3 ms·

I think some of the actual value of delivery apps has been that they have low start-up costs for restaurants. They aggregate demand for that channel and some o

I think some of the actual value of delivery apps has been that they have low start-up costs for restaurants. They aggregate demand for that channel and some of the genius here is that it's pretty simple putting a restaurant's menu online. It seems clear to me that there is plenty of demand to justify the service. Doordash's revenue was about $5B last year (I believe that's revenue and not GTV, which is probably 5x that). Doordash also only has about 50% of the market. Even if you believe that some of that demand is illusory, brought about by subsidized prices, that still seems like there's a pretty straightforward business there if you can charge a sort of "ordinary business profit." And, again, there's been delivery food businesses since time immemorial, it would be weird if we thought that there was no kind of business here. Pizza companies used to be more or less the only ones because pizza delivered so well that pizza restaurants could absorb the fixed cost of entire delivery employees, but a food delivery app lets you pay for just part of a delivery-person. It seems pretty straightforwardly the case to me that the problem in food delivery apps has never been that the fundamental business makes sense, the problem has been that from the very beginning there have been a large number of companies ferociously competing in the space, with nothing to differentiate them, which has squeezed margins to nothing.

bobthepanda 4y ago
The problem is inherent in paying for part of a delivery person. Pizza delivery works because there is only one place you need to go to pick up the food that needs to be delivered, and there is a very high volume of food to be delivered. There's no additional traveling cost to flit between restaurants, most of which don't churn out food at high production rates like a pizzeria. App delivery drivers spend a lot of their time not traveling directly to customers, or waiting around for food to be ready for them to deliver. --- > Even if you believe that some of that demand is illusory, brought about by subsidized prices, that still seems like there's a pretty straightforward business there if you can charge a sort of "ordinary business profit." This remains to be seen. MoviePass was never able to successfully both retain customers and raise prices, streaming services are starting to see the same issues. The premium over pickup is often $10-20 already, if it increases anymore that probably starts having a negative exponential effect on market size. (How many people are willing to pay $30? $50? over pickup?)

bobthepanda 4y ago

The problem is inherent in paying for part of a delivery person. Pizza delivery works because there is only one place you need to go to pick up the food that needs to be delivered, and there is a very high volume of food to be delivered. There's no additional traveling cost to flit between restaurants, most of which don't churn out food at high production rates like a pizzeria. App delivery drivers spend a lot of their time not traveling directly to customers, or waiting around for food to be ready for them to deliver. --- > Even if you believe that some of that demand is illusory, brought about by subsidized prices, that still seems like there's a pretty straightforward business there if you can charge a sort of "ordinary business profit." This remains to be seen. MoviePass was never able to successfully both retain customers and raise prices, streaming services are starting to see the same issues. The premium over pickup is often $10-20 already, if it increases anymore that probably starts having a negative exponential effect on market size. (How many people are willing to pay $30? $50? over pickup?)