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Restaurants rebel against delivery apps as cities crack down on fees

• officemonkey 6y ago
  I stopped using Grubhub because the majority of my purchases were to the same neighborhood Pizza joint. I just phone it in and literally cut out the middle-man. It takes two extra minutes.
  • kull 6y ago
    For some apps they give you incentives like points that you gain with each purchase to get your free meal later.
    • sokoloff 6y ago
      Suggests to me that perhaps the local pizza joint should get into that same game.
      • TeMPOraL 6y ago
        If they can also offer the ability to pre-pay for delivery on-line, or at the very least equip drivers with card terminals, they could also capture some extra customers who use a third party primarily for this kind of convenience.
    • sanchostache 6y ago
      skipping out on the "free meal" is worth it to me to not deal with these types of companies
    • the-dude 6y ago
      Until the VC money runs out.
• tomComb 6y ago
  There thing that really bugs me is that the net fees to the restaurant are usually hidden from the user, so when users who care (which I admit was probably few, until this recent wave of indignation) couldn't take this into account. I hope that the result of this new wave of concern is forcing the delivery apps to display the total fees they are charging the restaurant.
  • sokoloff 6y ago
    Are you similarly annoyed that you can’t learn the rent, ingredient prices, or wages costs? I think that businesses have all kinds of expenses and that they’re in business to abstract that away and offer me dish X for $Y at place P and time T. I’m not inclined to care about their bank fees, advertising costs, health care costs, or SEO strategy.
    • EGreg 6y ago
      This is different because it’s the app you are USING. It’s been added to the chain late in the game and therefore we as a society care about how the restaurant has been affected by this new development. Like are they in a race to the bottom now. It’s a bit like the Trolley problem where you only agonize about the latest decision, and not what happened before you came on the scene.
    • mehrdadn 6y ago
      Delivery cost is different in that you normally avoid it as a customer if you go in person. So it's not actually abstracted away from you. You can't avoid their rent, wages, etc.
      • the8472 6y ago
        If you're ordering from a chain then taking delivery could allow them to arbitrate on the rent part. And you wouldn't be taking up any of their table space either.
    • njovin 6y ago
      While we may not be able to know those exact costs we can get close. I know that a restaurant in an upscale mall is paying more for rent. I know the minimum staff costs depending on the city they’re in (minimum wage). What I don’t like is that these companies will flaunt “No delivery fee!” And then in the cart you see a $5 “service fee”. Okay, what’s the difference? Who is actually getting that money? Is any of it going to the driver? The restaurant? All of these factors would help me decide which platform to use, which restaurant to order from, and how to tip.
• deleted 6y ago
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• icedchocolate 6y ago
  The fees some of these apps charge is criminal. You’re an advertising and coordination company, do you really deserve a huge percentage per order? Gross.
  • deleted 6y ago
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  • sokoloff 6y ago
    Yeah, it’s terrible that we force these restaurants to be on these platforms and don’t give them any free market choice in the matter to opt out. /s
    • ganstyles 6y ago
      I think your being facetious, but in case not I'll emphasize that you it is indeed terrible. The way these predatory companies go after restaurants until they're added to the roster or create fake restaurant websites and phone numbers is ridiculous.
      • sokoloff 6y ago
        Yeah sorry. Text doesn’t carry tone well. I’ve added a trailing /s now. I feel for every business that’s hurting right now, especially the small business restaurants that have been a staple in their local community. That has limits though, which fall short of barring “if someone else can package up directory services and make a buck off it, they should be able to, because that makes life better for consumers and I care about consumers more than businesses.” Yellow pages used to charge what I considered obscene rates for ads before the internet. What did they do to deserve thousands of dollars per year from my local plumber? He’s the one who actually got in his truck, got dirty, and fixed my problem! Well, they’re the one who helped me find him...
      • SpicyLemonZest 6y ago
        I simply reject the label of "predatory" here. Restaurant owners are sophisticated businesspeople who negotiate supply contracts and such as a matter of course; it's not predatory for delivery apps to offer them a deal, even if they'd prefer a better one. The fake phone numbers and websites, yeah, I'll grant you those are dishonest. Anyone calling a restaurant's listed phone number is expecting to reach that restaurant.
• mhb 6y ago
  I haven't kept up with this, but why doesn't the restaurant charge the delivery service whatever they normally charge and have the customer pay the delivery charge?
  • giarc 6y ago
    Grubhub, Ubereats, doordash etc charge the restaurant a % of the total bill as a fee for connecting and organizing the clients order.
  • matz1 6y ago
    Some restaurants figured that out, they simply have different the menu price displayed on the delivery app or even different menu set. For customer who prefer lower price they can order directly with the restaurant.
