10 ms·

Food Delivery Is Magical Thinking

59 points by MilnerRoute 6y ago

AntiImperialist 6y ago
When I pay for food in a restaurant, what I'm paying goes into: - the cost of food itself - chef and kitchen staff salaries - waiter salary/tip - profit margin - rent I'm assuming that the waiter salary/tip will cover delivery costs... so, the cost for the consumer will mostly remain the same. The cost saving will come from the fact that if the restaurant operates just the kitchen, they don't need excellent location. A part of this saving can be claimed by the company that makes the app. The rent difference between where you can have a restaurant vs where you can have just a kitchen in the same general area is huge in most places... so I think the business opportunity is real. Now, the companies are competing to grab market share, and most restaurants still have the same restaurant kitchen, so we haven't seen those changes, but I think it's just a matter of time.
- bluGill 6y ago
  Having been in the business you way overestimate how much rent actually is. Payment for the kitchen equipment inside is more in many cases. Saving even 1000 a month is not that much. You will spend more than that on your delivery vehicles! (though you can outsource that to the drivers in some cases)
  - 01100011 6y ago
    Without having to worry about a store front, you could consolidate kitchen equipment between businesses. Say you use your ovens in the morning to bake bread, and at night to cook meat. Sure, there are limits to this, but there have to be some benefits from centralization. Another option for cost savings is on the fly demand pricing of meals. Through some process of ingredient availability, customer analytics, registered interest(voting or something), etc, the centralized kitchen could decide to make a particular dish at a greater volume/lower cost which could then be passed on to consumers. i.e. Tuesday is 'spaghetti night' and you can feed your family for 50% less than other options. I believe this may be how many cafeterias operate. Cafeterias are a good analogy because you have an environment already saving on wait staff and gratuities. This might seem odd to a typical HN reader who spends $300+ on sushi dinners in SF, but this sort of thing could appeal to many people with less income and without the time to prepare meals themselves. It probably won't work until we can automate the delivery process, but I think at some point the economics will work out in certain markets.
    - pwdisswordfish0 6y ago
      > Say you use your ovens in the morning to bake bread, and at night to cook meat. There's nothing inherent to the delivery app business that makes this possible. This has always been possible, but it doesn't really happen on any significant scale.
    - mattcwilson 6y ago
      Ghost kitchens are a real thing, but it’s still an open question how much value there is in building a brand relationship woth a customer from a dine-in experience. Cutting out the front-of-house, the ambiance, and the wait staff kinda also cuts out a lot of the personality and connection. Scrolling through a bunch of generic “chicken fettucini alfredo” options on an infinite grid is kinda soulless, and doesn’t give me a sense of what I’m getting for the extra money between the $14 and the $26 versions.
    - crooked-v 6y ago
      > Without having to worry about a store front, you could consolidate kitchen equipment between businesses. This is happening right now: see 'ghost kitchens' on delivery apps, with three or four different 'restaurants' that are actually operating out of the same location.
    - mattkrause 6y ago
      The deck ovens used to bake bread would be challenging to use for other types of food. You could perhaps bake some bread in a combi oven, but it’s going to be much slower.
- asciident 6y ago
  Personally I don't enjoy the dine-in experience that much. It takes an additional hour of time for long meals, mostly just sitting browsing through my phone, or 15-20 minutes for short meals, again browsing through my phone. I don't like the tipping system, feeling pressured to order drinks, or the whole credit card payment ritual. I hope you're right and that we see delivery-focused restaurants in low cost areas with sustainable packaging, so we can enjoy higher-end food at home besides pizza and chinese.
  - chrisseaton 6y ago
    > or the whole credit card payment ritual Huh?
    - falcolas 6y ago
      Probably: Wait for the check. Get the check, attach a credit card to it. Wait for the wait staff to return and get it. Wait for the wait staff to run the card. Wait for the wait staff to return with your card. Do some math for a tip, sign the receipt. It’s also mildly concerning to leave your bare credit card (with pretty much everything they need to commit fraud with it) with a complete stranger.
      - chrisseaton 6y ago
        Do you not have contactless, or chip-and-pin? The waiter or waitress turns up with the bill, I glance at it, I tap my card, or if it's a larger sum insert it and type in my PIN. Worst case scenario it's 30s. I'm pretty sure that your agreement with your card company includes that you must not let anyone else touch the card, let alone take it away.
        steveklabnik 6y ago
        It's still very new here, and most places just don't do it the way that you all do elsewhere in the world. I think I got my first one last year? And I bank with one of the biggest banks. Even then, we have just the chip, no PIN. (There is a PIN for like, ATM transactions, but if I go to Europe, I still have to sign, even if they do the contactless thing. Folks (reasonably) almost never expect it, and have to go find a pen...)
- jessaustin 6y ago
  I'm assuming that the waiter salary/tip will cover delivery costs... "Will" is doing double duty in that sentence. Maybe with some futuristic delivery tech (Rainbows End-style pneumatic cannons?) that would be possible. Today, delivery costs are covered by VCs and by paying drivers less than minimum wage. (58% of California voters approve!)
  - Stratoscope 6y ago
    > some futuristic delivery tech (Rainbows End-style pneumatic cannons?) You are closer to the truth than you may realize. It's a little-known fact that there once was an underground tunnel that delivered piping hot burritos from the SF Bay Area to hungry customers in New Jersey. Behold the Alameda-Weehawken Burrito Tunnel: https://idlewords.com/2007/04/the_alameda_weehawken_burrito_tunnel.htm https://idlewords.com/2007/04/the_alameda_weehawken_burrito_...
- roenxi 6y ago
  To some degree yes, but the market that you are talking about is going to be dominated by repeat diners. It isn't people going out to show off for example - it is people who want want food. The competition mentality in hospitality businesses is cut-throat and deeply ingrained. If they saw a profit margin, they would attempt to push the delivery service out of the market. If I'm a regular at Toby's Popular Take Away, it seems unlikely that Toby would sit quietly while Uber made money. He would try to muscle in on the distribution too. It is unlikely that the market share they are fighting for is defensible. A lot of people aren't fighting for it at the moment because there is no profit to be found. The app part might get commoditised or done in a community manner or by some random dude as a side project, it wouldn't be too hard to get local businesses on side with an idea like that. It doesn't need to be a big company.
