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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 a

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.)
  - bobthepanda 6y ago
    That kinda works the same, because most of what they're offering is made from bulk, cheap staples that doesn't require that much labor. (Assembly of a sandwich is pretty cheap and you let soups simmer away.) Most restaurants are not turning out food that is both extremely cheap and fast to make in high volume.
  - someguydave 6y ago
    Yeah Panera food is decent but it is not cheap, I am sure they have good margins.
mattcwilson 6y ago
As high as those fees might be, you have to look at the total cost of operation for the service.
ThePadawan 6y ago
> (6) There's a massive record-high unemployment due to people who have lost their jobs from the pandemic! That also means that there is less cash around to go to (incredibly expensive) takeout compared to cooking rice & beans at home (where people are now for much longer, without a commute).
- Nbox9 6y ago
  >rice & beans Cooking rice and beans at home is cheaper, better for the environment and more healthy than most of the food on door dash.
  - ThePadawan 6y ago
    You've decoded my hidden agenda ;).
    - Nbox9 6y ago
      I eat beans a lot, like 10+ times a week. I’ve stopped telling people I cook beans for dinner because they assume I have money problems when I do.
elindbe2 6y ago
And in case you didn't realize, these delivery apps are taking a 20% "marketing fee" out of the food subtotal on every order (in addition to all delivery costs, some of which are paid by the restaurant as well). Just for operating an online menu. How they can be unprofitable with an app that is basically printing money on every order is beyond me.
AniseAbyss 6y ago
The reason why they aren't profitable is because there is a war going on right now between food delivery apps. That war costs money. At some point only one or two will be left standing and that's when they'll start to make a profit.
duongnt 6y ago
DoorDash reported a $23m profit in the last quarter.

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.)
- bobthepanda 6y ago
  That kinda works the same, because most of what they're offering is made from bulk, cheap staples that doesn't require that much labor. (Assembly of a sandwich is pretty cheap and you let soups simmer away.) Most restaurants are not turning out food that is both extremely cheap and fast to make in high volume.
- someguydave 6y ago
  Yeah Panera food is decent but it is not cheap, I am sure they have good margins.

mattcwilson 6y ago

As high as those fees might be, you have to look at the total cost of operation for the service.

ThePadawan 6y ago

> (6) There's a massive record-high unemployment due to people who have lost their jobs from the pandemic! That also means that there is less cash around to go to (incredibly expensive) takeout compared to cooking rice & beans at home (where people are now for much longer, without a commute).

Nbox9 6y ago
>rice & beans Cooking rice and beans at home is cheaper, better for the environment and more healthy than most of the food on door dash.
- ThePadawan 6y ago
  You've decoded my hidden agenda ;).
  - Nbox9 6y ago
    I eat beans a lot, like 10+ times a week. I’ve stopped telling people I cook beans for dinner because they assume I have money problems when I do.

elindbe2 6y ago

And in case you didn't realize, these delivery apps are taking a 20% "marketing fee" out of the food subtotal on every order (in addition to all delivery costs, some of which are paid by the restaurant as well). Just for operating an online menu. How they can be unprofitable with an app that is basically printing money on every order is beyond me.

AniseAbyss 6y ago

The reason why they aren't profitable is because there is a war going on right now between food delivery apps. That war costs money. At some point only one or two will be left standing and that's when they'll start to make a profit.

duongnt 6y ago

DoorDash reported a $23m profit in the last quarter.