rocks instead of a $4k camera awhile back, one guy got two boxes of rocks after returning the first.
      • joshvm 6y ago
        Thinking about this more, I'm surprised this couldn't be caught when the items got delivered to Amazon. I find it extremely unlikely that a picking robot accidentally found an item with the same barcode if they weren't already in the wrong place. Seems like when the items arrived at the fulfilment centre, they got mis-scanned and ended up comingled. Presumably that's the stage where you can check weight and volume - eg does this item fit with the known dimensions. This check must be made somewhere otherwise people wouldn't bother returning high value electronics with rocks inside (presumably someone does a cursory check of weight before the inventory gets comingled again).
• olalonde 6y ago
  I'm surprised a guy in finance can't see the potential efficiency gains and economies of scale a delivery company could have over all restaurants having to operate their own delivery service. I don't know about DoorDash specifically (not in the US) but it seems obvious to me that those services are here to stay and they can be run profitably.
• et2o 6y ago
  Something just doesn’t make sense with this story. Ok, it’s possible doordash has accidentally mispriced a pizza. But why would they misprice a pizza but then pay the correct price to the restaurant?
  • icebraining 6y ago
    Because the person calling the restaurant to place the order gets the correct price. Why isn't it detected and fixed then? Probably a mix of bureaucracy and undermotivated employees; the call center people don't really know or care if DD is making a loss on purpose or not, even if they know how much the final customer actually paid.
• salimmadjd 6y ago
  Some background - In my past life I started Crazymenu.com The idea initially started as a central place to host all the restaurant menus with the idea of eventually expanding it to SAAS tech layer for everything restaurant related. The idea ultimately pivoted into google maps for restaurant menus. Meaning companies would just pay me a service fee to incorporate these menus into their services (ordering food, review sites, restaurant apps, etc.) I self-funded the idea and after my first beta launch (2006, I believe) I was pitching an angle investor (Mr. X) who years later became an early investor in Doordash. Right away, Mr. X said why not go into online food ordering business and then may be do delivery, etc. I never liked the idea of dealing with all the transaction headaches and told him I wasn't sure about the idea and dealing with so many fragmented restaurant softwares. From what I could gather attending a few National Restaurant Association events in Chicago and speaking with lots of restaurant owners, I noticed two categories. Very small mom and pop operations, or small medium chains. All the small to medium chains already had invested into some technology layer (some were closed off) and unless you could integrate with them, there was no interest to working with you and the smaller mom pop entities were either too busy or they were so bombarded by all types of tech solution offerings that they didn't want to listen to you. Years later when Mr. X had invested in Doordash I had private chat with him. I told him in my opinion, restaurant delivery is restaurant business. Meaning that it'll be very hard to compete. On top of one huge exception. You never crave DoorDash, you crave pizza or burger or Chinese food. When the OP says Dominos figured out the model as did lots of family owned Chinese restaurants. I can understand that. I believe this is a very vertical business. For one thing it's mostly around the brand, and the brand experience. This is the same reason Starbucks avoided franchising (if you think about it, DoorDash is a bit like franchising a delivery business) as did In-N-Out. These smart people had already figured out the nature of building a food brand experience. Getting a cold food, soggy pizza destroys the brand. This is very different than Amazon or UPS delivering books. Because delivery of books or jackets doesn't impact the brand at the same level it does with food. Not to mention when you don't deal with risk of food getting cold you can really scale delivery by mastering routing and all the different things UPS can do with scale. Ultimately, we either see a very vertical experience. Uber buying several popular food category chains (pizza, burgers, fried chicken, etc.) or the reverse, PEPSI's parent company buying UberEats/Grubhub or if there is a massive consolidations and Uber or Grubhub can charge in an economically sustainable way.
• cletus 6y ago
  Wow, that was great. And honestly good on them for profit-taking on this arbitrage. The author likes to pin this on zero-interest rates ("ZIRP") and that certainly explains why the system is awash with cash but I'd say he's missing a key point here. When I moved to NYC (~10 years ago) I didn't order delivery at all. Honestly it's a huge pain. To call someone up and try and communicate an order to someone who probably doesn't have the best grasp of English (no offense intended here). I just couldn't be bothered. What changed was Seamless came along and suddenly I could order food and not have to talk to anyone. It was (and is) amazing. In NYC at least the restaurants are still handling deliveries (with Seamless anyway) so there's still that control. Seamless/Grubhub seem to charge exorbitant fees but that's another issue. As an aside, this is a key factor in my use for Uber/Lyft: the fact that the process is seamless (pardon the pun). You order a car without talking to anyone, it arrives and it drops you off. There's no awkward payment step. No dealing with a machine that's broken. No card skimming. It just reduces friction. This is the promise of food delivery platforms: they benefit the consumer in terms of discovery, convenience and the seamlessness of ordering and payment. You might point out that people get cold pizza because UberEats drivers don't have the bag and you're right. But that's not an unsolvable problem. Oh and this is the first I'd heard of Grubhub replacing Yelp phone numbers with their own call center. More evidence that Yelp is a cess pool that needs to be flushed. It's sad Grubhub is engaging in this. We have enough rent-seekers. Thanks anyway.
