18 ms·

DoorDash and Societal Arbitrage

129 points by asaramis 6y ago

ronika1224 6y ago
Favorite part of this was learning about the $6,000 golden shower curtains from the 2002 Tyco scandal.
- quickthrower2 6y ago
  My browser wrapped after shower so I was wondering where the hell is this going
granzymes 6y ago
> A hidden loophole, meant for small businesses, co-opted by multibillion-dollar tech companies to avoid accountability, just because they can. There are a lot of issues with this newsletter, but this bit at the end stuck out. The 'loophole' is for companies with - total annual gross revenues less than $1.07 billion and - less than $1 billion in non-convertible debt in the past three years and - not a “large accelerated filer,” as defined in Exchange Act Rule 12b-2 The newsletter is trying to make this sound like it was meant for mom-and-pop shops, but how on earth can you have revenues of more than $1.07 billion without being a "multibillion-dollar" company? https://www.sec.gov/smallbusiness/goingpublic/EGC https://www.sec.gov/smallbusiness/goingpublic/EGC
- deleted 6y ago
  [deleted]
- Retric 6y ago
  Gross revenue is before expenses. Software tends to have great margins but retail can easily be 1% profit margin. So in many industries that’s a limit of just over 10 million per year in profit.
  - wwn_se 6y ago
    True still not really "mom and pop" at least in my mind.
    - Retric 6y ago
      Small business in the US is really ambiguous, but mom and pop is used very differently than small business. IMO, this bill doesn’t really line up well with the classic small / mid sized distinctions, but that’s political. Everyone wants to say they helped small businesses, and this is aimed in that general direction. “In the United States, the Small Business Administration establishes small business size standards on an industry-by-industry basis, but generally specifies a small business as having fewer than 500 employees for manufacturing businesses and less than $7.5 million in annual receipts for most non-manufacturing businesses.[4][5] The definition can vary by circumstance—for example, a small business having fewer than 25 full-time equivalent employees with average annual wages below $50,000 qualifies for a tax credit under the health care reform bill Patient Protection and Affordable Care Act.[6]” https://en.wikipedia.org/wiki/Small_business#Size_definitions https://en.wikipedia.org/wiki/Small_business#Size_definition... A sub 500 person factory could easily be too large for this bill, on the other hand an ACA small business would be tiny by comparison.
- TheTacoMerchant 6y ago
  You have mis-read the content. It state's that only companies with less than $1.07 bil can qualify. Not sure about you, but my mom and pop definitely fall in that category.
  - granzymes 6y ago
    No I read it right. The newsletter makes it sound like Doordash is somehow abusing a loophole intended for SMBs when in fact the reduced reporting requirements are obviously for companies of their size. Both Doordash and your mom and pop qualify (if your mom and pop decided to IPO).
JohnJamesRambo 6y ago
https://themargins.substack.com/p/doordash-and-pizza-arbitrage https://themargins.substack.com/p/doordash-and-pizza-arbitra... The previous article should be required reading for anyone trying to understand how crazy this era is.
- lilyball 6y ago
  It’s also linked in the very first sentence of this article.
baybal2 6y ago
I do remember well how Uber drivers in Moscow were very eager to drive themselves when it became clear that Uber pays for your ride in rush hours, and then Uber just left Russia. Yandex, which never felt to such idiocy, then scooped their remaining business for a symbolic sum.
Pfhreak 6y ago
Add to this that DoorDash, Uber, etc have given authority over wages and performance evaluations directly to the customers. (Through the practice of delegating tips and ratings to the end user.) There's a clear imbalance of power there -- it costs the customer nothing to not tip or to leave a one star review. But those things could absolutely impact someone's earning potential as a worker. Consider how many people seemingly enjoy being petty tyrants when given the opportunity, and the story gets worse and worse for the worker. I always recommend that people always give five stars and a generous tip (until we outlaw typing). It's not my job to narc on your workers, Uber.
- Retric 6y ago
  Uber essentially insisting you give everyone 5 stars just makes the railings meaningless. It’s much better for customers to defect from that game. It’s the same issue with tipping. The larger the standard tip the more power you give to people that defect and tip nothing. Essentially, high tips simply subsidize freeloaders, it’s much better for society to avoid restaurants or services that use tips.
- bee_rider 6y ago
  How do these services actually work? Since it is apparently just a system to connect customers, deliverers, and sellers with each-other, I assume (not really, but...) the deliverers can set their minimum pay? If not, that would be an interesting experiment.
  - Pfhreak 6y ago
    Deliverers cannot set their pay. It's a take it or leave it model where DoorDash basically says, "we have a delivery we will pay x".
- redis_mlc 6y ago
  > But those things could absolutely impact someone's earning potential as a worker. There was an eye-opening article in a newspaper on a US chain like Chili's or Olive Garden(?) waiters being rated by diners with a table device. A waiter could bring out a meal from the kitchen, and if it was "cold" or "not right", that waiter would get a 1 rating, which would result in loss of hours (from 30 or 40 hours down to 20), and eventually dismissal, by company policy. Pretty horrible outcome since the kitchen is responsible for that.
