8 ms·

UberEats lost $3.36 per order and would continue do so for next5 years

76 points by zoolander2 6y ago

buboard 6y ago
SliceLine did it better
- s09dfhks 6y ago
  sick reference
adamnemecek 6y ago
Capitalism evolved into socialism. The free market started subsidizing meels-on-wheels.
- deleted 6y ago
  [deleted]
- deleted 6y ago
  [deleted]
- devalgo 6y ago
  Subsidized for who though? It's not clear that the consumers, the restaurants or the Drivers are actually getting a good deal here.
  - roflulz 6y ago
    consumers get it cheaper than it should actually cost? restaurants get to sell more volume during covid, otherwise there's no way they'd have the volume to support staying open, and drivers are getting paid for something that normally wouldn't be a viable thing, I don't think many are leaving better opportunities, otherwise, they wouldn't do it...
    - devalgo 6y ago
      Have you used any of these apps? Delivery Fee + Servicing Fees + Driver Tip is usually minimum +20% on your order total. How is that cheaper? Restaurants have to pay a flat % to the Apps and this usually crushes their profit even with volume. Do we even need to argue that Uber drivers are getting a good deal? Car maintenance + lack of benefits usually leaves them making minimum wage or worse. It's A job but I don't think anyone is saying its a Good one.
- tgv 6y ago
  Not really. Socialism was supposed to be sharing production means. This is just an attempt at monopolizing a cut-throat market.
- Melting_Harps 6y ago
  > Capitalism evolved into socialism. The free market started subsidizing meels-on-wheels. More like: VC's headlong approach to funding everything under the sun in order to maintain some semblance of ROI is what led to this. The fact that they squander so much fiat is with nearly no repercussions, and little change to the order of things is the real astonishing part [1] as Misra lost $18 billion last year (a Historical record for Softbank) and still got a pay raise! VC's are operating just like Banks did in 2008, which helps re-enforce my argument that they too have become banks. Misra is former Deutsche Bank Debt trader and their wasteful and parasitic models are being deployed in this space and creating the forth that leads to bubbles and busts that distort the real innovation happening and often ignotring those smaller but valuable venture worth funding in exchange for short-term gains that seem to only generate losses. The real winners are Companies like Square who sold their (obsolete) products to companies like Doordash flush with VC money and use it to invest into Bitcoin and its related infrastructure as well as studies for UBI as its clear the World will need it moving forward. There is nothing humane about what any of these food delivery apps does or represents (just go look at their subreddits) which perhaps does align with socialist theories when put into practice--I've lived in and worked in what was former Yugoslavia and former Soviet satellites nations to realize what it really looks like and its usually the same paradigm of an overworked, underpaid and exploited underclass. That work culture never changed. Anyone wanting to revert to that is welcome to do so in my opinion, and that usually looks like what you see working in a warehouse for Amazon. 1: https://www.forbes.com/sites/sergeiklebnikov/2020/05/29/softbank-vision-fund-ceo-gets-113-pay-raise-despite-massive-losses/#6fd9d4724833 https://www.forbes.com/sites/sergeiklebnikov/2020/05/29/soft...
  - Apocryphon 6y ago
    Why is Square obsolete, in your opinion?
    - Melting_Harps 6y ago
      Caviar was/is obsolete in a race to the bottom type approach for Marketshare so getting nearly Half a billion for it in cash to invest into Bitcoin based business development was shrewd and pragmatic, I hope they bought the 3k dip we had earlier this year with most of the cash flow they had. I'm a big fan of Square/Cash and Jack Dorsey in general, as can be seen given a quick look of my post History. Even if they did shut down my early-adopter Cash account for no reason or explanation.
SeeDave 6y ago
UberEats is a real head-scratcher as almost all of the key players, from my perspective, have expressed dissatisfaction to some extent: 1. Restaurants as UberEats charges a fee often greater than the restaurant's own profitability 2. Restaurants as there is a real fear that Uber is gathering data for customer tastes/habits to then give priority to CloudKitchens™ or some other variant on commissary kitchen/virtual restaurants 3. Customers who are shocked by the fully-loaded cost (menu, fee, delivery, tip) 4. Drivers as they barely earn a living wage and put considerable wear and tear on their vehicles 5. Potential investors due to heavy losses generated by subsidizing this entire operation 6. White collar Employees as they are baited/strung along with generous RSU grants to then be overworked at a pace which would make a full vesting impossible This is really strange because the Indian Dabbawala[0] industry has been operating continuously for 100+ years and one would think that across-the-board PPP/COL adjustments would allow for similar sustainability. Is there any other industry where almost 100% of everyone involved is currently miserable or are at risk of being disappointed by long-run results? [0] https://en.wikipedia.org/wiki/Dabbawala https://en.wikipedia.org/wiki/Dabbawala
- teruakohatu 6y ago
