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The fundamental problem is just that the model of random delivery drivers grabbing (usually modest) amounts of food from random restaurants doesn't scale very w

The fundamental problem is just that the model of random delivery drivers grabbing (usually modest) amounts of food from random restaurants doesn't scale very well. It's inherently expensive because it's so time-consuming for the driver. Pizza is a bit of a different model because pizza delivery is sufficiently popular for pizza places to orient around supporting delivery well in the local area and have the drivers vertically integrated in-house.

the_snooze 2y ago
The on-demand deliver-anything business model just isn't sustainable. You can only have it when it's propped up by some combination of temporary subsidy (i.e., VC funding), price obfuscation (e.g., markups, fees, and tips), and shifting the costs and risks to drivers. DoorDash et al. aren't innovators in anything other than creative contracting and marketing. There's no magic practical efficiency that makes their business work.
- snapplebobapple 2y ago
  I dont agree. Their innovation was stitching a whole swath of the cheapest and least reliable labor (part timers with a pulse who have an hour or two to kill) into a fairly reliable system. Leguslated higher wages destroys that innovation and highlights just how price sensitive the delivery demand is. It can never be a career at volume.
  - Larrikin 2y ago
    Door Dash was unable to make a profit during a time period where restaurants weren't allowed to have indoor dining and most people were locked in their homes for a year. This was before drivers and law makers began realizing that with car wear and tear they were getting less than minimum wage.
    - gruez 2y ago
      >drivers and law makers began realizing that with car wear and tear they were getting less than minimum wage. Source? At least according to this study[1] 92% of uber/lyft drivers in seattle made above minimum wage. True, this isn't exactly the same as for delivery workers, but given how fungible the two jobs are I think it's fair to treat them as approximately the same. Much more interesting is how much your earnings vary depending on your assumptions. The study calculated $17.40/hr by using pessimistic assumptions, and $23.25/hr using optimistic assumptions. [1] https://ecommons.cornell.edu/items/161915a8-b0b8-4dc4-b5ff-d3e7b9012089 https://ecommons.cornell.edu/items/161915a8-b0b8-4dc4-b5ff-d...
- ssl-3 2y ago
  I've seen it be self-sustained in small-town middle America, where a fairly loose-knit bunch of folks work together to make it work. It just doesn't seem to scale globally very well without a continuous cash injection.
- Retric 2y ago
  Arguably they make sense in terms of a wealth gap. There’s a fairly long history of such services operating at small scale for the 1% that can’s afford full time servants but can pay for 10% of one by using housecleaning services and someone pickup their food etc. Where this falls down is trying to scale the business to less affluent people without some serious limitations. Pizza delivery places for example generally have a small delivery radius which makes a huge difference.
  - cassianoleal 2y ago
    I don't know how DoorDash and other similar services work in the US, but Deliveroo in the UK is always local - bike riders rarely take any longer than 10-15min between the restaurants and my place. All restaurants I can order from are within walkable distance (30-45min tops on foot).
- gotoeleven 2y ago