  • Barrin92 6y ago
    I honestly don't know if I'm living in a different world than everyone else but I've been ordering food and taking cabs all my life and I've never had to deal with any friction. Like, you call the pizzeria, tell them what you want and then some college student delivers your stuff, and if you order for more than 20 bucks it doesn't cost you anything. Not even being facetious, but what problem do these apps solve? I also don't know how "not having to talk to someone" is a perk.
    • johntiger1 6y ago
      Yeah, it seems like you didn't grow up in a big city?
• _bxg1 6y ago
  This whole sphere of economic activity is a gigantic farce. It would be hilarious if it weren't so pestilent. The only upshot I can see is that it feels like people are finally catching on to it.
• geofft 6y ago
  > How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners? Simple. Capitalism is broken. In order for capitalism to work, there has to be a meaningful profit/loss incentive. People who are doing the work must get rewarded if the work is done well and penalized if the work is done poorly. We already started moving away from this many years ago with the growth of large corporations. When was the last time that you at your "capitalist" firm were aware of revenue and costs for the things you were working on in a more-than-superficial way? When was the last time you saw someone make a buy-vs.-build decision based on the actual numerical cost of the employees needed to run the project and not just handwaving? (When was the last time you even knew what the cost of the employees on your team was, given the widespread taboos about compensation?) When was the last time that someone who said "I saved the company X million dollars" got some proportion of those X million dollars? When was the last time that someone who needlessly made the company spend X million dollars in the first place paid for it? The function of a big company is to abstract away the cold, unfeeling invisible hand of the market and protect people/groups who make unprofitable decisions. This is actually totally fine and good in the short term - nobody makes consistently good decisions, and insurance is a thing for a reason. You want people to take bigger risks on behalf of the company than they're willing to subsidize with their own paychecks, which is why individual artisans and professionals team up to form a company in the first place. But it's grown past that. As the article points out, some regional director somewhere is able to convince other people at the company that their work is profitable - with no hard link to whether the work is, in fact, profitable. And that scenario is entirely plausible for all of us; it's not specific to this one company in any way. If you're in the unlucky position where both you want to draw good charts and everyone around you wants to see good charts, there's no real way to figure out if you're wrong unless the company as a whole is dying, and there might be a host of reasons why it's not dying that have nothing to do with your decision-making. And now venture "capitalists" have decided that this model needs to scale out from protecting teams to protecting entire companies. You can run a business for years without even attempting to make a profit and get acquired based on the potential of the business. No more messy realities of the market determining whether you are in fact profitable or not - what matters is whether you look profitable. And, again, this is genuinely good at small scale, because it allows new ventures to ignore bumps and potholes that would otherwise have ended a small company. But if you scale it up, it also allows new ventures to ignore driving straight off a cliff. I expect capitalism to work very well if implemented right. But I don't know how we go from where we are today to actual, functioning capitalism.
• three14 6y ago
  The real arbitrage opportunity is for a competitor to DoorDash to place orders through DoorDash, and pay the delivery person a small fee plus let the delivery person collect the DoorDash fee. You could scale this up to huge numbers. Curious if doing so would survive a lawsuit. On the one hand, DoorDash could argue that it's unfair competition, but only by admitting that their deliveries are priced too low, which itself is unfair competition. I don't know how unfair competition is regulated.
  • quickthrower2 6y ago
    What if you set up a fake Pizza website "Super Pizzas", that advertises the Pizza for $16. That site then places the order with DoorDash automatically. Then Doordash will scrape "Super Pizzas" and sell those for say $12. Then set up another site "Supper Pizzas 2" selling the $12 Pizzas, buying from Doordash, and then Doordash will scrape that and sell them for $9. Repeat until you have a site selling $1 Pizzas, then get that posted on Lifehacker!
  • yoaviram 6y ago
    Or serve a different version of the pizza place's website to the Doordash scraper with lower prices?
    • deadly_syn 6y ago
      Wouldn't be too hard to do, use a PNG for your human menu and embed a "door dash" priced menu below.
