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I wonder who the heck makes money in these food delivery app schemes? - Doordash/Uber Eats/Postmates all operate at a loss on the investors tab. - The deliver

I wonder who the heck makes money in these food delivery app schemes? - Doordash/Uber Eats/Postmates all operate at a loss on the investors tab. - The delivery drivers aren't paid a decent wage. It's why these municipalities that care are trying to mandate wages. - The restaurants (which is already a low margin business ex-drinks... which people typically don't buy on these apps) don't make money. - The customer is gouged with fees and the (mandatory) tip. Where the heck is the money going?

paxys 3y ago
1. Executives, software engineers and plenty more employees at these companies are making obscene amounts of money. 2. While most drivers just scrape by, those who play the system correctly (driving at the correct times, knowing which orders to pick, which restaurants to avoid, how to get good tips etc) do very well for themselves. These are the ones who skew all the reported statistics from these companies. 3. Restaurants always complain about the high fees but the truth is that they have the option of getting off the apps but will not, because delivery is a massive revenue stream that was never open to most (outside of cheap pizza and Chinese take outs) in the past. Most of them also mark up menu items on these apps by a good amount.
acdha 3y ago
My understanding is that the main problem was the VC bubble mentality: prior to those companies, delivery wasn’t seen as a lucrative business – enough more expensive than picking it up yourself that many people didn’t, only suited for a few cuisines which travel well, and generally working best in certain areas with enough customers. The problem with that is that you’re talking low margins and that doesn’t get huge returns for investors or make the CEO a billionaire, so when these guys launched they had to talk like there was some magical property of an iPhone which cancelled out the laws of physics to justify the valuations claimed to potential marks. Now they have a problem that the investors are tired of shoveling money in but they’ve locked in debt, compensation like Google or Facebook, shiny headquarters, etc. but they’re still not that much more efficient and have little ability to prevent customers and drivers from bailing. They’ve also trained their customers to think of expensive things like ordering takeout from across the city as cheap and routine, so it’s hard to deal with the underlying inefficiencies unless they’re willing to increase prices even further. I stopped using them after a couple of hour+ delays DoorDash, Eat24, and GrubHub lied about but had multiple restaurants include their direct order info in the bag. Something like Airbnb has some inertia from the way people usually aren’t experts in the places they’re traveling to, but local meal delivery is routine and someone can compete with them in a given area without needing to build a global company first.
Analemma_ 3y ago
If nobody— not the investors, not the drivers, and not the restaurants— is making money even though customers are getting gouged, that’s the market telling you this is fundamentally not a viable business and it should not exist.

paxys 3y ago

1. Executives, software engineers and plenty more employees at these companies are making obscene amounts of money. 2. While most drivers just scrape by, those who play the system correctly (driving at the correct times, knowing which orders to pick, which restaurants to avoid, how to get good tips etc) do very well for themselves. These are the ones who skew all the reported statistics from these companies. 3. Restaurants always complain about the high fees but the truth is that they have the option of getting off the apps but will not, because delivery is a massive revenue stream that was never open to most (outside of cheap pizza and Chinese take outs) in the past. Most of them also mark up menu items on these apps by a good amount.

acdha 3y ago

My understanding is that the main problem was the VC bubble mentality: prior to those companies, delivery wasn’t seen as a lucrative business – enough more expensive than picking it up yourself that many people didn’t, only suited for a few cuisines which travel well, and generally working best in certain areas with enough customers. The problem with that is that you’re talking low margins and that doesn’t get huge returns for investors or make the CEO a billionaire, so when these guys launched they had to talk like there was some magical property of an iPhone which cancelled out the laws of physics to justify the valuations claimed to potential marks. Now they have a problem that the investors are tired of shoveling money in but they’ve locked in debt, compensation like Google or Facebook, shiny headquarters, etc. but they’re still not that much more efficient and have little ability to prevent customers and drivers from bailing. They’ve also trained their customers to think of expensive things like ordering takeout from across the city as cheap and routine, so it’s hard to deal with the underlying inefficiencies unless they’re willing to increase prices even further. I stopped using them after a couple of hour+ delays DoorDash, Eat24, and GrubHub lied about but had multiple restaurants include their direct order info in the bag. Something like Airbnb has some inertia from the way people usually aren’t experts in the places they’re traveling to, but local meal delivery is routine and someone can compete with them in a given area without needing to build a global company first.

Analemma_ 3y ago

If nobody— not the investors, not the drivers, and not the restaurants— is making money even though customers are getting gouged, that’s the market telling you this is fundamentally not a viable business and it should not exist.