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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

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.
      - true_religion 6y ago
        They also change prices so you pay higher costs per item just by using Doordash.
      - KoftaBob 6y ago
        Agreed. In an ideal world, whatever costs associated with delivery should be completely borne by the customer, not the restaurant. If the restaurant isn't the one providing the actual delivery, the service provided provides most of the benefit to the customer, and it should be us customers that pay for the convenience. This reminds me of the debate around NYC banning landlords from forcing tenants to pay brokers fees. The landlords are the ones benefitting the most from brokers' services, and should bear the brunt of the cost. I'm curious to see if any cities/states take a similar approach with food delivery and prohibit delivery companies from charging the restaurants themselves fees.
        tomp 6y ago
        Technically UberEats etc aren’t charging the restaurants for delivery, but for marketing - “you’ll get more orders by being on our platform” - at least that’s how they’re selling it, and I suspect it’s true at least for some restaurants
    - Larrikin 6y ago
      They do not. There's a nebulous category that fluctuates. My credit card currently has a deal with door dash they made to kill grub hub so that delivery fees are covered yet there is still a seemingly small random service fee tacked on. I feel bad for grub hub but I absolutely will take vc money propping up a failing business. I usually check all the apps and the restaurants website before putting in an order to account for different menu prices
- rubber_duck 6y ago
  >Not sure if they take an extra fee on top of the "pre-delivery price" or how does it work. Not sure about those but others in my country do - I've talked to a restaurant owner here - he has two companies with marked up prices for the same menu to get arround the app policy that prices must be the same as buying directly from vendor, if you order directly from him it's ~20% cheaper. That's on top of explicit delivery fee.
- Erwin 6y ago
  Same debate happens here in Europe for Just-Eat (originally Danish), and Wolt (bike courier, originally Finnish). There's a cut taken from the restaurant separate from the delivery fee visible.
antisthenes 6y ago
With an industry that runs on ~10% margins (and lower in many cases), how could one possibly imagine a 30% cut to fees being workable?
- topkai22 6y ago
  Costs don't scale linear with the production of more meals. If the variable costs (like food and staff) are lower than or roughly equal to the fixed costs (like rent) then 30% off the face price of food might be still be a money making proposition. That being said, it's becoming increasingly clear that restaurants and delivery services need to be co-designing to make widespread delivery work long term.
- itake 6y ago
  Increased prices :). Consumers are paying more than 30% more for delivery.
baxtr 6y ago
I wonder a bit why there is no player like amazon in the food business. I mean a completely integrated one from buying ingredients to cooking to delivering.
- kevingadd 6y ago
  As the article notes, Amazon tried it and bailed out (presumably because it was not worth the trouble)
- mikeiz404 6y ago
  For reference: > Amazon, a company that many would consider an expert in e-commerce and logistics, tested the market and left about a year ago. https://www.nytimes.com/2019/06/11/business/amazon-restaurant-delivery-service-ending.html https://www.nytimes.com/2019/06/11/business/amazon-restauran... > Since it started in Seattle in 2015, Amazon Restaurants has struggled to gain a foothold in the restaurant delivery market. Together, UberEats, Grubhub and DoorDash control nearly 80 percent of the restaurant delivery business, according to the research firm Edison Trends. > Still, Amazon Restaurants is unlikely to be the company’s last venture into restaurant delivery. Earlier this year, Amazon invested heavily in Deliveroo, signaling its sees long-term interest in the area.
- DoreenMichele 6y ago
  A lot of things that typically fall under the heading "women's work" are tough to make profitable as a business. This includes food prep and child care. Restaurants have notoriously slim margins. Yes, there are many restaurants on the planet. But it's a tough business. Adding delivery or what not just makes it tougher. What you are describing is like a personal chef, which is out of the price range of most people. (Or it's called a full-time wife, which is also out of the price range of most people these days.)
  - baxtr 6y ago
    Thanks. That was sad and insightful at the same time!
analyst74 6y ago
Is running your own delivery system actually cheaper? I can see it being the case if you already have scale, but assuming deliveroo collects 1 billion in fees from 100 thousand restaurants, for an average restaurant, it's 10 thousand per year, that is not a lot of money for setting up a delivery system. Provided, delivery being expensive is probably the reason most restaurants didn't offer that option before. And those who started off as delivery-first probably optimized their business to have the delivery cost in mind, like picking a cheaper location to save on rent (one of my favorite pizza place is in a shady back alley), reduce menu size to optimize kitchen efficiency, increase price to ensure profitability, etc. For a dine-in focused restaurant to offer delivery option profitably, their incremental revenue needs to be greater than the incremental costs. If a restaurant is not operating at capacity, their incremental cost of more orders is low; if a restaurant needs to expand capacity to fulfill new online orders, then the math becomes more muddy, is it just hiring more kitchen staff? does it require more equipment? does it require more kitchen space or even a completely separate kitchen?
