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A pizzeria owner made money buying his own $24 pizzas from DoorDash for $16 (2020)

276 points by pwthornton 4y ago

atlasunshrugged 4y ago
*article from 2020
googlryas 4y ago
I assumed this was one of those "true stories" that content marketers put out to push their newsletter, but I see in an update he actually names the restaurant that allegedly did this. Would this be fraud? Not necessarily ordering pizza from your own restaurant, but, say, ordering pizza from your own restaurant but only putting dough into the boxes?
- WrtCdEvrydy 4y ago
  I mean, if the customer doesn't complain, why would Doordash care?
- stickfigure 4y ago
  > Would this be fraud? It's hard to imagine. The restaurant clearly has no contractual relationship with Doordash. I don't know why they even bothered with the dough and boxes.
  - MerelyMortal 4y ago
    > why they even bothered with the dough and boxes So it wouldn't be fraud. They had to deliver what was ordered.
  - stonemetal12 4y ago
    If they shipped empty boxes the driver probably would have noticed and brought it to someone's attention. either refusing to deliver or ending the promotion early.
  - sigmoid10 4y ago
    You always enter in a contractual relationship with companies like Doordash if you buy anything through them - which they clearly did here. Whether or not this scheme breaks said agreement could only be answered by checking it closely, but if their legal department is worth anything there's probably some general purpose safeguard against abusing the service.
    - buscoquadnary 4y ago
      Ah yes the general. "Ultimately we can choose to screw you however we want, but we've made some sort of blanket clause in this that if you try something that is a breach of contract" Or as the The PHB in Dilbert once said "It's better than legal we are using the law to keep justice away."
    - pkaye 4y ago
      But Door dash also entered a contractual relationship when it bought pizza from the pizzeria. Did they read that contract clearly?
      - sigmoid10 4y ago
        I wouldn't bet on a small pizza place having a dedicated legal team that can craft clauses to keep this kind of abuse away.
    - Zigurd 4y ago
      Enforceability and recourse are hurdles to punishing the pizza parlor with anything more than denying them a listing if at some point they wanted one. The pizza parlor did not ask to be listed so recourse seems especially weak.
- puffoflogic 4y ago
  For this to be fraud someone would have to be defrauded. Certainly the owner was not defrauded, nor anyone working with him to purchase the dough. Nor was Doordash defrauded: they offered to sell anyone pizzas for $16, and the owner took them up on the offer.
  - WesternWind 4y ago
    Doordash defines itself as a technology company responsible for connecting customers with restaurants using dashers as contractors for delivery and itself providing logistics for ordering, paying, and routing dashers. Can you imagine what the press would do if Doordash actually sued the local pizza place because it was dumb, or filed a police report? I think it wouldn't be pretty, and the stock price could go down, and doing something that makes your stock go down can lead to an investor lawsuit. Not a lawyer, this is not legal advice, I'd love to see a lawyer analyze this though.
- colechristensen 4y ago
  >Would this be fraud? It might be fraud. I doubt the damage would be worth the possible backlash for doordash to pursue this.
- donohoe 4y ago
  No.
- blendergeek 4y ago
  > Would this be fraud? No. This is not fraud. Doordash and the pizza company had no contractual relationship. The pizza company did not contract with Doordash to run an "$8 off" pizza promotion. Rather, Doordash, in an attempt to claim a near monopoly on the food ordering market, chose to sell food at a loss. The goal of this strategy is to get consumers used to buying from Doordash (while prices are low). Once a sizable percentage of orders are going through Doordash, Doordash can raise fees and refuse to list companies that don't pay up. The only way to get this sort of market share is through tactics like the one described (selling food at a loss). When the pizza man chooses to buy his own pizza on Doordash, he is merely affording himself of the same cheap pizza that Doordash is providing to anyone else. Doordash is behaving rationally here. They need to capture the mindshare of users. By providing pizza delivery at prices that are lower than economically viable, Doordash will get this. The pizza man is simply choosing to benefit while he can. Long live the pizza man!
  - colpabar 4y ago
    If he wanted to really stick it to them, he'd complain that his pizzas were just dough and get himself some doordash credits :)
  - deleted 4y ago
    [deleted]
  - MichaelCollins 4y ago
    > Doordash and the pizza company had no contractual relationship. Don't Doordash and the pizza company owner have a contractual relationship when the pizza shop owner agrees to the Terms of Service for using the Doordash app to order food? I have no clue if the doordash TOS forbids such usage, but it might?
    - joshstrange 4y ago
      No, that was kind of the point. Doordash listed them without the restaurant's approval. In fact it was a surprise to the pizza place they were on DD.
- dszoboszlay 4y ago
  It may or may not be fraud as the letter of the law, but this is definitely the shadiest part of the story. Also a pretty lame thing to do. It would have been much more elegant to add some crazy overpriced option to your pizzas where you could make a huge margin. Like "gift wrap +$100" which would mean putting a $0.01 ribbon around the box. You could make much more money this way from Doordash with less hassle than switching certain orders to plain dough.
- goodcanadian 4y ago
  Would this be fraud? IANAL, but I am going to go against the prevailing trend and suggest that it might actually be fraud. In ordering the pizzas from Doordash, he misrepresented himself to Doordash as a genuine customer (for financial gain). As far as not actually delivering complete pizzas, that may not be fraud as he did not misrepresent the product to . . . himself. However, I could also see an argument for it being fraud as Doordash bought pizzas from him, and he did not deliver pizzas (regardless of the fact that Doordash then sold the "pizzas" back to him for less).
scarby2 4y ago
it's old, but had i discovered this i'd be tempted to automate something to deliver 20 pizzas every day to a homeless shelter and see how long they took to catch on...
- deleted 4y ago
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- 1123581321 4y ago
  Or just front-load it and donate from the proceeds. In a previous discussion, someone purchased several thousand dollars of pizzas in one order to give their local shop a multiple of that.
29athrowaway 4y ago
Before the handful of food delivery services made their way to the top 5 or so, there were a bunch of companies trying to do the same and they would often give you a free meal coupon. In this way I ate for almost an entire week for free and never use most of those services again after that.
- guywithahat 4y ago
  > most of Sounds like they were successful
  - 29athrowaway 4y ago
