4 ms·

If these fees are truly overbearing, wouldn’t you expect new competing delivery services to undercut incumbents? The delivery space seems very competitive alre

If these fees are truly overbearing, wouldn’t you expect new competing delivery services to undercut incumbents? The delivery space seems very competitive already which leads me to believe that the fees are representative of high operational costs

spywaregorilla 5y ago
Not if these companies are willing to price so low they run at a loss.
- qeternity 5y ago
  You just made the point you were attempting to argue against. If the fees currently being charged aren’t even profitable for the delivery company, how on earth does it make sense to come in and push them down further?!?
  - spywaregorilla 5y ago
    As many are pointing out, this isn't about pushing prices down. They're free to raise prices as a way to take less from restaurants. You're making an implicit assumption that these companies deserve to be profitable, or break even. But they don't, and they shouldn't be allowed to abuse their position as a platform to squeeze restaurants who don't have a lot of choice. Food delivery for low prices is not a sustainable business.
    - qeternity 5y ago
      This is an extremely naive view of economics, and not how things work in reality. If they raise fees on customers that will reduce customer demand, which in effect “takes” from restaurants. Customers are price sensitive to the all in cost, not just the sub-total. Customers are paying for all of these fees in the end, irrespective of how they are charged.
      - spywaregorilla 5y ago
        This is an extremely naive view of economics, and not how things work in reality. Delivered food is a substitute good for take out or non-delivered food. Artificially cheap delivery services shift consumer preferences to delivered food. It is likely that losing 30% margin on restaurants is worse than the overall growth of the market. But if delivery apps distort the market, restaurants are forced to play ball or lose out to competitors in a classic prisoner's dilemma, bringing everyone down together. Regulation to limit the proportion of revenue taken from restaurants helps prevent cash flooded delivery companies from just burning cash to fuel their own growth while leaving the restaurants to eat shit and die.

spywaregorilla 5y ago

Not if these companies are willing to price so low they run at a loss.

qeternity 5y ago
You just made the point you were attempting to argue against. If the fees currently being charged aren’t even profitable for the delivery company, how on earth does it make sense to come in and push them down further?!?
- spywaregorilla 5y ago
  As many are pointing out, this isn't about pushing prices down. They're free to raise prices as a way to take less from restaurants. You're making an implicit assumption that these companies deserve to be profitable, or break even. But they don't, and they shouldn't be allowed to abuse their position as a platform to squeeze restaurants who don't have a lot of choice. Food delivery for low prices is not a sustainable business.
  - qeternity 5y ago
    This is an extremely naive view of economics, and not how things work in reality. If they raise fees on customers that will reduce customer demand, which in effect “takes” from restaurants. Customers are price sensitive to the all in cost, not just the sub-total. Customers are paying for all of these fees in the end, irrespective of how they are charged.
    - spywaregorilla 5y ago
      This is an extremely naive view of economics, and not how things work in reality. Delivered food is a substitute good for take out or non-delivered food. Artificially cheap delivery services shift consumer preferences to delivered food. It is likely that losing 30% margin on restaurants is worse than the overall growth of the market. But if delivery apps distort the market, restaurants are forced to play ball or lose out to competitors in a classic prisoner's dilemma, bringing everyone down together. Regulation to limit the proportion of revenue taken from restaurants helps prevent cash flooded delivery companies from just burning cash to fuel their own growth while leaving the restaurants to eat shit and die.