- bertil 6y ago
  > Is running your own delivery system actually cheaper? For two reasons: really not. Deliveroo barely promisses to make a profit and that’s with a lot of things for them. 1. It’s surprisingly complicated to run that kind of service. They key issue is schedule: sure, if you have a couple of cousins of yours on mopeds, that’s simple enough but that has no economies of scale. If you want to have 15 people, your sanity will be challenged whether you try to use pen, paper & text messages or dedicated scheduling tools. 2. Scale is everything. More specifically, if you deliver from one restaurant, half of the time, your riders are coming back empty. That really lowers your effectiveness. Deliveroo works by having many restaurants and many customers spread out so that a bike can pick up from a restaurant that is closer. If you want more details on the numbers, I‘ve answered lower in the thread: https://news.ycombinator.com/item?id=23292414 https://news.ycombinator.com/item?id=23292414 > If a restaurant is not operating at capacity, their incremental cost of more orders is low; if a restaurant needs to expand capacity to fulfill new online orders Most restaurants can easily increase how many meals they serve if they know about it days ahead. The market for fast-order cooks and front-of-house personal is fairly liquid (shockingly so); tables not expandable especially at peak shift. A way you can see that is how enthusiastically restaurants expand their terrasse as soon as it’s possible — there’s never a second kitchen that opens in the back alley to match. Deliveries were leveraging existing capacity most of the time. “Dark kitchen” or delivery-only kitchens were suggested exclusively to be closer to customers.
nwienert 6y ago
I’ve been building a better Yelp of sorts, trying to do a variety of things to basically fix ratings and have a great app for finding food even down to the dish. We’ve been working on it for a few months and are getting close to a beta. But I’m starting to think we may look at building out a “Shopify” market for restaurants. You handle the delivery but we still give end users a consistent experience and single nice app. If you or anyone reading is interested even in just giving some feedback, we’ve gotten quite far and would love to work with one or two more really great developers. I really do think many restaurants would be happier like this: they already manage staff and do support, and down the road we could add on interesting collaborative tools for them to share drivers.
- tedmcory77 6y ago
  I think Kevin Rose looked into recommendations at the dish level with a startup (milk?). You might consider checking to see if he posted any lessons learned.
  - nwienert 6y ago
    Really appreciate the heads up, I’ll reach out.
- bhauer 6y ago
  > We’ve been working on it for a few months and are getting close to a beta. But I’m starting to think we may look at building out a “Shopify” market for restaurants. You handle the delivery but we still give end users a consistent experience and single nice app. Sounds cool. Take a look at ChowNow, which is a bit similar to that description, if you've not already.
alexashka 6y ago
I don't know why there isn't an app that simply only lets you order from places that are within 30 min walking distance. (I don't know why this isn't written in law - having someone drive more than a few minutes to deliver you food should be considered a crime against humanity because it is so dumb, inefficient and demeaning to those involved) That way people on bikes, mopeds, whatever can do the delivery and it's fast, easy and cheap for everyone involved. The people making the deliveries have to live within a specific radius of you and the delivery spot, that way people in affluent neighbourhoods get paid more to deliver, because it costs more to live in that neighbourhood and people who live in poorer neighbourhoods, get paid less. You know where I'm going with this - it should be teenagers and college/uni students doing these deliveries part time, not grown adults. We as a society should be moving beyond menial labor, not creating new 'gig economies' that prey on folks who have trouble finding stable jobs because we've optimized away any semblance of community and dignity in exchange for billionaire mansions and yachts.
koolhead17 6y ago
How difficult it is to build a B2B, white labeled software and charge as subscription for these shops? These shops can market the link on social media and yellow pages? Is it because Deliveroo also is the default source for online order making customers? Curious.
mcv 6y ago
In Amsterdam, plenty of small pizzerias also have or had their own delivery. It doesn't sound that hard to do. And especially with the Corona crisis, turning your waitstaff into deliverers sounds like an obvious solution. That seems to be what a lot of restaurants here have done. Of course we also have Deliveroo, Uber Eats, and of course our home-grown giant Thuisbezorgd (though I think Thuisbezorgd restaurants still do their own delivery, though they too have recently been complaining that Thuisbezorgd is raising their margins too much). But it seems to me that if those are more expensive to a restaurant, the restaurant should raise their prices only for those orders. Let the customer swallow the extra cost of the expensive delivery. That way you get cost transparency and fair competition between different options, and restaurants will get their share.

