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The platform fees and the insane menu price markups that restaurants apply for delivery app orders have made it impractical to use Uber Eats & DoorDash for a co

• stronglikedan 3y ago
  FWIW, the people that order food regularly don't care that they are paying an exorbitant fee for it, and there are plenty of them. The folks that don't regularly order may order less, but that's not going to really have a significant impact on the business overall.
• kiba 3y ago
  They aren't really viable business models to begin with. Only VC funding can keep these online platform up.
  • mym1990 3y ago
    Not sure why you got downvoted, its true. These platforms are all a race to the bottom to capture market share and then jack up of prices to recover lost revenue. Overall, it ends up being a terrible experience for the customer and the driver/deliverer.
    • Nextgrid 3y ago
      > a race to the bottom to capture market share That is the real problem, not that the concept of food delivery is unprofitable by itself.
      • mym1990 3y ago
        I think food delivery at scale is unprofitable, at this point the technology in those apps doesn’t really have a moat. The next logical big step is to have drones delivering the stuff, and at that point you have this massive amount of tech and research to get food 2 miles down the street…it seems pretty counterproductive.
      • MichaelZuo 3y ago
        Not sure where you folks live but all the major ordering apps present in Toronto have been excellent in the suburbs. I was fully satisfied at least 9 out of 10 times. And even the most expensive, ubereats is only, at most, a 20% surcharge compared to the in-restaurant price plus tip, for a $50 order.
        • stevenwoo 3y ago
          I live near Mountain View, California and its probably sampling bias but i would swear that for the entirety of pandemic there were complaints about food delivery missteps and prices on my Nextdoor neighborhood.
        • throwaway2037 3y ago
          This is a good post. Do you have any thoughts about why this works in Toronto? What is different from other cities? And do workers make living wages?
    • WendyTheWillow 3y ago
      Because it’s not true anymore, and complaining about high prices for a service that is just moving up market kind of ignores the reality that a business can make fewer sales if its margins on the remaining sales are sufficiently high, which is exactly what has happened. In other words, delivery apps went through the “burn vc money” phase already, and are now focusing on profitability, and successfully so.
      • mym1990 3y ago
        Food delivery products and companies are definitely not moving up market. Valuations have plummeted and many are still struggling to turn a profit despite layoffs and cutbacks.
        • WendyTheWillow 3y ago
          I'm curious; what do you think "moving up market" means? Does it mean "becoming a company that has a higher market cap and/or is more profitable" or does it mean, "Targeting a wealthier customer"? Because what you've listed would suggest you believe it means the former, which isn't accurate (it's the latter). Maybe I misunderstand, though.
      • lokar 3y ago
        I just opened the DoorDash app. A ton of fast food ads/offers I have not eaten fast food in like 10 years, and never had it delivered. Not really up market imo.
    • standardUser 3y ago
      How does the customer have a terrible experience? I order delivery more often than is reasonable across many different platforms and I usually have a perfectly fine experience.
      • mym1990 3y ago
        Because I put it a 9$ burrito in the cart and somehow at checkout the price ends up being 25$ before tip. The only way I use those apps is if I have really good incentives/discounts…so maybe I am not the target market, happy to eat in or not order at all. I have not had any problems with the delivery people, they are always super nice.
  • hotpotamus 3y ago
    I've never really gotten this. We can speculate about the intelligence of VCs, but I assume most of them know a bit of basic math. I wonder if perhaps they are so deep into a bubble of wealth and privilege that to them, spending $50 for a (cold by the time it arrives) burger seemed reasonable. Perhaps they thought that once everyone could experience this for an amount of money they find trifling, it would catch on? I've used these services a time or two just to see what the fuss is about and I don't get it myself.
    • mym1990 3y ago
      The VCs are hoping to hype the product enough in the early stage to achieve a lucrative exit, and do that 10% of the time(or whatever). What happens with the product once the company is public is not of their concern.