  It seemed to be sustained until the government required that wages be increased, then it was not sustained. Was there some temporary subsidy or other artificial force propping it up? Do you mean welfare? It's illogical to say a business is not sustainable because it dies after its been kneecapped by regulation.
  - foinker 2y ago
    The artificial force is almost always VC funding
  - Brian_K_White 2y ago
    It never "seemed to be sustained". It was always and obviously an artificial result of vc funding designed to get a market going and obscure the economics until it's established enough that they can get away with changing the deal like uber. It's illogical to ignore the size of the market and think that there should somehow be a need for just any number of drivers instead of the required number of drivers. It's illogical to ignore that when prices to customers are artificially low, customers will consume more than when they actually have to pay for what they consume. Since the driver pool has been paid for by vc funding rather than consumers, there are more drivers than needed. A smaller number of drivers is perfectly sustainable.
- readthenotes1 2y ago
  I guess the "temporary subsidy" in Columbia for Rappi etc is all the Venezuelan refugees...
- TulliusCicero 2y ago
  I think it's sustainable, it's just that the potential market isn't that big (because prices will have to be fairly high for it to be sustainable).
danpalmer 2y ago
Pizza has also traditionally been either independent shops or large chains, often with their own drivers, meaning there's either 1 party (the company with employees), or rarely 2 parties (the company, and a "contractor" driver). Now with the Uber/DoorDash/Deliveroo model there are 3 parties, the shop, the driver, and the network, all looking to take a cut. For a business that is relatively low margin already, adding a middleman trying to take their own cut is just not possible without either raising prices, or subsidising with investor cash.
- trog 2y ago
  I suspect pizza has historically also worked because there have been very few other options so little competition.
  - danpalmer 2y ago
    Perhaps, but I see a similar pattern in the UK where there have been many competing options for a long time. ~20 years ago it was common to have Indian, Chinese, Fish & Chips, Kebabs, and Pizza available for delivery in most areas, often multiple of each. I'm not familiar with the US market but it sounds like Pizza was more common? Based on this my guess is that it's less about the competition and more about the middleman taking a cut.
    - trog 2y ago
      I'm in Australia and the only thing I ever remember being able to get delivered, prior to VC funded delivery companies, was pizza. I guess in the UK (at least in cities) they were big and dense enough to support it but it's never really seemed feasible, at least in my city.
      - danpalmer 2y ago
        I wonder if it's a cultural thing too. Immigration in the UK happened in a particular way, and it does seem limited to Indian/Chinese/Turkish takeaways in particular. Pizza takeaways are a thing but they're mostly US chains like Dominos.
snapplebobapple 2y ago
I dont think its a scale thing, its an opportunity cost thing where there is very much a narrow price band where delivery can do high volume and with the price increase to drivers you cause more people interested on driving while also kneecapping demand. The pizza thibg is also more that the verticle integration lets you cut out atleast one middleman's worth of markup keeping your business profitable ehile also keeping your end user price in that high demand price band.
taeric 2y ago
Reminds me we had a steak delivery place growing up. Googling, I see Steak Out still exists? Never remember ordering it.