    • kombucha111 6y ago
      Problem solved.
      • foogazi 6y ago
        Now let’s write a Medium post to complain about it /s
  • goatinaboat 6y ago
    Some platforms ban restaurants who offer a different (higher) price on the platform than they do direct. The problem is that that these platforms flush with VC cash have forced themselves into the market as intermediaries, hoping that they can drive out direct ordering and hold the restaurants to ransom. But food delivery existed long before Deliveroo et al and I always try to order direct when I can. Sure it's not as slick as using an app, but the true price of the app is the long-term viability of my favourite takeaway restaurants, so screw the VCs.
    • rnotaro 6y ago
• SpicyLemonZest 6y ago
  While I'm not sure I'm on board with it, I have to admit that it's impressive how much restaurants have managed to moralize their pricing disputes with delivery apps. I didn't expect this genre of article would survive a ban on in-restaurant dining.
  • deleted 6y ago
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• softwaredoug 6y ago
  Good! To summarize what I’ve learned lately: Grubhub takes - 20-30% commission - all promotions are on a restaurants back - Has a very liberal, no questions asked return policy This post summarizes how expensive grubhub can be. https://www.eater.com/2020/5/1/21243966/giuseppe-badalamenti-chicago-pizza-boss-shares-grubhub-earning-statement-on-facebook https://www.eater.com/2020/5/1/21243966/giuseppe-badalamenti...
• ravenstine 6y ago
  My question is how long this can go on for before these delivery apps have to lower their fees. The fees are pretty obscene, and it's clear that apps like GrubHub pass that cost to the restaurant rather than the customer because they know that the customer won't want to pay that much and that restaurants at least want some amount of attention and visibility in these apps, especially since more customers are wanting to use these apps rather than ordering through some crappy website or by calling in. But I'm not convinced that apps actually should require the amount of overhead they might try and claim is responsible for these high fees. Customer and driver support for delivery apps is pretty minimal and almost always outsourced. Nowadays, most driver support is handled via text, which means you can have fewer support staff and they can just multitask. When I drove for GrubHub, when I visited the regional office, it was usually staffed by one or two people who were only there maybe a few hours out of the day(which is why, at least a few years ago, you couldn't just randomly show up). It's possible that they have way more employees at their HQ... but I have to wonder just how much of their costs are essential and not fluff generated by excessive growth from VC funding. Why bother building a lean organization if the money will just keep coming in whether or not the business model brings in enough money? All it has to do is bring in enough money to make lenders confident in the future of the business. In any case, there seems to be room for a delivery app, or a system of delivery apps, to compete with top-heavy companies like GrubHub and DoorDash. Why not run a leaner delivery app business, charge restaurants a flat fee, don't bother with a big marketing department because partnered restaurants will do most of the marketing by visibility, have restaurants pay the base delivery fee, allow drivers to keep all their tips to encourage more drivers, and pass the $3-4 deliver fee to the customer? Say you charged partnered restaurants $199 a month, and you acquired the market share of GrubHub, which is ~115,000 restaurants; that would be $22,885,000 per months of revenue. Is that really not enough to run a successful delivery app? Or is this a matter of everyone wanting to run a bajillion dollar unicorn?
  • holoduke 6y ago
    Completely agree. I think you can even ask just 10 per month. A team of 20 people is sufficient to run this entire business.
• lordnacho 6y ago
  I actually looked into opening a restaurant in the London suburbs. A friend of mine runs a chain of sushi delivery shops in central London, so I had some advice from an insider. It seems to not work at all with a 30% cut going to Deliveroo and those types. I went to look at some locations to find out the rent, and I had a look at the ingredient and staffing costs. Then I threw it all on a spreadsheet to make a guess about the breakeven, and I checked it with my buddy. The thing about Domino's and the sushi delivery is that they run their own delivery network. They don't have the costs that Uber Eats or Deliveroo have with marketing and tech. The delivery management is fairly complicated, perhaps not in a tech way (except for Dominos, who have a big tech arm) but in terms of marshalling a bunch of drivers to efficiently drop off food during the evening rush, it's a fair bit of work in itself. My buddy talked more about that than making sushi.
  • raverbashing 6y ago
    Deliveroo and Just Eat in Europe seems to have an explicit delivery fee shown at checkout (and distance based according to each restaurant). Not sure if they take an extra fee on top of the "pre-delivery price" or how does it work.
    • save_ferris 6y ago
      I wonder if European policy drives that because we don’t have that kind of transparency in the US
      • KoftaBob 6y ago
        What do you mean? I've used Doordash, UberEats, GrubHub, and others like it, and they've all explicitly listed a "service/delivery fee" at checkout.