  • blueblisters 6y ago
    How would the competitor get customers to pay higher than what DoorDash charges?
• econcon 6y ago
  Where I live in India, nearly 90% of the restaurants and hotels get their food from one place at rock bottom price. And the restaurant/hotel the customer is dealing is responsible for arranging delivery and serving.
• SergeAx 6y ago
  > If capitalism is driven by a search for profit, the food delivery business confuses the hell out of me. The modern Silicon valley venture capitalism is not about operational profit, it's about company valuation.
• abrookewood 6y ago
  There's an episode of Silicon Valley where Pied Piper bankrupt an unrelated start-up using this method so that they can hire their developers.
  • tempestn 6y ago
    Yep, this is the real world Sliceline.
• JumpCrisscross 6y ago
  I cut this deal with my neighborhood Italian restaurant! I texted the owner about being miffed they hadn’t told me they were on DoorDash. He replied. They aren’t. We compared pricing, and found the prices advertised are way off from what the restaurant charges. So I placed a $5,000 order to the neighbourhood homeless shelter. DoorDash paid him over $20,000, and I get free pasta for the rest of the year. (My neighbours have also partaken.) Glad to know it’s scaling. SoftBank has assembled a unique concentration of stupidity for itself.
  • ornornor 6y ago
    What was the deal? You pay 5,000, the owner gave you back your 5,000 and kept the 15,000 as profit from door dash? The owner made a massive profit and the shelter gets free food and it didn’t cost you anything?
    • JumpCrisscross 6y ago
      > The owner made a massive profit and the shelter gets free food and it didn’t cost you anything? We’re in the midst of a pandemic. The restaurant stays afloat, nothing more. The shelter got a donation, and I got promises of comped deliveries and catering. It cost me $5,000; it cost DoorDash over twenty thousand.
      • Apocryphon 6y ago
        Time for some cross-platform integration: start GoFundMes to crowdfund arbitrage of SoftBank derivatives in support of local small businesses.
      • ornornor 6y ago
        That’s fine, I wasn’t trying to expose you, I just wanted to understand. It looks like everyone is happy, the restaurant gets cash, the shelter gets food, and you get... a lot of pizza for the rest of your life! I don’t think I’ve eaten 5,000$ worth of pizza in my life so far haha
• nie100sowny 6y ago
  We really need a true crisis. Free market economy needs to let such companies to buncrupt. Lesson must be learned. Unfortuanetelly looking what FED is doing, it won't happen soon :(
• roystonvassey 6y ago
  Interesting. I always suspected this to be true but not the extent, especially the overall profits generated by food delivery cos. For e.g. one of India’s largest delivery co reported a loss that was double the revenue! [1] The other way to look at this is to think of it as a global capital transfer mechanism, from the super rich to the “real” economy. Sure, it is not sustainable in the long run but while it lasts there is significant transfer of capital which appears difficult to otherwise do, thanks to resistance to capital taxes. I really do not know what to make of the incentives for fraud though. 1 - https://yourstory.com/2019/12/foodtech-startup-swiggy-loss-revenue-ilfs-financials https://yourstory.com/2019/12/foodtech-startup-swiggy-loss-r...
• azinman2 6y ago
  Isn’t this fraud? What’s unclear to me is if it’s illegal, or just unethical.
• lambentor 6y ago
  > the only viable endgame is a promise of monopoly concentration and increased prices This is it! I've been involved with Foodpanda and Delivery Hero. The name of the game is, indeed, becoming the #1 player in the market. The tool of the game was M&A. That's what you see everywhere with Delivery Hero, Takeaway Group, Just Eat trading positions across the world. They are effectively cutting and slicing the world into countries and regions where each of them is #1 and the others don't compete. Such "collusion" creates incredibly profitable markets, as the #1 doesn't need to share 30% of top-line with Facebook and Google, can charge a 15% take rate to restaurants AND additionally, a delivery fee to consumers.
• saos 6y ago
  > Amazon just bailed on restaurant delivery in the U.S. Yeah and Amazon just plugged £500m into Deliveroo in the UK. They are going for UK food delivery market and potentially Europe with that investment. Deliveroo is pretty amazing. 1. I can track my driver in real-time 2. Communicate with drivers via Whatsapp 3. Great range of resturants 4. Super convenient. Order comes usually within 30 minutes
  • TulliusCicero 6y ago
    Are they? They were in Munich but then pulled out. Looks like only Lieferando still exists here, as far as I can tell.