    I ended up using Amazon Restaurants, the one that did not give me coupons.
tunesmith 4y ago
> It’s used to subsidize an untenable customer expectation. [...] the only viable endgame is a promise of monopoly concentration and increased prices. But is that even viable? I think that's such a great summary. This has arguably already been completed with the music industry and streaming. Although another option other than "increased prices" is to have it be a loss-leading part of a larger profitable media portfolio. Either way, songwriters still get screwed. (Five imaginary bucks to the first person who replies that songwriting is just supposed to be a marketing expense for touring and merch! :) )
- TimPC 4y ago
  Dedicated songwriters (who don't also perform) is a hard problem generally. It tends to be where most systems that want to eliminate copyright monopolies stumble badly.
- legitster 4y ago
  > Either way, songwriters still get screwed I have a couple of friends who make/made music and they all say this problem is overrated. What you've lost in royalty-per-cd you're more than making up for in availability. If you tried making music 30 years ago, and you got the 1-in-a-thousand record deal, you only make a cut per CD after you pay back the record label. Today, if you just want to make some jams in your basement, you can find a niche and end up on a few playlists and start pulling in some money. The only people losing out are the big name pop artists - but the distribution tail got a lot fatter for everyone else.
  - tunesmith 4y ago
    I'm not so much talking about the tradeoff from physical to streaming. I'm talking about how when the transition to streaming happened, it was funded with a bunch of VC money that set a customer expectation of a very cheap music supply, which was later used to leverage negotiations for low streaming rates. Paying the songwriters is a cost from the delivery perspective, and the tech companies have every interest to reduce that cost. They're going to try to turn that knob before they try to raise prices on consumers. Now, if the mathematical modeling has been done to show that any increase in streaming royalty rates is 100% correlated with a decrease in listenership, such that songwriter revenue decreases; in other words, if it's been mathematically shown we are at a maximum from the songwriters' perspective, that would be convincing. I just doubt that that is the case.
bena 4y ago
This felt familiar, here's the previous discussion about this. https://news.ycombinator.com/item?id=23216852 https://news.ycombinator.com/item?id=23216852
gt565k 4y ago
Similar to uber with their subsidized rides. Early on uber was dirt cheap, now it's 3x for those same fares after they drove the taxi businesses to the ground.
- sfe22 4y ago
  Did they really drive the taxi business to the ground? Do you have any proof of this? And if so, why is it now impossible to start a taxi business again now that Uber decided to triple their prices?
  - hk__2 4y ago
    > And if so, why is it now impossible to start a taxi business again now that Uber decided to triple their prices? If you ask OP for a proof of what they say, please at least do the same for your own claims.
    - sfe22 4y ago
      I did not make a claim that it is impossible to start another taxi company, rather they have to provide proof of this too in order for their claim to make sense.
- Turing_Machine 4y ago
  Eh... taxi companies have been extorting the public for over a century with the "medallion" scam. I have no sympathy for them.
sharemywin 4y ago
I still haven't figured out how an app would get a monopoly? Each city is pretty independent so there's not much incumbent advantage. Seems like a reasonable discount would get someone to try a new app. Drivers aren't loyal. If a restaurant uses any app they probably don't care where the order comes from. Taco bell and other chains might be hard to get but is the market for taco bell or mcdonalds that big for delivery? and seems like it clutters the app anyway. DashPass what does it get you? lower fees they should be charging anyway? Am I missing something?
- echelon 4y ago
  The exclusivity agreements are between the restaurant and the courier. DoorDash has a massive sales team to negotiate contracts. The theory is that restaurants may not be fungible to all diners and that by contracting with as many restaurants as possible, the competition becomes less attractive.
  - sharemywin 4y ago
    I don't know of any exclusivity clauses in contracts. Most restaurants are on GrubHub and Doordash and UberEats.
- chrisseaton 4y ago
  > I still haven't figured out how an app would get a monopoly? They don’t have a monopoly, that’s why.
  - sharemywin 4y ago
    But that's the premise why they've got such a huge multiple.
- zem 4y ago
  mostly they have solved the problem of "i've heard of this service and i will go to their homepage to search for restaurants when i want to order delivery"
paxys 4y ago
One can laugh at DoorDash all they want, but the bottom line is that out of the hundreds of similar services that entered this space in the last decade they are one of the only ones left standing and are worth $30B in the public market. The strategy of burning VC cash to get customers can be gamed, sure, but is also incredibly effective.
- hef19898 4y ago
  Until VC money runs out and we have another WeWork-like scenario at our hands.
  - yowlingcat 4y ago
    > and are worth $30B in the public market. It's not that I directionally disagree with you on VC waste, but this example isn't supporting your point.
    - hef19898 4y ago
      Well, there are valuations and there is value. WeWork had a decent ahot at becoming public before things came crashing down, so a valuation itself isn't telling a lot.
      - yowlingcat 4y ago
        Right, but DoorDash is /already public/. This thread isn't about WeWork.
  - dylan604 4y ago
    Yeah, some outrageous valuation that isn't based on anything in this reality is just not something that impresses me.
- Supermancho 4y ago
  SkipTheDishes is still around.
- 4y ago
bogwog 4y ago
Now someone just needs to make a Doordash arbitrage app, so restaurants can get notifications when Doordash does this and can do the same thing as OP.
bragr 4y ago
"It’s used to subsidize an untenable customer expectation. You leverage a broken workforce to minimize your genuine labor expenses." With the steady erosion of the quality of the drivers, I don't even expect to receive my order in a timely fashion, in good condition, and without any drama from the drivers. I've essentially stopped getting delivery which is a bad sign since I'm basically the target audience: single, urban dweller, disposable income, willing to pay $5-10 premium to not have to pick it up from myself. No particularly noteworthy stories, mostly just a series of odd encounters. Probably the funniest (in retrospect) was the taco order where I could see on the app the guy parked the next block over, and I get a call from him like 20 minutes later that he's "lost" my order and is going back to go replace it. Well he finally shows up at my place like an hour late with a fresh order of tacos reeking of weed. So he probably burned one down in the car and ate my tacos, but at least he made good. Why he couldn't deliver my original tacos and go get his own, I will never know.
