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So as I understand it Deliveroo and Uber eats charge 25% of the food costs, plus delivery fees on top. Uber eats I know is losing money and Deliveroo are losin

So as I understand it Deliveroo and Uber eats charge 25% of the food costs, plus delivery fees on top. Uber eats I know is losing money and Deliveroo are losing a few hundred million per year on revenues of about $500m. Basically cutting the food percentage like this to 10% would imply delivery services are permanently unprofitable? Why have all these restaurants signed up if 25% is so unfair?

wilde 6y ago
They haven't. Grubhub just scrapes business listings and pretends restaurants sign up. https://www.theverge.com/2020/1/29/21113876/grubhub-seamless-fake-restaurant-listings-no-permission-postmates-doordash https://www.theverge.com/2020/1/29/21113876/grubhub-seamless...
- andy_ppp 6y ago
  So people are willing to pay over inflated prices for takeaway? That’s capitalism for you...
- SeanLuke 6y ago
  If restaurants haven't signed up, then how are they getting fees from delivery services?
  - brianlweiner 6y ago
    In at least some cases ... the prices you see on grubhub may be higher than the actual prices the restaurant is charging. E.g $17.99 vs $14.99
    - chrisseaton 6y ago
      So the restaurants are getting the option of delivery and the increased customer base and advertising... for absolutely no change to themselves? And the customers who use delivery are the ones paying for it? And if they don't want to pay it they can still go straight to the restaurant who will again make the same money? Sounds like a win to absolutely everyone involved. What is everyone's problem? Why do we want to interfere with this?
      - yellow_postit 6y ago
        Option implies that restaurants can opt in/out which for cases like GrubHub isn’t possible. These apps can lead to poor experience and perception of the restaurant due to the delivery short comings and customers tend to transfer any unhappiness with the delivery as being the restaurants fault (eg late delivery and cold food).
        chrisseaton 6y ago
        > Option implies that restaurants can opt in/out which for cases like GrubHub isn’t possible. Should a manufacturer have the right to say that you can't re-sell something that you bought from them fairly? That doesn't sound great to me. If Doordash fairly buy the food then they can sell it to me (as long as they follow food regulations). That sounds fine, doesn't it?
        greenshackle2 6y ago
        If the reseller is pretty much pretending to be the manufacturer, and goes on yelp and change the manufacturer's phone number to their own.. I don't know if they have the right, but it's pretty scummy.
        YuPro 6y ago
        It shouldn't have the right to restrict re-selling but sure it's ok to have the right to not sell to somebody anymore.
        chrisseaton 6y ago
        They've already got that right.
      - 0x202020 6y ago
        I think people get lured in by no delivery fee and reduced prices originally so they order at basically the normal price. But then once the introductory prices go away and the fees go up they get mad at the restaurant, not the delivery service
    - adrianmsmith 6y ago
      What's wrong with that? If the restaurants are getting the price they want to charge, and if the customers are prepared to pay the higher price, seems everything's OK? I agree that it's scammy that grubhub etc. is pretending to be the restaurant. But if they made it clear, we are a delivery service giving you access to this restaurant, if you want to order this food you can do so for $17.99, I think everything would be fine with that business model.
      - jiofih 6y ago
        If, but that’s not what they are doing. So there’s everything wrong with that.
        adrianmsmith 6y ago
        Understood. But then the law should ban pretending to be someone else (it probably does, but evidently not effectively enough). Having a cap of x% on fees won't solve this problem. It will solve another problem which wasn't a problem in the first place.
  - empath75 6y ago
    they charge the user.
  - 0x202020 6y ago
    Like what the other person said, they increase the prices and then most people blame the restaurant. A local restaurant I get pickup from is $8.95 pre tax, curious I looked to see what delivery was and it is $11.65 pre tax and then a $4.00 delivery fee
albntomat0 6y ago
A number of anti-competitive business practices, such as offering delivery for restaurants without telling them. Previous discussion: https://news.ycombinator.com/item?id=23216852 https://news.ycombinator.com/item?id=23216852
- andrewnicolalde 6y ago
  Honest question, how is that anticompetitive?
  - ceejayoz 6y ago
    The Grubhubs of the world have substantially better SEO juice; if they start offering delivery for your restaurant, their listing is probably going to wind up above yours. Once a substantial portion of a restaurant's orders come in this way, they can cut off the flow at will. "Sign a contract with us, or these folks will go elsewhere".
- tonyarkles 6y ago
  There’s a really interesting liability question that comes along with that. If I order food from a restaurant via a delivery service that has no contractual relationship with them, and happen to get sick, who’s on the hook for that? I, legally, have no business relationship with the restaurant in that circumstance.
  - zwily 6y ago
    Legally, do you have a business relationship with a company you buy a product from on Amazon?
    - tonyarkles 6y ago
