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This is a regulatory response to Silicon Valley’s implementation of predatory pricing. Let me explain: Predatory pricing is defined as “the pricing of goods o

This is a regulatory response to Silicon Valley’s implementation of predatory pricing. Let me explain: Predatory pricing is defined as “the pricing of goods or services at such a low level that other suppliers cannot compete and are forced to leave the market.” For silicon valley startups like Doordash and Grubhub this is accomplished by acquiring customers at a significant loss in ways that may often seem idiotic. example: Doordash and Pizza Arbitrage https://news.ycombinator.com/item?id=23216852 https://news.ycombinator.com/item?id=23216852 The End game is to be the dominant food ordering platform in any given town where you get to dictate rates like 25%. Since predatory pricing is illegal, this response is justified. However, it would be better if regulators enforce predatory pricing rules to begin with, which they rarely ever do. for more info on predatory pricing rules in America see: https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/single-firm-conduct/predatory-or-below-cost https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

MisterTea 6y ago
> The End game is to be the dominant food ordering platform in any given town where you get to dictate rates like 25%. You fight back by calling your order in and having them deliver it or pick it up yourself. I do this 99%* of the time as I refuse to pay a web server $8+ order+delivery fee for a meal that costs the same. It's absurd to think that people are so lazy that they cant pick up a phone or walk a few blocks/cycle/drive to get their meal. *save for the rare late night drunk+high AF Dominoes orders.
- mchanson 6y ago
  Or just regulate the dumb behavior of these dumb start ups to not distort the market in dumb damaging ways,
  - MisterTea 6y ago
    Do you need these services that badly that you're willing to get the government involved? If you don't like the product or the company ethics then don't give them money. The only lesson greed will ever learn from is No Sale.
    - pwinnski 6y ago
      I don't follow your logic. I don't need these services badly at all. But since they exist, and are predatory, they "naturally" interpose themselves between the restaurants and their customers unless great effort is made by both the restaurants and all of their customers to avoid it. It's not a question of wanting or not wanting the services. Some of these companies are so nasty and predatory that they are very, very hard to avoid.
      - uedue828e 6y ago
        There isn't a single food delivery or ride hailing service in the world that is very very hard to avoid.
        pwinnski 6y ago
        In the middle of a pandemic, that's simply not true. Otherwise, sure, you just go get the food yourself in your ca--oh wait, ride hailing. In a taxi? On a bike? Within walking distance? But yes, just go to the restaurant, unless there's a global pandemic that requires many people to not leave their homes.
        uedue828e 6y ago
        Did take out or kitchens stop existing in your world? Do you really think grubhub or uber is even a rounding error in terms of how the majority of people get their food? There's being out of touch but your comment is a whole new level of reality disconnect. And your comment doesn't even make sense internally. You can't avoid ridesharing but you can't leave your house? LOL okay.
        pwinnski 6y ago
        Please, calm down, and keep the personal insults in check. I have eaten food that was not cooked in my home no more than six times since February. All but one of those times were takeout. I'm well aware of how both kitchens and takeout work. I'm very privileged in that sense. However, I was practicing empathy. Many people do not have the options I do, and I'm not sure mockery is the best way to think about them. You mentioned both delivery and ride hailing in your initial comment, so I made the starting assumption that you were talking about someone who doesn't have a car. If you don't live within walking distance of a restaurant offering takeout, and you don't have a car, how do you get takeout? In the suburbs where more than half of Americans live, access to restaurants within walking distance isn't ubiquitous. Many restaurants in my state remain closed, including in my case, both of the restaurants within walking distance. So, much of America cannot eat out, and some percentage don't have cars or can't drive due to injury or fear of the pandemic. That leaves cooking at home, yes, from groceries they've had delivered or taken public transit (quite the disease vector) or via ride hailing. And it leaves food delivery. GrubHub reported 22.6 million "active diners" in Q4 2019. That's a small number compared to everybody in America who eats, but it's not a tiny number. And GrubHub isn't the only food delivery company. My bottom line is that it may be easy for you or I to avoid food delivery or ride hailing services, but that is simply not true for everyone, and it's not even a value shared by everyone. If you want food delivery, and many people clearly do, it can be very hard to avoid GrubHub and Doordash due to their slimy and unethical practices. If you don't want food delivery, then clearly this issue has nothing whatsoever to do with you.
  - andrewla 6y ago