  On the other hand a friend of mine loves driving for Uber Eats, his friends who drive also love the company, and he thinks he has been especially well treated by the company during COVID. As soon as deliveries were allowed to resume in New Zealand Uber gave drivers a significant temporary increase in earnings to help them make up for lost earnings during our lockdown when food delivery was banned. As far as I know customers were not charged more so I guess VCs were funding New Zealand drivers. The detractors might argue friend is being taken advantage of and just doesn't realise it. He thinks otherwise.
  - kiwidrew 6y ago
    You're not wrong about VCs funding the New Zealand drivers; the fact that there's an "excess driver incentives" line item in the Uber 10-K is proof enough! My flatmate is an Uber Eats driver and didn't receive anything extra from Uber during or after the lockdown. Do you have any further info about the "significant temporary increase in earnings" that Uber provided?
tracker1 6y ago
Is part of the problem not reading the mythical man month, and trying to hire your way out of problems that don't work that way. I honestly don't get why there would be more than around 25-30 software developers working for Uber, generally speaking. I mean other resources around them, sure... Many companies will be stuck needing things done, hire teams and teams of new developers and things will only fall farther behind as a result. Instead of more designers, ux, management, leadership, review, marketing ahead of development so a clear experience is defined for a given project, they try to divide into more developer teams each bottle-necked more than if there were just fewer dev teams. Meanwhile, so much money is spent trying to get the smallest uplift in efficiencies when the problems tend to be systematic. --- I mean to exclude certain things like self-driving cars that should be a separate sub-company. Also, a bit off... since a team of 4-5 developer per device category or platform interest. api, web-ui, ios-ui, android-ui, 2x data-services, driver-devices, restaurant-devices, support-apps, 2x admin-apps/reporting (still talking well under 100).
- wolco 6y ago
  Are they still working on self driving cars? That will push the headcount up. For each developer you have project managers, product owners, database admins, techs, ba/technical ba, qa. Not to mention probably a big legal team. Nevermind marketing / ui/ux guys or guys doing reporting or people internal tools.
  - tracker1 6y ago
    imo, self-driving cars should probably be a separate company owned by the parent... and likely is, and doesn't even apply to the thousands of developers alone they are stafing. And for each developer there is probably 1:1 for other staff... in my experience for a team of 4 devs, you usually get 1/2 time for a PM, 1/2 time for an owner, a QA, 1/3-1/4 dba and a BA and maybe 1/4 time of a designer. The primary application could probably do very well with 3-5 dedicated teams to portions of the application with less general conflict and bottlenecking... The support staff would need to scale to meet the larger demands though. Given their funding, even top-tier engineers at $250-300k (Northern California) base would still be less expensive than hundreds or thousands of developers. Putting the self-driving car research into a separate company. The site is not THAT complex, and they are, or should be leveraging a number of existing tools. They probably have a byzantine codebase that takes days to make what should be a 15 minute change at this point because of the shear numbers.
sailfast 6y ago
How much of the overall investment was done in the hopes that some level of autonomy would turn all these minuses into pluses within a couple years? I get investing in a loser if there’s key enabling tech like this “in the pipeline” but it sounds like even then the math is a bit backward. Quote from the article: > “At some point, delivery drones and robots may reduce the cost of fulfillment, but it will be a long time before the capital costs and ongoing operating expenses are less than the cost of paying someone for 30-45 minutes of their time.”
deanCommie 6y ago
> “Bottom line is that you need to pay someone enough money to drive to the restaurant, pick up food and drive it to a diner. . . ,” the company wrote. “At some point, delivery drones and robots may reduce the cost of fulfillment, but it will be a long time before the capital costs and ongoing operating expenses are less than the cost of paying someone for 30-45 minutes of their time.” Key point here. Even if you are expecting that these drivers are making minimum wage and your operating costs are zero and they have to maintain their bikes/vehicles out of their own pocket, that's still 7.50-11.25$ per order. Which is not something people would be willing to pay for a 20-30$ food order. Hell, I'd say even for a 100$ order people would balk at because they're used to it being free. We are approaching a reckoning as a society where we need to understand the "true cost" of our choices. I think the only way you can make door-to-door food delivery financially viable is with A) delivery drones, and B) massive centralized kitchens.
- Barrin92 6y ago
  >We are approaching a reckoning as a society where we need to understand the "true cost" of our choices. the much scarier question is why investors apparently don't understand this rather simple fact and keep pumping ungodly sums of money into these ventures says a lot about the level of general innovation in our society
  - MattGaiser 6y ago
    If the move to the centralized kitchens and turn burgers into a commodity product, then I can see Uber being highly profitable. Costs can fall.
    - kmonsen 6y ago
      Right, then you can optimize the delivery with routes to several customers as well. And they can make food that handles delivery better etc. But that is not what is happening now.
      - Melting_Harps 6y ago
imtringued 6y ago