      That’s an interesting comparison! I admit it I took business law a long time ago, but I think the answer is: it depends. You’d also need to dig deep into the TOS for both the consumer side and the seller side. But ignoring the specific details, here’s my general thought process: - products sold directly by Amazon: you have products sourced through (nominally) a legitimate supply chain, where there are legal agreements for Amazon to be a distributor of the products. If the product is faulty, Amazon is likely protected by those agreements and the liability will likely ripple back to the OEM. But, Amazon sold the product to you, and depending on consumer protection laws in your jurisdiction, may ultimately be responsible if, say, the manufacturer goes out of business. - Fulfilled by Amazon: this gets trickier. In this case, it’s relatively clear that you’re not purchasing the product from Amazon, but rather from a company that has stored their product in Amazon’s warehouse. It seems to me that Amazon is less likely to be on the hook for this. - Third-party sellers: Amazon is mostly just a catalogue and payment processor in this situation, not to different than Etsy. Most likely the seller is on the hook here and not Amazon. Depending on how the seller came to acquire the product (legit supply chain or other), the manufacturer may or may not be on the hook via the distribution-agreement ripple. (For example, an independent company that refurbs broken phones and resells them on Amazon is unlikely to create liability for Samsung) In the delivery case, we’ve got an unlicensed (health inspector-wise) company distributing prepared food from a vendor they have no formal agreement with. If someone were to get sick, it seems pretty reasonable for the restaurant to shrug and say “we followed proper food handling protocols, maybe the liability should go onto the unlicensed company that bought our food, did who knows what with it, and resold it without our permission”.
josefresco 6y ago
FOMO? Most of my small business customers that experiment with new tech are simply scared of losing what they have, or envious of competitors who seemingly have more. "My competition is using it so maybe we should too?" is a common phrase heard. Add "delivery services" to the list of failed VC funded tech gambles (see Groupon) that cost small businesses dearly.
jfengel 6y ago
It's doubtful that these services are actually spending 25% of each food order on providing the service. The money goes to expansion, marketing, loss leaders, and other supposedly temporary overhead. They're hoping that when they reach scale and have eliminated competitors, they'll turn a tidy profit, the way Amazon did. It's not at all clear that they really need to spend that much money on their expansion or that they're doing so ethically, but either way, don't weep at their losses. That's not the reason they're charging so much. As for the restaurants, they're in a bind. The services that deliverers provide should be much cheaper at scale. They need somebody to do delivery and to take online orders, both of which are a hassle to set up yourself. Not impossible, but you'd expect economies of scale if you're effectively sharing a driver pool and software development cost with all of your competitors. If your competitor has a delivery service and you don't, you'll lose a lot of business. If you develop it yourself, you pay the overhead. If you buy in to the services, they have a lot of power to set prices where they want. I don't know why the delivery services aren't forced to undercut each other's prices to get the businesses. Customers don't seem to care which service they use; they have all of the apps anyway.
- andy_ppp 6y ago
  I think these things are a bit difficult to regulate though as how can the next Grubhub or whoever raise the cash to scale a competitor if you start down this road. I say on things like this let the market decide but force them to be clear about costs per order being +30% including delivery costs.
- vorpalhex 6y ago
  If you have nobody using your delivery service, you can't maintain deliver-ers. You're running a three sided marketplace in which you need to have both minimum wages and work for your delivery folks, enough orders for the restaurant to bother, and enough restaurants and ok enough prices for the consumer. That's why it's expensive. That's why you need marketing who doesn't just take out a facebook ad but literally visits and calls restaurants, IT teams to literally teach the basics to restaurants, and an ops team who can assist your delivery folks when a restaurant runs out of onion rings or accidentally slips an allergen into an order. All of that adds up real fast because you need all of those services running at all the times the business is running. Nobody is going to order from a delivery service that only gives you two options. Nobody is going to deliver for a service that only gives you two or three delivery runs a night. > economies of scale if you're effectively sharing a driver pool and software development cost with all of your competitors. The software is so cheap as to be fungible here. It's the drivers who have geographical restrictions, dynamic shifts (gig economy) and also the freedom to not take orders. If you're a runner and you know Chik-fil-a has horrendous lines all the time, you may just never want to run those orders - and in the gig economy, that's a viable choice for you. The delivery service still has to handle those cases (pay more on them, offer incentives, argue with the restaurant for a way to get orders to drivers more easily, etc). > I don't know why the delivery services aren't forced to undercut each other's prices to get the businesses. Delivery services don't generally struggle to get customers, they struggle to get and keep drivers.
muizelaar 6y ago
Why can't the delivery services just raise the delivery fee?
- aahhahahaaa 6y ago
  because they're all competing with each other by burning through VC money to monopolize the market
Proven 6y ago
The socialist busybodies in Portland want to "do something", so apart from rendering these businesses unprofitable, they are also going to put more of the relatively less skilled workers out of work, while at the same time lower the quality of life for consumers who will now be forced to find less convenient or more expensive ways to eat.
- criddell 6y ago
  The cap can be adjusted or even removed down the line. Maybe 10% is too low, too high, or maybe it's just right. It's an experiment worth trying.
  - missedthecue 6y ago
    Nothing is as permanent as a temporary government measure
  - temptosser 6y ago
    What experiment? Don’t delude yourself. Experimenting is over once the government steps in.
- deleted 6y ago