    No! Absolutely do not do this! Do not listen to this idea! Regulation is the wrong solution here! Warning! Jaguars will eat you if you do this! Prosecute the dumb startups for breaking the law. Don't force everyone to comply with some stupid pricing regulations and fill out a trillion forms when they're not doing anything wrong. Legislators should legislate, law enforcement should enforce laws. Regulators will just be captured by private equity and forced to set rules to that make the regulatory burden higher and higher for new companies, unless they have "friends" who can "cut" the "red tape", which means being financed by these predators. Regulation is the lazy answer for politicians who want to have no understanding of the issues of business responsibility, and just pay some unaccountable "experts" to decide what is acceptable.
    - dml2135 6y ago
      I don't really see your distinctions here. Regulations have the force of law, and regulators are law enforcement. Unless you are referring to some of the anti-trust laws which are actually criminal statutes? In that case I'm on the same page that we should actually start enforcing those.
      - andrewla 6y ago
        I am referring to existing anti-trust laws, and I do favor criminal action in almost every case here. Regulations do have the force of law, theoretically, but rarely have the ability to enforce at scale, and would much rather deal with a couple of giant companies rather than try to deal with a variety of different companies, so there's a natural push back in that direction.
    - sidr 6y ago
      Do you have any evidence that this particular rule actually involves any additional cumbersome paperwork? Is this just a knee-jerk reaction to the word "regulation"? Would it be better if the word "law" was used instead?
      - andrewla 6y ago
        The post I was replying to said "Or just regulate the dumb behavior of these dumb start ups to not distort the market in dumb damaging ways," I assume that the proposed regulation here was larger in scope than the Portland City Council rule, especially since that rule does not do anything to correct the market distortion -- arguably, it makes it worse, by mandating that they undercut economically viable approaches, rather than just letting them do so. That was what I was addressing. This particular rule is innocent enough on the face of it -- it has only two requirements [1]; that they cannot charge more than 10% of the purchase price, and that they cannot reduce payments based on compliance with the first part. To enforce this (especially given how broad the definition of a delivery service is) will be a supreme act of discretion, and clarifying this rule and eventually handing it off to the local commissioners of the counties' health departments for enforcement will complete the slide into the endless land of bureaucracy. [1] https://www.portlandoregon.gov/auditor/article/763323 https://www.portlandoregon.gov/auditor/article/763323
- deelowe 6y ago
  In my experience, most restaurant staff get super upset about this -- especially if you ask them to bring your order out. Restaurant owners need to be more clear with their staff about needing to support this.
  - butterfi 6y ago
    I have not experienced this at all. If anything, restaurants has been appreciative I picked it up because they made more money from the sale.
  - ceejayoz 6y ago
    I've never had a restaurant employee get upset about taking a take-out order. They'd likely expect a couple bucks tip for a curbside pickup, though.
  - MisterTea 6y ago
    Sounds like a restaurant that doesn't want to stay in business.
- a_c_s 6y ago
  Many of these platforms charge a fee for phone calls to the restaurant too. Platforms like Seamless go so far as to set up websites for restaurants (that often have better SEO than the restaurant's original website), so the phone number listed routes through Seamless, helping to ensure they get their cut of any order.
  - lotsofpulp 6y ago
    No one is forcing the restaurant to accept the fee, and if they do, then the restaurant should charge higher prices to offset it. Otherwise google maps and Apple Maps is sitting right there not charging any fees for the phone number.
    - pwinnski 6y ago
      I think you misunderstand. There are a number of restaurants listed on Yelp in my area for whom the phone number listed is answered by GrubHub. I refuse to deal with GrubHub, so I make an effort to search for a direct number, but it is often difficult to find. I'm not sure how GrubHub is getting themselves set as the primary number for restaurants in Yelp, but it's happening.
      - lotsofpulp 6y ago
        The solution to that is using google maps or Apple Maps or duck duck go or a phone book. If people don’t understand that a middleman adds cost as an adult, then that is an education issue.
        throwaway_USD 6y ago
        >If people don’t understand that a middleman adds cost as an adult, then that is an education issue. I think the point is that middlemen are now using deceptive business practice to obscure the fact they are involved and in many ways cannibalizing direct business to the restaurants using "dark patterns". In the case of middlemen changing the phone number of the restaurant on services like Yelp/Google Maps without the consent of the restaurant should be fraud...its almost like I go to a bank and put my ATM machine in front of the bank ATM machines and charge customers withdraw fees...then claiming well I am a 3rd party of course I had fees (even disclosed it in order to proceed), while ignoring the totality of the circumstances.