        • jaredklewis 6y ago
          But doordash, Uber eats etc...receive MORE than just the service delivery fee that they charge you. These platforms separately charge the restaurant itself a fee (rumored to usually be between 10% - 30% of the order total) for every order. This is the lack of transparency discussed in this thread. People would like to know at the end of the day, how much of the order money goes to the restaurant.
• Hamuko 6y ago
  How long until Grubhub starts mandating the drivers to check for such notes?
  • gruez 6y ago
    The restaurants can “seal” the bags. Getting the drivers to break those seals to search for marketing materials won’t look good for grubhub
    • catalogia 6y ago
      If the seals are removed entirely, not merely broken, then there's a good chance the customer wouldn't know they'd been screwed with.
• xhruso00 6y ago
  In Malaysia restaurants charge 30% more on delivery apps (Grab, Foodpanda). But they have also published phone number to order directly from them in case of pick-up. So those who can't pickup have to pay the extra fee.
  • Consultant32452 6y ago
    That's how it is for me here in the states. The Uber eats prices appear to have the markup baked in compared to calling and ordering for pickup. I am having a very hard time understanding why anyone is upset.
    • pc86 6y ago
      Any time someone else makes money people on HN start a tirade about how evil capitalism is and how they should know exactly who is getting every penny they spend on every product or service.
• holoduke 6y ago
  There must be a business model where every restaurant pays 10 dollars per month to be part of a food delivery program. Each delivery will be paid without additional costs other than the regular delivery rates (paid by the customer) It will be less lucrative than those 30% fee cut companies. But enough to make a good business. Maybe I should start it :)
  • sokoloff 6y ago
    I’d recommend something more like $0.25/order and a $10/mo minimum. You are going to have per-order costs and the restaurant is almost surely happy to realize that and pay them.
  • wenc 6y ago
    ChowNow charges a fixed fee (not sure what it is, I read somewhere that it's between $99-$150/month). For deliveries, I believe they outsource. Wix Restaurants is a fixed fee too -- but it's more like an augmentation to an existing Wix website I believe. They don't own a delivery fleet, so the restaurant has to hire its own drivers (which high-volume restaurants are not averse to doing). I tried ordering from a Wix restaurant last week and the process was seamless. All I (and I believe most users) really want is for a restaurant to have an online-ordering system. We don't necessarily care for delivery apps, but what a delivery app offers is a seamless checkout experience. See, I've never liked calling restaurants. It's annoying to call restaurants during the dinner rush, be put on hold, be treated curtly because the staff is struggling to keep up, and having to repeat your order several times over the din makes for an awful experience for complex orders. Side note: I've recently started hanging out at the r/restaurantowners subreddit[1] to overhear what restauranteurs are thinking. Could be good to hang out there to collect data points before embarking on a new venture. Seems like Toast is a popular restaurant POS that has online-ordering features [2], which could be another commission-free route for restaurants. [1] https://www.reddit.com/r/restaurantowners/ https://www.reddit.com/r/restaurantowners/ [2] https://pos.toasttab.com/products/online-ordering https://pos.toasttab.com/products/online-ordering
• naveen99 6y ago
  Maybe delivery costs would be lower if people could subscribe way out into the future... then, set it up like a paper route.
  • bertil 6y ago
    Deliveroo offers a subscription service but you still order on demand — the subscription just lowers your fee. Competitors have suggested options with regular deliveries to pool them. Few offer hot food, many it’s fresh but cold (Frichti in France), sometimes it’s frozen (AllPlants in the UK) and you might include food-prep kits (Blue Apron in the US). Based on the growth and successes that I’ve seen, I’m not sure that warm food on a route is far cheaper to operate; dish to re-heated seems to work, but not as well as food prep.
• ape4 6y ago
  The delivery fee should be based on distance - not how much you spend on food.
  • dylan604 6y ago
    Distance doesn't work the same for all cities. 10 miles in NYC is forever away far. 10 miles in Dallas is up the street. Delivery fees should take distance into consideration, but also how long it takes to do the delivery using actual congestion data.
    • ape4 6y ago
      OK, time estimate is fine. But it should be same for any kind of food.
• tehlike 6y ago
  I started using chownow, who has upfront cost for takeouts. Haven't done delivery yet.
• Robotbeat 6y ago
  This is a case where restaurants should start a delivery app co-op. Any time where you have a whole business segment subject to what boils down to rent-seeking tolls, there’s an opportunity for cooperatives.
  • koolba 6y ago
    Business idea: White label delivery co-op as a service
    • pc86 6y ago
      HubGrub!