  [deleted]
- temptosser 6y ago
  Can I recommend Voat? You are the only one on this page making any sense... HN has become a socialist dystopia. I looked through your comments and I can tell you right now that we will welcome you at Voat with open arms. There is zero censorship also.
onlyrealcuzzo 6y ago
Wait. So delivery apps pay restaurants 25% less for their food. Don't they also charge customers more for the food, even before they add on service fees, delivery fees, and a tip? At least this is what I've seen recently. I look at a restaurants menu, and it will have a dish for $9. When I try to order it, Postmates & Uber Eats say the same thing is $14 (though they both agree on the price). This isn't just one restaurant. This is most restaurants I've checked in Pittsburgh. In this example, I would probably never go to the restaurant for the $14 meal. I'd go once a week for the $9 meal. This seems bad for consumers because it's tricking you on how much the food costs and how much delivery costs.
- vorpalhex 6y ago
  > So delivery apps pay restaurants 25% less for their food. No, delivery apps charge you extra and pretend it's part of the restaurant cost. If you can buy your burrito at the restaurant for $8, the delivery service is going to show you a price of $10 on the order screen (and add in their $4 delivery fee, etc).
  - jagger27 6y ago
    This is only half true. Uber in particular has a loose rule that says any prices you display online have to match what's posted on Uber Eats. I say it's loose because restaurants just raise their prices on Uber Eats anyway and not post their full menu prices online. Citation: my family runs a restaurant that has slightly higher prices on Uber Eats despite the rule against it. It wasn't Uber that set those prices though, it was us. It still doesn't fully offset the 30% haircut we're taking though.
ryan_lane 6y ago
I'm not sure how this law is a problem. There's nothing saying that the delivery services can't increase their delivery fee to make up for the amount they're skimming from the restaurant. The restaurants have a hard time competing if they don't offer delivery, but they make little to no money off the deliveries due to the high fees. The delivery companies hide their true costs by making the delivery fee seem cheap. This law simply shows the true cost of the service to customers. If the only way these companies can survive is by leeching money from restaurants with extremely slim margins, they simply shouldn't exist.
raz32dust 6y ago
> Why have all these restaurants signed up if 25% is so unfair? Here is my impression of the problem: Say the restaurant was taking $10 for each order, making $3 in profit per order. i.e, cost is $7. Before delivery apps: 100 orders/day. Total profit $300. After delivery apps: 200 orders/day, cost $7, sale $7.5 (-25% fee), $0.5 profit per order. Total profit $150. After delivery apps, if you don't sign up for the app and agree to their 25% fee: 50 orders (because people are mostly using the app now), total profit $150. If true, it is a lose-lose for restaurants. Their profit margin is going down either way. On top of that their costs are likely going up, since they have to serve more orders.
- andy_ppp 6y ago
  Doesn’t the app make the market larger?
  - raz32dust 6y ago
    It does. That's why I bumped the orders to 200. Despite selling more, the restaurants are making less. Of course these are random numbers that came to mind, but this is my understanding of the issue.
kerkeslager 6y ago
> Why have all these restaurants signed up if 25% is so unfair? Because these delivery services are Moloch[1]. The value these services provide is to customers, not businesses, and the service they provide to customers is pretty minimal. But it's a slight convenience for customers. That means that if one restaurant uses a delivery service, and their competitor doesn't, the first restaurant's ordering experience is slightly easier than their competitors', which gives them an advantage. Let me reiterate that, because it's important: if and only if one restaurant uses a delivery service and their competitor doesn't, using the delivery service gives that company a competitive advantage. So what happens is first one restaurant starts using a delivery service, and they have a competitive advantage, because none of their competitors are using the delivery service. But one by one, their competitors notice, and start using the delivery service. Finally, there's only a few restaurants left not using a delivery service, and by this point, they have to use a delivery service, or they can't compete. So let's go back to the competitive advantage here: if a restaurant uses a delivery service and their competitor doesn't, using the delivery service offers a competitive advantage. But that's not the situation we're in any more: the restaurant is just using the same delivery service everyone else is, so none of them get a competitive advantage from using it. Instead, the entire restaurant industry has just let this middle man into their business that provides no competitive advantage, but charges rent. The rational thing, of course, is for restaurants to create a united front and all agree not to buy into the delivery services in the first place. However, it only takes a few short-sighted restaurants breaking rank for a short-term profit, for that to all fall apart. Cooperation at this level has to have teeth, because there are incentives to not cooperate. But in the US, there's a strong faction of people who think any regulation is bad, so regulation that actually solves the problem won't happen. The best that can be done is to limit the problem with measures like this 10% regulation. Ultimately, the best solution that can work without regulation might be local delivery service cooperatives, which allow businesses which don't have the delivery throughput to maintain their own delivery staff to pool resources, while not giving up a large percentage to rent-seekers outside their community. [1] https://web.archive.org/web/20200528004232/https://slatestarcodex.com/2014/07/30/meditations-on-moloch/ https://web.archive.org/web/20200528004232/https://slatestar...