- briandear 6y ago
  > It's absurd to think that people are so lazy that they cant pick up a phone or walk a few blocks/cycle/drive to get their meal. You don’t have kids. Calling me lazy because I don’t have time to load up for small children in the car to drive a few miles then have to wait 0-25 minutes — potentially having to get out of the car and unloading said four kids to pick up the food, then reloading them to return home. Such an assumption that I am “lazy” is just bullshit and represents a failed understanding of a good portion of the market. We aren’t all childless adults sitting around smoking pot playing XBox waiting around for a key lime pie to be delivered. (Not saying you are, but that people who value their time more than the delivery costs are “lazy” is exactly the point you are making.) I am happy to pay 25% for the time I am saving. It’s the same reason I don’t wash my own car: sure I could do it, but I have more valuable uses for my limited time.
  - slugiscool99 6y ago
    Very true - I think it's important to be careful we don't generalize our own experience to others. If people ARE paying 25%, (i.e. 60% of US consumers order at least once a week [1]) then the service is valuable enough to them (for whatever reason) to pay that much. [1] https://upserve.com/restaurant-insider/online-ordering-statistics/ https://upserve.com/restaurant-insider/online-ordering-stati...
  - MisterTea 6y ago
    > You don’t have kids. Calling me lazy because I don’t have time to load up for small children in the car to drive a few miles then have to wait 0-25 minutes My mother did that all day long when we were children.
    - Bootwizard 6y ago
      She also didn't have a choice because delivery apps didn't exist
- cortesoft 6y ago
  I really hate this sort of argument... that people who use the newer, more convenient, technology are just lazy and should keep using the old way of doing things. Why stop at delivery apps? Why are lazy people driving cars instead of just riding horses? Why are you ordering things online instead of just going to the store? Why are you farming using that tractor instead of a horse drawn plow? Small conveniences add up. I don't want to live in a world where we aren't allowed to make things slightly easier.
  - ethbro 6y ago
    Because sometimes the net result of individual optimization (predatory food delivery apps) is social deoptimization (local restaurants close). And for the same reason that we don't allow health insurance to charge people different rates on the basis of their genetic profiles, the exercise of government prerogative to optimize for the greater good, on behalf of all, is apt here. Whether or not this particular approach is the best way to produce that good is a valid debate.
    - valuearb 6y ago
      We don't even let health insurance to charge people different rates based on pre-existing conditions anymore, which is what drove health insurance premiums through the roof.
      - ceejayoz 6y ago
        Healthcare premiums were steadily marching higher from the 1970s onwards, and continued to do so post-ACA at about the same annual growth rate.
        valuearb 6y ago
        Almost in perfect correlation as one by one pre-existing condition limits were legislatively banned over the years. And ACA eliminated almost all remaining pre-existing conditions, so of course it drove insurance costs and pricing sky high.
- andrewla 6y ago
  "You fight back by calling your order in" -- if they are offering free delivery through an app, all you are doing is paying inflated prices to subsidize their delivery customers. If they are not offering you an explicit called-in or picked-up discount, you're not really helping anyone except all those people using the app.
  - sidr 6y ago
    I've noticed more and more restaurants in the Seattle area are listing higher prices for the GrubHubs/UberEats (some have explicitly told me during pickup to just call it in if I want to save some money). The picked up discount already exists within the app. So what you're saying is starting to happen as restaurants wise up.
    - andrewla 6y ago
      I am really glad to hear that! I can only hope that this practice spreads. I want there to be a viable business model in the restaurant delivery business, but it has to be actually viable, which most likely means that it will have to be local approaches.
  - verall 6y ago
    That makes no sense. Maybe normally ordering at my favorite place nets them about $5. I don't want any gig economy startup cutting into that profit, when I pay it. I understand it is worth it for the restaurant to take GH orders and net $3 on them, I just think using that service is the wrong option. I care about supporting my favorite local eats. Same reason we should all be tipping full even when getting take out. Support your local restaurants. Many are about to go out of business.
- elliekelly 6y ago
  Sometimes it’s really hard to do this though. I recently wanted to order from a sushi place and I couldn’t find the paper menu with their number so I searched DDG. The first three or four things I clicked on weren’t the direct website of the restaurant. And only one was an ad. I get that for some of these small local restaurant owners the margins are tight and I’ll do my best to make sure my money goes directly to them and not GrubHub/Yelp/Uber but I also understand that most of these places aren’t run by front-end developers and SEO experts. I’m not sure what the answer is but I also don’t think it’s always quite as simple as you’re making it out to be.