It doesn't work because the delivery driver isn't delivering multiple orders at once.
- TYPE_FASTER 6y ago
  If that's the case, then everything makes sense to me now, except why they would do that.
  - neltnerb 6y ago
    Optimizing for rapidly growing the customer base (both restaurants and diners) over short term profitability. It's understandable, if a terrible actual plan. I guess they feel they have to grow fast enough that people don't just ignore them and order directly like we used to and probably will again soon. Some restaurants won't do delivery anymore, just like it was until recently, and if they want to get into it then the smart people with actual local experience can decide if it makes sense or not.
Havoc 6y ago
>unworkable business model That's not the right conclusion. The model is fine - you just jack up the price by 5 bucks and you're done. Lose some customers, but remainder is likely break even. That -3.36 is a result of VC money pushing to companies to go head to head in a race to the bottom that isn't capped to zero. That simple fact distorts everything. It's _NOT_ a problem with the model of sticking a burger on a bicycle. Look at the bike couriers in NYC - physically this can work and there are probably a fair number of people willing to pay +5.
- puranjay 6y ago
  I've said this before but I really don't see any reason whatsoever why UberEats has to be a nationwide, or heck, even a statewide thing. This market can benefit a great deal from local players who serve just one or a handful of cities. Keep the tech simple to keep costs low. Don't need to invest in any $250k/year data scientists since you won't have a great deal of data to work with anyway (given the small scale). Lower costs means you can give restaurants and drivers a bigger cut as well. Most people who will use your app will be local residents. They don't need an app that can help them order in 500 cities across the world - they need an app that can help them order in just their city.
  - pedrocr 6y ago
    Local services like that have existed for decades. They usually have poor websites or even phone ordering, often don't have an app, and the payment methods can be behind the times. But they have always worked fine. The new wave of VC-funded services are trying to grab away the market with both much better UX and subsidizing the deliveries. It's just that no one seems to have a viable plan to exit that phase and be profitable. Meanwhile the traditional services are being edged out of the market. I don't know how this doesn't trip up more fair competition laws because of that.
    - puranjay 6y ago
      We've come to a point where the tech and UX has been commoditized enough that putting together a functional app with rock solid payment infrastructure isn't technically challenging. VC money might have pushed smaller players out of the market, but I suspect they might make a comeback soon enough
stefap2 6y ago
They will make it up on volume.
MattGaiser 6y ago
I'm really surprised that UberEats doesn't try and pull a cruise line type thing, where they have a massive central kitchen and just churn out vast quantities fairly standard food.
- puranjay 6y ago
  Cruise line customers generally don't have hundreds of nearby restaurants to choose from.
dang 6y ago
This submission broke the site guidelines by using the title to editorialize. Please don't do that. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=by%3Adang%20%22level%20playing%20field%22&sort=byDate&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu....
- lhorie 6y ago
  Also, the title isn't even factually correct. The sentence from the article is "In August 2019, analysts from the investment firm Cowen estimated that Uber Eats was losing $3.36 on every order and would continue to lose money on every order for the next five years". It's an estimation from a third-party, not official numbers.
curiousllama 6y ago
I'm incredibly sad that the era of VCs wildly subsidizing my millenial lifestyle is coming to a close.
lordnacho 6y ago
The thesis that you can grab market share and then use it to make profits doesn't work in this case. There's no reason why the customer needs your particular delivery service. Even in a last-man-standing scenario, that last service is competing with a note delivered with every meal that says "please order direct". I looked into starting a restuarant and it made no sense to me to pay 30% of the meal price to a third party. The breakdown I got from my friend who runs a sushi delivery service in central London is roughly 25% fish, 25% rent / utilities, 30-40% labor. And that's when things are going well, you die if the chefs waste a few % more fish, or if a few people less a day come to order your food. So there's no space for a 30% cut. Why anyone does it, I'm not sure. Perhaps it is to do with maintaining market share, or making sure your ingredients are used. Of course it's also true that the fish is the only part of that budget that is roughly linear with the number of orders, so maybe the restaurants also fall into a trap of saying they'll try to boost the 45% remaining with volume.
jpalomaki 6y ago
Deliveries could be more efficient if kitchens were centralized. It is inefficient to pick from multiple locations. Maybe you could just have larger kitchens, preparing different types of food under different brands.
lukevdp 6y ago
I couldn’t tell from the article, but is the 3.36 loss on unit economics, or the loss of the company as a whole per order?
Jommi 6y ago
It's always great seeing tons of HN commenters never really realising the potential completely valid reasons a VC would fund a business like this. It feels in part fueled by the media and general anti-VC thing that's going on.

