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Third-party food delivery remains an uncertain business

• paxys 6y ago
  - Restaurants have to pay a big chunk of their margin to delivery apps. - Consumers see increased food prices and other misc charges, greatly inflating their bill (sometimes up to 2x), and get a sub-par experience (long delivery times, cold food, incorrect orders). - Drivers get no benefits, have to pay for fuel/depreciation/taxes, and sometimes end up making less than minimum wage. - Uber Eats, Grubhub, Doordash etc. all lose billions of dollars every quarter (and are still valued in the tens to hundreds of billions). I genuinely do not understand this industry.
  • tomdell 6y ago
    Just another instance of VCs pumping money into a bad but appealing idea and propping it up indefinitely at the expense of society at large. This kind of investment really needs to be more closely regulated - the businesses never even have to be successful for the investors to profit as long as they go public in time to leave retail investors holding the bag before the crash.
    • samizdis 6y ago
      And here's the latest one, Deliveroo set to float with an expected $10bn valuation: Deliveroo: taste test [1], (non-paywalled version) [2] From the article: That Deliveroo could not turn a profit in a year when sales were up more than half is concerning. It is operating in a ferociously competitive market. Deliveroo is proud of its gross profit margin — as a percentage of gross transaction value it is up from 5.8 per cent in 2018 to 8.8 per cent in 2020 — but it is slim by the standards of other industries. [1] https://www.ft.com/content/17dc510c-b396-4dc5-84a8-243a5bfa7825 https://www.ft.com/content/17dc510c-b396-4dc5-84a8-243a5bfa7... [2] https://archive.is/i1Mor https://archive.is/i1Mor
  • jghn 6y ago
    My chief motivation for using these apps is that I don't want to deal with a phone call. I'm happy to pay a premium for that. I switched to primarily ordering online around 2000 and go out of my way to avoid ordering from places that are not accessible somehow. I hope that in the fallout of the obvious bad situation we're in now is not to roll back to days gone by on this front.
    • tomc1985 6y ago
      But.... why? I don't know where you're ordering from but calling the place is generally way faster than trying to futz about with an app to order a burrito or whatever A typical exchange for me is: "Hi, Jose's tacos" "Hi, I'd like to place a to-go order." "Sure, go ahead" "Get me an OMG burrito and a large diet coke please" "No problem. What's the name on the order?" "tomc1985" "Ok tomc1985, that'll be $8.43 and be ready in about 15 minutes" "Thanks!"
      • jghn 6y ago
        A few reasons: 1) I hate talking on the phone 2) Your experience is very different than my experience. I find it much easier to click through what I want than to do it via voice 3) My original motivation was around accuracy. There were many times where I'd get off the phone and was pretty sure there had been some miscommunication. Now they get a readout of exactly what I requested.
        • paxys 6y ago
          4) I have had my credit card number stolen by restaurant employees in the past, and will now never give it out over the phone
          • 1123581321 6y ago
            I’ve had just a couple restaurants text a payment link for a phone order. I wish this would become more popular.
        • tomc1985 6y ago
  • MuffinFlavored 6y ago
    > I genuinely do not understand this industry. Consumers are willing to pay for the convenience and deal with cold food.
  • Kalium 6y ago
    > I genuinely do not understand this industry. A great many restaurants do not know how to run their own effective delivery operation or do not want to. Third party apps handle all of this.
• acchow 6y ago
  > “In 60 years,” CFO Stuart Levy said on Thursday, “we’ve never made a dollar delivering a pizza. We make money on the product, but we don’t make money on the delivery.” Domino's charges a $5.99 delivery fee whereas UberEats is charging me a $4.05 service fee plus a $3.49 delivery fee plus $2 CA Driver Benefits bringing its total fees to $9.54.
  • ev1 6y ago
    Don't forget that Uber is also charging the restaurants nearly the same amount.
  • khuey 6y ago
    Domino's runs a business designed around delivery with a delivery-friendly product and runs delivery in-house. UberEats does none of that.