  - palsir 6y ago
    The answer is another tool that reduces friction to setting up a website. I'm friends with a bunch of bands that don't have websites, but they do have facebook pages! Why? Because they're free and they do what the band needs from a website. A restaurant doesn't need more than a page with contact info and link to a pdf menu. But even standing that up is a massive hurdle for <people who don't browse HN casually>.
    - jiggunjer 6y ago
      I'd rather pay the 10% than touch facebook with a 10-foot pole.
bmmayer1 6y ago
Isn't this a price cap, to prevent prices from getting too high? What does that do to protect against prices that are too low?
- willcipriano 6y ago
  If prices are only legally allowed to rise so far it will be harder to find investors willing to throw money in the "make prices low to grab market share fire" as the highest possible rate in now 10% regardless of market share.
_sbrk 6y ago
"Although the FTC examines claims of predatory pricing carefully, courts, including the Supreme Court, have been skeptical of such claims." Which means that predatory pricing rarely, if ever, exists. If you don't like the 25% delivery fee, GET OFF YOUR ASS AND GO GET YOUR OWN FOOD.
- lotsofpulp 6y ago
  Yes, this is a completely unnecessary law. Restaurant phone numbers are seconds away using the same device used to order from these apps, and a phone call is free. Absolutely no reason a restaurant can’t recoup extra costs by charging the app users more or simply refusing to do business with the app.
  - i_am_proteus 6y ago
    A family member of mine owns a restaurant that does mostly delivery business. He employs his own drivers; he's on GrubHub because it brings in more business and is a net positive for his bottom line. He includes flyers with every order that says, in large obvious text, "Call us directly at [this number] and save 20% compared to GrubHub." He still gets a sizeable amount of repeat business from GrubHub.
    - catalogia 6y ago
      I've experienced the opposite. I used to order pizza on a phone from a local shop a few times a month but then one day a machine answered the phone telling me to order using Grubhub. I've never bought anything from that business again.
    - robrenaud 6y ago
      I am pretty sure he signed a contract that says he isn't allowed to charge GrubHub users more.
      - i_am_proteus 6y ago
        He's not charging more, GrubHub pads the price and charges a delivery fee.
andrewla 6y ago
The problem is that this response is in the wrong direction. By forcing prices lower, we guarantee that only over-capitalized predatory businesses can compete in the space. The problem is that consumer advocacy and anti-monopoly are practically the opposite thing. The end result of government action here should be short-term higher prices to the consumer, that reflect the actual cost of operations, rather than lower prices to the consumer (i.e. "free delivery") that is achieved by pricing at a loss to drive out competitors.
- waheoo 6y ago
  You realise free shipping on ebay and amazon is.. anything but free right?
  - cpwright 6y ago
    Yes, but neither is the rent for an in-store experience. Having the item of the price subsidize the shipping vs. pay the merchant's rent is not all that different.
    - waheoo 6y ago
      You realise merchants have to pay fees on ebay/amazon too right?
  - ajphdiv 6y ago
    Maybe that's whats next -- online only restaurants. Food made in a warehouse.
    - mattmcknight 6y ago
      Or in the vehicle that delivers it to you, like Zume Pizza.
    - treeman79 6y ago
      Wouldn’t last long. Perhaps if most energy was removed first. Then local depots could store them in thermal insulators. Not sure if anyone would ever eat a pizza that has stored below freezing point
mostlyghostly 6y ago
I'm struggling to call this predatory pricing when most of the food delivery app industry is unprofitable. The correct industry action: push through higher pricing for the end users, share gains with drivers and restaurants to get to a sustainable business model, and accept the resulting decline in unit volume. (which also means fewer drivers will have jobs, so there's a human cost here as well) It's easy to tell "corporations" to just suck it up, but you're dealing with a pure variable cost business here. If you make it unprofitable to serve a particular geography, they'll just exit the market. That only consolidates future market power in the surviving businesses....
- creato 6y ago
  "Predatory" refers to competing businesses, not customers. The fact that the industry is unprofitable is the main indication that the pricing is predatory. It's unclear to me if this industry would exist at all if it were profitable. There's a minimum volume needed to make the industry viable, once you fall below some (quite high) density of people ordering food delivery, it doesn't work.
throw2346785 6y ago
>For silicon valley startups like Doordash and Grubhub Ah, yes, Grubhub, the Silicon Valley startup that was founded in Chicago, is headquartered in Chicago, and has been a public company for 6 years.
amelius 6y ago
I think this has little to do with predatory pricing, but more with abuse of power. This power has been obtained in an unfair way, by collecting money from investors.