the_snooze 2y ago

The on-demand deliver-anything business model just isn't sustainable. You can only have it when it's propped up by some combination of temporary subsidy (i.e., VC funding), price obfuscation (e.g., markups, fees, and tips), and shifting the costs and risks to drivers. DoorDash et al. aren't innovators in anything other than creative contracting and marketing. There's no magic practical efficiency that makes their business work.

snapplebobapple 2y ago
I dont agree. Their innovation was stitching a whole swath of the cheapest and least reliable labor (part timers with a pulse who have an hour or two to kill) into a fairly reliable system. Leguslated higher wages destroys that innovation and highlights just how price sensitive the delivery demand is. It can never be a career at volume.
- Larrikin 2y ago
  Door Dash was unable to make a profit during a time period where restaurants weren't allowed to have indoor dining and most people were locked in their homes for a year. This was before drivers and law makers began realizing that with car wear and tear they were getting less than minimum wage.
  - gruez 2y ago
    >drivers and law makers began realizing that with car wear and tear they were getting less than minimum wage. Source? At least according to this study[1] 92% of uber/lyft drivers in seattle made above minimum wage. True, this isn't exactly the same as for delivery workers, but given how fungible the two jobs are I think it's fair to treat them as approximately the same. Much more interesting is how much your earnings vary depending on your assumptions. The study calculated $17.40/hr by using pessimistic assumptions, and $23.25/hr using optimistic assumptions. [1] https://ecommons.cornell.edu/items/161915a8-b0b8-4dc4-b5ff-d3e7b9012089 https://ecommons.cornell.edu/items/161915a8-b0b8-4dc4-b5ff-d...
ssl-3 2y ago
I've seen it be self-sustained in small-town middle America, where a fairly loose-knit bunch of folks work together to make it work. It just doesn't seem to scale globally very well without a continuous cash injection.
Retric 2y ago
Arguably they make sense in terms of a wealth gap. There’s a fairly long history of such services operating at small scale for the 1% that can’s afford full time servants but can pay for 10% of one by using housecleaning services and someone pickup their food etc. Where this falls down is trying to scale the business to less affluent people without some serious limitations. Pizza delivery places for example generally have a small delivery radius which makes a huge difference.
- cassianoleal 2y ago
  I don't know how DoorDash and other similar services work in the US, but Deliveroo in the UK is always local - bike riders rarely take any longer than 10-15min between the restaurants and my place. All restaurants I can order from are within walkable distance (30-45min tops on foot).
gotoeleven 2y ago
It seemed to be sustained until the government required that wages be increased, then it was not sustained. Was there some temporary subsidy or other artificial force propping it up? Do you mean welfare? It's illogical to say a business is not sustainable because it dies after its been kneecapped by regulation.
- foinker 2y ago
  The artificial force is almost always VC funding
- Brian_K_White 2y ago
  It never "seemed to be sustained". It was always and obviously an artificial result of vc funding designed to get a market going and obscure the economics until it's established enough that they can get away with changing the deal like uber. It's illogical to ignore the size of the market and think that there should somehow be a need for just any number of drivers instead of the required number of drivers. It's illogical to ignore that when prices to customers are artificially low, customers will consume more than when they actually have to pay for what they consume. Since the driver pool has been paid for by vc funding rather than consumers, there are more drivers than needed. A smaller number of drivers is perfectly sustainable.
readthenotes1 2y ago
I guess the "temporary subsidy" in Columbia for Rappi etc is all the Venezuelan refugees...
TulliusCicero 2y ago
I think it's sustainable, it's just that the potential market isn't that big (because prices will have to be fairly high for it to be sustainable).

danpalmer 2y ago

Pizza has also traditionally been either independent shops or large chains, often with their own drivers, meaning there's either 1 party (the company with employees), or rarely 2 parties (the company, and a "contractor" driver). Now with the Uber/DoorDash/Deliveroo model there are 3 parties, the shop, the driver, and the network, all looking to take a cut. For a business that is relatively low margin already, adding a middleman trying to take their own cut is just not possible without either raising prices, or subsidising with investor cash.

trog 2y ago
I suspect pizza has historically also worked because there have been very few other options so little competition.
- danpalmer 2y ago
  Perhaps, but I see a similar pattern in the UK where there have been many competing options for a long time. ~20 years ago it was common to have Indian, Chinese, Fish & Chips, Kebabs, and Pizza available for delivery in most areas, often multiple of each. I'm not familiar with the US market but it sounds like Pizza was more common? Based on this my guess is that it's less about the competition and more about the middleman taking a cut.
  - trog 2y ago
    I'm in Australia and the only thing I ever remember being able to get delivered, prior to VC funded delivery companies, was pizza. I guess in the UK (at least in cities) they were big and dense enough to support it but it's never really seemed feasible, at least in my city.
    - danpalmer 2y ago
      I wonder if it's a cultural thing too. Immigration in the UK happened in a particular way, and it does seem limited to Indian/Chinese/Turkish takeaways in particular. Pizza takeaways are a thing but they're mostly US chains like Dominos.

snapplebobapple 2y ago

I dont think its a scale thing, its an opportunity cost thing where there is very much a narrow price band where delivery can do high volume and with the price increase to drivers you cause more people interested on driving while also kneecapping demand. The pizza thibg is also more that the verticle integration lets you cut out atleast one middleman's worth of markup keeping your business profitable ehile also keeping your end user price in that high demand price band.

taeric 2y ago

Reminds me we had a steak delivery place growing up. Googling, I see Steak Out still exists? Never remember ordering it.