- falcolas 6y ago
  > I'm assuming that the waiter salary/tip will cover delivery costs... Unlikely. At least, not a non-exploitative delivery cost. Beyond the employee cost and mileage, there’s the fact that (in the US) delivery drivers are also tipped. They’re also probably more expensive for a company to insure.
  - cma 6y ago
    If consumers don't drive to get their food, over time their insurance should come down. It should come down more since a restaurant delivery driver can make multiple stops on one optimized route vs a customer just going to the restaurant and back, but once you factor in how much more dangerous scooter delivery is vs car maybe this doesn't hold up.
- leetcrew 6y ago
  > Now, the companies are competing to grab market share, and most restaurants still have the same restaurant kitchen, so we haven't seen those changes, but I think it's just a matter of time. I wouldn't be so sure of that. delivery is inherently less profitable for the restaurant. a single employee can serve many more dine-in and especially take-out customers in an hour than they can as a delivery driver. at the same time, you are throwing maintenance and insurance for a vehicle into the equation. you can push a lot of this cost onto the driver, but not all of it. I also doubt that the location savings are that substantial. you don't need to lease the prime real estate that everyone walks by, but you still need to be within a 15-20 minute drive of your customer base. any property within 20 minutes of a dense area tends to be expensive to rent. there are already a few take-out/delivery only places in my area. the only ones that seem to be doing well have pretty bad food for the price.
  - furyofantares 6y ago
    > at the same time, you are throwing maintenance and insurance for a vehicle into the equation. We're comparing to the customer driving to the restaurant, right? So this was always a cost the customer was paying and it's just moved into the transaction
    - mattcwilson 6y ago
      If by “cost” you mean car mileage, sure. But in a store pickup situation, there is no additional driver to pay, special packaging for transportation of the food, liability for safe transport of the food, transportation logistics operating costs, etc.
    - leetcrew 6y ago
      right, but the fundamental problem is that customers aren't willing to pay the full cost of delivery. delivery places don't just compete with other delivery places on price; they also have to compete with takeout prices. people don't mentally add the cost of gas, vehicle depreciation, and their own time onto takeout prices. plus a pretty common "workflow" is for people to pickup food on their way home from work, which has a negligible cost for them even if they rigorously price it out.
- jvm_ 6y ago
  'Ghost kitchen': How a plain storefront hides more than a dozen delivery restaurants Business model is gaining popularity as food delivery apps gain a foothold in Canada https://www.cbc.ca/news/canada/calgary/ghost-kitchen-calgary-1.4989791 https://www.cbc.ca/news/canada/calgary/ghost-kitchen-calgary...
- romanoderoma 6y ago
  Why order out to some (probably unsafe) dark kitchen when I have a kitchen in my house? In this covid times when I don't want to cook I simply go downstairs and order a take out from one of the tens of restaurants around, where I can get the same quality of a dine in at half the price while also supporting local businesses that are suffering. Food delivery is overrated in my opinion and also unfair to workers. The only reason I found to order from a delivery company is to skip the waiting line at McDonald's those rare times I feel like having junk food on a Sunday night while watching a movie and don't move from the couch. But if I want a good pasta I simply order to the guy at the restaurant below my home from the window, don't even need to phone them, and they give me the food in a regular dish, not some lousy plastic wrap that I just return when I have time.
- perlgeek 6y ago
  I don't know if it's everywhere, but here in Germany the profit margins on the food tend to pretty low, and the restaurants try to make up for that by selling drinks pretty expensively. So for takeout, I just order food, and often just drink tap water. I also assume I'm not the only one doing that, so for the restaurants, a significant part of their profit dries up. They'll have to adjust to that somehow, most likely by increasing food prices, or by cutting into the extra profit from rent differences that you have laid out. If they do exist, I'm not yet convinced.
  - Nbox9 6y ago
    In the US ordering (free) water is common for casual restaurants. There is a lot of profit to be made from selling alcoholic drinks, but that’s not in everyone’s business plan.
- duongnt 6y ago
  You also need to spend time and money getting to and from the restaurant. If you use Uber both ways it’s already more than double the cost of getting the food to you.
hprotagonist 6y ago
There's only four things we do better than anyone else : music, movies, microcode, high-speed pizza delivery.
- jessaustin 6y ago
  Only with your username does that get an upvote...
  - Balgair 6y ago
    For those wondering: https://en.wikipedia.org/wiki/Snow_Crash https://en.wikipedia.org/wiki/Snow_Crash
Guthur 6y ago
The argument seems to be a non sequitur to me. The complaint is that food delivery is wholly inefficient to the point of unsustainabilty, but then says this is stopping more sustainable options. How so? Thankfully there is nothing other than VC dollars propping this up and so if you can come up with a more efficient approach you will win as there is a proven market it should be easy to come in and out compete.
- sneak 6y ago
  My favorite problems are those that will resolve themselves naturally and automatically if you just wait a little while. The bigger they are (WeWork, Uber) the more satisfying they are to watch get “fixed”. The market will eventually find the price, fear not.
  - olefoo 6y ago
    "The market can remain irrational longer than you can remain solvent." -- J.M. Keynes Also applies to competitors of Venture funded vortexes like Uber/Lyft/Doordash. Sure, in the long run your cloud kitchen with guest chefs and nifty social networking features might be a more sustainable model in the long run. But you'll never find out because your effort will be murdered by Uber's marketing spend.
lukifer 6y ago
See also: "pizza arbitrage". https://themargins.substack.com/p/doordash-and-pizza-arbitrage https://themargins.substack.com/p/doordash-and-pizza-arbitra...
maxpert 6y ago
Amazon was a magical thinking! Google was a magical thinking! iPhone was a magical thinking! This article makes confusing arguments on sustainability and unsustainability.
- disgruntledphd2 6y ago
