6 ms·

There was a post a few months go about a pizza place that started getting customers complaining about their food arriving cold and damaged: except they didn't o

by foobar1962 6y ago

There was a post a few months go about a pizza place that started getting customers complaining about their food arriving cold and damaged: except they didn't offer delivery. They discovered that a popular search engine was offering free delivery. The story ended with them ordering dozens of pizzas from themselves to themselves and making a nice profit.

joubert 6y ago
The story: https://www.theverge.com/2020/5/18/21262316/doordash-pizza-profits-venture-capital-the-margins-ranjan-roy https://www.theverge.com/2020/5/18/21262316/doordash-pizza-p...
dogma1138 6y ago
How did they made a profit off this?
- foobar1962 6y ago
  They delivered pizza base with no toppings. The base was just so the boxes weren't empty. EDIT and Doordash got the price wrong (I forgot about that).
- deleted 6y ago
  [deleted]
- ljm 6y ago
  Doordash priced the pizza at $16, but the pizza place charged $24. Presumably a 'growth hack' to get more users. The pizza place, seeing the difference, bought pizzas for $16 and received $24 from Door Dash, so for each purchase they were $8 better off. They also ordered plain pizza dough in larger quantities, for more profit. Presumably because they didn't have to actually make the full pizza.
  - dogma1138 6y ago
    That makes more sense than someone just offering a free delivery.
  - frombody 6y ago
    Technically they didn't have to make any pizzas at all. I always felt like the story about the dough was embellished a little bit to avoid being charged with fraud.
    - Slartie 6y ago
      They had to produce something that could legally be called a pizza to at least fulfill the purchase contract with DoorDash and avoid making themselves legally liable. But what would probably have worked would be to pull this off with two restaurants, each ordering pizzas from the other, with them sending the same physical pizzas around all the time. Cold and old pizza is still legally a pizza, just a bad one.
      - rainbowzootsuit 6y ago
        That reminds me of the Raines sandwich. "Minimum viable sandwich" https://www.atlasobscura.com/articles/raines-sandwich https://www.atlasobscura.com/articles/raines-sandwich So this is "Minimum viable pizza"
        rrjjww 6y ago
        Before clicking on this I thought it was going to be about Cuomo's order in this summer that all restaurants offering drinks had to be served with food. I went to at least a couple outside bars that were serving half a piece of white bread with a slice of American cheese on it for your "meal"
      - ashtonkem 6y ago
        They have to claim that they made something that met the definition of pizza, but with the “buyer”, driver, and store colluding they could just lie.
        Slartie 6y ago
        The first buyer is DoorDash however, and if they somehow want to take vengeance on you after you managed draining their funds in an otherwise perfectly legal way, they might just use the non-fulfillment of their initial purchase contracts as a wedge to take you to court (of course this assumes they somehow learned about that detail of your plan). I don't know if they would have any luck with that, but it's easy to prevent this from happening by actually delivering something that's basically a minimally viable pizza.
  - mrweasel 6y ago
    How would is that ever going to work long term? Most pizza places I frequent offer free delivery, or very cheap delivery once you get pizza for two people. The “growth hack” will never work when you compete with your supplier. Even if this was somehow going to work, once Doordash has pushed others out of the market, then they would need to raise the price significantly, pushing many to just do pickup themselfs. More suprising, to me, is that it was ever legal to list resturants without and opt in.
    - ljm 6y ago