  • vikramkr 6y ago
    The delivery apps are going to be hard to compete with. Restaurants have to get a base of people willing g to deliver for them. And even more difficult, they'll have to make a platform that makes it easy for people to see what the menu is and order. Have you ever seen a restaurant website? Even one that does delivery? I'm incredibly skeptical that a co op would have the will, desire, or skillset needed from its members to succeed
    • Robotbeat 6y ago
      Think of like a credit union: it’s not like the members of the credit union have the skillset; they hire people who do. The members just provide the will/desire and maybe some small amount of pooled capital EDIT: and most important, a pool of customers with an incentive to stick around (the customers ARE the owners).
    • kerkeslager 6y ago
      > The delivery apps are going to be hard to compete with. Restaurants have to get a base of people willing g to deliver for them. This isn't a problem. DoorDash et al aren't particularly good to work for. A local Pizza joint bootstrapped CarryOut Kings[1] off of their existing delivery staff after the pandemic started, and is now delivering for any business in town. They're making a killing, and I've got friends who work there who are making a lot more money than I was when I delivered from DoorDash. If I lost my clientele for my business I'd be driving for CarryOut Kings over the delivery apps without hesitation. And even putting aside the numbers, there's a lot to be said for working for someone who has to look you in the eye if he screws you over. [1] https://www.carryoutkings.com/ https://www.carryoutkings.com/
• cpuguy83 6y ago
  The thing with GrubHub, UberEats, etc... is they are (usually exclusive) marketing services masquerading as delivery services. What's infuriating is knowing they are charging 30% in addition to the 10% they charge me, the consumer... and still you have to pay the driver. There's one restaurant about a half mile from me... Uber Eats was going to charge me a $10+ fee for the pleasure of using them (not including tip). I could literally take an Uber there AND back and it would have been less expensive... screw it I'll walk and reheat my food. It is a completely backwards model. Open Table seems to be in the same realm... I can't remember if the figure is correct so I'm loathe to mention it... but our favorite restaurant told us Open Table charges $5/head (to the restaurant).
  • deleted 6y ago
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  • stephenhuey 6y ago
    17 years ago a friend was trying to get me to start a restaurant delivery service with him in Houston. He explained most around the country were mom-and-pop businesses utilizing little technology but be had visited 2 millionaires in Phoenix and LA whose delivery businesses served hundreds of restaurants. He found the guy who supplied Windows software to some of these businesses that handled all the specific bookkeeping and proximity calculations for changing fees based on distance, etc. I was amazed they took a 30% cut from the restaurants but he explained that the restaurants were increasing their capacity beyond the seating they had on-site. I don’t really know how all those restaurant customers felt about that, though. Maybe they were grateful to be able to build new customer relationships, but we never got going since the investors fell through. Recently after reading about restaurants teaming up to share delivery people, I wondered if providing restaurants with generic back-office apps that allowed them to easily partner with other businesses to make small delivery operations (maybe a half dozen or dozen sharing drivers) would blow the giant VC-backed ones out of the water. Basically some lightweight SaaS solution for a few bucks a month, easy to integrate with their website, etc. Customers should be able to get used to the idea that they can just go to the restaurant’s homepage and look for the Delivery button instead of perusing VC-backed indexes of restaurants.
  • 6y ago
• troughway 6y ago
  I'm sure HN has no shortage of ex-Uber engineers given how many people from their tech divisions they have let go of recently. I am curious to hear what they think about this, in light of them being let go en masse, which in itself shines even more light on things that are outside of this discussion. Was the company ever sustainably profitable? If so, which divisions/apps? When did they start becoming unprofitable? Gouging restaurants who are already working with razor thin margins is really strange to me. I am guessing they thought that as long as VCs kept pouring money in like gasoline, they could turn a blind eye to the fact that they have destabilized a fragile ecosystem that _a lot_ of people depend on (remember: knowing how to cook is an anomaly these days). I'm guessing they didn't learn anything from Groupon.