MisterTea 6y ago

> The End game is to be the dominant food ordering platform in any given town where you get to dictate rates like 25%. You fight back by calling your order in and having them deliver it or pick it up yourself. I do this 99%* of the time as I refuse to pay a web server $8+ order+delivery fee for a meal that costs the same. It's absurd to think that people are so lazy that they cant pick up a phone or walk a few blocks/cycle/drive to get their meal. *save for the rare late night drunk+high AF Dominoes orders.

mchanson 6y ago
Or just regulate the dumb behavior of these dumb start ups to not distort the market in dumb damaging ways,
- MisterTea 6y ago
  Do you need these services that badly that you're willing to get the government involved? If you don't like the product or the company ethics then don't give them money. The only lesson greed will ever learn from is No Sale.
  - pwinnski 6y ago
    I don't follow your logic. I don't need these services badly at all. But since they exist, and are predatory, they "naturally" interpose themselves between the restaurants and their customers unless great effort is made by both the restaurants and all of their customers to avoid it. It's not a question of wanting or not wanting the services. Some of these companies are so nasty and predatory that they are very, very hard to avoid.
    - uedue828e 6y ago
      There isn't a single food delivery or ride hailing service in the world that is very very hard to avoid.
      - pwinnski 6y ago
        In the middle of a pandemic, that's simply not true. Otherwise, sure, you just go get the food yourself in your ca--oh wait, ride hailing. In a taxi? On a bike? Within walking distance? But yes, just go to the restaurant, unless there's a global pandemic that requires many people to not leave their homes.
        uedue828e 6y ago
        Did take out or kitchens stop existing in your world? Do you really think grubhub or uber is even a rounding error in terms of how the majority of people get their food? There's being out of touch but your comment is a whole new level of reality disconnect. And your comment doesn't even make sense internally. You can't avoid ridesharing but you can't leave your house? LOL okay.
        pwinnski 6y ago
        Please, calm down, and keep the personal insults in check. I have eaten food that was not cooked in my home no more than six times since February. All but one of those times were takeout. I'm well aware of how both kitchens and takeout work. I'm very privileged in that sense. However, I was practicing empathy. Many people do not have the options I do, and I'm not sure mockery is the best way to think about them. You mentioned both delivery and ride hailing in your initial comment, so I made the starting assumption that you were talking about someone who doesn't have a car. If you don't live within walking distance of a restaurant offering takeout, and you don't have a car, how do you get takeout? In the suburbs where more than half of Americans live, access to restaurants within walking distance isn't ubiquitous. Many restaurants in my state remain closed, including in my case, both of the restaurants within walking distance. So, much of America cannot eat out, and some percentage don't have cars or can't drive due to injury or fear of the pandemic. That leaves cooking at home, yes, from groceries they've had delivered or taken public transit (quite the disease vector) or via ride hailing. And it leaves food delivery. GrubHub reported 22.6 million "active diners" in Q4 2019. That's a small number compared to everybody in America who eats, but it's not a tiny number. And GrubHub isn't the only food delivery company. My bottom line is that it may be easy for you or I to avoid food delivery or ride hailing services, but that is simply not true for everyone, and it's not even a value shared by everyone. If you want food delivery, and many people clearly do, it can be very hard to avoid GrubHub and Doordash due to their slimy and unethical practices. If you don't want food delivery, then clearly this issue has nothing whatsoever to do with you.
- andrewla 6y ago
  No! Absolutely do not do this! Do not listen to this idea! Regulation is the wrong solution here! Warning! Jaguars will eat you if you do this! Prosecute the dumb startups for breaking the law. Don't force everyone to comply with some stupid pricing regulations and fill out a trillion forms when they're not doing anything wrong. Legislators should legislate, law enforcement should enforce laws. Regulators will just be captured by private equity and forced to set rules to that make the regulatory burden higher and higher for new companies, unless they have "friends" who can "cut" the "red tape", which means being financed by these predators. Regulation is the lazy answer for politicians who want to have no understanding of the issues of business responsibility, and just pay some unaccountable "experts" to decide what is acceptable.
  - dml2135 6y ago
    I don't really see your distinctions here. Regulations have the force of law, and regulators are law enforcement. Unless you are referring to some of the anti-trust laws which are actually criminal statutes? In that case I'm on the same page that we should actually start enforcing those.