    • ev1 6y ago
      On the other hand, every time I've ordered papajohns [directly from PJ] I get a doordash driver, interestingly.
      • datavirtue 6y ago
        They are punting their delivery costs to the cute little DoorDash while they can. I personally hate these third parties being interjected unexpectedly. I feel like the local business is probably being hijacked (like Yelp does) because I don't know the terms of the transaction. Furthermore, I don't trust DoorDash or whatever delivery app-dujor is running the food this week, I used to trust the business I was ordering from. Leaves a bad taste in my mouth ...pun partially intended.
  • kevindong 6y ago
    The delivery models are fundamentally different. Domino's (and restaurants like it that have historically had in-house delivery drivers) is always single source, multi-destination. Uber, Grubhub, DoorDash et. al. are multi-source, multi-destination.
• sharemywin 6y ago
  Here's the thing. Most food doesn't deliver well. So what delivers well? Pizza, Wings, Subs. and some Chinese food. Who already has their own delivery drivers usually. And when they do they run 3 and 4 deliveries at a time. way more efficient. Right now the dynamic has a lot of power towards the delivery services. So, restaurants will subsidize some of the delivery cost to sell the food. But in a few months a lot of the restaurants are going to be crowded as F. because there are less restaurants to compete with. So, most deliveries are going to cost $7 plus tip or more. and it won't be as good as right from the restaurant. And I see some of the service really pushing their own shadow stores because they can make profit off that.
  • jghn 6y ago
    At least where I am and at least on GrubHub it seems like the standard delivery type places you cite are using their own drivers. I have only done pickup with DoorDash, and have only used Caviar & UberEats a combined total of 1 time. But when that's the model the primary advantage is being able to do it all through a website and not the phone
  • chrisseaton 6y ago
    I think we've discovered in this pandemic that a whole lot of other food actually delivers just fine and restaurants could have been doing it all along!
  • InitialLastName 6y ago
    The most frustrating thing is that once upon a time, even local pizza places and Chinese restaurants had delivering food at max quality totally in hand. Heated bags, good delivery logistics, and well-planned menus meant that everything you could buy showed up on time, at the perfect temperature and correctly cooked. If there was an issue with delivery and you complained to the restaurant, they had a meaningful amount of control to provide that feedback to the deliverer. In my area these days, most of them (other than perhaps the chains) have outsourced their delivery to one of the sites, using unaffiliated drivers with no interest in maintaining the reputation of the restaurant. What happens? Collapse in the quality of the delivery, along all axes.
• deleted 6y ago
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• aaron695 6y ago
  > “In 60 years,” CFO Stuart Levy said on Thursday, “we’ve never made a dollar delivering a pizza. We make money on the product, but we don’t make money on the delivery.” This is playing with words. HR at any company never made a profit. Doesn't mean recruiters are an uncertain business. I do think looking at pizza delivery is interesting. And I also think Dominos is interesting, although they are becoming a little cult like. Pizza is delivered because the food fits with delivery. It would be interesting to look to see if Domino's or pizza in general has changed to make it better for delivery.
  • bombcar 6y ago
    Pizza is one of those foods that can sit under heat lamps and not become incredibly bad - which means it will travel and deliver well. Anything above the fast food level gets progressively more difficult- until you’re at fancy dishes that waiters have a hard time delivering to a table at the restaurant let alone across town.
• deleted 6y ago
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• nickthemagicman 6y ago
  If I lived in a big city where parking and traffic was a nightmare that's one thing. But I live in a small city and am not paying twice as much for the food to save a 10-15 minute drive to pick it up myself.
  • mwfunk 6y ago
    If you lived in a big city there'd be a gazillion places within 10-15 minutes that you could drive to without dealing with traffic or parking issues, assuming you're not talking about SF or Manhattan. Even with high-density places like those, depending on where you lived there might be a gazillion places within a 10-15 minute walk. The people that live in those cities still enjoy getting stuff delivered though, for the same reason that people in small towns do (time is money and convenience is time, so if you have more money than time, it can be totally worth it).
    • nickthemagicman 6y ago
      I lived in LA and ordered Uber eats all the time to avoid finding parking.