  • jacobkg 6y ago
    Unfortunately in exchange for severance, these folks likely had to sign some sort of agreement limiting what they can say about the company
  • bertil 6y ago
    Not Uber but Deliveroo — and it was long enough that I can talk freely. Mind you: that was a while ago. The vast majority of people underestimate the cost of delivery, more specifically two things: the duration of delivery or rather how many deliveries per hour of work at peak time, and the utilisation rate. It’s hard, in the best circumstances (good weather, constant demand, professional restaurant, dense habitat) to have a driver handle two deliveries per hour. If you take a £2 free from the customer and a £5 commission over a £17 order, you can pay a rider £14 per hour. At that rate, you typically would get the left wing press to call you exploitative every other day. That’s excluding everything else: marketing, customer service, tech. You can’t improve anything without capital that has to come from investors. All that ignore the key problem availability: if you have 100 riders on schedule, about 60 would show up. They are not employees after all, and you can’t fire half of your contractors every day when you are growing like weed. Probably fewer than 30 will show up if it rains, but 80 might if the weather looks nice and there’s nothing on TV. If you have reasons to believe that you’ll get 360 deliveries during the three hour dinner shift, you should be good but… if you get 350 orders and 70 riders show up (nothing unusual exceptional) they’ll all get one fewer order than expected and they will complain they are are not making enough money. More likely, half will do six, a third will do five and a dozen not enough to justify them showing up. That’s excluding any exceptional case: hail, Premier League finals, etc. 20 riders for 4,000 orders wasn’t out of the question with bad enough weather. Your marketing team is quite likely to tell you that means 3950 unhappy customers because most riders will switch off the app after the second of third customer insults them because the website isn’t responsive. There are many ideas about how to increase the number of delivery per hour of work: * telling people to pedal faster isn’t a good idea; * asking more than 30% from restaurants will get chef’s knife thrown your way (not a metaphor); * paying people any less than £14/h gets you call a slave trader by the international press; * asking customers for more than £2 is a crime against humanity and will tank your retention faster than spilling broth and bringing cold pizza; * setting an ordering minimum to something as high as a meal for two people, i.e. £20, is an effective way to become a trending topic on twitter for all the wrong reasons; reasons that my grandmother would wash out of your mouth with soap; * handling over two deliveries from the same restaurant to a single rider can work at times, but it’s hard to find the rare good cases and you get very angry customers ver fast; handling two deliveries from different restaurants is… ::shivers:: Let’s not talk about it. So, you are right: razor thin margins at best in most cases. What works is looking at the above and seeing in as a stats game: 1. 360 orders ± 30, 60 riders ± 20 isn’t a great combination. 3,600±100 and 500±50 are better: your margin can be improved with just the large number theorem. That means, in any places without the population density of central Paris, to feed a significant portion of the population. It sounds absurd but having 20 riders out in a hail storm means you will have none within an hour, even if the sun goes back (thank you non-sensical May weather); having 200 means they see their peers riding and wait it out. 2. Another thing where scale really helps is opportunities: if you have more than 3,000 deliveries in three hours per square mile, that’s 50 deliveries in the last three minutes. One is bound to be nearby, less than two minutes away. So rather than pay riders to do delivery, then shlep for the next one to a restaurant half a mile away and only then to start carrying food again, you get to pay them to deliver food, then turn the corner and do it again. That way, you can hope riders to handle more than two deliveries per hour. That considerably helps your business models. 3. What can help a little bit more is that with ten times more order, the rare cases when one rider can pick up two orders and not make it awkward increases as O(n^2) so they go from rare to worth the time to implement an assignment logic for those. That should give you a hint why you’ve heard the words “billion raised in a new round of financing” used around that business model: there is path to profitability but it has to go through extreme growth. I’ll let you do the math on rider pay, restaurant, fees, possible subscription models, population density, etc. but if you do, remember that a service like that requires, at maturity, thousands of engineers hoping Silicon-Valley level pay.
• rdlecler1 6y ago
  My friend runs a restaurant. He changed his prices for the delivery services.
  • mcv 6y ago
    That sounds like the easiest way to handle this.
• BurningFrog 6y ago
  It's fascinating to see people having such strong moral intuitions that restaurant people deserve to get paid for their work, while food delivery people do not.
  • thescriptkiddie 6y ago
    GrubHub charges a 15-30% fee, of which only 10% goes to the delivery person. On average the app owners are making twice as much as the person who does all of the actual work.
    • BurningFrog 6y ago
      By "food delivery people" I mean the entire company, not just the person in the car. So it's the app developers and management that don't deserve to get paid? Despite the large fees, these companies are all losing tons of money. So it's not like anyone is getting rich by overcharging restaurants. It looks to me like maybe food delivery simply isn't a sustainable business with 2020 technology. Or it needs a whole different business model.
      • c22 6y ago
        Seems like it. 10-15 years ago I had a bunch of paper menus in a folder taped to my fridge that I would have to look at to order food. Perhaps I didn't have access to every restaurant in the area, but the selection was broad enough. The only extra fee I paid was whatever tip I chose to give the driver which I always assumed got added on top of a reasonable wage. That system seemed to be sustainable--at least it operated fine for many decades. It's too bad the old system was cannabilized by the apps. I'm sure some smaller operations that couldn't afford to run their own delivery before have seen an uptick in sales, but as a consumer the choice paralysis, screwed-up orders from over-worked kitchens, and insane fees/price bloat has turned getting food delivery into an unpleasant experience I now try to avoid.