    • saos 6y ago
      https://uk.deliveroo.news/news/amazon-leads-series-g.html https://uk.deliveroo.news/news/amazon-leads-series-g.html But it seems there has been some issues getting the funding past the CMA – https://www.gov.uk/cma-cases/amazon-deliveroo-merger-inquiry https://www.gov.uk/cma-cases/amazon-deliveroo-merger-inquiry I believe you're correct. Deliveroo did pull out of Germany.
• nelaboras 6y ago
  so they have two possible endgames: 1) find a sucker (aka retail investors) that buy a loss-making stock 2) become a monopoly and squeeze everyone to get higher margins (kind of how booking.com pushes hotels to increase their standard prices so that booking can offer a discount; which you also get if you call the hotel itself).
• RobLach 6y ago
  I think I finally understand "growth hacking".
• yftsui 6y ago
  This reminds me of the SliceLine episode of Silicon Valley Season 5. https://www.youtube.com/watch?v=Txl90NEl92U https://www.youtube.com/watch?v=Txl90NEl92U Its even better, DoorDash is doing this without even switching boxes.
  • tcarn 6y ago
    So true. So many of these apps need to do some basic math and not "try and make it up with volume" if their gross margin is negative...
• raverbashing 6y ago
  I don't see why it's hard. Probably because Grubhub and Doordash are approaching this with the "holistic mindset" of a "visionary" mind like the WeWorks founders. Hence we get behaviour like this which is probably illegal in multiple ways. Provide your work at a fixed price per order. Or you might take a (transparent, explicit, of those who actually signed up for the service) commission, fair enough. Providing a good service is hard on itself, but it won't distract you from all the other crap and won't alienate the people that actually make your service work.
• simias 6y ago
  >I knew Doordash scraped restaurant websites. After we discussed it more, it was clear that the way his menu was set up on his website, Doordash had mistakenly taken the price for a plain cheese pizza and applied it to a 'specialty' pizza with a bunch of toppings. If that's really what happened (sounds plausible) that means that you should be able to trick DD even more by designing a website specifically in order to confuse the scraper. Have some cheap dish listed at $50 but in a way that would be scrapped as $5 or something. As long as a human would have no issue parsing the menu and understanding the actual price I don't really see how you could get into trouble, it's DD's fault for having crappy parsers.
  • bootlooped 6y ago
    I'm not sure I would call a scraper crappy if it was fooled by a site deliberately designed to fool it. It would be like calling somebody's vision crappy if they were fooled by an optical illusion. Scraping can be an adversarial exercise, but not typically in that manner.
• bambax 6y ago
  > Now suddenly each trade would net $75 in riskless profit ⇒ $240 from Doordash minus ($160 in costs + $5 in boxes). If you do this over and over, obviously you can use the same dough and boxes, so costs are just what you pay Doordash.
• novalis78 6y ago
  Reminds me of the discussion in ‘The Bitcoin Standard’ about zombie industries directly or indirectly build on top of unsound monetary policies. One could argue this capital burning colossi exist by virtue of access to a populations purchasing power / wealth. Instead of multiplying productivity and increasing living standards they stall progress.
  • vivab0rg 6y ago
    Source please?
• gandutraveler 6y ago
  I remember the time when I self referred the shit out of doordash, caviar few years back only to stop because I started feeling bad about it.
• burroisolator 6y ago
  How does the author know it isn't the driver that will get the short end of the stick here? To put it differently, what would happen if the restaurant mistakenly charged the driver who is picking up the food more than listed and then the driver pays that mistaken amount with Doordash's credit card? Will they be penalized/fired once Doordash discovers the accounting error?
  • grumple 6y ago
    It would be illegal to penalize the drivers, at least financially. I doubt the driver is given the choice of not buying the food based on price. If Doordash did have some way to penalize them, they could just bounce over to Grubhub or others. Doordash is advertising food at a given price - they must sell it at that price, regardless of price of purchase.
• ram1981 6y ago
  The part of the article that shocked me was the Google hijacking. It seems Google is allowing it as a policy. Why screw these poor restaurants? https://support.google.com/business/answer/6218037 https://support.google.com/business/answer/6218037
• mietek 6y ago
  > How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners? “(…) What sphinx of cement and aluminum bashed open their skulls and ate up their brains and imagination? Moloch! Solitude! Filth! Ugliness! Ashcans and unobtainable dollars! Children screaming under the stairways! Boys sobbing in armies! Old men weeping in the parks! (…)” https://www.poetryfoundation.org/poems/49303/howl https://www.poetryfoundation.org/poems/49303/howl
• overthemoon 6y ago
  >> Uber Eats is Uber's "most profitable division” . Uber Eats lost $461 million in Q4 2019 off of revenue of $734 million. Sometimes I need to write this out to remind myself. Uber Eats spent $1.2 billion to make $734 million. In one quarter. These might be stupid questions, but... can this go on forever? No, right? Is there precedent for this? How long of a horizon do companies like this expect to be a money toilet? What happens to everyone else if companies like this collapse? Why hasn't it happened yet?
