4 ms·

>Seems like a solid move Are any of these food delivery companies even making money? What will capping their fees do except make them lose even more?

atonse 6y ago
I'm just reading more that this business model was never going to work the way it is right now given the thin margins in restaurants and the cost of delivery drivers. With automation, it might change the economics. I think that's what everyone's betting on. I think the Ubers and all are just trying their damndest to not completely drown until driver automation reaches a certain stage. They obviously can't openly say that because there would be revolts from their drivers.
- ghaff 6y ago
  >They obviously can't openly say that because there would be revolts from their drivers. Uber at least has been quite explicit about that. It's somewhere between delusional and what's known in the vernacular as "lying" but investors who are either naive or are cynically bought into the greater fool theory lap it up. Delivery specifically can work in dense areas but it mostly relies on local kids or family members working for peanuts and can't really pay for overpriced SV engineers or VC yachts.
Nextgrid 6y ago
Food delivery worked for decades when it was done by the restaurant itself so worst-case scenario we wouldn't lose much as these companies go bankrupt and we go back to restaurant-provided delivery. In fact, with all their tech and economies of scale, I'm surprised food delivery services are doing worse in terms of per-unit profitability than the low-tech restaurant-provided ones despite already charging excessive fees. I guess the reason is that the various venture capital firms poisoned their own well by subsidizing the services and competing at below-cost pricing.
- paulgb 6y ago
  You're right, and that's why I'm genuinely confused by what's going on. Restaurant delivery used to be a healthy market that didn't need to eat up external capital. Now we have a situation where: - Restaurants say they are paying too much. - Delivery companies are losing money. - Customers are paying fees to the sites in addition to the delivery cost we used to pay. What gives? It seems these can't all be true.
  - marcinzm 6y ago
    In NYC I'm guessing most restaurants paid illegal immigrants in cash to deliver for them. Not sure about elsewhere. That lowers the cost a lot versus having a legitimate delivery business with legal workers and taxes.
  - belltaco 6y ago
    Add to that drivers complaining that they're getting exploited. But yes, all of those can be true. Paying someone for 30 to 45 minutes of their time is expensive.
    - paulgb 6y ago
      > Paying someone for 30 to 45 minutes of their time is expensive. Definitely, but this was also the case before Uber Eats et al.
      - belltaco 6y ago
        It's not the same though, because the costs are reduced by two things at places like Pizza joints and Chinese restaurants. First, every trip by a driver would include multiple deliveries, which is very rare with Uber Eats style delivery. Secondly all of the drivers would wait and drive back to a single restaurant, eliminating the time needed for a driver to drive to the restaurant from their spot. Not to mention that crazy high costs of developing, running and maintaining slick apps that work for all restaurants, restaurant and customer acquisition, and tech support. Those costs have to be made up somehow.
r0maia 6y ago
Who should be losing money? The delivery apps or the restaurants?
- cocoa19 6y ago
  Neither, a business that loses money is not a business.

atonse 6y ago

I'm just reading more that this business model was never going to work the way it is right now given the thin margins in restaurants and the cost of delivery drivers. With automation, it might change the economics. I think that's what everyone's betting on. I think the Ubers and all are just trying their damndest to not completely drown until driver automation reaches a certain stage. They obviously can't openly say that because there would be revolts from their drivers.

ghaff 6y ago
>They obviously can't openly say that because there would be revolts from their drivers. Uber at least has been quite explicit about that. It's somewhere between delusional and what's known in the vernacular as "lying" but investors who are either naive or are cynically bought into the greater fool theory lap it up. Delivery specifically can work in dense areas but it mostly relies on local kids or family members working for peanuts and can't really pay for overpriced SV engineers or VC yachts.

Nextgrid 6y ago

Food delivery worked for decades when it was done by the restaurant itself so worst-case scenario we wouldn't lose much as these companies go bankrupt and we go back to restaurant-provided delivery. In fact, with all their tech and economies of scale, I'm surprised food delivery services are doing worse in terms of per-unit profitability than the low-tech restaurant-provided ones despite already charging excessive fees. I guess the reason is that the various venture capital firms poisoned their own well by subsidizing the services and competing at below-cost pricing.

paulgb 6y ago
You're right, and that's why I'm genuinely confused by what's going on. Restaurant delivery used to be a healthy market that didn't need to eat up external capital. Now we have a situation where: - Restaurants say they are paying too much. - Delivery companies are losing money. - Customers are paying fees to the sites in addition to the delivery cost we used to pay. What gives? It seems these can't all be true.
- marcinzm 6y ago
  In NYC I'm guessing most restaurants paid illegal immigrants in cash to deliver for them. Not sure about elsewhere. That lowers the cost a lot versus having a legitimate delivery business with legal workers and taxes.
- belltaco 6y ago
  Add to that drivers complaining that they're getting exploited. But yes, all of those can be true. Paying someone for 30 to 45 minutes of their time is expensive.
  - paulgb 6y ago
    > Paying someone for 30 to 45 minutes of their time is expensive. Definitely, but this was also the case before Uber Eats et al.
    - belltaco 6y ago
      It's not the same though, because the costs are reduced by two things at places like Pizza joints and Chinese restaurants. First, every trip by a driver would include multiple deliveries, which is very rare with Uber Eats style delivery. Secondly all of the drivers would wait and drive back to a single restaurant, eliminating the time needed for a driver to drive to the restaurant from their spot. Not to mention that crazy high costs of developing, running and maintaining slick apps that work for all restaurants, restaurant and customer acquisition, and tech support. Those costs have to be made up somehow.

r0maia 6y ago

Who should be losing money? The delivery apps or the restaurants?

cocoa19 6y ago
Neither, a business that loses money is not a business.