        • saurik 6y ago
          > The only extra fee I paid was whatever tip I chose to give the driver which I always assumed got added on top of a reasonable wage. I would give low odds on this assumption being true :(.
• billfruit 6y ago
  Restaurants aren't free from unfair practices, often they charge the same price for takeway as for dine in, whereas takeway should be cheaper not including delivery charges. Costs including for facilities/rent/upkeep for dining areas shouldn't be added to remote orders. In some jurisdictions(esp in 3rd world), even are supposed to be different for takeaway and dining as orders made in air-conditioned dining areas are often taxed at a higher rate.
  • melq 6y ago
    > Costs including for facilities/rent/upkeep for dining areas shouldn't be added to remote orders. of course they should, where do you think they make the food?
  • HelloMcFly 6y ago
    What an odd reaction to this article. Do you believe there is some sort of moral or ethical obligation that restaurants must operate at the same margin for every transaction? Should liquor prices be reduced to meet the margin of the steak entree? Those "air-conditioned dining areas" help create the overall economics available to supply you takeout; few restaurants could sustainably survive on takeout alone. Takeout orders also either cannot buy higher-margin items (alcohol) or typically do not (dessert) so it's not like the are a strictly equal value proposition. Takeout and dine-in are not two separate business, they both operate together.
  • hleach 6y ago
    I'm not sure what you mean, takeout is typically 10% to 20% cheaper than the same food served to you at the table.
  • jacquesm 6y ago
    Do you suggest they make the food on the street or is it ok with you that they rent a space somewhere? By the time you factor in the costs of the delivery service the cost to the restaurant is about equal. Unless you have experience in the industry I suggest you do the math first and then complain, assuming by then you still have something to complain about. Restaurants are nothing at all like the software industry.
• calmlynarczyk 6y ago
  I could write a lot about the benefits these apps provide, but I think we can all agree their ease of use and flattening of the marketplace into a centralized data source is a very powerful combination. This means restaurants essentially have to be on them to compete. Before, more decentralized factors like geography and word-of-mouth helped restaurants gain and hold marketshare. This isn’t a new phenomenon, but it’s a definite shakeup of an industry that didn’t have to deal with this issue as much before. It’s similar to how credit card networks like Visa and Mastercard inserted themselves into the payments space. The ease of use these services offered customers simply outweigh the option for sellers to not use them. Sellers already didn’t like how these companies skimmed a few percent off of every purchase. Now you have delivery apps which are taking far more significant chunks of revenue out of each transaction. However, how many customers know how much of what they’re paying is going to transaction costs? Some stores and gas stations offer slightly lower prices if you pay with cash instead of card. Customers are given this awareness so they understand that they are paying more for a feature. Takeout apps not only add to the transaction cost, but also control the interface between the customer and restaurant. A restaurant wouldn’t even have the option to tell the customer how much of the price of their food goes toward middleman fees because it’s not in the takeout services’ interests to surface that info in their app. Instead, they can hide away the details of price differences between restaurants and then play sellers off against each other for their own benefit. Even credit card networks don’t have that much control over the entire transaction process, but these new end-to-end marketplaces control both factors in order to pawn off blame on the sellers. If this continues, I foresee these takeout services exerting so much control over small-business restaurants that the restaurants either fold or all be homogenized under whatever the takeout services will. Given the propensity for vertical integration these days, the takeout services will probably just stand up their own food services in place of the restaurants, similar to what Uber ultimately wants to do with its drivers. Small business won’t be able to compete and even more local restaurants will disappear. Some will continue to exist as a niche as demand for variety/personable service and low prices/convenience fluctuate back and forth between stabilizing somewhere in the middle. This will probably be at the expense of customers and society as a whole, given that restaurants are one of the last bastions of small business in the ever globalizing economy. In order to combat the shock that restaurants face while takeout apps hold a huge level of control over the marketplace, public institutions and personal will are needed to keep these apps from becoming too powerful. I see it as a more proactive form of anti-trust enforcement. Otherwise, you’re looking at a future where local restaurants probably won’t exist.
• mxd3 6y ago
  I delivered for Pita & Sticks in 2015 when it was a new restaurant. The owner refused to pay me my last paycheck after I quit and found another delivery job. Point is.. delivery drivers were treated like shit before GrubHub and Uber. Before it was restaurant owners. Not all, but many. Now that the deliveries are all centralized to a few companies, it’s an opportunity to get delivery workers better wages and benefits.