  • gvb 6y ago
    The foundation is immense "VC" funds that are throwing money at (often "unicorn") businesses that are using the money to grow their currently unprofitable businesses. The premise is that, once they are big enough to drive all the competing businesses out of business, they will be able to transition to being profitable. The poster child of these "VC" funds is Softbank. The foundation is crumbling. https://www.cnn.com/2020/05/18/tech/softbank-earnings-intl-hnk/index.html https://www.cnn.com/2020/05/18/tech/softbank-earnings-intl-h... When these companies collapse, the investment funding them will have to write down the losses the "unicorns" have built up, and there will be a lot of investors that will be sharing in that hurt.
• OwlsParlay 6y ago
  I don't get the opening story. If his restaurants weren't delivering, who was Doordash picking up from? Did they just get doggy-bags to go?
  • rhodysurf 6y ago
    yes
• linsomniac 6y ago
  "Isn't business supposed to solve problems?" This is a common misconception... Capitalism is only designed to solve one problem: maximizing shareholder value.
• thedonkeycometh 6y ago
  I think it is most likely a case of x-y, where they are artificially deflating prices (or simplifying the menu) to get traction for their service. Be aware that this may be a tactic to strangle competition. There's still a possibility of a Fraud action being brought if the owner is buying their own pizzas in bulk, indirectly, although it would be quite novel. And if they are using virtual phone numbers and other such things it would prove culpability. I'm surprised this isn't buried in some Terms of Service somewhere.
• neap24 6y ago
  I've noticed the opposite phenomenon at a popular restaurant in Austin. The menu through DoorDash is priced higher than the normal price. Curiously, the restaurant's own, in-house delivery system is the same price as dining in. This is when I stopped using DoorDash...when I discovered that using the restaurant's own delivery system is just as easy and maybe cheaper.
  • fokinsean 6y ago
    Which restaurant? (I live in Austin)
    • neap24 6y ago
      Tarka
• blackboxlogic 6y ago
  Sounds like the driver is the loose end. I wonder if the author considered becoming a Doordash driver just for the arbitrage transactions.
• kyleblarson 6y ago
  My initial response to this headline was anger as I assumed that the arb would inevitably screw over the small business owner. That anger quickly turned to glee upon reading the first couple of paragraphs!
• lonelappde 6y ago
  Saying that delivery can work for most food in most places just because dirt cheap pizza and super dense NYC can do it, strikes me quite naive.
• spv 6y ago
  It's kind of hard to imagine how DoorDash execs are going to explain to those investors who find this on HN / elsewhere and ask them what the eff is going on ?
• foobaw 6y ago
  i know no lawyer wants to provide conclusive opinion here, but this has to be illegal
• vowelless 6y ago
  So funny how this mirrors the pizza app thing from HBO Silicon Vally.
• akeck 6y ago
  Since at a high level this seems like mis-assigning VC funds, could someone who does this arbitrage eventually be sued by Softbank to recover VC funds?
• victor106 6y ago
  > The owner insisted the driver take the pizza in a heated bag so the customer didn’t get cold pizza, but leave an ID so the driver would be compelled to return the bag. >Doordash was causing him real problems. The most common was, Doordash delivery drivers didn't have the proper bags for pizza so it inevitably would arrive cold What this means is that the restaurants really care about their customers. The delivery really really don't care. I spoke with a few restaurant owners in NYC and they all universally hate the delivery companies. The restaurants are charged anywhere between 30% - 40% which is a ridiculous amount. There's another company in India called Swiggy. I used to travel to India and would frequent a few bars in Bangalore and Hyderabad. All of them absolutely hated them for the same reason.
• blackrock 6y ago
  Is there really a monopoly play here for food delivery? Granted, DoorDash can possibly be used for other kinds of delivery, like medicine and groceries. It seems the cost of labor and transportation is too high to make it feasible. But the actual play, might be robotic. To first take over the manual market, and then, conduct research into automated delivery services, like aerial drone delivery, or robotic dog delivery. Once that technology is viable, then phase out the human delivery people, and replace them all with robots. I actually never thought something like this would ever be economically viable. And then one day, a pandemic hit the entire world.
• WorldPeas 6y ago
  Maybe they should rebrand as sliceline.
• monkeydust 6y ago
  Nice - this made BBC news! https://www.bbc.co.uk/news/technology-52724062 https://www.bbc.co.uk/news/technology-52724062