wilde 6y ago

They haven't. Grubhub just scrapes business listings and pretends restaurants sign up. https://www.theverge.com/2020/1/29/21113876/grubhub-seamless-fake-restaurant-listings-no-permission-postmates-doordash https://www.theverge.com/2020/1/29/21113876/grubhub-seamless...

andy_ppp 6y ago
So people are willing to pay over inflated prices for takeaway? That’s capitalism for you...
SeanLuke 6y ago
If restaurants haven't signed up, then how are they getting fees from delivery services?
- brianlweiner 6y ago
  In at least some cases ... the prices you see on grubhub may be higher than the actual prices the restaurant is charging. E.g $17.99 vs $14.99
  - chrisseaton 6y ago
    So the restaurants are getting the option of delivery and the increased customer base and advertising... for absolutely no change to themselves? And the customers who use delivery are the ones paying for it? And if they don't want to pay it they can still go straight to the restaurant who will again make the same money? Sounds like a win to absolutely everyone involved. What is everyone's problem? Why do we want to interfere with this?
    - yellow_postit 6y ago
      Option implies that restaurants can opt in/out which for cases like GrubHub isn’t possible. These apps can lead to poor experience and perception of the restaurant due to the delivery short comings and customers tend to transfer any unhappiness with the delivery as being the restaurants fault (eg late delivery and cold food).
      - chrisseaton 6y ago
        > Option implies that restaurants can opt in/out which for cases like GrubHub isn’t possible. Should a manufacturer have the right to say that you can't re-sell something that you bought from them fairly? That doesn't sound great to me. If Doordash fairly buy the food then they can sell it to me (as long as they follow food regulations). That sounds fine, doesn't it?
        greenshackle2 6y ago
        If the reseller is pretty much pretending to be the manufacturer, and goes on yelp and change the manufacturer's phone number to their own.. I don't know if they have the right, but it's pretty scummy.
        YuPro 6y ago
        It shouldn't have the right to restrict re-selling but sure it's ok to have the right to not sell to somebody anymore.
        chrisseaton 6y ago
        They've already got that right.
    - 0x202020 6y ago
      I think people get lured in by no delivery fee and reduced prices originally so they order at basically the normal price. But then once the introductory prices go away and the fees go up they get mad at the restaurant, not the delivery service
  - adrianmsmith 6y ago
    What's wrong with that? If the restaurants are getting the price they want to charge, and if the customers are prepared to pay the higher price, seems everything's OK? I agree that it's scammy that grubhub etc. is pretending to be the restaurant. But if they made it clear, we are a delivery service giving you access to this restaurant, if you want to order this food you can do so for $17.99, I think everything would be fine with that business model.
    - jiofih 6y ago
      If, but that’s not what they are doing. So there’s everything wrong with that.
      - adrianmsmith 6y ago
        Understood. But then the law should ban pretending to be someone else (it probably does, but evidently not effectively enough). Having a cap of x% on fees won't solve this problem. It will solve another problem which wasn't a problem in the first place.
- empath75 6y ago
  they charge the user.
- 0x202020 6y ago
  Like what the other person said, they increase the prices and then most people blame the restaurant. A local restaurant I get pickup from is $8.95 pre tax, curious I looked to see what delivery was and it is $11.65 pre tax and then a $4.00 delivery fee