  No, those were different in that there was a path to profitability that didn't involve unicorns and pixie dust. Uber and Lyft (the progenitors of this model) have been losing money hand over fist for over a decade now, and are both public companies and are still losing money. Food delivery is incredibly unprofitable (because of the last-mile problem and the fact that it needs to be quick), and Uber have forced otherwise profitable companies to compete with their unprofitable model. Here's a good review: https://ftalphaville.ft.com/2019/11/11/1573464859000/Deliveroo-and-the-profitability-problem/ https://ftalphaville.ft.com/2019/11/11/1573464859000/Deliver...
  - coldcode 6y ago
    Food delivery from my neighbor (or within my apartment building) is easy. Food delivery from arbitrary locations to arbitrary locations is complex, especially given the product being delivered is time sensitive. Unless the customer is cost blind (i.e. wealthy) and taste ignorant, there is no way to make this work profitably other than inventing a transporter beam.
maxsilver 6y ago
It's absolutely ridiculous that Food Delivery apps aren't making gobs of cash right now. (1) Restaurants are closed for indoor dining (or obviously should be anywhere they aren't). You literally can't sit in a restaurant in good faith, anywhere in the US today. (2) The Food Delivery app prices are usually 5% to 20% higher than the in-dining counterparts. (3) In addition to that, the order/delivery fees are much higher than all other competitors. (At least, on my app the 'delivery fee' from GrubHub is 25% higher than the equivalent delivery fee from the local Pizza Hut and Panera Bread, for example) (4) And because of all of that, the default tip rates are also higher than all other delivery services. (5) Despite all of the above, everyone is still paying for it. Paid-in-full delivery purchases are at an all-time high, despite all-time high prices for it. (6) There's a massive record-high unemployment due to people who have lost their jobs from the pandemic! It's cheaper than ever to pick up folks as part-time drivers. And pizza places generally actually employ their drivers, delivery apps lie to the feds and claim their employees as 1099-contractors, cutting their costs even lower. Sure, DoorDash's "efficiency" claims are all lies. But who cares, they don't need "magically efficient logistics" to make their model work, this model has already worked for every single random pizza place or equivalent from the past 40+ years straight. These delivery-only-apps have the highest revenue and margins (while having the lowest overhead cost and lowest employee cost) of any food service business I've ever heard of. They've been handed the best possible scenario for their business. How they aren't wildly profitable right now is absolutely due to ridiculous management/financing shenanigans alone, and not because "ordering food for delivery via touch-tone telephone" is some inherently unsustainable business practice.
- 01100011 6y ago
  I would be careful in extrapolating what works for pizza to other types of foods. AFAIK, pizza is very profitable and those margins can subsidize delivery drivers.
  - maxsilver 6y ago
    Panera Bread offers sandwiches and soups and deli-like food via pizza-like delivery with pizza-like employment (their drivers are real employees, with tips+mileage, health benefits, 401k, PTO, etc) https://careers.panerabread.com/global/en/c/restaurant-delivery-drivers-jobs https://careers.panerabread.com/global/en/c/restaurant-deliv... (I get that technically Panera just started offering pizza now, but like 90% of their menu is not pizza and hasn't been for most of the year.)
k__ 6y ago
Never understood why such companies aren't cooperatives.
- maxsilver 6y ago
  Because then VC's couldn't package them up as mostly-monopolized markets and flip them to a megacorp for crazy high returns
- newfangle 6y ago
  Because the people that create them create them for themselves. People doing food delivery generally arent capable of building the infra that uber has
- Gaessaki 6y ago
  That’s why we started https://radish.coop https://radish.coop.
  - muststopmyths 6y ago
    looks great ! I'd love to see this kind of thing in SF.
aviraldg 6y ago
In India, there are quite a few vertically integrated "cloud kitchen" food delivery startups. I wonder if that's a more sustainable model for food delivery. Most of them (box8.in is a great example) have what appears to be a pretty broad menu, but once you order you can tell they're reusing the same pre-prepared ingredients for most things. It's basically the same as pizza delivery, but for other kinds of food.
ponker 6y ago
Any good insights into why food preparation is still stuck in pre-Industrial Revolution technologies? I prepare dinner from my family every night from scratch like I was a medieval artisan. With the economics of industrial production I should be able to purchase pre-made meals that just need to be heated in the oven at one temperature, that are healthy, and cost less than buying components and assembling them. Why hasn’t this happened at scale?
- twblalock 6y ago
  > Any good insights into why food preparation is still stuck in pre-Industrial Revolution technologies? I prepare dinner from my family every night from scratch like I was a medieval artisan. No you don't. You go to a store and buy processed ingredients that have satisfied numerous legal requirements and inspections to ensure product safety, which are enforced by a vast bureaucracy. The store you bought your ingredients from offered many product options, including food from other countries. In the medieval period you would not be able to afford anything that was not grown further than a few miles from your home unless you were rich. You prepared those ingredients in your home, which has electricity and running water, and a stove and oven that you can turn on with a knob instead of starting a wood fire. You don't share your home with livestock. If you are unwilling to prepare your meals with a knife (even though all of the meat has already been cut into "cuts of meat" for you), you can buy food processors, blenders, meat slicers, and other contraptions to make things as easy as possible. To say that your food preparation is similar to the way people did it before the Industrial Revolution is ridiculous.
- nemo44x 6y ago
  The industrial “TV Dinner” has been around since the 1950’s. Pre-made, reheated, and relatively “healthy” in some cases. Have you looked at the frozen aisle of your grocery store?
- romanoderoma 6y ago
  "prepare dinner from scratch" is what everybody else call cooking. Which is quite an enjoyable activity and not a relic of the past. Pre made food has been everywhere around you, you just didn't notice. When was the last time you made your own bacon or olive oil or sugar, pepper, salt, etc etc? (I grew up in a farm, we made all of that, except for the salt)
gnicholas 6y ago