  • pavel_lishin 6y ago
    This is the first time I've ever seen anyone suggest that Uber has treated their drivers with anything but contempt.
    • MiroF 6y ago
      where do they suggest that?
  • softwaredoug 6y ago
    How much income do they make on grubhub outside the tip the customer pays?
    • wenc 6y ago
      Here's one data point https://news.ycombinator.com/item?id=23217005 https://news.ycombinator.com/item?id=23217005 Other data points can be found here (take with a pinch of salt, but gets you the right ball park) are here: https://www.reddit.com/r/couriersofreddit/ https://www.reddit.com/r/couriersofreddit/
  • analyst74 6y ago
    I used to deliver pizza around 2010, and was averaging 5~6 dollars per delivery (half from the pizza shop and half from tips) and 2~3 deliveries per hour, it was a very exploitative job, but actually better than many other manual labor jobs I've had...out of 10 or so such jobs, it's probably top 3.
• Dumblydorr 6y ago
  I drive to all of the eateries I want to support. Some of them don't do delivery, others do, but it's a chance to leave the apartment and it's all money going straight to the eatery, not an exploitative delivery app.
• softwaredoug 6y ago
  Are restaurants allowed to have Grubhub specific pricing?
  • ckrailo 6y ago
    Yes and many do
• paulie_a 6y ago
  Resteraunts should just put "GrubHub fee" on the bill
• jacquesm 6y ago
  The new middle men: same as the old. Any kind of commission based service will always use its position as a wedge to either gain marketshare or increase its profits by hammering on that wedge as much as they can. As long as it moves, keep on hammering. I've yet to find an ethical one. Here in NL 'Thuisbezorgd' pulled the exact same stunts. I hate them with a passion and always search to find out if the restaurant I'm ordering from has a direct process as well, they are usually super happy about that.
• technick 6y ago
  I'm all for banning grubhub, ubereats, postmates, and doordash. If people want to order take out, let them get off their lazy ass, come down and pick up their own order.
  • atom-morgan 6y ago
    Would you apply this to all convenience based services you use?
  • DoreenMichele 6y ago
    Some people order delivery because they don't have transportation. Others order delivery because they are handicapped and, for example, in snowy, icy weather, their wheelchair plus snow and ice and so forth mean going somewhere is not very feasible at times. I mostly get takeout and pick it up myself. I think these delivery services are generally a bad idea, but some people getting delivery aren't simply "lazy ass" people.
  • bigwavedave 6y ago
    I have a brain tumor that gives me seizures, meaning I'm unable to drive anymore. But sure, you're right- maybe if I wish real hard and pull myself up by my bootstraps, that will solve the problem. It really blows my mind that you're not able to even consider the idea that your situation isn't universal. Good grief.
• dehrmann 6y ago
  > owner John Stamos I had to check; it's not the "Full House" John Stamos.
• fxtentacle 6y ago
  As a foreigner, it seems to me that the problem in the US is that too many people live alone. My favorite pizza shop in northern Germany has a minimum order of $22 and charges $4 in delivery fees. For one person alone, that wouldn't work. So you order together as a family. Or together with your flatmates in university.
  • binxbolling 6y ago
    In Germany, 41.8% of households have just one person. In the USA, 28.4% of households have just one person.
    • fxtentacle 6y ago
      I'd wager they count in different ways. Or I'm living in a total bubble. None of my friends is living alone. All of them are either sharing a house with others or living together with their girlfriend/wife. Edit: it might be that your statistic is dominated by houses being owned by old people
  • fma 6y ago
    Maybe it's just me, but I've never ordered a pizza alone, even when I did live alone. I only ordered pizza when friends or family came over. If it's just me eating I'd go get a burger or some other single serving fast food.
  • aglionby 6y ago
    Dominos in the UK has similar incentives but put in place less rigidly - any medium/large pizza will run you £18-£20, but there are loads of 40%-50% discount above £x (x >= 35) or 2-4-1 deals. This makes it more difficult to justify a solo order (unless you get 2 pizzas, which, fair enough) and incentivises ordering with friends or not at all.
• deft 6y ago
  So not only the unprofitable gig-economy apps are going under, they're actually dragging everyone else down with them. How long until the VC and other funding runs out?
  • TeMPOraL 6y ago
    This was written in 2013: https://www.ribbonfarm.com/2013/04/03/the-locust-economy/ https://www.ribbonfarm.com/2013/04/03/the-locust-economy/ Year after year, I'm appreciating the analogy to locusts more and more.
• systematical 6y ago
  Amazon, Expedia, Grubhub and others are just middlemen sucking blood from small businesses and consumers.