albntomat0 6y ago

A number of anti-competitive business practices, such as offering delivery for restaurants without telling them. Previous discussion: https://news.ycombinator.com/item?id=23216852 https://news.ycombinator.com/item?id=23216852

andrewnicolalde 6y ago
Honest question, how is that anticompetitive?
- ceejayoz 6y ago
  The Grubhubs of the world have substantially better SEO juice; if they start offering delivery for your restaurant, their listing is probably going to wind up above yours. Once a substantial portion of a restaurant's orders come in this way, they can cut off the flow at will. "Sign a contract with us, or these folks will go elsewhere".
tonyarkles 6y ago
There’s a really interesting liability question that comes along with that. If I order food from a restaurant via a delivery service that has no contractual relationship with them, and happen to get sick, who’s on the hook for that? I, legally, have no business relationship with the restaurant in that circumstance.
- zwily 6y ago
  Legally, do you have a business relationship with a company you buy a product from on Amazon?
  - tonyarkles 6y ago
    That’s an interesting comparison! I admit it I took business law a long time ago, but I think the answer is: it depends. You’d also need to dig deep into the TOS for both the consumer side and the seller side. But ignoring the specific details, here’s my general thought process: - products sold directly by Amazon: you have products sourced through (nominally) a legitimate supply chain, where there are legal agreements for Amazon to be a distributor of the products. If the product is faulty, Amazon is likely protected by those agreements and the liability will likely ripple back to the OEM. But, Amazon sold the product to you, and depending on consumer protection laws in your jurisdiction, may ultimately be responsible if, say, the manufacturer goes out of business. - Fulfilled by Amazon: this gets trickier. In this case, it’s relatively clear that you’re not purchasing the product from Amazon, but rather from a company that has stored their product in Amazon’s warehouse. It seems to me that Amazon is less likely to be on the hook for this. - Third-party sellers: Amazon is mostly just a catalogue and payment processor in this situation, not to different than Etsy. Most likely the seller is on the hook here and not Amazon. Depending on how the seller came to acquire the product (legit supply chain or other), the manufacturer may or may not be on the hook via the distribution-agreement ripple. (For example, an independent company that refurbs broken phones and resells them on Amazon is unlikely to create liability for Samsung) In the delivery case, we’ve got an unlicensed (health inspector-wise) company distributing prepared food from a vendor they have no formal agreement with. If someone were to get sick, it seems pretty reasonable for the restaurant to shrug and say “we followed proper food handling protocols, maybe the liability should go onto the unlicensed company that bought our food, did who knows what with it, and resold it without our permission”.

josefresco 6y ago

FOMO? Most of my small business customers that experiment with new tech are simply scared of losing what they have, or envious of competitors who seemingly have more. "My competition is using it so maybe we should too?" is a common phrase heard. Add "delivery services" to the list of failed VC funded tech gambles (see Groupon) that cost small businesses dearly.