> Maybe, as Roy suggested, viable food delivery services look more like Domino’s Pizza or other restaurants that deliver their own food; industrial kitchens that churn out meals only for delivery; or something else that no one can imagine because instead we have food delivery apps that can’t survive on their own. Apparently the author is not aware that DoorDash in fact operates "industrial kitchens that churn out meals only for delivery": https://www.businessinsider.com/doordash-ghost-kitchen-silicon-valley-chick-fil-a-photos-2019-11 https://www.businessinsider.com/doordash-ghost-kitchen-silic...
nix23 6y ago
>Food delivery services in the United States are fighting an ugly, inefficient, fragmented war, and it will likely be that way for a long time. Say hello to Dabbawala https://en.wikipedia.org/wiki/Dabbawala https://en.wikipedia.org/wiki/Dabbawala >>The union initiation fee is 30,000 rupees, which guarantees a 5,000-rupee monthly income and a job for life.
- anshumankmr 6y ago
  And it is six sigma certified
  - simonh 6y ago
    If their claimed error rate was true then they would in theory meet part of the six sigma criteria, but the claimed rate was an off the cuff remark in one interview and has never been substantiated.
    - anshumankmr 6y ago
      https://www.bbc.com/future/article/20170114-the-125-year-old-network-that-keeps-mumbai-going#:~:text=A%202010%20study%20by%20the,Timeliness%20is%20crucial https://www.bbc.com/future/article/20170114-the-125-year-old....
- trevyn 6y ago
  Kind of loses its charm when you discover that 5,000 rupees is US$67. Just go into the countryside and plant some seeds already.
  - nix23 6y ago
    Does Uber/DoorDash etc guarantee you any income at all?
  - kumarvvr 6y ago
    In India, that 67 USD is the difference between kids going to school with a full belly, and working menial jobs with empty stomachs. Have some respect towards struggles of fellow human beings.
controlweather 6y ago
Who tf would pay to read this crap? Paywall
amelius 6y ago
The problem is that business people have figured out a way to turn the age-old local business-model of a restaurant into a global winner-takes-all game: the one who owns the portal/platform, owns the market. I think we should really have regulation to break that ridiculous pattern.
- sokoloff 6y ago
  Have they figured that out? I don’t even get delivery directly from a restaurant, preferring to pick up takeaway myself as I can be more assured of having the food have the least possible time sitting around getting cold and mushy. If I were sick is the only remotely common case where I’ll order delivery. Even there, I’m perfectly capable to call my local restaurant. If someone ends up dominating this field, it’ll be because the local restaurants gave up an enormous advantage they started with. I don’t see any amount of “optimized route planning” that’s going to get customers food that’s sat around less, tastes better, or costs less which are the only things I can see durably disrupting the “I give you money and you give me food” market.
- leppr 6y ago
  It's precisely regulation that creates this situation. Creating and operating a delivery platform wouldn't have to be so costly if they didn't need an army of lawyers and lobbyists to simply exist. In a free market, food delivery platforms could be a thin convenience layer charging a small premium instead of the gargantuan 30%+ they are able to command now due to artificial lack of competition.
Havoc 6y ago
I suspect that part of the issue is the idea of delivering a single hot meal being do-able at reasonable rates. It isn't and thus you've got all the VC cash making up the difference. Something like Hellofresh seems much more viable. Not heated & more than 1 meal per shot.
andi999 6y ago
Can somebody explain to me what the problem in the US is? I mean here I choose food, I order it, pay it and it gets delivered in less than 30 minutes (usually). It does not require not exhibit magical thinking to do so. What step does not work in the US? Do people call pizza delivery and before it comes sacrifice some small animals? :-)
- soared 6y ago
  I don’t know where you’re located, but I live 2 miles from downtown and it takes at least 15 minutes to drive there. So the restaurant would need to see my order, immediately start cooking, and drive immediately to me after it’s done to accomplish the same. Plenty of other problems, but our urban/suburban sprawl presents challenges.
  - andi999 6y ago
    Well here it is also probably 10min. And yes, the restaurant probably sees the order, immediately starts cooking and immediately drives to me. Why would they delay this process? For the pizza joint one can track the process online and it seems to be frictionless.
    - m4rtink 6y ago
      At least one local pizza place even shows a map when you can track the delivery vehicle in real time once it gets on it's way. :)
- m4rtink 6y ago
  Yeah, here in a smaller town in Europe (Czech Republic) you just call to the restaurant (basically 100% pizzerias provide deliveries, others case by case) say what you want & they will tell you an estimate when it will come. Then after a while a guy in a car shows up, you pay him (usually in cash, some accept meal tickets) and you get your food. And the service is not limited to the town but also the villages around it. Some restaurants have their own cars, some cooperate with taxi companies. A fairly new addition to this are what I would say are "food aggragator services", like: https://www.damejidlo.cz/en/ https://www.damejidlo.cz/en/ The provide a common interface for restaurants that cooperate with them in a given area, so you just search the street or location you are in and it will show you the restaurants that provide deliveries in that area & their menus. The main added value is in this case convenience - you can just click what you want and have ti delivered without calling someone. They also have their own cars so they can offer deliveries from restaurants that otherwise don't offer deliveries. Also they make it possible to pay for most deliveries by card. The downside is of course that not every restaurant that does deliveries is in their system & substantial cut they are taking from the money that goes to the restaurant to cover their services. Which most likely explains why there are restaurants missing in their list.
jgalt212 6y ago
I'd go so far to say that substantially all of post quantitative easing SV has been one big exercise in Magical Thinking.
kumarvvr 6y ago
The logical end point of food delivery apps seems to be a platform for independently run kitchens, in general and niche cuisines.
jpalomaki 6y ago
I think the "future of food delivery" is larger ghost kitchens, preparing food under different brands to give customer the feeling of choice. These facilities can share personnel, stock and equipment between different brands. Larger volumes may allow investment in more automation. Facilities can be optimized for quick pickups. The whole food preparation process can be optimized together with deliveries to allow courier to deliver more food on one run.
lurcio 6y ago
It’s great that this reduces barriers to entry: “I sold microwave meals on Deliveroo” https://m.youtube.com/watch?v=k47u9tduwb8 https://m.youtube.com/watch?v=k47u9tduwb8