lacker 6y ago
To me, this is the key claim of the article: This is not a genuine partnership, it’s extractive. Is DoorDash extracting money from its users, the restaurants and the delivery drivers? Or is it actually providing something of value? To me, the delivery apps like DoorDash and Uber Eats just work a lot better than calling up restaurants for delivery did in the pre-app era. Maybe the drivers are underpaid, maybe the restaurants are underpaid, maybe the food costs too much, but even if they end up charging more money, are they really going to go away like Groupon did? I don't think so, the underlying product is just too valuable. So, I don't agree with this claim. There's a real partnership here. It just hasn't settled down. As long as the business space is real, DoorDash and Uber Eats and the others are just going to fight tooth and claw to win it. That means discounting the real price, that means raising money at whatever valuation they can get, that means turning the screws on all partners to squeeze out more money. All of this seems like craziness, and it is, but it's craziness in pursuit of winning a prize that really does exist. Some industries, like the music industry, once they settle down it turns out that one of the players has very little pricing power. I think that might happen here for drivers and for the sort of restaurant that isn't differentiated. But like music, it won't just go away, it'll be a new business structure that perhaps dominates the industry.
- ponker 6y ago
  The question is, if the prices were raised to sustainable levels, would the market be big enough to justify the amount of unsustainable spending that is going on right now to capture it?
  - JumpCrisscross 6y ago
    > if the prices were raised to sustainable levels, would the market be big enough It was big enough in tier-1 cities when it required someone at the restaurant writing down the order, hiring a delivery person and dealing with disgruntled customers. They have at least that market with economies of scale.
- lurker619 6y ago
  I agree 100%. I don't think I'd ever order so much from random local restaurants if they weren't easily available in the doordash/ubereats apps in a standard format at the click of a button. No way would I google, search and decide a menu, then call up, I'd just eat from my local subway every time.
techsupporter 6y ago
> I’m going to end this by noting as I read through the S-1, you can’t help but develop a grudging respect for Tony Xu and his team. It’s the ultimate encapsulation of don’t hate the player, hate the game. To use a meme, "por que no los dos?" I hate both the player and the game. No one ordered Mr Xu to get into this business; there's no requirement that he abuse the living shit out of his workers and sell them up the river by helping pass prop 22. At every step in the decision process, he or people he hired and gave instructions to voluntarily made these decisions. From the pay scale to the inclusion of binding arbitration, they own every single one of those choices. Along the same lines, we own not making the changes we claim to want, while wolfing down our ghost kitchen burritos with subsidized delivery. California voters absolutely own voting for proposition 22, and signing the petition to get it on the ballot. We're not reforming our labor laws to give some people the flexibility they want while not leaving everyone as an unrestricted free agent. We don't separate health care from employment. We gab about it, but little changes, and certainly not at the rate of the people exploiting those pressure points. As someone once told Captain Picard, "you talk and you talk, but you have no guramba." And now, with COVID, we're watching our economy cleave into the starkest case of haves and have-nots in my lifetime. That split won't be permanent, but fixing it is going to happen when we least expect it and is going to be messy and painful.
- remote_phone 6y ago
  Prop 22 was not the way to do it. I’m glad that terrible law was correctly voted down by California. It is clear that people want flexibility. The fact that Prop 22 had to have over 100 exclusions because it broke so many other industries reeks of bad code smell. It was a badly written law and badly written laws need to be reversed. In the end, drivers got better protections and guarantees but remained flexible and independent.
  - cmeacham98 6y ago
    Maybe you're not aware, but prop 22 actually passed and helps gig economy companies like DoorDash.
fxtentacle 6y ago
"We know restaurant ‘partners’ are a flight risk because this is not a genuine partnership, it’s extractive." In my area, there's a pizza shop that is doing well. They also sell on Takeaway.com. But if you order through that - like I initially did - they'll give you a small business card that says "Did you know that our prices on Takeaway.com are 15% higher to compensate for the fees that they charge us?" And on the back of the business card is their URL for ordering and their own phone number. I now always order directly from them and the service is insanely better than the best I ever got from Takeaway.com. Their long-term delivery employees will actually remember how to find my house on the 1st try while the Pizza is still hot. I've never ever had a <30 minute delivery from Takeaway.com. But those pizza guys reliably hit 20 minutes if I order directly from them. So yes, the restaurant that I know that does best on online delivery platforms is the one that treats it like an expensive advertisement channel and that funnels customers off the platform as fast as they can. DoorDash's biggest risk is that one of their "partners" might become successful enough to leave.