76 points by zoolander2 6y ago

buboard 6y ago

SliceLine did it better

s09dfhks 6y ago
sick reference

adamnemecek 6y ago

Capitalism evolved into socialism. The free market started subsidizing meels-on-wheels.

deleted 6y ago
[deleted]
deleted 6y ago
[deleted]
devalgo 6y ago
Subsidized for who though? It's not clear that the consumers, the restaurants or the Drivers are actually getting a good deal here.
- roflulz 6y ago
  consumers get it cheaper than it should actually cost? restaurants get to sell more volume during covid, otherwise there's no way they'd have the volume to support staying open, and drivers are getting paid for something that normally wouldn't be a viable thing, I don't think many are leaving better opportunities, otherwise, they wouldn't do it...
  - devalgo 6y ago
    Have you used any of these apps? Delivery Fee + Servicing Fees + Driver Tip is usually minimum +20% on your order total. How is that cheaper? Restaurants have to pay a flat % to the Apps and this usually crushes their profit even with volume. Do we even need to argue that Uber drivers are getting a good deal? Car maintenance + lack of benefits usually leaves them making minimum wage or worse. It's A job but I don't think anyone is saying its a Good one.
tgv 6y ago
Not really. Socialism was supposed to be sharing production means. This is just an attempt at monopolizing a cut-throat market.
Melting_Harps 6y ago
> Capitalism evolved into socialism. The free market started subsidizing meels-on-wheels. More like: VC's headlong approach to funding everything under the sun in order to maintain some semblance of ROI is what led to this. The fact that they squander so much fiat is with nearly no repercussions, and little change to the order of things is the real astonishing part [1] as Misra lost $18 billion last year (a Historical record for Softbank) and still got a pay raise! VC's are operating just like Banks did in 2008, which helps re-enforce my argument that they too have become banks. Misra is former Deutsche Bank Debt trader and their wasteful and parasitic models are being deployed in this space and creating the forth that leads to bubbles and busts that distort the real innovation happening and often ignotring those smaller but valuable venture worth funding in exchange for short-term gains that seem to only generate losses. The real winners are Companies like Square who sold their (obsolete) products to companies like Doordash flush with VC money and use it to invest into Bitcoin and its related infrastructure as well as studies for UBI as its clear the World will need it moving forward. There is nothing humane about what any of these food delivery apps does or represents (just go look at their subreddits) which perhaps does align with socialist theories when put into practice--I've lived in and worked in what was former Yugoslavia and former Soviet satellites nations to realize what it really looks like and its usually the same paradigm of an overworked, underpaid and exploited underclass. That work culture never changed. Anyone wanting to revert to that is welcome to do so in my opinion, and that usually looks like what you see working in a warehouse for Amazon. 1: https://www.forbes.com/sites/sergeiklebnikov/2020/05/29/softbank-vision-fund-ceo-gets-113-pay-raise-despite-massive-losses/#6fd9d4724833 https://www.forbes.com/sites/sergeiklebnikov/2020/05/29/soft...
- Apocryphon 6y ago
  Why is Square obsolete, in your opinion?
  - Melting_Harps 6y ago
    Caviar was/is obsolete in a race to the bottom type approach for Marketshare so getting nearly Half a billion for it in cash to invest into Bitcoin based business development was shrewd and pragmatic, I hope they bought the 3k dip we had earlier this year with most of the cash flow they had. I'm a big fan of Square/Cash and Jack Dorsey in general, as can be seen given a quick look of my post History. Even if they did shut down my early-adopter Cash account for no reason or explanation.

