9 ms·

> It's like Uber are trying to shoot themselves in the foot with all the cost squeezing and profit seeking at the same time they're in a fundamental fight defin

> It's like Uber are trying to shoot themselves in the foot with all the cost squeezing and profit seeking at the same time they're in a fundamental fight defining what they are. I don't think they have a choice. UberEats is fundamentally unprofitable. If it was run profitably, the high(er) prices would drive a large portion of their customers away and into the arms of other "startups" willing to run at a loss or towards picking up the food themselves. Plus Uber can't pretend to be an early-stage startup anymore and their constant quarterly losses are starting to add up. I'm still not convinced this new food delivery industry is viable without constant cash injections.

lumost 6y ago
I don't understand why an investor would fund unprofitable Uber 2.0. Without a massive differentiator there is no reason to believe their trajectory would be any different from Uber's - except with increased capital requirements from being the third(fourth?) mover. Uber's burned 10s of billions in the hopes of becoming a few hundred billion dollar company. Would Uber 2.0 need to burn hundreds of billions in the hope of becoming a hundred billion dollar company?
- mikepurvis 6y ago
  Uber 2.0 would probably make the same pitch Uber did— that all of this is temporary moat-building as we prepare for a glorious self driving future. So I think the difficulty is less around investors being more savvy to the economics of ride sharing and delivery services, but that they're more savvy to the realities of how far off those technologies are. And that the entrenched firms like Waymo will be far, far better positioned to offer an autonomous taxi service on day 1 than some plucky startup will be.
- mrweasel 6y ago
  It would be interesting to hear why investors keep throwing money at Uber. Does anyone honestly believe that they will ever be profitable? You would have to throw billions at them to keep them alive long enough for autonomous vehicles to be a possible rescue.
barkingcat 6y ago
I can imagine a UberChef where an Uber driver gets an order, and drives a freelance Chef to a freelance kitchen where the chef cooks the food (groceries provided by an uber shopper who can also get one-off ingredients from specialty stores), the chef cooks the food to order (steak, medium rare, or seafood boil for a party of 2, etc) - and then uber driver delivers the food.
- lotsofpulp 6y ago
  If you’ve ever managed a food business, this is unimaginable.
  - selestify 6y ago
    Why?
    - vkou 6y ago
      Because any food business already has insanely tight margins, and operates incredibly efficiently. The scenario proposed by the grandparent poster adds so much waste and slack and overhead in the system that the family-owned-and-operated Thai kitchen on Main St. will eat Uber's lunch, and the Dominos franchise two doors down from it will pick through its bones.
      - barkingcat 6y ago
        the family operated kitchen on Main St. has rent, fire codes, safety equipment needs, some form of sanitation code/inspection to pass with the city. Uber Chef ignores all of that and bypasses all overhead - you don't need a restaurant or even the physical location of a building to employ chefs to cook food. No need for health inspections or expensive fire suppression equipment. (you use people who want to rent their home kitchens out for cooking) That's Uber's raison-d'etre - to bypass all legal restrictions and externalize all overhead in the way of getting the items to you. This isn't a joke, this is what Uber did with their taxi service at the beginning as MVP so why not do it to food services as well?
rrrrrrrrrrrryan 6y ago
I wouldn't go so far as saying they're "fundamentally unprofitable". They have a couple long-term options: the often-discussed one is autonomous driving (though it's becoming increasingly obvious this is many years out), but the less discussed one is vertical integration. It's not hard to imagine them choosing to pursue Amazon-style vertical integration where they own the "restaurants" themselves. I put "restaurants" in quotes, because it'll almost certainly just be warehouse-style kitchens, where drivers skid up out front and grab food from heated tables, and you won't be able to dine-in at all. It would fill the same role for aspiring restaurateurs as food trucks do today: a startup cost, low-barrier to entry way to build out a brand, rapidly iterate menu-items, and begin building revenue to eventually secure a business loan to open a proper restaurant. If UberEats can really squeeze both the drivers AND the restaurants, there's no fundamental reason that food delivery can't be done profitably - pizza companies have been doing it in almost all markets for decades. Brick and mortar retail stores got eaten by Amazon warehouses, and it seems inevitable that many brick and mortar restaurants will eventually get eaten by a massive tech company as well.
- darrenoc 6y ago
  It's noteworthy that Deliveroo is already doing the kind of vertical integration you describe, it's called "Deliveroo Editions"