- sascha_sl 4y ago
  It's a thankless job, most of the value is extracted by the middle men (who realistically should be getting the least since they can scale to thousands of transactions like it per hour). I'd happily pay a premium if it went to the people doing the actual ground work, but that doesn't exist.
  - toomuchtodo 4y ago
    https://delivery.coop/ https://delivery.coop/ https://www.yesmagazine.org/economy/2021/07/13/delivery-fee-low-wages https://www.yesmagazine.org/economy/2021/07/13/delivery-fee-... https://www.marketplace.org/2021/08/18/why-are-some-restaurants-shutting-the-door-on-food-delivery-giants/ https://www.marketplace.org/2021/08/18/why-are-some-restaura...
    - jlund-molfese 4y ago
      0 restaurants delivering to downtown Chicago, the second largest central business district in the world after midtown Manhattan. I’d be happy to pay extra for delivery and try out places outside of walking distance if I knew the money was going to restaurants and drivers. But for all their complaints about DoorDash, the restaurants aren’t making themselves accessible elsewhere. The delivery companies put in work that restaurants weren't, and aren't able or willing to do, and that's part of the reason they have such high revenue (all concerns about quality and sustainability aside).
gnicholas 4y ago
(2020), and discussed previously here: https://news.ycombinator.com/item?id=23216852 https://news.ycombinator.com/item?id=23216852
- anamexis 4y ago
  Also discussed a month ago: https://news.ycombinator.com/item?id=32086170 https://news.ycombinator.com/item?id=32086170
anderspitman 4y ago
I think who's going to make money in this space in the long run is a company that provides a single app to get delivery from many places, like DoorDash, but only works with companies that already offer their own delivery service like pizza joints, Jimmy Johns, etc. Such a company can charge a very small fee and simply handle the transaction and some logistics, while fulfillment is handled by the companies that have been doing a good job at it for decades. It's a win-win-win. Maybe such a thing already exists?
- toss1 4y ago
  Exactly Another key quote from the article: >>"the only viable endgame is a promise of monopoly concentration and increased prices. But is that even viable?" No, it is not viable, because as soon as Uber/Grubhub/Doordash/whatever start thinking they have enough of a monopoly to raise prices, ppl will get sick of it, and your scenario of the locals, perhaps with an app, will overtake them because they don't have the global overhead. I don't see this as a business with advantages of scale, but disadvantages of scale - it's all about getting the local market right?
- decko 4y ago
  That’s more or less what just eat did/does. Though it combines both delivery and pickup
- hk__2 4y ago
  Wasn’t the whole point of this "space" to offer delivery for restaurants that didn’t have it? Outside of pizzas, I’m struggling to find another kind of restaurant that offered home delivery before UberEats/etc.
yrgulation 4y ago
“don’t make sense about global capitalism” i am puzzled. has this happened in any other capitalist country? or is the author shy in limiting the statement to just his own?
labrador 4y ago
It seems like there would be a ton of arbitrage examples like this
sva_ 4y ago
I can't say how much I have "abused" various delivery services here in Europe with their coupons. I've never even once ordered for the full price there. If I were to do that, I'd place an order at the restaurant directly instead.
ng-user 4y ago
> “He realized that a delivery option had mysteriously appeared on their company’s Google Listing. The delivery option was created by Doordash,” Roy wrote. Isn't that the crux of the issue? No one except the business owner should be able to edit the Google Listing.
- julianlam 4y ago
  You'd think so, but Google allows people to claim businesses without so much as a shred of proof. Maybe they have their own heuristics, who knows. When my FIL started a sunflower farm, I wrote a nice review and google offered to have me claim the page.
  - ThrowawayTestr 4y ago
    I have also been offered to claim a business that I reviewed. There isn't even an option to say that you aren't the owner.
    - MertsA 4y ago
      Why on earth is that even a suggestion? If it's actually the owner leaving a review of their own business that seems like the kind of situation where at a minimum you wouldn't want to go out of your way to help them claim the listing. The cynic in me thinks this was probably a data driven decision and reflects the sad state of third party reviews and small businesses.
- hk__2 4y ago
  > No one except the business owner should be able to edit the Google Listing. Or something in between: you should be able to "suggest" an edit and then when enough people confirmed it the information would show up but with something like "not confirmed by the owner". Otherwise Google would lose all this free workforce that is the people who go to restaurants and then fill the missing bits because the owners don’t know they have a listing on Google Maps / don’t know they can edit it.
aurizon 4y ago
Register as a driver. Make a cart that holds 50 pizza boxes.Load 50 boxes, place order, capture this order as yours the moment it is placed you wheel the cart out and sign for it. Wheel the cart back with the same empty 50 boxes go through the payment rigmarole, tip etc ~~ 5-10 minute delivery gap. Repeat 6-12 times/hour. The question is:-Are there 5000 or 10,000 drivers out there doing this? There are probably $200 million worth or more...
smm11 4y ago
I managed a pizza place during college. The night the local 'burger place' had a deal on cheeseburgers, we also ironically offered cheeseburger pizzas. Bumped the price a few bucks, paid for the 49 cent cheeseburger, and cleared a bit more cash those nights.
someweirdperson 4y ago
For improved profit, re-heat the pizzas and buy/sell the same ones again.
- grayclhn 4y ago
  If you're just selling them to yourself, no need to even reheat the pizzas.
- teacpde 4y ago
  That's probably not necessary. It doesn't even need the pizza in the first place.
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etempleton 4y ago
I love DoorDash as a service, but I worry about it being a sustainable business at the pricing they have and I don’t see myself paying more than I already pay.
- sharemywin 4y ago
  I still haven't figured out how they can charge what they do and still loose money?
vt100 4y ago
This is from May 2020...
- cheeze 4y ago
  Been reposted here a million times too, and not even the original source. But HN loves to talk about how terrible DoorDash is so this gets upvotes (and I agree, I hate the delivery apps personally)
tristor 4y ago