SeeDave 6y ago

UberEats is a real head-scratcher as almost all of the key players, from my perspective, have expressed dissatisfaction to some extent: 1. Restaurants as UberEats charges a fee often greater than the restaurant's own profitability 2. Restaurants as there is a real fear that Uber is gathering data for customer tastes/habits to then give priority to CloudKitchens™ or some other variant on commissary kitchen/virtual restaurants 3. Customers who are shocked by the fully-loaded cost (menu, fee, delivery, tip) 4. Drivers as they barely earn a living wage and put considerable wear and tear on their vehicles 5. Potential investors due to heavy losses generated by subsidizing this entire operation 6. White collar Employees as they are baited/strung along with generous RSU grants to then be overworked at a pace which would make a full vesting impossible This is really strange because the Indian Dabbawala[0] industry has been operating continuously for 100+ years and one would think that across-the-board PPP/COL adjustments would allow for similar sustainability. Is there any other industry where almost 100% of everyone involved is currently miserable or are at risk of being disappointed by long-run results? [0] https://en.wikipedia.org/wiki/Dabbawala https://en.wikipedia.org/wiki/Dabbawala

teruakohatu 6y ago
On the other hand a friend of mine loves driving for Uber Eats, his friends who drive also love the company, and he thinks he has been especially well treated by the company during COVID. As soon as deliveries were allowed to resume in New Zealand Uber gave drivers a significant temporary increase in earnings to help them make up for lost earnings during our lockdown when food delivery was banned. As far as I know customers were not charged more so I guess VCs were funding New Zealand drivers. The detractors might argue friend is being taken advantage of and just doesn't realise it. He thinks otherwise.
- kiwidrew 6y ago
  You're not wrong about VCs funding the New Zealand drivers; the fact that there's an "excess driver incentives" line item in the Uber 10-K is proof enough! My flatmate is an Uber Eats driver and didn't receive anything extra from Uber during or after the lockdown. Do you have any further info about the "significant temporary increase in earnings" that Uber provided?

tracker1 6y ago

Is part of the problem not reading the mythical man month, and trying to hire your way out of problems that don't work that way. I honestly don't get why there would be more than around 25-30 software developers working for Uber, generally speaking. I mean other resources around them, sure... Many companies will be stuck needing things done, hire teams and teams of new developers and things will only fall farther behind as a result. Instead of more designers, ux, management, leadership, review, marketing ahead of development so a clear experience is defined for a given project, they try to divide into more developer teams each bottle-necked more than if there were just fewer dev teams. Meanwhile, so much money is spent trying to get the smallest uplift in efficiencies when the problems tend to be systematic. --- I mean to exclude certain things like self-driving cars that should be a separate sub-company. Also, a bit off... since a team of 4-5 developer per device category or platform interest. api, web-ui, ios-ui, android-ui, 2x data-services, driver-devices, restaurant-devices, support-apps, 2x admin-apps/reporting (still talking well under 100).

