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Now that I think about it, I think this law could also hurt competition even amongst established players, allowing them to squeeze restaurants even harder. Ima
by rattray 6y ago
Now that I think about it, I think this law could also hurt competition even amongst established players, allowing them to squeeze restaurants even harder.
Imagine platforms A, B, and C. Platform A approaches Daisy's Cafe offering an amazing deal on a delivery partnership, as long as the Cafe agrees not to use any other delivery companies. Daisy asks around and hears great things about Platform A, so she says yes – what a win!
Months later, the quality of Platform A starts going way down – food is delivered to the wrong addresses, delivered cold, etc. All of the restaurants in Daisy's area also deliver with Platform A, so the local customers don't use other platforms – she's stuck. If she switches, she'll lose almost all her delivery traffic overnight.
Now imagine if Platform C did delivery for her without an agreement signed. Daisy isn't breaking the agreement with Platform A when customers order through Platform C! She'll still lose business when she stops working with Platform A, but not as much, so it's an easier choice to make.
In this scenario, predatory platforms are more likely to squeeze restaurants if agreements must be signed, because exclusivity can be enforced.
Of course, the simple patch here is to disallow exclusive delivery platform contracts, but I don't see that in this bill.
- propogandist 6y agoWe’re at a point with this pandemic that those who will purchase with delivery platform have likely developed some form of affinity towards a preferred vendor or two. A bigger issue is that few restaurants will survive through the extended statewide shutdowns. Delivery is meant to be a small route of generating revenue, rather than the sole revenue stream. The overhead costs of a retail storefront and operations will destroy most restaurants, if it hasn’t already. Separately, these delivery apps and services are terrible, unprofitable businesses. None of the platforms have turned a profit despite the once in a lifetime opportunity with all customers being locked inside... all these platforms are optimized to run on VC money as they are garbage ventures that cannot make money. The IPOs are rushed to give VC money a way out of the ticking timebomb.
- ghaff 6y agoUnless you think the pandemic has created a significant shift in consumer behavior with respect to takeout--like it probably has with grocery delivery--it's hard to see how delivery companies unable to make money over the past year will do so in the future. And I'm not sure why people would change. The overall take one hears is nice to have (even essential in some views) during pandemic, but expensive and unreliable. The fact is that mainstream, even upper middle class, consumers won't en masse pay enough for some sorts of services to work when extended beyond the niches when it already does work.
- r00fus 6y agoWhat’s preventing them from doing this today?
- rattray 6y agoI'm definitely under the impression that exclusivity agreements exist in this industry today. But the fact that some delivery apps list restaurants that haven't signed up with them reduces the power of the exclusivity (since some delivery traffic is coming from these other, "unofficial" apps).