- s_dev 6y ago
  >It's not hard to imagine them choosing to pursue Amazon-style vertical integration where they own the "restaurants" themselves. I put "restaurants" in quotes, because it'll almost certainly just be warehouse-style kitchens, where drivers skid up out front and grab food from heated tables, and you won't be able to dine-in at all. The term for this is dark kitchens.
- et-al 6y ago
  > If UberEats can really squeeze both the drivers AND the restaurants, there's no fundamental reason that food delivery can't be done profitably - pizza companies have been doing it in almost all markets for decades. Pizza delivery is profitable because they sell cardboard and depend on teenager drivers relying on their parent's auto insurance. Anyone who's actually looked at the person delivering their food would have thought twice about the margins in food delivery. To spell it out: food delivery is often performed by immigrants with few choices for under-the-table work. The margins are thin-to-none. The current system has worked because no one's investigating the thousands of independent restaurants. Now tech companies are trying to do the same thing, but multimillion dollar corporations have a harder time hiding their labor exploitation from the public. Going back to ryan's point, I agree that with full vertical integration (dirt cheap ingredients and centralised factory kitchens), food delivery could be profitable, but at what point is one just selling frozen food from a microwave/oven in the back of a car?
ab_testing 6y ago
COVID-19 is like the golden age of food delivery. If these food delivery apps are not profitable now, they will probably never be profitable. When the severity of COVID subsides in a few years, people will like to go out to eat again rather than have it delivered.
- iso1631 6y ago
  The only reason I could think of to use something like ubereats, deliveroo, justeat, etc would be if I wanted a non-pizza delivered while I was staying in a hotel in a strange city somewhere. If I'm at home I'll look at the menu of my favourite indian/chineese/whatever place, phone them up, and they deliver it as they have done for decades. I've spent two nights in a hotel since March, normally it's 70 a year. One night I ordered a dominos as I got back to the hotel just before 2300. The other night I ate out with a supplier. Likewise with Uber, if I'm at home and not flying off somewhere, I'm not going to be ordering a taxi, either to get to the airport, or when I'm in a strange city on the other side of the planet. I can see this is the golden age of takeaways and home-delivery (which basically means amazon or groceries), but I don't see it for takeaways.
  - cortesoft 6y ago
    I get so frustrated when people act like these food delivery services aren’t a WAY better user experience than the old version of having to call for delivery. So many times, I will be super busy with the kids, or work, or housework, and I will just pull up DoorDash with one hand (while the other is feeding a hangry 1 year old) and hit ‘reorder’ on one of my past meals. Literally 15 seconds and food is on the way. Compare this to having to call someone, wait on hold, give my phone number/address, tell them my order, correct the mistakes, find my wallet, get out my credit card, give them the number, confirm the number and expiration and security code, then sign a paper copy with the tip when the driver drops it off. Can I do the old style of delivery? Sure, but man it is a lot easier now.
    - Balgair 6y ago
      Not to trivialize your experiences (toddlers are not easy), but for me, the list you give isn't all that much of a barrier. Yes, it is simpler to use the app, but not all that much more. Also, where I am, they take the credit card at the door, not over the phone. Most use a Square-style card reader attached to a work phone, even the mom-n-pop delivery, even now in the pandemic (they use gloves mostly).
Shivetya 6y ago
Has there been a delivery service that didn't have these issues? Raising the prices is effectively the only means, people don't seem to be put off by how much Instacart can jack prices; Costco even warns you the prices are much higher if you choose this as delivery. Pizza chains and others who own their delivery process can at least set where they will deliver and tend to encourage bigger purchases to avoid delivery charges and hopes of fresher food. I am going to assume the only type of agreement would be tighter integration with restaurants to the point the service name is hidden, as in contracting out drivers to particular restaurants but the difficulty there is guaranteeing a driver is always available. Basically an outsourcing for drivers. Restaurants get some filtering of drivers and drivers have a set number of stores with instant familiarity.
treeman79 6y ago
I once got paid 17 dollars to deliver a smoothie. Took me nearly an hour. I found most of clients fell into two categories. Poor and really should not be using the service. Rich areas where cost isn’t an issue. Middle of the day was to a lot of businesses/schools. Lunch tips were crap so I avoided that time frame.