wolco 6y ago
Are they still working on self driving cars? That will push the headcount up. For each developer you have project managers, product owners, database admins, techs, ba/technical ba, qa. Not to mention probably a big legal team. Nevermind marketing / ui/ux guys or guys doing reporting or people internal tools.
- tracker1 6y ago
  imo, self-driving cars should probably be a separate company owned by the parent... and likely is, and doesn't even apply to the thousands of developers alone they are stafing. And for each developer there is probably 1:1 for other staff... in my experience for a team of 4 devs, you usually get 1/2 time for a PM, 1/2 time for an owner, a QA, 1/3-1/4 dba and a BA and maybe 1/4 time of a designer. The primary application could probably do very well with 3-5 dedicated teams to portions of the application with less general conflict and bottlenecking... The support staff would need to scale to meet the larger demands though. Given their funding, even top-tier engineers at $250-300k (Northern California) base would still be less expensive than hundreds or thousands of developers. Putting the self-driving car research into a separate company. The site is not THAT complex, and they are, or should be leveraging a number of existing tools. They probably have a byzantine codebase that takes days to make what should be a 15 minute change at this point because of the shear numbers.

sailfast 6y ago

How much of the overall investment was done in the hopes that some level of autonomy would turn all these minuses into pluses within a couple years? I get investing in a loser if there’s key enabling tech like this “in the pipeline” but it sounds like even then the math is a bit backward. Quote from the article: > “At some point, delivery drones and robots may reduce the cost of fulfillment, but it will be a long time before the capital costs and ongoing operating expenses are less than the cost of paying someone for 30-45 minutes of their time.”

deanCommie 6y ago

> “Bottom line is that you need to pay someone enough money to drive to the restaurant, pick up food and drive it to a diner. . . ,” the company wrote. “At some point, delivery drones and robots may reduce the cost of fulfillment, but it will be a long time before the capital costs and ongoing operating expenses are less than the cost of paying someone for 30-45 minutes of their time.” Key point here. Even if you are expecting that these drivers are making minimum wage and your operating costs are zero and they have to maintain their bikes/vehicles out of their own pocket, that's still 7.50-11.25$ per order. Which is not something people would be willing to pay for a 20-30$ food order. Hell, I'd say even for a 100$ order people would balk at because they're used to it being free. We are approaching a reckoning as a society where we need to understand the "true cost" of our choices. I think the only way you can make door-to-door food delivery financially viable is with A) delivery drones, and B) massive centralized kitchens.

Barrin92 6y ago
>We are approaching a reckoning as a society where we need to understand the "true cost" of our choices. the much scarier question is why investors apparently don't understand this rather simple fact and keep pumping ungodly sums of money into these ventures says a lot about the level of general innovation in our society
- MattGaiser 6y ago
  If the move to the centralized kitchens and turn burgers into a commodity product, then I can see Uber being highly profitable. Costs can fall.
  - kmonsen 6y ago
    Right, then you can optimize the delivery with routes to several customers as well. And they can make food that handles delivery better etc. But that is not what is happening now.
    - Melting_Harps 6y ago

imtringued 6y ago

It doesn't work because the delivery driver isn't delivering multiple orders at once.

TYPE_FASTER 6y ago
If that's the case, then everything makes sense to me now, except why they would do that.
- neltnerb 6y ago
  Optimizing for rapidly growing the customer base (both restaurants and diners) over short term profitability. It's understandable, if a terrible actual plan. I guess they feel they have to grow fast enough that people don't just ignore them and order directly like we used to and probably will again soon. Some restaurants won't do delivery anymore, just like it was until recently, and if they want to get into it then the smart people with actual local experience can decide if it makes sense or not.