    - andrewla 6y ago
      I am referring to existing anti-trust laws, and I do favor criminal action in almost every case here. Regulations do have the force of law, theoretically, but rarely have the ability to enforce at scale, and would much rather deal with a couple of giant companies rather than try to deal with a variety of different companies, so there's a natural push back in that direction.
  - sidr 6y ago
    Do you have any evidence that this particular rule actually involves any additional cumbersome paperwork? Is this just a knee-jerk reaction to the word "regulation"? Would it be better if the word "law" was used instead?
    - andrewla 6y ago
      The post I was replying to said "Or just regulate the dumb behavior of these dumb start ups to not distort the market in dumb damaging ways," I assume that the proposed regulation here was larger in scope than the Portland City Council rule, especially since that rule does not do anything to correct the market distortion -- arguably, it makes it worse, by mandating that they undercut economically viable approaches, rather than just letting them do so. That was what I was addressing. This particular rule is innocent enough on the face of it -- it has only two requirements [1]; that they cannot charge more than 10% of the purchase price, and that they cannot reduce payments based on compliance with the first part. To enforce this (especially given how broad the definition of a delivery service is) will be a supreme act of discretion, and clarifying this rule and eventually handing it off to the local commissioners of the counties' health departments for enforcement will complete the slide into the endless land of bureaucracy. [1] https://www.portlandoregon.gov/auditor/article/763323 https://www.portlandoregon.gov/auditor/article/763323
deelowe 6y ago
In my experience, most restaurant staff get super upset about this -- especially if you ask them to bring your order out. Restaurant owners need to be more clear with their staff about needing to support this.
- butterfi 6y ago
  I have not experienced this at all. If anything, restaurants has been appreciative I picked it up because they made more money from the sale.
- ceejayoz 6y ago
  I've never had a restaurant employee get upset about taking a take-out order. They'd likely expect a couple bucks tip for a curbside pickup, though.
- MisterTea 6y ago
  Sounds like a restaurant that doesn't want to stay in business.
a_c_s 6y ago
Many of these platforms charge a fee for phone calls to the restaurant too. Platforms like Seamless go so far as to set up websites for restaurants (that often have better SEO than the restaurant's original website), so the phone number listed routes through Seamless, helping to ensure they get their cut of any order.
- lotsofpulp 6y ago
  No one is forcing the restaurant to accept the fee, and if they do, then the restaurant should charge higher prices to offset it. Otherwise google maps and Apple Maps is sitting right there not charging any fees for the phone number.
  - pwinnski 6y ago
    I think you misunderstand. There are a number of restaurants listed on Yelp in my area for whom the phone number listed is answered by GrubHub. I refuse to deal with GrubHub, so I make an effort to search for a direct number, but it is often difficult to find. I'm not sure how GrubHub is getting themselves set as the primary number for restaurants in Yelp, but it's happening.
    - lotsofpulp 6y ago
      The solution to that is using google maps or Apple Maps or duck duck go or a phone book. If people don’t understand that a middleman adds cost as an adult, then that is an education issue.
      - throwaway_USD 6y ago
        >If people don’t understand that a middleman adds cost as an adult, then that is an education issue. I think the point is that middlemen are now using deceptive business practice to obscure the fact they are involved and in many ways cannibalizing direct business to the restaurants using "dark patterns". In the case of middlemen changing the phone number of the restaurant on services like Yelp/Google Maps without the consent of the restaurant should be fraud...its almost like I go to a bank and put my ATM machine in front of the bank ATM machines and charge customers withdraw fees...then claiming well I am a 3rd party of course I had fees (even disclosed it in order to proceed), while ignoring the totality of the circumstances.
briandear 6y ago
> It's absurd to think that people are so lazy that they cant pick up a phone or walk a few blocks/cycle/drive to get their meal. You don’t have kids. Calling me lazy because I don’t have time to load up for small children in the car to drive a few miles then have to wait 0-25 minutes — potentially having to get out of the car and unloading said four kids to pick up the food, then reloading them to return home. Such an assumption that I am “lazy” is just bullshit and represents a failed understanding of a good portion of the market. We aren’t all childless adults sitting around smoking pot playing XBox waiting around for a key lime pie to be delivered. (Not saying you are, but that people who value their time more than the delivery costs are “lazy” is exactly the point you are making.) I am happy to pay 25% for the time I am saving. It’s the same reason I don’t wash my own car: sure I could do it, but I have more valuable uses for my limited time.