- TeMPOraL 6y ago
  Clever, but how long until Takeaway.com and others add a clause in their contract against putting such business cards in their order? These companies have power over restaurants, because they can ruin a restaurant's reputation until it yields and accepts the new contract.
  - fxtentacle 6y ago
    That's about as anticompetitive as it gets, using your market power to prohibit your partners from mentioning a lower cost alternative. The damage to consumers would be easy to illustrate.
    - bobbylarrybobby 6y ago
      Reminds me of a certain fruit company whose new M1 processor has been making the rounds on the news lately.
  - tartoran 6y ago
mathattack 6y ago
2 thoughts.... 1 - Voters voted Prop 22 in their own self interest. It keeps prices lower. Similar to voters who vote for lower property taxes. (May harm others but not the voters) 2 - I deleted the app because the times not reliable. This is what will hurt them more than ballots.
randrews543 6y ago
A big ? for DoorDash is how big can they really be as a company. Too many people are making a big deal about their profitability as a whole. But if you look at customers at a cohort level once customers get to years 2,3,4 they are actually profitable. The big question is what is the average lifespan of a customer for them, do they make it to years 2,3,4, how far in do they make it and at scale how much profit can they expect to make from each customer that does last that long. Then when that is all said and one what size company are we lookin at? $1B in annual revenue?, $10B?, $100B? That will determine the viability of DoorDash and its size as a public company.
- bwilliams18 6y ago
  The cohorts are similarly profitable when they get to 2020, the year when there was a massive pandemic that forced everyone to order in all of the time.
- sithlord 6y ago
  I think the better question is, how loyal are the customers, personally - I am going to go for the cheaper of the platforms. Especially knowing that the drivers are basically all the same.
mdorazio 6y ago
> Doordash built a $25 billion business powered by a combination of regulatory and labor arbitrage. This is an excellent encapsulation of most of the gig economy in one sentence and explains why I hate the entire thing. It's only a valid business model by taking advantage of people and sidestepping regulations, all funded by VC money rather than actual profits.
aaisola 6y ago
If we consider Doordash's approach to be similar to Amazon's then companies such as Chownnow and Ritual are more equivalent to Shopify. They want to arm mom and pop restaurants with the tools to enable delivery without the hefty commissions and fees. I know that personally I don't want to live in a world dominated by chain restaurants and sub-standard options simply because they are the only ones with power to negotiate favourable terms with Doordash etc.
boringg 6y ago
Am I the only one who has feels bad buying food with online delivery services but also feels an obligation to support the restaurants? Not only because the margins the companies are taking, but the guilt with how much to tip the driver (is the company providing them salary of some sort?). However there is no other easy way to buy food without doing significant amount of research and then most of these companies are reliant on the online ordering for inbound sales anyways. It's a total cluster. Probably a downvote here but I don't feel good making investment money on an extractive business like this - i.e. I'm not going to buy stock. Even though these services are lifelines during the pandemic, I wonder if they are a faustian bargain of sorts in the long-run understanding full well that in the short-run the alternative is to shutdown. The sad future: I think the executives and staff will make off and the retail investors will be holding the bag as well as the shutdown restaurants and employees laid off. The happy future: Some/most restaurants survive pandemic and ease off their online habits, stock stabilizes/investors take a hit and people go back into restaurants. Online delivery services companies market caps take a nose dive.
paulus_magnus2 6y ago
It always baffles me, how do these companies get to get that far. OK, it is possible to get your friends to fund you after you describe the innovative idea, then perhaps it's possible to get an Angel to invest into your uber after you explain the losing business is only temporary to capture the market and the ultimate goal is a self-driving taxi. Wishing for self-driving cars is easy, building them not so much. But Pizza delivery unicorn based on some arbitrage?? Come on, at least develop a fleet of food trucks in which the pizza is cooked along the way. Baking a Pizza takes 6mins, add 2-3 for preparation so the order can be prepared along the way. No need to get back to the restaurant. This gives you 2x efficiency of the delivery person ($15/h). Equipping a restaurant is probably $200k+, a food truck closer to $50k which gives 4x capex efficiency. Perhaps in the future the pizza can be made by a robot saving you one person (50%) of the personnel. There is room for efficiency. Here in Europe during Lockdown take away pizza was €2 cheaper, around €8 instead of €12+. I cannot imagine how someone selling it cheaper is anything but a pyramid scheme / attempt to corner the market.
ada1981 6y ago
The insight that Doordash is in the business of finance, not food delivery is important. They are out to extract market share from folks with less information, primarily drivers and owners.