59 points by MilnerRoute 6y ago

When I pay for food in a restaurant, what I'm paying goes into: - the cost of food itself - chef and kitchen staff salaries - waiter salary/tip - profit margin - rent I'm assuming that the waiter salary/tip will cover delivery costs... so, the cost for the consumer will mostly remain the same. The cost saving will come from the fact that if the restaurant operates just the kitchen, they don't need excellent location. A part of this saving can be claimed by the company that makes the app. The rent difference between where you can have a restaurant vs where you can have just a kitchen in the same general area is huge in most places... so I think the business opportunity is real. Now, the companies are competing to grab market share, and most restaurants still have the same restaurant kitchen, so we haven't seen those changes, but I think it's just a matter of time.

bluGill 6y ago
Having been in the business you way overestimate how much rent actually is. Payment for the kitchen equipment inside is more in many cases. Saving even 1000 a month is not that much. You will spend more than that on your delivery vehicles! (though you can outsource that to the drivers in some cases)
- 01100011 6y ago
  Without having to worry about a store front, you could consolidate kitchen equipment between businesses. Say you use your ovens in the morning to bake bread, and at night to cook meat. Sure, there are limits to this, but there have to be some benefits from centralization. Another option for cost savings is on the fly demand pricing of meals. Through some process of ingredient availability, customer analytics, registered interest(voting or something), etc, the centralized kitchen could decide to make a particular dish at a greater volume/lower cost which could then be passed on to consumers. i.e. Tuesday is 'spaghetti night' and you can feed your family for 50% less than other options. I believe this may be how many cafeterias operate. Cafeterias are a good analogy because you have an environment already saving on wait staff and gratuities. This might seem odd to a typical HN reader who spends $300+ on sushi dinners in SF, but this sort of thing could appeal to many people with less income and without the time to prepare meals themselves. It probably won't work until we can automate the delivery process, but I think at some point the economics will work out in certain markets.
  - pwdisswordfish0 6y ago
    > Say you use your ovens in the morning to bake bread, and at night to cook meat. There's nothing inherent to the delivery app business that makes this possible. This has always been possible, but it doesn't really happen on any significant scale.
  - mattcwilson 6y ago
    Ghost kitchens are a real thing, but it’s still an open question how much value there is in building a brand relationship woth a customer from a dine-in experience. Cutting out the front-of-house, the ambiance, and the wait staff kinda also cuts out a lot of the personality and connection. Scrolling through a bunch of generic “chicken fettucini alfredo” options on an infinite grid is kinda soulless, and doesn’t give me a sense of what I’m getting for the extra money between the $14 and the $26 versions.
  - crooked-v 6y ago
    > Without having to worry about a store front, you could consolidate kitchen equipment between businesses. This is happening right now: see 'ghost kitchens' on delivery apps, with three or four different 'restaurants' that are actually operating out of the same location.
  - mattkrause 6y ago
    The deck ovens used to bake bread would be challenging to use for other types of food. You could perhaps bake some bread in a combi oven, but it’s going to be much slower.
asciident 6y ago
Personally I don't enjoy the dine-in experience that much. It takes an additional hour of time for long meals, mostly just sitting browsing through my phone, or 15-20 minutes for short meals, again browsing through my phone. I don't like the tipping system, feeling pressured to order drinks, or the whole credit card payment ritual. I hope you're right and that we see delivery-focused restaurants in low cost areas with sustainable packaging, so we can enjoy higher-end food at home besides pizza and chinese.
- chrisseaton 6y ago
  > or the whole credit card payment ritual Huh?
  - falcolas 6y ago
    Probably: Wait for the check. Get the check, attach a credit card to it. Wait for the wait staff to return and get it. Wait for the wait staff to run the card. Wait for the wait staff to return with your card. Do some math for a tip, sign the receipt. It’s also mildly concerning to leave your bare credit card (with pretty much everything they need to commit fraud with it) with a complete stranger.
    - chrisseaton 6y ago
      Do you not have contactless, or chip-and-pin? The waiter or waitress turns up with the bill, I glance at it, I tap my card, or if it's a larger sum insert it and type in my PIN. Worst case scenario it's 30s. I'm pretty sure that your agreement with your card company includes that you must not let anyone else touch the card, let alone take it away.
      - steveklabnik 6y ago
        It's still very new here, and most places just don't do it the way that you all do elsewhere in the world. I think I got my first one last year? And I bank with one of the biggest banks. Even then, we have just the chip, no PIN. (There is a PIN for like, ATM transactions, but if I go to Europe, I still have to sign, even if they do the contactless thing. Folks (reasonably) almost never expect it, and have to go find a pen...)
jessaustin 6y ago
I'm assuming that the waiter salary/tip will cover delivery costs... "Will" is doing double duty in that sentence. Maybe with some futuristic delivery tech (Rainbows End-style pneumatic cannons?) that would be possible. Today, delivery costs are covered by VCs and by paying drivers less than minimum wage. (58% of California voters approve!)
- Stratoscope 6y ago
  > some futuristic delivery tech (Rainbows End-style pneumatic cannons?) You are closer to the truth than you may realize. It's a little-known fact that there once was an underground tunnel that delivered piping hot burritos from the SF Bay Area to hungry customers in New Jersey. Behold the Alameda-Weehawken Burrito Tunnel: https://idlewords.com/2007/04/the_alameda_weehawken_burrito_tunnel.htm https://idlewords.com/2007/04/the_alameda_weehawken_burrito_...
roenxi 6y ago
To some degree yes, but the market that you are talking about is going to be dominated by repeat diners. It isn't people going out to show off for example - it is people who want want food. The competition mentality in hospitality businesses is cut-throat and deeply ingrained. If they saw a profit margin, they would attempt to push the delivery service out of the market. If I'm a regular at Toby's Popular Take Away, it seems unlikely that Toby would sit quietly while Uber made money. He would try to muscle in on the distribution too. It is unlikely that the market share they are fighting for is defensible. A lot of people aren't fighting for it at the moment because there is no profit to be found. The app part might get commoditised or done in a community manner or by some random dude as a side project, it wouldn't be too hard to get local businesses on side with an idea like that. It doesn't need to be a big company.
falcolas 6y ago
> I'm assuming that the waiter salary/tip will cover delivery costs... Unlikely. At least, not a non-exploitative delivery cost. Beyond the employee cost and mileage, there’s the fact that (in the US) delivery drivers are also tipped. They’re also probably more expensive for a company to insure.
- cma 6y ago
  If consumers don't drive to get their food, over time their insurance should come down. It should come down more since a restaurant delivery driver can make multiple stops on one optimized route vs a customer just going to the restaurant and back, but once you factor in how much more dangerous scooter delivery is vs car maybe this doesn't hold up.
leetcrew 6y ago
> Now, the companies are competing to grab market share, and most restaurants still have the same restaurant kitchen, so we haven't seen those changes, but I think it's just a matter of time. I wouldn't be so sure of that. delivery is inherently less profitable for the restaurant. a single employee can serve many more dine-in and especially take-out customers in an hour than they can as a delivery driver. at the same time, you are throwing maintenance and insurance for a vehicle into the equation. you can push a lot of this cost onto the driver, but not all of it. I also doubt that the location savings are that substantial. you don't need to lease the prime real estate that everyone walks by, but you still need to be within a 15-20 minute drive of your customer base. any property within 20 minutes of a dense area tends to be expensive to rent. there are already a few take-out/delivery only places in my area. the only ones that seem to be doing well have pretty bad food for the price.
- furyofantares 6y ago
  > at the same time, you are throwing maintenance and insurance for a vehicle into the equation. We're comparing to the customer driving to the restaurant, right? So this was always a cost the customer was paying and it's just moved into the transaction
  - mattcwilson 6y ago
    If by “cost” you mean car mileage, sure. But in a store pickup situation, there is no additional driver to pay, special packaging for transportation of the food, liability for safe transport of the food, transportation logistics operating costs, etc.
  - leetcrew 6y ago
    right, but the fundamental problem is that customers aren't willing to pay the full cost of delivery. delivery places don't just compete with other delivery places on price; they also have to compete with takeout prices. people don't mentally add the cost of gas, vehicle depreciation, and their own time onto takeout prices. plus a pretty common "workflow" is for people to pickup food on their way home from work, which has a negligible cost for them even if they rigorously price it out.
jvm_ 6y ago
'Ghost kitchen': How a plain storefront hides more than a dozen delivery restaurants Business model is gaining popularity as food delivery apps gain a foothold in Canada https://www.cbc.ca/news/canada/calgary/ghost-kitchen-calgary-1.4989791 https://www.cbc.ca/news/canada/calgary/ghost-kitchen-calgary...
romanoderoma 6y ago
Why order out to some (probably unsafe) dark kitchen when I have a kitchen in my house? In this covid times when I don't want to cook I simply go downstairs and order a take out from one of the tens of restaurants around, where I can get the same quality of a dine in at half the price while also supporting local businesses that are suffering. Food delivery is overrated in my opinion and also unfair to workers. The only reason I found to order from a delivery company is to skip the waiting line at McDonald's those rare times I feel like having junk food on a Sunday night while watching a movie and don't move from the couch. But if I want a good pasta I simply order to the guy at the restaurant below my home from the window, don't even need to phone them, and they give me the food in a regular dish, not some lousy plastic wrap that I just return when I have time.
perlgeek 6y ago
I don't know if it's everywhere, but here in Germany the profit margins on the food tend to pretty low, and the restaurants try to make up for that by selling drinks pretty expensively. So for takeout, I just order food, and often just drink tap water. I also assume I'm not the only one doing that, so for the restaurants, a significant part of their profit dries up. They'll have to adjust to that somehow, most likely by increasing food prices, or by cutting into the extra profit from rent differences that you have laid out. If they do exist, I'm not yet convinced.
- Nbox9 6y ago
  In the US ordering (free) water is common for casual restaurants. There is a lot of profit to be made from selling alcoholic drinks, but that’s not in everyone’s business plan.
duongnt 6y ago
You also need to spend time and money getting to and from the restaurant. If you use Uber both ways it’s already more than double the cost of getting the food to you.