• 20years 6y ago
  Are there any food service establishments out there that solely focus on delivery? No walk-ins, no dining in but only delivery? Their staff would pretty much consist of cooks and delivery employees and the facility would be big enough for a kitchen and prep area. I would think a setup like that with good food would do well in this new reality we are in. I imagine it would challenging for a restaurant to focus on a good dine-in experience alongside a good delivery service, especially considering the low margins.
  • theNJR 6y ago
    Yes, Cloud kitchens. Guess who has the most high profile one?
    • kombucha111 6y ago
      Travis?
      • theNJR 6y ago
        Yep
  • bertil 6y ago
    Yes, I’d split them in two types in the markets where Deliveroo operates: * existing restaurants (or food trucks) that were identified as promising by the Deliveroo; there’s a program to help them grow and the most common step is to lend them spaces in delivery-only kitchen. The key thing is to have a menu that is meant for that, so the food and the containers can survive a 20-minute ride. Some use the same brand; other create a different one for delivery only. Compared to the experience of getting a loan from a bank to open a second restaurant with a front-of-house in a busy street and having to commute between the two without experience is managing a kitchen remotely, that program was described as far sensical and likely to succeed. * restaurants that were designed with that idea from scratch. Taster is a start-up (founded by Anton who ran the afore-mentioned program for Deliveroo in France). They identify concepts that would work, develop, finance and grow those brands from scratch. I believe that the idea is working really well.
• DoreenMichele 6y ago
  If you are ordering online and getting delivery because of the pandemic -- because you think it is a best practice for germ control -- I think you are probably better off ordering takeout and picking it up yourself. Delivery drivers have been known to sample the food they are delivering and things like that. I am not thrilled with the idea of some underpaid delivery driver having time alone with my food. Restaurants have to comply with food safety and hygiene laws and their staff get appropriate training. I doubt delivery drivers get similar training (correct me if I'm wrong). Staff in restaurants are not only trained in food safety, they are typically not alone. This is one of the best ways to ensure that people are behaving. Delivery drivers are going to be alone with your food and therein lies the problem. https://www.wasserstrom.com/blog/2018/10/12/food-delivery-risks/ https://www.wasserstrom.com/blog/2018/10/12/food-delivery-ri...
  • bdcravens 6y ago
    It's not universal, but I've seen many restaurants do a pretty good job of sealing the bag, in order to combat this problem.
    • DoreenMichele 6y ago
      I have a permanently compromised immune system. I default to preferring takeout over delivery where possible. I occasionally get delivery where that's just not practical for some reason, but it's the exception. There's a pandemic on. If people are interested in my opinion about best practices for playing defensively in a germy world, there it is. And if they aren't, (shrug).
      • bdcravens 6y ago
        You'll recall that I also have CF. For whatever reason, I don't fear delivery (though I'm more and more sensitive to how exploitative it is for businesses)
        • DoreenMichele 6y ago
• zhoujianfu 6y ago
  I guess I don’t understand the uproar here... is anybody forcing people to use these apps? Anybody forcing the restaurants to pay fees to them? Is there some monopoly force at play here? My city (Santa Monica) recently passed a 15% cap on fees delivery apps can charge, and immediately grubhub dropped Din Tai Fung from us, I assume because they’re too far away for 15% to work. They don’t do their own delivery so to get it yesterday I had to place a to-go order and drive and pick it up myself, about an hour total round-trip with no opportunities for efficiently stacking orders. I guess I probably “saved” $40, but I would have preferred to pay it!
  • foogazi 6y ago
    Here are the instructions for how to fix this ( from the article): >Shortly after he put the message on the internet, Singh ended his contract with Grubhub. That’s it. End the contract, don’t pay the high fees
• sarahcho 6y ago
  This is a real problem that has existed for a long time, but has really only came to public attention because of the lockdowns. I wrote about it here: https://blog.routesimply.com/why-your-restaurant-should-bring-deliveries-in-house/ https://blog.routesimply.com/why-your-restaurant-should-brin... My partner owns a pretty successful craft brewery in the bay area, and he's recently decided to get rid of doordash, grubhub and ubereats. What worked for him is using a network of ex-Uber drivers (there are tons of whatsapp and telegram groups where these guys hang out) together with an app (www.routesimply.com) that I built for him. He takes orders directly on the phone, instagram and fb messengers and tacks on a delivery fee that the customer pays for and gives 100% to the driver.
• aabbcc1241 6y ago
  If the delivery platform is not evil, it can charge as low as PayPal do. But if they charge less, they can only do less advertising, which makes the network effect weaker. Is there a way to let people discover suitable service without paying a lot for advertising? Like the real word-of-mouth, not the "KOL" one.