129 points by asaramis 6y ago

ronika1224 6y ago

Favorite part of this was learning about the $6,000 golden shower curtains from the 2002 Tyco scandal.

quickthrower2 6y ago
My browser wrapped after shower so I was wondering where the hell is this going

granzymes 6y ago

> A hidden loophole, meant for small businesses, co-opted by multibillion-dollar tech companies to avoid accountability, just because they can. There are a lot of issues with this newsletter, but this bit at the end stuck out. The 'loophole' is for companies with - total annual gross revenues less than $1.07 billion and - less than $1 billion in non-convertible debt in the past three years and - not a “large accelerated filer,” as defined in Exchange Act Rule 12b-2 The newsletter is trying to make this sound like it was meant for mom-and-pop shops, but how on earth can you have revenues of more than $1.07 billion without being a "multibillion-dollar" company? https://www.sec.gov/smallbusiness/goingpublic/EGC https://www.sec.gov/smallbusiness/goingpublic/EGC

deleted 6y ago
[deleted]
Retric 6y ago
Gross revenue is before expenses. Software tends to have great margins but retail can easily be 1% profit margin. So in many industries that’s a limit of just over 10 million per year in profit.
- wwn_se 6y ago
  True still not really "mom and pop" at least in my mind.
  - Retric 6y ago
    Small business in the US is really ambiguous, but mom and pop is used very differently than small business. IMO, this bill doesn’t really line up well with the classic small / mid sized distinctions, but that’s political. Everyone wants to say they helped small businesses, and this is aimed in that general direction. “In the United States, the Small Business Administration establishes small business size standards on an industry-by-industry basis, but generally specifies a small business as having fewer than 500 employees for manufacturing businesses and less than $7.5 million in annual receipts for most non-manufacturing businesses.[4][5] The definition can vary by circumstance—for example, a small business having fewer than 25 full-time equivalent employees with average annual wages below $50,000 qualifies for a tax credit under the health care reform bill Patient Protection and Affordable Care Act.[6]” https://en.wikipedia.org/wiki/Small_business#Size_definitions https://en.wikipedia.org/wiki/Small_business#Size_definition... A sub 500 person factory could easily be too large for this bill, on the other hand an ACA small business would be tiny by comparison.
TheTacoMerchant 6y ago
You have mis-read the content. It state's that only companies with less than $1.07 bil can qualify. Not sure about you, but my mom and pop definitely fall in that category.
- granzymes 6y ago
  No I read it right. The newsletter makes it sound like Doordash is somehow abusing a loophole intended for SMBs when in fact the reduced reporting requirements are obviously for companies of their size. Both Doordash and your mom and pop qualify (if your mom and pop decided to IPO).