hprotagonist 6y ago

There's only four things we do better than anyone else : music, movies, microcode, high-speed pizza delivery.

jessaustin 6y ago
Only with your username does that get an upvote...
- Balgair 6y ago
  For those wondering: https://en.wikipedia.org/wiki/Snow_Crash https://en.wikipedia.org/wiki/Snow_Crash

Guthur 6y ago

The argument seems to be a non sequitur to me. The complaint is that food delivery is wholly inefficient to the point of unsustainabilty, but then says this is stopping more sustainable options. How so? Thankfully there is nothing other than VC dollars propping this up and so if you can come up with a more efficient approach you will win as there is a proven market it should be easy to come in and out compete.

sneak 6y ago
My favorite problems are those that will resolve themselves naturally and automatically if you just wait a little while. The bigger they are (WeWork, Uber) the more satisfying they are to watch get “fixed”. The market will eventually find the price, fear not.
- olefoo 6y ago
  "The market can remain irrational longer than you can remain solvent." -- J.M. Keynes Also applies to competitors of Venture funded vortexes like Uber/Lyft/Doordash. Sure, in the long run your cloud kitchen with guest chefs and nifty social networking features might be a more sustainable model in the long run. But you'll never find out because your effort will be murdered by Uber's marketing spend.

lukifer 6y ago

See also: "pizza arbitrage". https://themargins.substack.com/p/doordash-and-pizza-arbitrage https://themargins.substack.com/p/doordash-and-pizza-arbitra...

maxpert 6y ago

Amazon was a magical thinking! Google was a magical thinking! iPhone was a magical thinking! This article makes confusing arguments on sustainability and unsustainability.