    • johnnyanmac 3y ago
      >I've used these services a time or two just to see what the fuss is about and I don't get it myself. It's similar to fast food itself. convenient and cheap. these days the latter is falling off the wayside (again, just like modern fast food). It was invaluable during a pandemic to help encourage social distancing, but even if it was still cheap it was bound to fall off a bit (probably not to pre-pandemic levels, but no longer record customers). >I wonder if perhaps they are so deep into a bubble of wealth and privilege that to them, spending $50 for a (cold by the time it arrives) burger seemed reasonable. As others have mentioned, it's more a matter that VC's aren't necessarily looking to be the next big tech company. Many are looking for a profitable IPO and then move on to the next company. Lots of problems with enabling that model to begin with, but that's a whole other bucket of worms.
      • sokoloff 3y ago
        > convenient and cheap But it’s neither of those things, assuming you believe (as I do) that receiving food that should be hot but is cold isn’t convenient.
    • acchow 3y ago
      These services are very popular. Just look at DoorDash's explosive growth. It's not only out-of-touch VCs that like ordering food.
  • Nextgrid 3y ago
    The basic concept of food delivery existed long before tech and VC and was viable. The only reason these companies can't turn a profit is because all those microservices, ads and "engagement" don't come for free.
    • jltsiren 3y ago
      Food delivery existed before platforms, but only where it made sense. You could order something like a pizza, where the marginal cost and effort required to make another meal was low, and the sales volume was high enough to justify using paid employees for delivery. Service area was also chosen by the restaurant itself to ensure that they would not spend too much time on a single delivery. In the end, it's pretty simple. How many deliveries does a single person make in an hour, including idle time? Is someone paying enough for that? And does the kitchen have enough spare capacity for that?
      • lokar 3y ago
        There were also 3rd party services that would deliver from most anywhere, but they were expensive (they made actual net profit on each delivery).
      • chimeracoder 3y ago
        > Food delivery existed before platforms, but only where it made sense. This article is about NYC, where food delivery was ubiquitous long before DoorDash. In fact, Seamless in 2010 was a better experience than Doordash is in 2023, when you consider the absurd markup on Doordash. Doordash struggled to enter the NYC market for a while because it was trying to compete with an established product, yet using a higher price point. It was only with massive amounts of VC funding that they were able to get a foothold.
    • ghaff 3y ago
      >The basic concept of food delivery existed long before tech and VC and was viable. In limited markets, for specific types of food, and for pretty crappy wages for the delivery people. (And, yes, for mostly pretty low tech approaches.)
  • lhorie 3y ago
    That's a somewhat outdated narrative to still be parroting. Uber just got included into the SP 500. One of the pre-requisites for that is being profitable on a GAAP basis.
    • BoiledCabbage 3y ago
      Which if I recall correctly they are only profitable due to a one time revenue boost right of something like hundreds of millions ? And that one time "revenue" boost was that a company they own they are asserting is now valued more than last year. And they are calling that "revenue".
      • lhorie 3y ago
        No, it's operating profit.
        • kiba 3y ago
          I took a look at a fool article. If you exclude the unrealized return from an investment they made, their profit are in the single digit millions. Not really confidence inspiring, but maybe I am wrong and that they could indeed make their business sustainable.
          • Dylan16807 3y ago
            "could indeed make"? What's not sustainable about that level of profit? And aren't they still spending a lot on expansion?
            • kiba 3y ago
              It implies that their margin is really low. We're talking about revenues in hundred of millions and they're only able to make single digit millions. Next quarter, their margin might entirely be wiped out by a slight downturn in business. If they could increase their margin and make profit consistently, then I'll change my mind.