JohnJamesRambo 6y ago

https://themargins.substack.com/p/doordash-and-pizza-arbitrage https://themargins.substack.com/p/doordash-and-pizza-arbitra... The previous article should be required reading for anyone trying to understand how crazy this era is.

lilyball 6y ago
It’s also linked in the very first sentence of this article.

baybal2 6y ago

I do remember well how Uber drivers in Moscow were very eager to drive themselves when it became clear that Uber pays for your ride in rush hours, and then Uber just left Russia. Yandex, which never felt to such idiocy, then scooped their remaining business for a symbolic sum.

Pfhreak 6y ago

Add to this that DoorDash, Uber, etc have given authority over wages and performance evaluations directly to the customers. (Through the practice of delegating tips and ratings to the end user.) There's a clear imbalance of power there -- it costs the customer nothing to not tip or to leave a one star review. But those things could absolutely impact someone's earning potential as a worker. Consider how many people seemingly enjoy being petty tyrants when given the opportunity, and the story gets worse and worse for the worker. I always recommend that people always give five stars and a generous tip (until we outlaw typing). It's not my job to narc on your workers, Uber.

Retric 6y ago
Uber essentially insisting you give everyone 5 stars just makes the railings meaningless. It’s much better for customers to defect from that game. It’s the same issue with tipping. The larger the standard tip the more power you give to people that defect and tip nothing. Essentially, high tips simply subsidize freeloaders, it’s much better for society to avoid restaurants or services that use tips.
bee_rider 6y ago
How do these services actually work? Since it is apparently just a system to connect customers, deliverers, and sellers with each-other, I assume (not really, but...) the deliverers can set their minimum pay? If not, that would be an interesting experiment.
- Pfhreak 6y ago
  Deliverers cannot set their pay. It's a take it or leave it model where DoorDash basically says, "we have a delivery we will pay x".
redis_mlc 6y ago
> But those things could absolutely impact someone's earning potential as a worker. There was an eye-opening article in a newspaper on a US chain like Chili's or Olive Garden(?) waiters being rated by diners with a table device. A waiter could bring out a meal from the kitchen, and if it was "cold" or "not right", that waiter would get a 1 rating, which would result in loss of hours (from 30 or 40 hours down to 20), and eventually dismissal, by company policy. Pretty horrible outcome since the kitchen is responsible for that.

lacker 6y ago

To me, this is the key claim of the article: This is not a genuine partnership, it’s extractive. Is DoorDash extracting money from its users, the restaurants and the delivery drivers? Or is it actually providing something of value? To me, the delivery apps like DoorDash and Uber Eats just work a lot better than calling up restaurants for delivery did in the pre-app era. Maybe the drivers are underpaid, maybe the restaurants are underpaid, maybe the food costs too much, but even if they end up charging more money, are they really going to go away like Groupon did? I don't think so, the underlying product is just too valuable. So, I don't agree with this claim. There's a real partnership here. It just hasn't settled down. As long as the business space is real, DoorDash and Uber Eats and the others are just going to fight tooth and claw to win it. That means discounting the real price, that means raising money at whatever valuation they can get, that means turning the screws on all partners to squeeze out more money. All of this seems like craziness, and it is, but it's craziness in pursuit of winning a prize that really does exist. Some industries, like the music industry, once they settle down it turns out that one of the players has very little pricing power. I think that might happen here for drivers and for the sort of restaurant that isn't differentiated. But like music, it won't just go away, it'll be a new business structure that perhaps dominates the industry.