disgruntledphd2 6y ago
No, those were different in that there was a path to profitability that didn't involve unicorns and pixie dust. Uber and Lyft (the progenitors of this model) have been losing money hand over fist for over a decade now, and are both public companies and are still losing money. Food delivery is incredibly unprofitable (because of the last-mile problem and the fact that it needs to be quick), and Uber have forced otherwise profitable companies to compete with their unprofitable model. Here's a good review: https://ftalphaville.ft.com/2019/11/11/1573464859000/Deliveroo-and-the-profitability-problem/ https://ftalphaville.ft.com/2019/11/11/1573464859000/Deliver...
- coldcode 6y ago
  Food delivery from my neighbor (or within my apartment building) is easy. Food delivery from arbitrary locations to arbitrary locations is complex, especially given the product being delivered is time sensitive. Unless the customer is cost blind (i.e. wealthy) and taste ignorant, there is no way to make this work profitably other than inventing a transporter beam.

maxsilver 6y ago

It's absolutely ridiculous that Food Delivery apps aren't making gobs of cash right now. (1) Restaurants are closed for indoor dining (or obviously should be anywhere they aren't). You literally can't sit in a restaurant in good faith, anywhere in the US today. (2) The Food Delivery app prices are usually 5% to 20% higher than the in-dining counterparts. (3) In addition to that, the order/delivery fees are much higher than all other competitors. (At least, on my app the 'delivery fee' from GrubHub is 25% higher than the equivalent delivery fee from the local Pizza Hut and Panera Bread, for example) (4) And because of all of that, the default tip rates are also higher than all other delivery services. (5) Despite all of the above, everyone is still paying for it. Paid-in-full delivery purchases are at an all-time high, despite all-time high prices for it. (6) There's a massive record-high unemployment due to people who have lost their jobs from the pandemic! It's cheaper than ever to pick up folks as part-time drivers. And pizza places generally actually employ their drivers, delivery apps lie to the feds and claim their employees as 1099-contractors, cutting their costs even lower. Sure, DoorDash's "efficiency" claims are all lies. But who cares, they don't need "magically efficient logistics" to make their model work, this model has already worked for every single random pizza place or equivalent from the past 40+ years straight. These delivery-only-apps have the highest revenue and margins (while having the lowest overhead cost and lowest employee cost) of any food service business I've ever heard of. They've been handed the best possible scenario for their business. How they aren't wildly profitable right now is absolutely due to ridiculous management/financing shenanigans alone, and not because "ordering food for delivery via touch-tone telephone" is some inherently unsustainable business practice.

01100011 6y ago
I would be careful in extrapolating what works for pizza to other types of foods. AFAIK, pizza is very profitable and those margins can subsidize delivery drivers.
- maxsilver 6y ago
  Panera Bread offers sandwiches and soups and deli-like food via pizza-like delivery with pizza-like employment (their drivers are real employees, with tips+mileage, health benefits, 401k, PTO, etc) https://careers.panerabread.com/global/en/c/restaurant-delivery-drivers-jobs https://careers.panerabread.com/global/en/c/restaurant-deliv... (I get that technically Panera just started offering pizza now, but like 90% of their menu is not pizza and hasn't been for most of the year.)

k__ 6y ago

Never understood why such companies aren't cooperatives.

maxsilver 6y ago
Because then VC's couldn't package them up as mostly-monopolized markets and flip them to a megacorp for crazy high returns
newfangle 6y ago
Because the people that create them create them for themselves. People doing food delivery generally arent capable of building the infra that uber has
Gaessaki 6y ago
That’s why we started https://radish.coop https://radish.coop.
- muststopmyths 6y ago
  looks great ! I'd love to see this kind of thing in SF.

aviraldg 6y ago

In India, there are quite a few vertically integrated "cloud kitchen" food delivery startups. I wonder if that's a more sustainable model for food delivery. Most of them (box8.in is a great example) have what appears to be a pretty broad menu, but once you order you can tell they're reusing the same pre-prepared ingredients for most things. It's basically the same as pizza delivery, but for other kinds of food.

ponker 6y ago

Any good insights into why food preparation is still stuck in pre-Industrial Revolution technologies? I prepare dinner from my family every night from scratch like I was a medieval artisan. With the economics of industrial production I should be able to purchase pre-made meals that just need to be heated in the oven at one temperature, that are healthy, and cost less than buying components and assembling them. Why hasn’t this happened at scale?

twblalock 6y ago
> Any good insights into why food preparation is still stuck in pre-Industrial Revolution technologies? I prepare dinner from my family every night from scratch like I was a medieval artisan. No you don't. You go to a store and buy processed ingredients that have satisfied numerous legal requirements and inspections to ensure product safety, which are enforced by a vast bureaucracy. The store you bought your ingredients from offered many product options, including food from other countries. In the medieval period you would not be able to afford anything that was not grown further than a few miles from your home unless you were rich. You prepared those ingredients in your home, which has electricity and running water, and a stove and oven that you can turn on with a knob instead of starting a wood fire. You don't share your home with livestock. If you are unwilling to prepare your meals with a knife (even though all of the meat has already been cut into "cuts of meat" for you), you can buy food processors, blenders, meat slicers, and other contraptions to make things as easy as possible. To say that your food preparation is similar to the way people did it before the Industrial Revolution is ridiculous.
nemo44x 6y ago
The industrial “TV Dinner” has been around since the 1950’s. Pre-made, reheated, and relatively “healthy” in some cases. Have you looked at the frozen aisle of your grocery store?
romanoderoma 6y ago
"prepare dinner from scratch" is what everybody else call cooking. Which is quite an enjoyable activity and not a relic of the past. Pre made food has been everywhere around you, you just didn't notice. When was the last time you made your own bacon or olive oil or sugar, pepper, salt, etc etc? (I grew up in a farm, we made all of that, except for the salt)

gnicholas 6y ago

> Maybe, as Roy suggested, viable food delivery services look more like Domino’s Pizza or other restaurants that deliver their own food; industrial kitchens that churn out meals only for delivery; or something else that no one can imagine because instead we have food delivery apps that can’t survive on their own. Apparently the author is not aware that DoorDash in fact operates "industrial kitchens that churn out meals only for delivery": https://www.businessinsider.com/doordash-ghost-kitchen-silicon-valley-chick-fil-a-photos-2019-11 https://www.businessinsider.com/doordash-ghost-kitchen-silic...