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.
    - true_religion 6y ago
      They also change prices so you pay higher costs per item just by using Doordash.
    - KoftaBob 6y ago
      Agreed. In an ideal world, whatever costs associated with delivery should be completely borne by the customer, not the restaurant. If the restaurant isn't the one providing the actual delivery, the service provided provides most of the benefit to the customer, and it should be us customers that pay for the convenience. This reminds me of the debate around NYC banning landlords from forcing tenants to pay brokers fees. The landlords are the ones benefitting the most from brokers' services, and should bear the brunt of the cost. I'm curious to see if any cities/states take a similar approach with food delivery and prohibit delivery companies from charging the restaurants themselves fees.
      - tomp 6y ago
        Technically UberEats etc aren’t charging the restaurants for delivery, but for marketing - “you’ll get more orders by being on our platform” - at least that’s how they’re selling it, and I suspect it’s true at least for some restaurants
  - Larrikin 6y ago
    They do not. There's a nebulous category that fluctuates. My credit card currently has a deal with door dash they made to kill grub hub so that delivery fees are covered yet there is still a seemingly small random service fee tacked on. I feel bad for grub hub but I absolutely will take vc money propping up a failing business. I usually check all the apps and the restaurants website before putting in an order to account for different menu prices
rubber_duck 6y ago
>Not sure if they take an extra fee on top of the "pre-delivery price" or how does it work. Not sure about those but others in my country do - I've talked to a restaurant owner here - he has two companies with marked up prices for the same menu to get arround the app policy that prices must be the same as buying directly from vendor, if you order directly from him it's ~20% cheaper. That's on top of explicit delivery fee.
Erwin 6y ago
Same debate happens here in Europe for Just-Eat (originally Danish), and Wolt (bike courier, originally Finnish). There's a cut taken from the restaurant separate from the delivery fee visible.

antisthenes 6y ago

With an industry that runs on ~10% margins (and lower in many cases), how could one possibly imagine a 30% cut to fees being workable?

topkai22 6y ago
Costs don't scale linear with the production of more meals. If the variable costs (like food and staff) are lower than or roughly equal to the fixed costs (like rent) then 30% off the face price of food might be still be a money making proposition. That being said, it's becoming increasingly clear that restaurants and delivery services need to be co-designing to make widespread delivery work long term.
itake 6y ago
Increased prices :). Consumers are paying more than 30% more for delivery.

baxtr 6y ago

I wonder a bit why there is no player like amazon in the food business. I mean a completely integrated one from buying ingredients to cooking to delivering.

kevingadd 6y ago
As the article notes, Amazon tried it and bailed out (presumably because it was not worth the trouble)
mikeiz404 6y ago
For reference: > Amazon, a company that many would consider an expert in e-commerce and logistics, tested the market and left about a year ago. https://www.nytimes.com/2019/06/11/business/amazon-restaurant-delivery-service-ending.html https://www.nytimes.com/2019/06/11/business/amazon-restauran... > Since it started in Seattle in 2015, Amazon Restaurants has struggled to gain a foothold in the restaurant delivery market. Together, UberEats, Grubhub and DoorDash control nearly 80 percent of the restaurant delivery business, according to the research firm Edison Trends. > Still, Amazon Restaurants is unlikely to be the company’s last venture into restaurant delivery. Earlier this year, Amazon invested heavily in Deliveroo, signaling its sees long-term interest in the area.
DoreenMichele 6y ago
A lot of things that typically fall under the heading "women's work" are tough to make profitable as a business. This includes food prep and child care. Restaurants have notoriously slim margins. Yes, there are many restaurants on the planet. But it's a tough business. Adding delivery or what not just makes it tougher. What you are describing is like a personal chef, which is out of the price range of most people. (Or it's called a full-time wife, which is also out of the price range of most people these days.)
- baxtr 6y ago
  Thanks. That was sad and insightful at the same time!

analyst74 6y ago

Is running your own delivery system actually cheaper? I can see it being the case if you already have scale, but assuming deliveroo collects 1 billion in fees from 100 thousand restaurants, for an average restaurant, it's 10 thousand per year, that is not a lot of money for setting up a delivery system. Provided, delivery being expensive is probably the reason most restaurants didn't offer that option before. And those who started off as delivery-first probably optimized their business to have the delivery cost in mind, like picking a cheaper location to save on rent (one of my favorite pizza place is in a shady back alley), reduce menu size to optimize kitchen efficiency, increase price to ensure profitability, etc. For a dine-in focused restaurant to offer delivery option profitably, their incremental revenue needs to be greater than the incremental costs. If a restaurant is not operating at capacity, their incremental cost of more orders is low; if a restaurant needs to expand capacity to fulfill new online orders, then the math becomes more muddy, is it just hiring more kitchen staff? does it require more equipment? does it require more kitchen space or even a completely separate kitchen?