I used to use DoorDash heavily, I have since given up on all food delivery services. They are incredibly unreliable, overpriced, and it takes too long. I recently tried delivery after moving to a new place and it took 75 minutes to get a beef & rice bowl delivered from a restaurant that was 2.3 miles away, and cost $26 for what was a $12 product. When it arrived it was cold and I had to immediately microwave it. At that point, why would you even bother? I could have /walked/ 2.3 miles there and back, sat down for dinner in the restaurant, and still done it in less than 75 minutes while saving $14. The "gig economy" is driving everything to the lowest common denominator /and/ exploiting workers at the same time. I don't want somebody who can barely fog a mirror and is desperate delivering my food, I want somebody that gives a damn and is compensated well enough they can afford to give a damn. I don't mind paying a premium for delivery, but I do mind paying a premium and getting nothing in return. The reality is that the economics just probably don't support delivery even being a thing unless it's a very large order because of the increased cost of fuel and maintenance.
- opisthenar84 4y ago
  Safeway suffers from a similar pricing problem. Ordered items that cost $42 on the receipt but $35 on DoorDash, with fees and tip.
- xhkkffbf 4y ago
  Absolutely. I was at a kids' birthday party. The pizza arrived 90 minutes after it was supposed to. It took 2+ hours to deliver it. The pizzeria claimed they had nothing to do with it. It was all UberEats. What a bogus product. They have no control over their drivers.
  - porpoisemonkey 4y ago
    That’s an unfortunate situation, but I’m not surprised to hear this. I worked in a single-location pizza shop when I was in high school and there is a lot more customer-benefitting coordination going on between the inside and the drivers than may be obvious. (These applied to my shop; I’m not sure if the big chains actually do this kind of stuff.) * Most shops have a delivery radius of less than 10 miles and it’s pretty impressive how detailed a driver’s address knowledge of the area can get after just a few months. * The people taking orders over the phone were often delivery drivers waiting between runs and will clarify addresses and locations as well as delivery instructions (drop off locations, gate codes, etc.). * The inside crew will typically batch deliveries headed for the same area and time the oven to get all the food out around the same time. * If for any reason a delivery can’t be made (car accident, flat tire, made a wrong delivery and no longer have the right food for the order, etc.) the driver will call the shop which will remake the order and send it with either another driver or an inside crew member.
WaitWaitWha 4y ago
I guess the business model for DoorDash is to 'lock' customers (both receiving and sending side) into their systems. Once ingrained to a point where it is painful to extricate, prices creep up till it is profitable? Sort of like cable TV, satellite radio, Youtube, et al. I remember all were initially introduces as 'no commercials, that is what the monthly fee is for', or 'you will not see commercials in our videos'. Today, none of these media can be watched without advertisements. Step one, present something slightly more convenient, or less costly than status quo. Step two, wait till every frog is comfortably swimming in the pot and abandons original something. Step three, put lid on pot, but keep telling frogs that it is for an improvement. Maybe even get Gov to declare original something was dangerous, think of the children! Step four, turn up heat and start charging big bucks.
SergeAx 4y ago
(2020), please. It is at least third time I'm seeing this story on HN top page.
vxNsr 4y ago
This needs a (2020) tag. It’s super old but still an interesting anecdote about “blitz scaling” gone wrong. I found a few of these myself, was able to order a free sandwich that normally cost $16 as long as I ordered something else.
andrewmcwatters 4y ago
There is a Streets of New York Pizza on Camelback Rd in Phoenix, AZ that has a sign up by the cash register. I read it picking up an order one day. It tells patrons that Uber Eats et al. charge up to a cool app-store-esque 30% premium on deliveries. I'm not sure how that works out for the business or affects their pricing or margins, but they say it pushes them down for their side of the transaction. Uber Eats already gets out of hand for the consumer, so I assume the only winner involved is the corporate body, because it certainly isn't the driver.
jrm4 4y ago
The correct next step, not sure where to begin. How can localities ban (perhaps outright or through heavy taxation) these services, and perhaps roll their own. I'm aware of all the pro-free-market economic religiosity one would have to cut through to get there, but I really don't care about any of it. There is no reason any rando Silicon Valley person or company should get ANY money from a $mycity driver delivering $mycity restaurant food to a $mycity customer. Not any more.
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themantra514 4y ago
Let's be honest, as soon as L5 is cleared the human driver will be disposable in the context of home deliveries. Then, $1 delivery will be the standard, the crazy surcharges will be gone and you will order all the things you crave without hesitation. Look at Starship on campuses.
- nr2x 4y ago
  Pretty sure a fusion grid will happen first.
billconan 4y ago
Yesterday I heard a story about the Chinese green energy industry. The government subsidizes companies that run city transportation services. The subsidy amount is determined by the overall mileage (of clean energy buses) a company has served during one year. So those companies raise their clean energy buses with a jack and let them run continuously to update the odometers in order to collect the money.
bitwize 4y ago
This reminds me of the time when I believe it was California implemented a gun buyback program for dangerous, untraceable 3D printed guns. Some clever git with a 3D printer saw the obvious opportunity and made his almost-literal money printer go brrrr.
bmmayer1 4y ago
@dang please tag (2020)
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polskibus 4y ago
The article is from 2020, it’s a bit different landscape in 2022 with cuts across many VC-fueled startups
phkahler 4y ago
>> the only viable endgame is a promise of monopoly concentration and increased prices. But is that even viable? No, the endgame is to IPO and unload that money furnace on the public. If you can get big enough certain funds will even be required to buy the shares. Part of the problem here is that general public have outsourced stock picking to mutual funds or ETFs via the 401K plan. Good plans won't buy this, but a simple ETF will if the criteria are met right?
- val314159 4y ago
  if you look at Uber's fundamentals thru the IPO it's clear that most of the value was a money laundering scheme for the Saudis.
wizofaus 4y ago
I don't get the "in fairness: COVID-19" remark. Lockdown was the one time many people I know and I actually did make use of food delivery services because we couldn't eat on prem...
tolstoshev 4y ago
This reminds me of Milo Minderbinder from Catch 22 :)
paxvinci 4y ago
I know this post is related to the umpteenth food delivery but how could it possible to sell a pizza for $24? I mean, a pizza contains flour, yeast, water, tomato sauce, cheese (mozzarella if you want an Italian pizza) and olive oil. All of these ingredients are in US so you don't need to pay extra fees to bring those ingredients in your country. In Italy a delivered pizza costs €7-€12. The raw materials to produce a single pizza costs €1-€3 plus the cost of the resturant (employees, fixed costs) €3-5€, the margin is €3-€4 per pizza.