lumost 6y ago

I don't understand why an investor would fund unprofitable Uber 2.0. Without a massive differentiator there is no reason to believe their trajectory would be any different from Uber's - except with increased capital requirements from being the third(fourth?) mover. Uber's burned 10s of billions in the hopes of becoming a few hundred billion dollar company. Would Uber 2.0 need to burn hundreds of billions in the hope of becoming a hundred billion dollar company?

mikepurvis 6y ago
Uber 2.0 would probably make the same pitch Uber did— that all of this is temporary moat-building as we prepare for a glorious self driving future. So I think the difficulty is less around investors being more savvy to the economics of ride sharing and delivery services, but that they're more savvy to the realities of how far off those technologies are. And that the entrenched firms like Waymo will be far, far better positioned to offer an autonomous taxi service on day 1 than some plucky startup will be.
mrweasel 6y ago
It would be interesting to hear why investors keep throwing money at Uber. Does anyone honestly believe that they will ever be profitable? You would have to throw billions at them to keep them alive long enough for autonomous vehicles to be a possible rescue.

barkingcat 6y ago

I can imagine a UberChef where an Uber driver gets an order, and drives a freelance Chef to a freelance kitchen where the chef cooks the food (groceries provided by an uber shopper who can also get one-off ingredients from specialty stores), the chef cooks the food to order (steak, medium rare, or seafood boil for a party of 2, etc) - and then uber driver delivers the food.

lotsofpulp 6y ago
If you’ve ever managed a food business, this is unimaginable.
- selestify 6y ago
  Why?
  - vkou 6y ago
    Because any food business already has insanely tight margins, and operates incredibly efficiently. The scenario proposed by the grandparent poster adds so much waste and slack and overhead in the system that the family-owned-and-operated Thai kitchen on Main St. will eat Uber's lunch, and the Dominos franchise two doors down from it will pick through its bones.
    - barkingcat 6y ago
      the family operated kitchen on Main St. has rent, fire codes, safety equipment needs, some form of sanitation code/inspection to pass with the city. Uber Chef ignores all of that and bypasses all overhead - you don't need a restaurant or even the physical location of a building to employ chefs to cook food. No need for health inspections or expensive fire suppression equipment. (you use people who want to rent their home kitchens out for cooking) That's Uber's raison-d'etre - to bypass all legal restrictions and externalize all overhead in the way of getting the items to you. This isn't a joke, this is what Uber did with their taxi service at the beginning as MVP so why not do it to food services as well?

rrrrrrrrrrrryan 6y ago

I wouldn't go so far as saying they're "fundamentally unprofitable". They have a couple long-term options: the often-discussed one is autonomous driving (though it's becoming increasingly obvious this is many years out), but the less discussed one is vertical integration. It's not hard to imagine them choosing to pursue Amazon-style vertical integration where they own the "restaurants" themselves. I put "restaurants" in quotes, because it'll almost certainly just be warehouse-style kitchens, where drivers skid up out front and grab food from heated tables, and you won't be able to dine-in at all. It would fill the same role for aspiring restaurateurs as food trucks do today: a startup cost, low-barrier to entry way to build out a brand, rapidly iterate menu-items, and begin building revenue to eventually secure a business loan to open a proper restaurant. If UberEats can really squeeze both the drivers AND the restaurants, there's no fundamental reason that food delivery can't be done profitably - pizza companies have been doing it in almost all markets for decades. Brick and mortar retail stores got eaten by Amazon warehouses, and it seems inevitable that many brick and mortar restaurants will eventually get eaten by a massive tech company as well.