bertil 6y ago
> Is running your own delivery system actually cheaper? For two reasons: really not. Deliveroo barely promisses to make a profit and that’s with a lot of things for them. 1. It’s surprisingly complicated to run that kind of service. They key issue is schedule: sure, if you have a couple of cousins of yours on mopeds, that’s simple enough but that has no economies of scale. If you want to have 15 people, your sanity will be challenged whether you try to use pen, paper & text messages or dedicated scheduling tools. 2. Scale is everything. More specifically, if you deliver from one restaurant, half of the time, your riders are coming back empty. That really lowers your effectiveness. Deliveroo works by having many restaurants and many customers spread out so that a bike can pick up from a restaurant that is closer. If you want more details on the numbers, I‘ve answered lower in the thread: https://news.ycombinator.com/item?id=23292414 https://news.ycombinator.com/item?id=23292414 > If a restaurant is not operating at capacity, their incremental cost of more orders is low; if a restaurant needs to expand capacity to fulfill new online orders Most restaurants can easily increase how many meals they serve if they know about it days ahead. The market for fast-order cooks and front-of-house personal is fairly liquid (shockingly so); tables not expandable especially at peak shift. A way you can see that is how enthusiastically restaurants expand their terrasse as soon as it’s possible — there’s never a second kitchen that opens in the back alley to match. Deliveries were leveraging existing capacity most of the time. “Dark kitchen” or delivery-only kitchens were suggested exclusively to be closer to customers.

nwienert 6y ago

I’ve been building a better Yelp of sorts, trying to do a variety of things to basically fix ratings and have a great app for finding food even down to the dish. We’ve been working on it for a few months and are getting close to a beta. But I’m starting to think we may look at building out a “Shopify” market for restaurants. You handle the delivery but we still give end users a consistent experience and single nice app. If you or anyone reading is interested even in just giving some feedback, we’ve gotten quite far and would love to work with one or two more really great developers. I really do think many restaurants would be happier like this: they already manage staff and do support, and down the road we could add on interesting collaborative tools for them to share drivers.

tedmcory77 6y ago
I think Kevin Rose looked into recommendations at the dish level with a startup (milk?). You might consider checking to see if he posted any lessons learned.
- nwienert 6y ago
  Really appreciate the heads up, I’ll reach out.
bhauer 6y ago
> We’ve been working on it for a few months and are getting close to a beta. But I’m starting to think we may look at building out a “Shopify” market for restaurants. You handle the delivery but we still give end users a consistent experience and single nice app. Sounds cool. Take a look at ChowNow, which is a bit similar to that description, if you've not already.

alexashka 6y ago

I don't know why there isn't an app that simply only lets you order from places that are within 30 min walking distance. (I don't know why this isn't written in law - having someone drive more than a few minutes to deliver you food should be considered a crime against humanity because it is so dumb, inefficient and demeaning to those involved) That way people on bikes, mopeds, whatever can do the delivery and it's fast, easy and cheap for everyone involved. The people making the deliveries have to live within a specific radius of you and the delivery spot, that way people in affluent neighbourhoods get paid more to deliver, because it costs more to live in that neighbourhood and people who live in poorer neighbourhoods, get paid less. You know where I'm going with this - it should be teenagers and college/uni students doing these deliveries part time, not grown adults. We as a society should be moving beyond menial labor, not creating new 'gig economies' that prey on folks who have trouble finding stable jobs because we've optimized away any semblance of community and dignity in exchange for billionaire mansions and yachts.

koolhead17 6y ago

How difficult it is to build a B2B, white labeled software and charge as subscription for these shops? These shops can market the link on social media and yellow pages? Is it because Deliveroo also is the default source for online order making customers? Curious.

mcv 6y ago

In Amsterdam, plenty of small pizzerias also have or had their own delivery. It doesn't sound that hard to do. And especially with the Corona crisis, turning your waitstaff into deliverers sounds like an obvious solution. That seems to be what a lot of restaurants here have done. Of course we also have Deliveroo, Uber Eats, and of course our home-grown giant Thuisbezorgd (though I think Thuisbezorgd restaurants still do their own delivery, though they too have recently been complaining that Thuisbezorgd is raising their margins too much). But it seems to me that if those are more expensive to a restaurant, the restaurant should raise their prices only for those orders. Let the customer swallow the extra cost of the expensive delivery. That way you get cost transparency and fair competition between different options, and restaurants will get their share.