276 points by pwthornton 4y ago

*article from 2020

I assumed this was one of those "true stories" that content marketers put out to push their newsletter, but I see in an update he actually names the restaurant that allegedly did this. Would this be fraud? Not necessarily ordering pizza from your own restaurant, but, say, ordering pizza from your own restaurant but only putting dough into the boxes?

WrtCdEvrydy 4y ago
I mean, if the customer doesn't complain, why would Doordash care?
stickfigure 4y ago
> Would this be fraud? It's hard to imagine. The restaurant clearly has no contractual relationship with Doordash. I don't know why they even bothered with the dough and boxes.
- MerelyMortal 4y ago
  > why they even bothered with the dough and boxes So it wouldn't be fraud. They had to deliver what was ordered.
- stonemetal12 4y ago
  If they shipped empty boxes the driver probably would have noticed and brought it to someone's attention. either refusing to deliver or ending the promotion early.
- sigmoid10 4y ago
  You always enter in a contractual relationship with companies like Doordash if you buy anything through them - which they clearly did here. Whether or not this scheme breaks said agreement could only be answered by checking it closely, but if their legal department is worth anything there's probably some general purpose safeguard against abusing the service.
  - buscoquadnary 4y ago
    Ah yes the general. "Ultimately we can choose to screw you however we want, but we've made some sort of blanket clause in this that if you try something that is a breach of contract" Or as the The PHB in Dilbert once said "It's better than legal we are using the law to keep justice away."
  - pkaye 4y ago
    But Door dash also entered a contractual relationship when it bought pizza from the pizzeria. Did they read that contract clearly?
    - sigmoid10 4y ago
      I wouldn't bet on a small pizza place having a dedicated legal team that can craft clauses to keep this kind of abuse away.
  - Zigurd 4y ago
    Enforceability and recourse are hurdles to punishing the pizza parlor with anything more than denying them a listing if at some point they wanted one. The pizza parlor did not ask to be listed so recourse seems especially weak.
puffoflogic 4y ago
For this to be fraud someone would have to be defrauded. Certainly the owner was not defrauded, nor anyone working with him to purchase the dough. Nor was Doordash defrauded: they offered to sell anyone pizzas for $16, and the owner took them up on the offer.
- WesternWind 4y ago
  Doordash defines itself as a technology company responsible for connecting customers with restaurants using dashers as contractors for delivery and itself providing logistics for ordering, paying, and routing dashers. Can you imagine what the press would do if Doordash actually sued the local pizza place because it was dumb, or filed a police report? I think it wouldn't be pretty, and the stock price could go down, and doing something that makes your stock go down can lead to an investor lawsuit. Not a lawyer, this is not legal advice, I'd love to see a lawyer analyze this though.
colechristensen 4y ago
>Would this be fraud? It might be fraud. I doubt the damage would be worth the possible backlash for doordash to pursue this.
donohoe 4y ago
No.
blendergeek 4y ago
> Would this be fraud? No. This is not fraud. Doordash and the pizza company had no contractual relationship. The pizza company did not contract with Doordash to run an "$8 off" pizza promotion. Rather, Doordash, in an attempt to claim a near monopoly on the food ordering market, chose to sell food at a loss. The goal of this strategy is to get consumers used to buying from Doordash (while prices are low). Once a sizable percentage of orders are going through Doordash, Doordash can raise fees and refuse to list companies that don't pay up. The only way to get this sort of market share is through tactics like the one described (selling food at a loss). When the pizza man chooses to buy his own pizza on Doordash, he is merely affording himself of the same cheap pizza that Doordash is providing to anyone else. Doordash is behaving rationally here. They need to capture the mindshare of users. By providing pizza delivery at prices that are lower than economically viable, Doordash will get this. The pizza man is simply choosing to benefit while he can. Long live the pizza man!
- colpabar 4y ago
  If he wanted to really stick it to them, he'd complain that his pizzas were just dough and get himself some doordash credits :)
- deleted 4y ago
  [deleted]
- MichaelCollins 4y ago
  > Doordash and the pizza company had no contractual relationship. Don't Doordash and the pizza company owner have a contractual relationship when the pizza shop owner agrees to the Terms of Service for using the Doordash app to order food? I have no clue if the doordash TOS forbids such usage, but it might?
  - joshstrange 4y ago
    No, that was kind of the point. Doordash listed them without the restaurant's approval. In fact it was a surprise to the pizza place they were on DD.
dszoboszlay 4y ago
It may or may not be fraud as the letter of the law, but this is definitely the shadiest part of the story. Also a pretty lame thing to do. It would have been much more elegant to add some crazy overpriced option to your pizzas where you could make a huge margin. Like "gift wrap +$100" which would mean putting a $0.01 ribbon around the box. You could make much more money this way from Doordash with less hassle than switching certain orders to plain dough.
goodcanadian 4y ago
Would this be fraud? IANAL, but I am going to go against the prevailing trend and suggest that it might actually be fraud. In ordering the pizzas from Doordash, he misrepresented himself to Doordash as a genuine customer (for financial gain). As far as not actually delivering complete pizzas, that may not be fraud as he did not misrepresent the product to . . . himself. However, I could also see an argument for it being fraud as Doordash bought pizzas from him, and he did not deliver pizzas (regardless of the fact that Doordash then sold the "pizzas" back to him for less).

scarby2 4y ago

it's old, but had i discovered this i'd be tempted to automate something to deliver 20 pizzas every day to a homeless shelter and see how long they took to catch on...

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1123581321 4y ago
Or just front-load it and donate from the proceeds. In a previous discussion, someone purchased several thousand dollars of pizzas in one order to give their local shop a multiple of that.