darrenoc 6y ago
It's noteworthy that Deliveroo is already doing the kind of vertical integration you describe, it's called "Deliveroo Editions"
s_dev 6y ago
>It's not hard to imagine them choosing to pursue Amazon-style vertical integration where they own the "restaurants" themselves. I put "restaurants" in quotes, because it'll almost certainly just be warehouse-style kitchens, where drivers skid up out front and grab food from heated tables, and you won't be able to dine-in at all. The term for this is dark kitchens.
et-al 6y ago
> If UberEats can really squeeze both the drivers AND the restaurants, there's no fundamental reason that food delivery can't be done profitably - pizza companies have been doing it in almost all markets for decades. Pizza delivery is profitable because they sell cardboard and depend on teenager drivers relying on their parent's auto insurance. Anyone who's actually looked at the person delivering their food would have thought twice about the margins in food delivery. To spell it out: food delivery is often performed by immigrants with few choices for under-the-table work. The margins are thin-to-none. The current system has worked because no one's investigating the thousands of independent restaurants. Now tech companies are trying to do the same thing, but multimillion dollar corporations have a harder time hiding their labor exploitation from the public. Going back to ryan's point, I agree that with full vertical integration (dirt cheap ingredients and centralised factory kitchens), food delivery could be profitable, but at what point is one just selling frozen food from a microwave/oven in the back of a car?

ab_testing 6y ago

COVID-19 is like the golden age of food delivery. If these food delivery apps are not profitable now, they will probably never be profitable. When the severity of COVID subsides in a few years, people will like to go out to eat again rather than have it delivered.

iso1631 6y ago
The only reason I could think of to use something like ubereats, deliveroo, justeat, etc would be if I wanted a non-pizza delivered while I was staying in a hotel in a strange city somewhere. If I'm at home I'll look at the menu of my favourite indian/chineese/whatever place, phone them up, and they deliver it as they have done for decades. I've spent two nights in a hotel since March, normally it's 70 a year. One night I ordered a dominos as I got back to the hotel just before 2300. The other night I ate out with a supplier. Likewise with Uber, if I'm at home and not flying off somewhere, I'm not going to be ordering a taxi, either to get to the airport, or when I'm in a strange city on the other side of the planet. I can see this is the golden age of takeaways and home-delivery (which basically means amazon or groceries), but I don't see it for takeaways.
- cortesoft 6y ago
  I get so frustrated when people act like these food delivery services aren’t a WAY better user experience than the old version of having to call for delivery. So many times, I will be super busy with the kids, or work, or housework, and I will just pull up DoorDash with one hand (while the other is feeding a hangry 1 year old) and hit ‘reorder’ on one of my past meals. Literally 15 seconds and food is on the way. Compare this to having to call someone, wait on hold, give my phone number/address, tell them my order, correct the mistakes, find my wallet, get out my credit card, give them the number, confirm the number and expiration and security code, then sign a paper copy with the tip when the driver drops it off. Can I do the old style of delivery? Sure, but man it is a lot easier now.
  - Balgair 6y ago
    Not to trivialize your experiences (toddlers are not easy), but for me, the list you give isn't all that much of a barrier. Yes, it is simpler to use the app, but not all that much more. Also, where I am, they take the credit card at the door, not over the phone. Most use a Square-style card reader attached to a work phone, even the mom-n-pop delivery, even now in the pandemic (they use gloves mostly).

Shivetya 6y ago

Has there been a delivery service that didn't have these issues? Raising the prices is effectively the only means, people don't seem to be put off by how much Instacart can jack prices; Costco even warns you the prices are much higher if you choose this as delivery. Pizza chains and others who own their delivery process can at least set where they will deliver and tend to encourage bigger purchases to avoid delivery charges and hopes of fresher food. I am going to assume the only type of agreement would be tighter integration with restaurants to the point the service name is hidden, as in contracting out drivers to particular restaurants but the difficulty there is guaranteeing a driver is always available. Basically an outsourcing for drivers. Restaurants get some filtering of drivers and drivers have a set number of stores with instant familiarity.

treeman79 6y ago

I once got paid 17 dollars to deliver a smoothie. Took me nearly an hour. I found most of clients fell into two categories. Poor and really should not be using the service. Rich areas where cost isn’t an issue. Middle of the day was to a lot of businesses/schools. Lunch tips were crap so I avoided that time frame.