ponker 6y ago
The question is, if the prices were raised to sustainable levels, would the market be big enough to justify the amount of unsustainable spending that is going on right now to capture it?
- JumpCrisscross 6y ago
  > if the prices were raised to sustainable levels, would the market be big enough It was big enough in tier-1 cities when it required someone at the restaurant writing down the order, hiring a delivery person and dealing with disgruntled customers. They have at least that market with economies of scale.
lurker619 6y ago
I agree 100%. I don't think I'd ever order so much from random local restaurants if they weren't easily available in the doordash/ubereats apps in a standard format at the click of a button. No way would I google, search and decide a menu, then call up, I'd just eat from my local subway every time.

techsupporter 6y ago

> I’m going to end this by noting as I read through the S-1, you can’t help but develop a grudging respect for Tony Xu and his team. It’s the ultimate encapsulation of don’t hate the player, hate the game. To use a meme, "por que no los dos?" I hate both the player and the game. No one ordered Mr Xu to get into this business; there's no requirement that he abuse the living shit out of his workers and sell them up the river by helping pass prop 22. At every step in the decision process, he or people he hired and gave instructions to voluntarily made these decisions. From the pay scale to the inclusion of binding arbitration, they own every single one of those choices. Along the same lines, we own not making the changes we claim to want, while wolfing down our ghost kitchen burritos with subsidized delivery. California voters absolutely own voting for proposition 22, and signing the petition to get it on the ballot. We're not reforming our labor laws to give some people the flexibility they want while not leaving everyone as an unrestricted free agent. We don't separate health care from employment. We gab about it, but little changes, and certainly not at the rate of the people exploiting those pressure points. As someone once told Captain Picard, "you talk and you talk, but you have no guramba." And now, with COVID, we're watching our economy cleave into the starkest case of haves and have-nots in my lifetime. That split won't be permanent, but fixing it is going to happen when we least expect it and is going to be messy and painful.

remote_phone 6y ago
Prop 22 was not the way to do it. I’m glad that terrible law was correctly voted down by California. It is clear that people want flexibility. The fact that Prop 22 had to have over 100 exclusions because it broke so many other industries reeks of bad code smell. It was a badly written law and badly written laws need to be reversed. In the end, drivers got better protections and guarantees but remained flexible and independent.
- cmeacham98 6y ago
  Maybe you're not aware, but prop 22 actually passed and helps gig economy companies like DoorDash.

fxtentacle 6y ago

"We know restaurant ‘partners’ are a flight risk because this is not a genuine partnership, it’s extractive." In my area, there's a pizza shop that is doing well. They also sell on Takeaway.com. But if you order through that - like I initially did - they'll give you a small business card that says "Did you know that our prices on Takeaway.com are 15% higher to compensate for the fees that they charge us?" And on the back of the business card is their URL for ordering and their own phone number. I now always order directly from them and the service is insanely better than the best I ever got from Takeaway.com. Their long-term delivery employees will actually remember how to find my house on the 1st try while the Pizza is still hot. I've never ever had a <30 minute delivery from Takeaway.com. But those pizza guys reliably hit 20 minutes if I order directly from them. So yes, the restaurant that I know that does best on online delivery platforms is the one that treats it like an expensive advertisement channel and that funnels customers off the platform as fast as they can. DoorDash's biggest risk is that one of their "partners" might become successful enough to leave.