29athrowaway 4y ago

Before the handful of food delivery services made their way to the top 5 or so, there were a bunch of companies trying to do the same and they would often give you a free meal coupon. In this way I ate for almost an entire week for free and never use most of those services again after that.

guywithahat 4y ago
> most of Sounds like they were successful
- 29athrowaway 4y ago
  I ended up using Amazon Restaurants, the one that did not give me coupons.

tunesmith 4y ago

> It’s used to subsidize an untenable customer expectation. [...] the only viable endgame is a promise of monopoly concentration and increased prices. But is that even viable? I think that's such a great summary. This has arguably already been completed with the music industry and streaming. Although another option other than "increased prices" is to have it be a loss-leading part of a larger profitable media portfolio. Either way, songwriters still get screwed. (Five imaginary bucks to the first person who replies that songwriting is just supposed to be a marketing expense for touring and merch! :) )

TimPC 4y ago
Dedicated songwriters (who don't also perform) is a hard problem generally. It tends to be where most systems that want to eliminate copyright monopolies stumble badly.
legitster 4y ago
> Either way, songwriters still get screwed I have a couple of friends who make/made music and they all say this problem is overrated. What you've lost in royalty-per-cd you're more than making up for in availability. If you tried making music 30 years ago, and you got the 1-in-a-thousand record deal, you only make a cut per CD after you pay back the record label. Today, if you just want to make some jams in your basement, you can find a niche and end up on a few playlists and start pulling in some money. The only people losing out are the big name pop artists - but the distribution tail got a lot fatter for everyone else.
- tunesmith 4y ago
  I'm not so much talking about the tradeoff from physical to streaming. I'm talking about how when the transition to streaming happened, it was funded with a bunch of VC money that set a customer expectation of a very cheap music supply, which was later used to leverage negotiations for low streaming rates. Paying the songwriters is a cost from the delivery perspective, and the tech companies have every interest to reduce that cost. They're going to try to turn that knob before they try to raise prices on consumers. Now, if the mathematical modeling has been done to show that any increase in streaming royalty rates is 100% correlated with a decrease in listenership, such that songwriter revenue decreases; in other words, if it's been mathematically shown we are at a maximum from the songwriters' perspective, that would be convincing. I just doubt that that is the case.

bena 4y ago

This felt familiar, here's the previous discussion about this. https://news.ycombinator.com/item?id=23216852 https://news.ycombinator.com/item?id=23216852

gt565k 4y ago

Similar to uber with their subsidized rides. Early on uber was dirt cheap, now it's 3x for those same fares after they drove the taxi businesses to the ground.

sfe22 4y ago
Did they really drive the taxi business to the ground? Do you have any proof of this? And if so, why is it now impossible to start a taxi business again now that Uber decided to triple their prices?
- hk__2 4y ago
  > And if so, why is it now impossible to start a taxi business again now that Uber decided to triple their prices? If you ask OP for a proof of what they say, please at least do the same for your own claims.
  - sfe22 4y ago
    I did not make a claim that it is impossible to start another taxi company, rather they have to provide proof of this too in order for their claim to make sense.
Turing_Machine 4y ago
Eh... taxi companies have been extorting the public for over a century with the "medallion" scam. I have no sympathy for them.

sharemywin 4y ago

I still haven't figured out how an app would get a monopoly? Each city is pretty independent so there's not much incumbent advantage. Seems like a reasonable discount would get someone to try a new app. Drivers aren't loyal. If a restaurant uses any app they probably don't care where the order comes from. Taco bell and other chains might be hard to get but is the market for taco bell or mcdonalds that big for delivery? and seems like it clutters the app anyway. DashPass what does it get you? lower fees they should be charging anyway? Am I missing something?

echelon 4y ago
The exclusivity agreements are between the restaurant and the courier. DoorDash has a massive sales team to negotiate contracts. The theory is that restaurants may not be fungible to all diners and that by contracting with as many restaurants as possible, the competition becomes less attractive.
- sharemywin 4y ago
  I don't know of any exclusivity clauses in contracts. Most restaurants are on GrubHub and Doordash and UberEats.
chrisseaton 4y ago
> I still haven't figured out how an app would get a monopoly? They don’t have a monopoly, that’s why.
- sharemywin 4y ago
  But that's the premise why they've got such a huge multiple.
zem 4y ago
mostly they have solved the problem of "i've heard of this service and i will go to their homepage to search for restaurants when i want to order delivery"

paxys 4y ago

One can laugh at DoorDash all they want, but the bottom line is that out of the hundreds of similar services that entered this space in the last decade they are one of the only ones left standing and are worth $30B in the public market. The strategy of burning VC cash to get customers can be gamed, sure, but is also incredibly effective.

hef19898 4y ago
Until VC money runs out and we have another WeWork-like scenario at our hands.
- yowlingcat 4y ago
  > and are worth $30B in the public market. It's not that I directionally disagree with you on VC waste, but this example isn't supporting your point.
  - hef19898 4y ago
    Well, there are valuations and there is value. WeWork had a decent ahot at becoming public before things came crashing down, so a valuation itself isn't telling a lot.
    - yowlingcat 4y ago
      Right, but DoorDash is /already public/. This thread isn't about WeWork.
- dylan604 4y ago
  Yeah, some outrageous valuation that isn't based on anything in this reality is just not something that impresses me.
Supermancho 4y ago
SkipTheDishes is still around.
4y ago

bogwog 4y ago

Now someone just needs to make a Doordash arbitrage app, so restaurants can get notifications when Doordash does this and can do the same thing as OP.

bragr 4y ago

"It’s used to subsidize an untenable customer expectation. You leverage a broken workforce to minimize your genuine labor expenses." With the steady erosion of the quality of the drivers, I don't even expect to receive my order in a timely fashion, in good condition, and without any drama from the drivers. I've essentially stopped getting delivery which is a bad sign since I'm basically the target audience: single, urban dweller, disposable income, willing to pay $5-10 premium to not have to pick it up from myself. No particularly noteworthy stories, mostly just a series of odd encounters. Probably the funniest (in retrospect) was the taco order where I could see on the app the guy parked the next block over, and I get a call from him like 20 minutes later that he's "lost" my order and is going back to go replace it. Well he finally shows up at my place like an hour late with a fresh order of tacos reeking of weed. So he probably burned one down in the car and ate my tacos, but at least he made good. Why he couldn't deliver my original tacos and go get his own, I will never know.