  • crdrost 3y ago
    I mean I think it can be, given that there's a $20-$30 markup per order, but it definitely requires some particular circumstances. The bigger thing is that if you're thinking of Lean manufacturing principles or Theory of Constraints, where the goal is to get the noise out of the system, you would never maximize a business the way that Uber Eats and Doordash are. It'd instead be something like the following pipe dream: - We sell "pizza delivery as a service" to businesses who want it -- at first we're trying to partner with Target and Walmart, etc. Our value proposition to them is "hey Amazon is eating you alive, how about we help you offer ultra-rapid delivery and the people you're working with basically become fellow trusted Target employees?" (Of course, we'd be happy to double-dip -- ideally we'd convince Amazon that we're a cheaper way to reach their customers than their own delivery drivers. But that's a really hard sell.) - The company rents delivery people from us per day, we provide the delivery network. If you need to "burst" we can provide extra folks to augment at a premium. Ideally someday we'll get some lucrative Amazon contract where the Amazon warehouse, but to start with we're doing laundry delivery and other odd jobs. The company maintains their brand; we're just a courier service. You don't go to the FedEx website to order something, you select FedEx at the end with "how would you like this to come to you." - On the side, we do sell a service of "we will give you a new pickup/delivery portal web site that works with our delivery service" to smaller businesses so that they can get started with us. - We are a courier service but we only operate in cities where we can sufficiently average out the volumes needed. Amazon, UPS, FedEx can be the kings of the countryside, that's fine. - The company, assuming food, sends their delivery-person right when the food is cooked, they are our employee and package it to our standards and bring it straight out to our delivery hub. In general they will not be going to the final address. We use this as a process buffer to maximize our throughput for the people actually driving to the home addresses, we can make sure that certain people get to know neighborhood X better, etc. - The shipping price should come in two tiers, give people a generous shipping discount for advance orders where we can have more opportunity to batch and optimize. - Because the company pays us (and the user pays them for "shipping"), under no circumstance does the user tip; that workflow is just too indirect to sustain tipping. - Which means we have to do a 180 on how we treat the delivery folks; ideally they'd be full-time employees and we'd proactively unionize them. That last bit sounds like suicide but really there's a ton of noise in terms of all of this "well the question of who are our delivery people is fraught, they can drop off the map at any time" and it's like, no, I want to be able to say at the central hub, "here's the route you're about to follow, review it while you wait 2 more minutes for Tina to arrive with order 6AF12B, that's your third one, we've got the motor running for you and you know these streets better than anybody," and under no circumstance is that person saying "eh, I have a party I want to go check out, I'm just going to go with these 2 orders and leave Tina in the lurch." And, we can sell it to city-goers as "this is the ethical way to deliver, the union makes sure that we maintain the cars and that we pay as well as we can." And the rest of it is making the profit back up in volume.
• legitster 3y ago
  It was never a sustainable business model to begin with. It takes 10 minutes for a chef to make my meal, and 25 minutes for someone to come to the restaurant, pick it up, and drive it to my house. The only way it works is if someone else's time is an order of magnitude less valuable than yours.
  • johnnyanmac 3y ago
    >The only way it works is if someone else's time is an order of magnitude less valuable than yours. Targeting mainly the wealthy isn't necessarily a bad business strategy. It should also be noted that it's also useful for bulk order to people and those unable to physically move themselves to a place (disability, lack of car, etc). It's not a "use everyday" mechanism, but it has uses.
    • lokar 3y ago
      But the whole structure of these companies (and valuations) is based on a much larger scale/market.
  • bloodyplonker22 3y ago
    Indeed, the only way it is working right now is because a significant piece of their revenue is from discounted gift cards so their revenue grows while taking a loss. In the future, they will have to replace the driver with something automated if they want to make money.
  • grecy 3y ago
    > The only way it works is if someone else's time is an order of magnitude less valuable than yours I mean, you've basically just described the entire service industry and virtually any job in North American where tips are expected. There is an entire class of people ready to serve you.
    • legitster 3y ago
      I mean, don't get me wrong. My first job was fast food. But there's a difference between being able to serve 50 customers in an hour and 2.
• delfinom 3y ago
  Everytime I get one of those uber eats coupons for 25% or even 50% off a order, it's rigged. Open two windows, apply the coupon in one. Watch as the order totals are not 50% apart. They instantly jack the service fees on the 50% coupon order.
  • resolutebat 3y ago
    It's 50% off the base price, which excludes the delivery fee, the convenience fee, the inconvenience fee, the COVID recovery charge, the Livable Wage surcharge etc. The last time I ordered UberEats, all the fees plus tip nearly doubled the cost of my order.