jfengel 6y ago

It's doubtful that these services are actually spending 25% of each food order on providing the service. The money goes to expansion, marketing, loss leaders, and other supposedly temporary overhead. They're hoping that when they reach scale and have eliminated competitors, they'll turn a tidy profit, the way Amazon did. It's not at all clear that they really need to spend that much money on their expansion or that they're doing so ethically, but either way, don't weep at their losses. That's not the reason they're charging so much. As for the restaurants, they're in a bind. The services that deliverers provide should be much cheaper at scale. They need somebody to do delivery and to take online orders, both of which are a hassle to set up yourself. Not impossible, but you'd expect economies of scale if you're effectively sharing a driver pool and software development cost with all of your competitors. If your competitor has a delivery service and you don't, you'll lose a lot of business. If you develop it yourself, you pay the overhead. If you buy in to the services, they have a lot of power to set prices where they want. I don't know why the delivery services aren't forced to undercut each other's prices to get the businesses. Customers don't seem to care which service they use; they have all of the apps anyway.

andy_ppp 6y ago
I think these things are a bit difficult to regulate though as how can the next Grubhub or whoever raise the cash to scale a competitor if you start down this road. I say on things like this let the market decide but force them to be clear about costs per order being +30% including delivery costs.
vorpalhex 6y ago
If you have nobody using your delivery service, you can't maintain deliver-ers. You're running a three sided marketplace in which you need to have both minimum wages and work for your delivery folks, enough orders for the restaurant to bother, and enough restaurants and ok enough prices for the consumer. That's why it's expensive. That's why you need marketing who doesn't just take out a facebook ad but literally visits and calls restaurants, IT teams to literally teach the basics to restaurants, and an ops team who can assist your delivery folks when a restaurant runs out of onion rings or accidentally slips an allergen into an order. All of that adds up real fast because you need all of those services running at all the times the business is running. Nobody is going to order from a delivery service that only gives you two options. Nobody is going to deliver for a service that only gives you two or three delivery runs a night. > economies of scale if you're effectively sharing a driver pool and software development cost with all of your competitors. The software is so cheap as to be fungible here. It's the drivers who have geographical restrictions, dynamic shifts (gig economy) and also the freedom to not take orders. If you're a runner and you know Chik-fil-a has horrendous lines all the time, you may just never want to run those orders - and in the gig economy, that's a viable choice for you. The delivery service still has to handle those cases (pay more on them, offer incentives, argue with the restaurant for a way to get orders to drivers more easily, etc). > I don't know why the delivery services aren't forced to undercut each other's prices to get the businesses. Delivery services don't generally struggle to get customers, they struggle to get and keep drivers.

muizelaar 6y ago

Why can't the delivery services just raise the delivery fee?

aahhahahaaa 6y ago
because they're all competing with each other by burning through VC money to monopolize the market

Proven 6y ago

The socialist busybodies in Portland want to "do something", so apart from rendering these businesses unprofitable, they are also going to put more of the relatively less skilled workers out of work, while at the same time lower the quality of life for consumers who will now be forced to find less convenient or more expensive ways to eat.

criddell 6y ago
The cap can be adjusted or even removed down the line. Maybe 10% is too low, too high, or maybe it's just right. It's an experiment worth trying.
- missedthecue 6y ago
  Nothing is as permanent as a temporary government measure
- temptosser 6y ago
  What experiment? Don’t delude yourself. Experimenting is over once the government steps in.
deleted 6y ago
[deleted]
temptosser 6y ago
Can I recommend Voat? You are the only one on this page making any sense... HN has become a socialist dystopia. I looked through your comments and I can tell you right now that we will welcome you at Voat with open arms. There is zero censorship also.

onlyrealcuzzo 6y ago

Wait. So delivery apps pay restaurants 25% less for their food. Don't they also charge customers more for the food, even before they add on service fees, delivery fees, and a tip? At least this is what I've seen recently. I look at a restaurants menu, and it will have a dish for $9. When I try to order it, Postmates & Uber Eats say the same thing is $14 (though they both agree on the price). This isn't just one restaurant. This is most restaurants I've checked in Pittsburgh. In this example, I would probably never go to the restaurant for the $14 meal. I'd go once a week for the $9 meal. This seems bad for consumers because it's tricking you on how much the food costs and how much delivery costs.