sascha_sl 4y ago
It's a thankless job, most of the value is extracted by the middle men (who realistically should be getting the least since they can scale to thousands of transactions like it per hour). I'd happily pay a premium if it went to the people doing the actual ground work, but that doesn't exist.
- toomuchtodo 4y ago
  https://delivery.coop/ https://delivery.coop/ https://www.yesmagazine.org/economy/2021/07/13/delivery-fee-low-wages https://www.yesmagazine.org/economy/2021/07/13/delivery-fee-... https://www.marketplace.org/2021/08/18/why-are-some-restaurants-shutting-the-door-on-food-delivery-giants/ https://www.marketplace.org/2021/08/18/why-are-some-restaura...
  - jlund-molfese 4y ago
    0 restaurants delivering to downtown Chicago, the second largest central business district in the world after midtown Manhattan. I’d be happy to pay extra for delivery and try out places outside of walking distance if I knew the money was going to restaurants and drivers. But for all their complaints about DoorDash, the restaurants aren’t making themselves accessible elsewhere. The delivery companies put in work that restaurants weren't, and aren't able or willing to do, and that's part of the reason they have such high revenue (all concerns about quality and sustainability aside).

gnicholas 4y ago

(2020), and discussed previously here: https://news.ycombinator.com/item?id=23216852 https://news.ycombinator.com/item?id=23216852

anamexis 4y ago
Also discussed a month ago: https://news.ycombinator.com/item?id=32086170 https://news.ycombinator.com/item?id=32086170

anderspitman 4y ago

I think who's going to make money in this space in the long run is a company that provides a single app to get delivery from many places, like DoorDash, but only works with companies that already offer their own delivery service like pizza joints, Jimmy Johns, etc. Such a company can charge a very small fee and simply handle the transaction and some logistics, while fulfillment is handled by the companies that have been doing a good job at it for decades. It's a win-win-win. Maybe such a thing already exists?

toss1 4y ago
Exactly Another key quote from the article: >>"the only viable endgame is a promise of monopoly concentration and increased prices. But is that even viable?" No, it is not viable, because as soon as Uber/Grubhub/Doordash/whatever start thinking they have enough of a monopoly to raise prices, ppl will get sick of it, and your scenario of the locals, perhaps with an app, will overtake them because they don't have the global overhead. I don't see this as a business with advantages of scale, but disadvantages of scale - it's all about getting the local market right?
decko 4y ago
That’s more or less what just eat did/does. Though it combines both delivery and pickup
hk__2 4y ago
Wasn’t the whole point of this "space" to offer delivery for restaurants that didn’t have it? Outside of pizzas, I’m struggling to find another kind of restaurant that offered home delivery before UberEats/etc.

yrgulation 4y ago

“don’t make sense about global capitalism” i am puzzled. has this happened in any other capitalist country? or is the author shy in limiting the statement to just his own?

labrador 4y ago

It seems like there would be a ton of arbitrage examples like this

sva_ 4y ago

I can't say how much I have "abused" various delivery services here in Europe with their coupons. I've never even once ordered for the full price there. If I were to do that, I'd place an order at the restaurant directly instead.

ng-user 4y ago

> “He realized that a delivery option had mysteriously appeared on their company’s Google Listing. The delivery option was created by Doordash,” Roy wrote. Isn't that the crux of the issue? No one except the business owner should be able to edit the Google Listing.

julianlam 4y ago
You'd think so, but Google allows people to claim businesses without so much as a shred of proof. Maybe they have their own heuristics, who knows. When my FIL started a sunflower farm, I wrote a nice review and google offered to have me claim the page.
- ThrowawayTestr 4y ago
  I have also been offered to claim a business that I reviewed. There isn't even an option to say that you aren't the owner.
  - MertsA 4y ago
    Why on earth is that even a suggestion? If it's actually the owner leaving a review of their own business that seems like the kind of situation where at a minimum you wouldn't want to go out of your way to help them claim the listing. The cynic in me thinks this was probably a data driven decision and reflects the sad state of third party reviews and small businesses.
hk__2 4y ago
> No one except the business owner should be able to edit the Google Listing. Or something in between: you should be able to "suggest" an edit and then when enough people confirmed it the information would show up but with something like "not confirmed by the owner". Otherwise Google would lose all this free workforce that is the people who go to restaurants and then fill the missing bits because the owners don’t know they have a listing on Google Maps / don’t know they can edit it.

aurizon 4y ago

Register as a driver. Make a cart that holds 50 pizza boxes.Load 50 boxes, place order, capture this order as yours the moment it is placed you wheel the cart out and sign for it. Wheel the cart back with the same empty 50 boxes go through the payment rigmarole, tip etc ~~ 5-10 minute delivery gap. Repeat 6-12 times/hour. The question is:-Are there 5000 or 10,000 drivers out there doing this? There are probably $200 million worth or more...

smm11 4y ago

I managed a pizza place during college. The night the local 'burger place' had a deal on cheeseburgers, we also ironically offered cheeseburger pizzas. Bumped the price a few bucks, paid for the 49 cent cheeseburger, and cleared a bit more cash those nights.

someweirdperson 4y ago

For improved profit, re-heat the pizzas and buy/sell the same ones again.

grayclhn 4y ago
If you're just selling them to yourself, no need to even reheat the pizzas.
teacpde 4y ago
That's probably not necessary. It doesn't even need the pizza in the first place.