      Growth hacks are never about sustainably growing a business, they're just there to fatten it up before parading it in front of the VCs. Of course by growth hacking, we're talking about the act of using unethical practices against users to boost certain metrics.
- deleted 6y ago
  [deleted]
- deleted 6y ago
  [deleted]
- josefx 6y ago
  The goal is to kill the competition, no local delivery service can compete with a few million in VC funding. Once you are the only delivery in town you can raise the prices all you want and force the local restaurants into one sided deals on your terms. It also has a rather questionable legality
  - tt433 6y ago
    When it's goods and not services (delivery is the service here, I guess, not the food as a good), usually it's termed dumping, and I'm fairly sure it's illegal. I don't know if that language ever gets used for services.
  - jimmaswell 6y ago
    > no local delivery service can compete with a few million in VC funding A simple ordering form on the restaurant's own website always gets preference from me and seems to usually end up being the first result on Google/Google Maps.
    - jiofih 6y ago
      No, part of the problem here is that the big delivery company will always win in SEO.
      - jimmaswell 6y ago
        It doesn't in my experience. Google Five Guys near you, the actual first result ignoring ads will almost certainly be their website or even its order form. Same for every local restaurant with an order form I've tried it on.
        kaslai 6y ago
        A lot of "local restaurant order forms" are actually sites set up by the likes of GrubHub, Uber Eats, etc. Not all of them, but it's one of the sneaky ways they use to insert themselves.
    - 6y ago
amingilani 6y ago
Similar story but with Door Dash. Explanation: Door Dash charged lower than actual price, so owner placed an order and sent just plain dough. Their profit was higher than cost of making the pizza. https://themargins.substack.com/p/doordash-and-pizza-arbitrage https://themargins.substack.com/p/doordash-and-pizza-arbitra...
- 1-6 6y ago
  Now that's what I call making dough!
- bshep 6y ago
  for even more profit become a doordash driver and exclusively ‘deliver’ these pizzas.
powerapple 6y ago
lol. That's nice. I can see from the trademark point of view, it makes sense to stop other people from listing your business in their list, brands should be protected. But providing a service for customer should be legal. It would be the same as Taxi drivers should be able to pick you up from your home to a business without the permission of the business.
- paranoidrobot 6y ago
  The difference between what delivery services like Doordash and what Taxi companies are doing is that Doordash is holding themselves out to be the company. There's several instances where Company A has had Service Provider B set up a website in the name of Company A, update Google Listings to replace the Phone number and website of Company A with their own version of the site. Then when an unwitting customer calls the number given, they're actually talking to Service Provider B, not Company A. Taxi services don't hold themselves out as the personal driver service for the company you're going to.
  - powerapple 6y ago
    I totally agree with you. The business of Doordash should be legal while the exact practices you described above are illegal.
    - RHSeeger 6y ago
      The problem is how to allow the former while preventing the latter, in a way that is reasonable for small businesses.
      - alisonkisk 6y ago
        Just prosecute the fraudulent misrepresentation of the restaurant.
        balls187 6y ago
29athrowaway 6y ago
Reminds me of the story of Don Johnson, a professional blackjack player who made $6,000,000 in one night. Because he is a known high stakes player, the Tropicana casino in Atlantic City invited him over and gave him a discount ("loss rebate") on chips. Because of this 10% rebase on loss, even when his blackjack win-rate was below 50%, he would still make more money that what he lost. https://www.theatlantic.com/magazine/archive/2012/04/the-man-who-broke-atlantic-city/308900/ https://www.theatlantic.com/magazine/archive/2012/04/the-man...