vorpalhex 6y ago
> So delivery apps pay restaurants 25% less for their food. No, delivery apps charge you extra and pretend it's part of the restaurant cost. If you can buy your burrito at the restaurant for $8, the delivery service is going to show you a price of $10 on the order screen (and add in their $4 delivery fee, etc).
- jagger27 6y ago
  This is only half true. Uber in particular has a loose rule that says any prices you display online have to match what's posted on Uber Eats. I say it's loose because restaurants just raise their prices on Uber Eats anyway and not post their full menu prices online. Citation: my family runs a restaurant that has slightly higher prices on Uber Eats despite the rule against it. It wasn't Uber that set those prices though, it was us. It still doesn't fully offset the 30% haircut we're taking though.

ryan_lane 6y ago

I'm not sure how this law is a problem. There's nothing saying that the delivery services can't increase their delivery fee to make up for the amount they're skimming from the restaurant. The restaurants have a hard time competing if they don't offer delivery, but they make little to no money off the deliveries due to the high fees. The delivery companies hide their true costs by making the delivery fee seem cheap. This law simply shows the true cost of the service to customers. If the only way these companies can survive is by leeching money from restaurants with extremely slim margins, they simply shouldn't exist.

raz32dust 6y ago

> Why have all these restaurants signed up if 25% is so unfair? Here is my impression of the problem: Say the restaurant was taking $10 for each order, making $3 in profit per order. i.e, cost is $7. Before delivery apps: 100 orders/day. Total profit $300. After delivery apps: 200 orders/day, cost $7, sale $7.5 (-25% fee), $0.5 profit per order. Total profit $150. After delivery apps, if you don't sign up for the app and agree to their 25% fee: 50 orders (because people are mostly using the app now), total profit $150. If true, it is a lose-lose for restaurants. Their profit margin is going down either way. On top of that their costs are likely going up, since they have to serve more orders.

andy_ppp 6y ago
Doesn’t the app make the market larger?
- raz32dust 6y ago
  It does. That's why I bumped the orders to 200. Despite selling more, the restaurants are making less. Of course these are random numbers that came to mind, but this is my understanding of the issue.

kerkeslager 6y ago

> Why have all these restaurants signed up if 25% is so unfair? Because these delivery services are Moloch[1]. The value these services provide is to customers, not businesses, and the service they provide to customers is pretty minimal. But it's a slight convenience for customers. That means that if one restaurant uses a delivery service, and their competitor doesn't, the first restaurant's ordering experience is slightly easier than their competitors', which gives them an advantage. Let me reiterate that, because it's important: if and only if one restaurant uses a delivery service and their competitor doesn't, using the delivery service gives that company a competitive advantage. So what happens is first one restaurant starts using a delivery service, and they have a competitive advantage, because none of their competitors are using the delivery service. But one by one, their competitors notice, and start using the delivery service. Finally, there's only a few restaurants left not using a delivery service, and by this point, they have to use a delivery service, or they can't compete. So let's go back to the competitive advantage here: if a restaurant uses a delivery service and their competitor doesn't, using the delivery service offers a competitive advantage. But that's not the situation we're in any more: the restaurant is just using the same delivery service everyone else is, so none of them get a competitive advantage from using it. Instead, the entire restaurant industry has just let this middle man into their business that provides no competitive advantage, but charges rent. The rational thing, of course, is for restaurants to create a united front and all agree not to buy into the delivery services in the first place. However, it only takes a few short-sighted restaurants breaking rank for a short-term profit, for that to all fall apart. Cooperation at this level has to have teeth, because there are incentives to not cooperate. But in the US, there's a strong faction of people who think any regulation is bad, so regulation that actually solves the problem won't happen. The best that can be done is to limit the problem with measures like this 10% regulation. Ultimately, the best solution that can work without regulation might be local delivery service cooperatives, which allow businesses which don't have the delivery throughput to maintain their own delivery staff to pool resources, while not giving up a large percentage to rent-seekers outside their community. [1] https://web.archive.org/web/20200528004232/https://slatestarcodex.com/2014/07/30/meditations-on-moloch/ https://web.archive.org/web/20200528004232/https://slatestar...