TeMPOraL 6y ago
Clever, but how long until Takeaway.com and others add a clause in their contract against putting such business cards in their order? These companies have power over restaurants, because they can ruin a restaurant's reputation until it yields and accepts the new contract.
- fxtentacle 6y ago
  That's about as anticompetitive as it gets, using your market power to prohibit your partners from mentioning a lower cost alternative. The damage to consumers would be easy to illustrate.
  - bobbylarrybobby 6y ago
    Reminds me of a certain fruit company whose new M1 processor has been making the rounds on the news lately.
- tartoran 6y ago

mathattack 6y ago

2 thoughts.... 1 - Voters voted Prop 22 in their own self interest. It keeps prices lower. Similar to voters who vote for lower property taxes. (May harm others but not the voters) 2 - I deleted the app because the times not reliable. This is what will hurt them more than ballots.

randrews543 6y ago

A big ? for DoorDash is how big can they really be as a company. Too many people are making a big deal about their profitability as a whole. But if you look at customers at a cohort level once customers get to years 2,3,4 they are actually profitable. The big question is what is the average lifespan of a customer for them, do they make it to years 2,3,4, how far in do they make it and at scale how much profit can they expect to make from each customer that does last that long. Then when that is all said and one what size company are we lookin at? $1B in annual revenue?, $10B?, $100B? That will determine the viability of DoorDash and its size as a public company.

bwilliams18 6y ago
The cohorts are similarly profitable when they get to 2020, the year when there was a massive pandemic that forced everyone to order in all of the time.
sithlord 6y ago
I think the better question is, how loyal are the customers, personally - I am going to go for the cheaper of the platforms. Especially knowing that the drivers are basically all the same.

mdorazio 6y ago

> Doordash built a $25 billion business powered by a combination of regulatory and labor arbitrage. This is an excellent encapsulation of most of the gig economy in one sentence and explains why I hate the entire thing. It's only a valid business model by taking advantage of people and sidestepping regulations, all funded by VC money rather than actual profits.

aaisola 6y ago

If we consider Doordash's approach to be similar to Amazon's then companies such as Chownnow and Ritual are more equivalent to Shopify. They want to arm mom and pop restaurants with the tools to enable delivery without the hefty commissions and fees. I know that personally I don't want to live in a world dominated by chain restaurants and sub-standard options simply because they are the only ones with power to negotiate favourable terms with Doordash etc.

boringg 6y ago

Am I the only one who has feels bad buying food with online delivery services but also feels an obligation to support the restaurants? Not only because the margins the companies are taking, but the guilt with how much to tip the driver (is the company providing them salary of some sort?). However there is no other easy way to buy food without doing significant amount of research and then most of these companies are reliant on the online ordering for inbound sales anyways. It's a total cluster. Probably a downvote here but I don't feel good making investment money on an extractive business like this - i.e. I'm not going to buy stock. Even though these services are lifelines during the pandemic, I wonder if they are a faustian bargain of sorts in the long-run understanding full well that in the short-run the alternative is to shutdown. The sad future: I think the executives and staff will make off and the retail investors will be holding the bag as well as the shutdown restaurants and employees laid off. The happy future: Some/most restaurants survive pandemic and ease off their online habits, stock stabilizes/investors take a hit and people go back into restaurants. Online delivery services companies market caps take a nose dive.

paulus_magnus2 6y ago

It always baffles me, how do these companies get to get that far. OK, it is possible to get your friends to fund you after you describe the innovative idea, then perhaps it's possible to get an Angel to invest into your uber after you explain the losing business is only temporary to capture the market and the ultimate goal is a self-driving taxi. Wishing for self-driving cars is easy, building them not so much. But Pizza delivery unicorn based on some arbitrage?? Come on, at least develop a fleet of food trucks in which the pizza is cooked along the way. Baking a Pizza takes 6mins, add 2-3 for preparation so the order can be prepared along the way. No need to get back to the restaurant. This gives you 2x efficiency of the delivery person ($15/h). Equipping a restaurant is probably $200k+, a food truck closer to $50k which gives 4x capex efficiency. Perhaps in the future the pizza can be made by a robot saving you one person (50%) of the personnel. There is room for efficiency. Here in Europe during Lockdown take away pizza was €2 cheaper, around €8 instead of €12+. I cannot imagine how someone selling it cheaper is anything but a pyramid scheme / attempt to corner the market.

ada1981 6y ago

The insight that Doordash is in the business of finance, not food delivery is important. They are out to extract market share from folks with less information, primarily drivers and owners.