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etempleton 4y ago

I love DoorDash as a service, but I worry about it being a sustainable business at the pricing they have and I don’t see myself paying more than I already pay.

sharemywin 4y ago
I still haven't figured out how they can charge what they do and still loose money?

vt100 4y ago

This is from May 2020...

cheeze 4y ago
Been reposted here a million times too, and not even the original source. But HN loves to talk about how terrible DoorDash is so this gets upvotes (and I agree, I hate the delivery apps personally)

tristor 4y ago

I used to use DoorDash heavily, I have since given up on all food delivery services. They are incredibly unreliable, overpriced, and it takes too long. I recently tried delivery after moving to a new place and it took 75 minutes to get a beef & rice bowl delivered from a restaurant that was 2.3 miles away, and cost $26 for what was a $12 product. When it arrived it was cold and I had to immediately microwave it. At that point, why would you even bother? I could have /walked/ 2.3 miles there and back, sat down for dinner in the restaurant, and still done it in less than 75 minutes while saving $14. The "gig economy" is driving everything to the lowest common denominator /and/ exploiting workers at the same time. I don't want somebody who can barely fog a mirror and is desperate delivering my food, I want somebody that gives a damn and is compensated well enough they can afford to give a damn. I don't mind paying a premium for delivery, but I do mind paying a premium and getting nothing in return. The reality is that the economics just probably don't support delivery even being a thing unless it's a very large order because of the increased cost of fuel and maintenance.

opisthenar84 4y ago
Safeway suffers from a similar pricing problem. Ordered items that cost $42 on the receipt but $35 on DoorDash, with fees and tip.
xhkkffbf 4y ago
Absolutely. I was at a kids' birthday party. The pizza arrived 90 minutes after it was supposed to. It took 2+ hours to deliver it. The pizzeria claimed they had nothing to do with it. It was all UberEats. What a bogus product. They have no control over their drivers.
- porpoisemonkey 4y ago
  That’s an unfortunate situation, but I’m not surprised to hear this. I worked in a single-location pizza shop when I was in high school and there is a lot more customer-benefitting coordination going on between the inside and the drivers than may be obvious. (These applied to my shop; I’m not sure if the big chains actually do this kind of stuff.) * Most shops have a delivery radius of less than 10 miles and it’s pretty impressive how detailed a driver’s address knowledge of the area can get after just a few months. * The people taking orders over the phone were often delivery drivers waiting between runs and will clarify addresses and locations as well as delivery instructions (drop off locations, gate codes, etc.). * The inside crew will typically batch deliveries headed for the same area and time the oven to get all the food out around the same time. * If for any reason a delivery can’t be made (car accident, flat tire, made a wrong delivery and no longer have the right food for the order, etc.) the driver will call the shop which will remake the order and send it with either another driver or an inside crew member.

WaitWaitWha 4y ago

I guess the business model for DoorDash is to 'lock' customers (both receiving and sending side) into their systems. Once ingrained to a point where it is painful to extricate, prices creep up till it is profitable? Sort of like cable TV, satellite radio, Youtube, et al. I remember all were initially introduces as 'no commercials, that is what the monthly fee is for', or 'you will not see commercials in our videos'. Today, none of these media can be watched without advertisements. Step one, present something slightly more convenient, or less costly than status quo. Step two, wait till every frog is comfortably swimming in the pot and abandons original something. Step three, put lid on pot, but keep telling frogs that it is for an improvement. Maybe even get Gov to declare original something was dangerous, think of the children! Step four, turn up heat and start charging big bucks.

SergeAx 4y ago

(2020), please. It is at least third time I'm seeing this story on HN top page.

vxNsr 4y ago

This needs a (2020) tag. It’s super old but still an interesting anecdote about “blitz scaling” gone wrong. I found a few of these myself, was able to order a free sandwich that normally cost $16 as long as I ordered something else.

andrewmcwatters 4y ago

There is a Streets of New York Pizza on Camelback Rd in Phoenix, AZ that has a sign up by the cash register. I read it picking up an order one day. It tells patrons that Uber Eats et al. charge up to a cool app-store-esque 30% premium on deliveries. I'm not sure how that works out for the business or affects their pricing or margins, but they say it pushes them down for their side of the transaction. Uber Eats already gets out of hand for the consumer, so I assume the only winner involved is the corporate body, because it certainly isn't the driver.

jrm4 4y ago

The correct next step, not sure where to begin. How can localities ban (perhaps outright or through heavy taxation) these services, and perhaps roll their own. I'm aware of all the pro-free-market economic religiosity one would have to cut through to get there, but I really don't care about any of it. There is no reason any rando Silicon Valley person or company should get ANY money from a $mycity driver delivering $mycity restaurant food to a $mycity customer. Not any more.

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themantra514 4y ago

Let's be honest, as soon as L5 is cleared the human driver will be disposable in the context of home deliveries. Then, $1 delivery will be the standard, the crazy surcharges will be gone and you will order all the things you crave without hesitation. Look at Starship on campuses.

nr2x 4y ago
Pretty sure a fusion grid will happen first.

billconan 4y ago

Yesterday I heard a story about the Chinese green energy industry. The government subsidizes companies that run city transportation services. The subsidy amount is determined by the overall mileage (of clean energy buses) a company has served during one year. So those companies raise their clean energy buses with a jack and let them run continuously to update the odometers in order to collect the money.

bitwize 4y ago

This reminds me of the time when I believe it was California implemented a gun buyback program for dangerous, untraceable 3D printed guns. Some clever git with a 3D printer saw the obvious opportunity and made his almost-literal money printer go brrrr.

bmmayer1 4y ago

@dang please tag (2020)

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polskibus 4y ago

The article is from 2020, it’s a bit different landscape in 2022 with cuts across many VC-fueled startups

phkahler 4y ago

>> the only viable endgame is a promise of monopoly concentration and increased prices. But is that even viable? No, the endgame is to IPO and unload that money furnace on the public. If you can get big enough certain funds will even be required to buy the shares. Part of the problem here is that general public have outsourced stock picking to mutual funds or ETFs via the 401K plan. Good plans won't buy this, but a simple ETF will if the criteria are met right?

val314159 4y ago
if you look at Uber's fundamentals thru the IPO it's clear that most of the value was a money laundering scheme for the Saudis.

wizofaus 4y ago

I don't get the "in fairness: COVID-19" remark. Lockdown was the one time many people I know and I actually did make use of food delivery services because we couldn't eat on prem...

tolstoshev 4y ago

This reminds me of Milo Minderbinder from Catch 22 :)

paxvinci 4y ago

I know this post is related to the umpteenth food delivery but how could it possible to sell a pizza for $24? I mean, a pizza contains flour, yeast, water, tomato sauce, cheese (mozzarella if you want an Italian pizza) and olive oil. All of these ingredients are in US so you don't need to pay extra fees to bring those ingredients in your country. In Italy a delivered pizza costs €7-€12. The raw materials to produce a single pizza costs €1-€3 plus the cost of the resturant (employees, fixed costs) €3-5€, the margin is €3-€4 per pizza.