Havoc 6y ago

>unworkable business model That's not the right conclusion. The model is fine - you just jack up the price by 5 bucks and you're done. Lose some customers, but remainder is likely break even. That -3.36 is a result of VC money pushing to companies to go head to head in a race to the bottom that isn't capped to zero. That simple fact distorts everything. It's _NOT_ a problem with the model of sticking a burger on a bicycle. Look at the bike couriers in NYC - physically this can work and there are probably a fair number of people willing to pay +5.

puranjay 6y ago
I've said this before but I really don't see any reason whatsoever why UberEats has to be a nationwide, or heck, even a statewide thing. This market can benefit a great deal from local players who serve just one or a handful of cities. Keep the tech simple to keep costs low. Don't need to invest in any $250k/year data scientists since you won't have a great deal of data to work with anyway (given the small scale). Lower costs means you can give restaurants and drivers a bigger cut as well. Most people who will use your app will be local residents. They don't need an app that can help them order in 500 cities across the world - they need an app that can help them order in just their city.
- pedrocr 6y ago
  Local services like that have existed for decades. They usually have poor websites or even phone ordering, often don't have an app, and the payment methods can be behind the times. But they have always worked fine. The new wave of VC-funded services are trying to grab away the market with both much better UX and subsidizing the deliveries. It's just that no one seems to have a viable plan to exit that phase and be profitable. Meanwhile the traditional services are being edged out of the market. I don't know how this doesn't trip up more fair competition laws because of that.
  - puranjay 6y ago
    We've come to a point where the tech and UX has been commoditized enough that putting together a functional app with rock solid payment infrastructure isn't technically challenging. VC money might have pushed smaller players out of the market, but I suspect they might make a comeback soon enough

stefap2 6y ago

They will make it up on volume.

MattGaiser 6y ago

I'm really surprised that UberEats doesn't try and pull a cruise line type thing, where they have a massive central kitchen and just churn out vast quantities fairly standard food.

puranjay 6y ago
Cruise line customers generally don't have hundreds of nearby restaurants to choose from.

dang 6y ago

This submission broke the site guidelines by using the title to editorialize. Please don't do that. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=by%3Adang%20%22level%20playing%20field%22&sort=byDate&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu....

lhorie 6y ago
Also, the title isn't even factually correct. The sentence from the article is "In August 2019, analysts from the investment firm Cowen estimated that Uber Eats was losing $3.36 on every order and would continue to lose money on every order for the next five years". It's an estimation from a third-party, not official numbers.

curiousllama 6y ago

I'm incredibly sad that the era of VCs wildly subsidizing my millenial lifestyle is coming to a close.

lordnacho 6y ago

The thesis that you can grab market share and then use it to make profits doesn't work in this case. There's no reason why the customer needs your particular delivery service. Even in a last-man-standing scenario, that last service is competing with a note delivered with every meal that says "please order direct". I looked into starting a restuarant and it made no sense to me to pay 30% of the meal price to a third party. The breakdown I got from my friend who runs a sushi delivery service in central London is roughly 25% fish, 25% rent / utilities, 30-40% labor. And that's when things are going well, you die if the chefs waste a few % more fish, or if a few people less a day come to order your food. So there's no space for a 30% cut. Why anyone does it, I'm not sure. Perhaps it is to do with maintaining market share, or making sure your ingredients are used. Of course it's also true that the fish is the only part of that budget that is roughly linear with the number of orders, so maybe the restaurants also fall into a trap of saying they'll try to boost the 45% remaining with volume.

jpalomaki 6y ago

Deliveries could be more efficient if kitchens were centralized. It is inefficient to pick from multiple locations. Maybe you could just have larger kitchens, preparing different types of food under different brands.

lukevdp 6y ago

I couldn’t tell from the article, but is the 3.36 loss on unit economics, or the loss of the company as a whole per order?

Jommi 6y ago

It's always great seeing tons of HN commenters never really realising the potential completely valid reasons a VC would fund a business like this. It feels in part fueled by the media and general anti-VC thing that's going on.