- slugiscool99 6y ago
  Very true - I think it's important to be careful we don't generalize our own experience to others. If people ARE paying 25%, (i.e. 60% of US consumers order at least once a week [1]) then the service is valuable enough to them (for whatever reason) to pay that much. [1] https://upserve.com/restaurant-insider/online-ordering-statistics/ https://upserve.com/restaurant-insider/online-ordering-stati...
- MisterTea 6y ago
  > You don’t have kids. Calling me lazy because I don’t have time to load up for small children in the car to drive a few miles then have to wait 0-25 minutes My mother did that all day long when we were children.
  - Bootwizard 6y ago
    She also didn't have a choice because delivery apps didn't exist
cortesoft 6y ago
I really hate this sort of argument... that people who use the newer, more convenient, technology are just lazy and should keep using the old way of doing things. Why stop at delivery apps? Why are lazy people driving cars instead of just riding horses? Why are you ordering things online instead of just going to the store? Why are you farming using that tractor instead of a horse drawn plow? Small conveniences add up. I don't want to live in a world where we aren't allowed to make things slightly easier.
- ethbro 6y ago
  Because sometimes the net result of individual optimization (predatory food delivery apps) is social deoptimization (local restaurants close). And for the same reason that we don't allow health insurance to charge people different rates on the basis of their genetic profiles, the exercise of government prerogative to optimize for the greater good, on behalf of all, is apt here. Whether or not this particular approach is the best way to produce that good is a valid debate.
  - valuearb 6y ago
    We don't even let health insurance to charge people different rates based on pre-existing conditions anymore, which is what drove health insurance premiums through the roof.
    - ceejayoz 6y ago
      Healthcare premiums were steadily marching higher from the 1970s onwards, and continued to do so post-ACA at about the same annual growth rate.
      - valuearb 6y ago
        Almost in perfect correlation as one by one pre-existing condition limits were legislatively banned over the years. And ACA eliminated almost all remaining pre-existing conditions, so of course it drove insurance costs and pricing sky high.
andrewla 6y ago
"You fight back by calling your order in" -- if they are offering free delivery through an app, all you are doing is paying inflated prices to subsidize their delivery customers. If they are not offering you an explicit called-in or picked-up discount, you're not really helping anyone except all those people using the app.
- sidr 6y ago
  I've noticed more and more restaurants in the Seattle area are listing higher prices for the GrubHubs/UberEats (some have explicitly told me during pickup to just call it in if I want to save some money). The picked up discount already exists within the app. So what you're saying is starting to happen as restaurants wise up.
  - andrewla 6y ago
    I am really glad to hear that! I can only hope that this practice spreads. I want there to be a viable business model in the restaurant delivery business, but it has to be actually viable, which most likely means that it will have to be local approaches.
- verall 6y ago
  That makes no sense. Maybe normally ordering at my favorite place nets them about $5. I don't want any gig economy startup cutting into that profit, when I pay it. I understand it is worth it for the restaurant to take GH orders and net $3 on them, I just think using that service is the wrong option. I care about supporting my favorite local eats. Same reason we should all be tipping full even when getting take out. Support your local restaurants. Many are about to go out of business.
elliekelly 6y ago
Sometimes it’s really hard to do this though. I recently wanted to order from a sushi place and I couldn’t find the paper menu with their number so I searched DDG. The first three or four things I clicked on weren’t the direct website of the restaurant. And only one was an ad. I get that for some of these small local restaurant owners the margins are tight and I’ll do my best to make sure my money goes directly to them and not GrubHub/Yelp/Uber but I also understand that most of these places aren’t run by front-end developers and SEO experts. I’m not sure what the answer is but I also don’t think it’s always quite as simple as you’re making it out to be.
- palsir 6y ago
  The answer is another tool that reduces friction to setting up a website. I'm friends with a bunch of bands that don't have websites, but they do have facebook pages! Why? Because they're free and they do what the band needs from a website. A restaurant doesn't need more than a page with contact info and link to a pdf menu. But even standing that up is a massive hurdle for <people who don't browse HN casually>.
  - jiggunjer 6y ago
    I'd rather pay the 10% than touch facebook with a 10-foot pole.