• tschwimmer 6y ago
  I concur with the article. My frequency of online ordering has increased with the pandemic, but I can't imagine doing it much after we can go back out. In some respects I'm the prime target for online ordering (young working professional) but in others I'm not (single, somewhat discerning in terms of food quality). I've kept an informal tracker of deliveries I've received over the past year, noting issues and an overall rating for each order (good or bad). A few insights: 1) In the past 20 orders, there has been some sort of issue in 15 of them. There has been what I categorize as a major issue in 10(!) of them. Major issues include missing items, incorrect items, >30 delay over estimated arrival, delivered to the wrong place, a delivery person entering my house (!), hot/cold food arriving at room temperature. Overall, execution quality is awful! I have basically come to expect poor service at this point, and I really question if I want to bother with the aggravation of delivery every time I order. When your convenience service is arguably not as convenient as just getting takeout yourself, there's clearly a problem. In terms of fixing these issues, I don't see an easy solution. A lot of the problem seems to stem from not having enough drivers. This is surprising since I live in the SF Bay Area, which I imagine to have a bigger driver population (perhaps mistakenly). 2) Quality varies a lot between delivery vendors and restaurants. Despite over a year of time to adjust to this new delivery-first world, some restaurants consistently make mistakes with orders again and again. Taco Bell seems to always forget an item or two, which is especially annoying given how marked up their food is on the apps. Chipotle and Sweetgreen have the best consistency. Uber Eats has the worst record among the delivery apps - I have recorded an abysmal 60% favorable experience rate with them. The biggest problem seems to be that they'll happily send your order to the restaurant to be prepared but then take 40+ minutes to place that order with a driver. That's happened to me multiple times and has led me to stop placing orders with them. The best is Doordash, though I suspect that this has more to do with them delivering Chipotle, which seems to have their delivery operations dialed in and holds up relatively well in transport. 3) Not captured in my data but of note is how many times I check the apps for dinner but decide to either cook at home or get takeout because of how expensive delivery is. I understand that getting food delivered is a luxury, but it feels really bad to pay above menu prices and then pay up to three additional fees. Often times the fees add up to 50%+ of the base food price. I think that scales a bit better if you're ordering for two or more, but in my case I get sticker shock a not insignificant portion of the time I want to do delivery. As I read what I wrote here I realize it comes off as spoiled and lacking perspective. It's definitely true that in 2021 you can tap a few buttons and have food from any culture left at your door in less than an hour (sometimes, at least :P). It also ignores the problems encountered by restaurants and drivers. Really what I'm trying to say here is that third-party food delivery doesn't seem like a long term sustainable business post-pandemic. There are too many hard problems associated with it that simply can't be solved with technology (short of far future robotic automation).
• endisneigh 6y ago
  It seems to be that the primary driver is an aversion to social interactions but a desire to have the food. I wonder if vending machines could make a come back, hah. In all seriousness - are there vending machines that serve warm food in the USA? I know these exist in Japan, but have never seen one in SF, NYC, Boston or Chicago (not that I checked every inch in those places). An interesting idea would be to use statistics to find out what categories of food are popular at specific complexes (apartment or housing) at specific times. Then restaurants could bid to get space to put prepared food in the "mystical vending machines" at the predicted quantity with the predicted types of foods that would sit well. Then you don't even need your food to be delivered. Just go to the thing and get it. Done.
  • Enginerrrd 6y ago
    I don't think you'll ever be able to get the requisite quality required to pull this off.
  • aaron695 6y ago
    Automated vending machine shops were around in the 1950 https://www.thoughtco.com/the-rise-and-fall-of-the-automat-4152992 https://www.thoughtco.com/the-rise-and-fall-of-the-automat-4... I'd like to understand why Japan has a vending machine culture. I would guess it's regulatory, but it might be crime related.
    • bombcar 6y ago
      I suspect it has more to do with trying to serve “all hours” without the associated staffing costs - an American example used to be rest stops before everything went 24hr. They used to have soup dispensing machines and more.