joubert 6y ago

The story: https://www.theverge.com/2020/5/18/21262316/doordash-pizza-profits-venture-capital-the-margins-ranjan-roy https://www.theverge.com/2020/5/18/21262316/doordash-pizza-p...

dogma1138 6y ago

How did they made a profit off this?

foobar1962 6y ago
They delivered pizza base with no toppings. The base was just so the boxes weren't empty. EDIT and Doordash got the price wrong (I forgot about that).
deleted 6y ago
[deleted]
ljm 6y ago
Doordash priced the pizza at $16, but the pizza place charged $24. Presumably a 'growth hack' to get more users. The pizza place, seeing the difference, bought pizzas for $16 and received $24 from Door Dash, so for each purchase they were $8 better off. They also ordered plain pizza dough in larger quantities, for more profit. Presumably because they didn't have to actually make the full pizza.
- dogma1138 6y ago
  That makes more sense than someone just offering a free delivery.
- frombody 6y ago
  Technically they didn't have to make any pizzas at all. I always felt like the story about the dough was embellished a little bit to avoid being charged with fraud.
  - Slartie 6y ago
    They had to produce something that could legally be called a pizza to at least fulfill the purchase contract with DoorDash and avoid making themselves legally liable. But what would probably have worked would be to pull this off with two restaurants, each ordering pizzas from the other, with them sending the same physical pizzas around all the time. Cold and old pizza is still legally a pizza, just a bad one.
    - rainbowzootsuit 6y ago
      That reminds me of the Raines sandwich. "Minimum viable sandwich" https://www.atlasobscura.com/articles/raines-sandwich https://www.atlasobscura.com/articles/raines-sandwich So this is "Minimum viable pizza"
      - rrjjww 6y ago
        Before clicking on this I thought it was going to be about Cuomo's order in this summer that all restaurants offering drinks had to be served with food. I went to at least a couple outside bars that were serving half a piece of white bread with a slice of American cheese on it for your "meal"
    - ashtonkem 6y ago
      They have to claim that they made something that met the definition of pizza, but with the “buyer”, driver, and store colluding they could just lie.
      - Slartie 6y ago
        The first buyer is DoorDash however, and if they somehow want to take vengeance on you after you managed draining their funds in an otherwise perfectly legal way, they might just use the non-fulfillment of their initial purchase contracts as a wedge to take you to court (of course this assumes they somehow learned about that detail of your plan). I don't know if they would have any luck with that, but it's easy to prevent this from happening by actually delivering something that's basically a minimally viable pizza.
- mrweasel 6y ago
  How would is that ever going to work long term? Most pizza places I frequent offer free delivery, or very cheap delivery once you get pizza for two people. The “growth hack” will never work when you compete with your supplier. Even if this was somehow going to work, once Doordash has pushed others out of the market, then they would need to raise the price significantly, pushing many to just do pickup themselfs. More suprising, to me, is that it was ever legal to list resturants without and opt in.
  - ljm 6y ago
    Growth hacks are never about sustainably growing a business, they're just there to fatten it up before parading it in front of the VCs. Of course by growth hacking, we're talking about the act of using unethical practices against users to boost certain metrics.
deleted 6y ago
[deleted]
deleted 6y ago
[deleted]
josefx 6y ago
The goal is to kill the competition, no local delivery service can compete with a few million in VC funding. Once you are the only delivery in town you can raise the prices all you want and force the local restaurants into one sided deals on your terms. It also has a rather questionable legality
- tt433 6y ago
  When it's goods and not services (delivery is the service here, I guess, not the food as a good), usually it's termed dumping, and I'm fairly sure it's illegal. I don't know if that language ever gets used for services.
- jimmaswell 6y ago
  > no local delivery service can compete with a few million in VC funding A simple ordering form on the restaurant's own website always gets preference from me and seems to usually end up being the first result on Google/Google Maps.
  - jiofih 6y ago
    No, part of the problem here is that the big delivery company will always win in SEO.
    - jimmaswell 6y ago
      It doesn't in my experience. Google Five Guys near you, the actual first result ignoring ads will almost certainly be their website or even its order form. Same for every local restaurant with an order form I've tried it on.
      - kaslai 6y ago
        A lot of "local restaurant order forms" are actually sites set up by the likes of GrubHub, Uber Eats, etc. Not all of them, but it's one of the sneaky ways they use to insert themselves.
  - 6y ago

amingilani 6y ago

Similar story but with Door Dash. Explanation: Door Dash charged lower than actual price, so owner placed an order and sent just plain dough. Their profit was higher than cost of making the pizza. https://themargins.substack.com/p/doordash-and-pizza-arbitrage https://themargins.substack.com/p/doordash-and-pizza-arbitra...

1-6 6y ago
Now that's what I call making dough!
bshep 6y ago
for even more profit become a doordash driver and exclusively ‘deliver’ these pizzas.

powerapple 6y ago

lol. That's nice. I can see from the trademark point of view, it makes sense to stop other people from listing your business in their list, brands should be protected. But providing a service for customer should be legal. It would be the same as Taxi drivers should be able to pick you up from your home to a business without the permission of the business.

paranoidrobot 6y ago
The difference between what delivery services like Doordash and what Taxi companies are doing is that Doordash is holding themselves out to be the company. There's several instances where Company A has had Service Provider B set up a website in the name of Company A, update Google Listings to replace the Phone number and website of Company A with their own version of the site. Then when an unwitting customer calls the number given, they're actually talking to Service Provider B, not Company A. Taxi services don't hold themselves out as the personal driver service for the company you're going to.
- powerapple 6y ago
  I totally agree with you. The business of Doordash should be legal while the exact practices you described above are illegal.
  - RHSeeger 6y ago
    The problem is how to allow the former while preventing the latter, in a way that is reasonable for small businesses.
    - alisonkisk 6y ago
      Just prosecute the fraudulent misrepresentation of the restaurant.
      - balls187 6y ago

29athrowaway 6y ago

Reminds me of the story of Don Johnson, a professional blackjack player who made $6,000,000 in one night. Because he is a known high stakes player, the Tropicana casino in Atlantic City invited him over and gave him a discount ("loss rebate") on chips. Because of this 10% rebase on loss, even when his blackjack win-rate was below 50%, he would still make more money that what he lost. https://www.theatlantic.com/magazine/archive/2012/04/the-man-who-broke-atlantic-city/308900/ https://www.theatlantic.com/magazine/archive/2012/04/the-man...