bmmayer1 6y ago

Isn't this a price cap, to prevent prices from getting too high? What does that do to protect against prices that are too low?

willcipriano 6y ago
If prices are only legally allowed to rise so far it will be harder to find investors willing to throw money in the "make prices low to grab market share fire" as the highest possible rate in now 10% regardless of market share.

_sbrk 6y ago

"Although the FTC examines claims of predatory pricing carefully, courts, including the Supreme Court, have been skeptical of such claims." Which means that predatory pricing rarely, if ever, exists. If you don't like the 25% delivery fee, GET OFF YOUR ASS AND GO GET YOUR OWN FOOD.

lotsofpulp 6y ago
Yes, this is a completely unnecessary law. Restaurant phone numbers are seconds away using the same device used to order from these apps, and a phone call is free. Absolutely no reason a restaurant can’t recoup extra costs by charging the app users more or simply refusing to do business with the app.
- i_am_proteus 6y ago
  A family member of mine owns a restaurant that does mostly delivery business. He employs his own drivers; he's on GrubHub because it brings in more business and is a net positive for his bottom line. He includes flyers with every order that says, in large obvious text, "Call us directly at [this number] and save 20% compared to GrubHub." He still gets a sizeable amount of repeat business from GrubHub.
  - catalogia 6y ago
    I've experienced the opposite. I used to order pizza on a phone from a local shop a few times a month but then one day a machine answered the phone telling me to order using Grubhub. I've never bought anything from that business again.
  - robrenaud 6y ago
    I am pretty sure he signed a contract that says he isn't allowed to charge GrubHub users more.
    - i_am_proteus 6y ago
      He's not charging more, GrubHub pads the price and charges a delivery fee.

andrewla 6y ago

The problem is that this response is in the wrong direction. By forcing prices lower, we guarantee that only over-capitalized predatory businesses can compete in the space. The problem is that consumer advocacy and anti-monopoly are practically the opposite thing. The end result of government action here should be short-term higher prices to the consumer, that reflect the actual cost of operations, rather than lower prices to the consumer (i.e. "free delivery") that is achieved by pricing at a loss to drive out competitors.

waheoo 6y ago
You realise free shipping on ebay and amazon is.. anything but free right?
- cpwright 6y ago
  Yes, but neither is the rent for an in-store experience. Having the item of the price subsidize the shipping vs. pay the merchant's rent is not all that different.
  - waheoo 6y ago
    You realise merchants have to pay fees on ebay/amazon too right?
- ajphdiv 6y ago
  Maybe that's whats next -- online only restaurants. Food made in a warehouse.
  - mattmcknight 6y ago
    Or in the vehicle that delivers it to you, like Zume Pizza.
  - treeman79 6y ago
    Wouldn’t last long. Perhaps if most energy was removed first. Then local depots could store them in thermal insulators. Not sure if anyone would ever eat a pizza that has stored below freezing point

mostlyghostly 6y ago

I'm struggling to call this predatory pricing when most of the food delivery app industry is unprofitable. The correct industry action: push through higher pricing for the end users, share gains with drivers and restaurants to get to a sustainable business model, and accept the resulting decline in unit volume. (which also means fewer drivers will have jobs, so there's a human cost here as well) It's easy to tell "corporations" to just suck it up, but you're dealing with a pure variable cost business here. If you make it unprofitable to serve a particular geography, they'll just exit the market. That only consolidates future market power in the surviving businesses....

creato 6y ago
"Predatory" refers to competing businesses, not customers. The fact that the industry is unprofitable is the main indication that the pricing is predatory. It's unclear to me if this industry would exist at all if it were profitable. There's a minimum volume needed to make the industry viable, once you fall below some (quite high) density of people ordering food delivery, it doesn't work.

throw2346785 6y ago

>For silicon valley startups like Doordash and Grubhub Ah, yes, Grubhub, the Silicon Valley startup that was founded in Chicago, is headquartered in Chicago, and has been a public company for 6 years.

amelius 6y ago

I think this has little to do with predatory pricing, but more with abuse of power. This power has been obtained in an unfair way, by collecting money from investors.