nix23 6y ago

>Food delivery services in the United States are fighting an ugly, inefficient, fragmented war, and it will likely be that way for a long time. Say hello to Dabbawala https://en.wikipedia.org/wiki/Dabbawala https://en.wikipedia.org/wiki/Dabbawala >>The union initiation fee is 30,000 rupees, which guarantees a 5,000-rupee monthly income and a job for life.

anshumankmr 6y ago
And it is six sigma certified
- simonh 6y ago
  If their claimed error rate was true then they would in theory meet part of the six sigma criteria, but the claimed rate was an off the cuff remark in one interview and has never been substantiated.
  - anshumankmr 6y ago
    https://www.bbc.com/future/article/20170114-the-125-year-old-network-that-keeps-mumbai-going#:~:text=A%202010%20study%20by%20the,Timeliness%20is%20crucial https://www.bbc.com/future/article/20170114-the-125-year-old....
trevyn 6y ago
Kind of loses its charm when you discover that 5,000 rupees is US$67. Just go into the countryside and plant some seeds already.
- nix23 6y ago
  Does Uber/DoorDash etc guarantee you any income at all?
- kumarvvr 6y ago
  In India, that 67 USD is the difference between kids going to school with a full belly, and working menial jobs with empty stomachs. Have some respect towards struggles of fellow human beings.

controlweather 6y ago

Who tf would pay to read this crap? Paywall

amelius 6y ago

The problem is that business people have figured out a way to turn the age-old local business-model of a restaurant into a global winner-takes-all game: the one who owns the portal/platform, owns the market. I think we should really have regulation to break that ridiculous pattern.

sokoloff 6y ago
Have they figured that out? I don’t even get delivery directly from a restaurant, preferring to pick up takeaway myself as I can be more assured of having the food have the least possible time sitting around getting cold and mushy. If I were sick is the only remotely common case where I’ll order delivery. Even there, I’m perfectly capable to call my local restaurant. If someone ends up dominating this field, it’ll be because the local restaurants gave up an enormous advantage they started with. I don’t see any amount of “optimized route planning” that’s going to get customers food that’s sat around less, tastes better, or costs less which are the only things I can see durably disrupting the “I give you money and you give me food” market.
leppr 6y ago
It's precisely regulation that creates this situation. Creating and operating a delivery platform wouldn't have to be so costly if they didn't need an army of lawyers and lobbyists to simply exist. In a free market, food delivery platforms could be a thin convenience layer charging a small premium instead of the gargantuan 30%+ they are able to command now due to artificial lack of competition.

Havoc 6y ago

I suspect that part of the issue is the idea of delivering a single hot meal being do-able at reasonable rates. It isn't and thus you've got all the VC cash making up the difference. Something like Hellofresh seems much more viable. Not heated & more than 1 meal per shot.

andi999 6y ago

Can somebody explain to me what the problem in the US is? I mean here I choose food, I order it, pay it and it gets delivered in less than 30 minutes (usually). It does not require not exhibit magical thinking to do so. What step does not work in the US? Do people call pizza delivery and before it comes sacrifice some small animals? :-)

soared 6y ago
I don’t know where you’re located, but I live 2 miles from downtown and it takes at least 15 minutes to drive there. So the restaurant would need to see my order, immediately start cooking, and drive immediately to me after it’s done to accomplish the same. Plenty of other problems, but our urban/suburban sprawl presents challenges.
- andi999 6y ago
  Well here it is also probably 10min. And yes, the restaurant probably sees the order, immediately starts cooking and immediately drives to me. Why would they delay this process? For the pizza joint one can track the process online and it seems to be frictionless.
  - m4rtink 6y ago
    At least one local pizza place even shows a map when you can track the delivery vehicle in real time once it gets on it's way. :)
m4rtink 6y ago
Yeah, here in a smaller town in Europe (Czech Republic) you just call to the restaurant (basically 100% pizzerias provide deliveries, others case by case) say what you want & they will tell you an estimate when it will come. Then after a while a guy in a car shows up, you pay him (usually in cash, some accept meal tickets) and you get your food. And the service is not limited to the town but also the villages around it. Some restaurants have their own cars, some cooperate with taxi companies. A fairly new addition to this are what I would say are "food aggragator services", like: https://www.damejidlo.cz/en/ https://www.damejidlo.cz/en/ The provide a common interface for restaurants that cooperate with them in a given area, so you just search the street or location you are in and it will show you the restaurants that provide deliveries in that area & their menus. The main added value is in this case convenience - you can just click what you want and have ti delivered without calling someone. They also have their own cars so they can offer deliveries from restaurants that otherwise don't offer deliveries. Also they make it possible to pay for most deliveries by card. The downside is of course that not every restaurant that does deliveries is in their system & substantial cut they are taking from the money that goes to the restaurant to cover their services. Which most likely explains why there are restaurants missing in their list.

jgalt212 6y ago

I'd go so far to say that substantially all of post quantitative easing SV has been one big exercise in Magical Thinking.

kumarvvr 6y ago

The logical end point of food delivery apps seems to be a platform for independently run kitchens, in general and niche cuisines.

jpalomaki 6y ago

I think the "future of food delivery" is larger ghost kitchens, preparing food under different brands to give customer the feeling of choice. These facilities can share personnel, stock and equipment between different brands. Larger volumes may allow investment in more automation. Facilities can be optimized for quick pickups. The whole food preparation process can be optimized together with deliveries to allow courier to deliver more food on one run.

lurcio 6y ago

It’s great that this reduces barriers to entry: “I sold microwave meals on Deliveroo” https://m.youtube.com/watch?v=k47u9tduwb8 https://m.youtube.com/watch?v=k47u9tduwb8