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Comment by loceng | Hacker News Reader

They make a lot of profit, recycling it buy up and coming startups to maintain market share and the business model.

> They make a lot of profit

I have always heard food delivery as a business is a great way to lose money. Do you have any examples of companies doing it profitably?

Different market, but Gojek does it profitably. They do delivery, ride hailing, and a bunch of other stuff, and all of their segments are profitable, except ride hailing. They also have a slightly different model, which might not work in other markets. They don’t need to onboard merchants in the same way, because with them the driver pays for the order, and then the customer pays the driver, either in-app or with cash.

Interesting business model, but Jakarta is insanely dense (largest city in APAC) which is probably why its more profitable. In the U.S. you have urban sprawl and suburbs, which increase variable costs of delivery.

Jakarta has ridiculous urban sprawl, has worse traffic than any city in the US, and floods for months in the year. I lived there for years, it’s much harder to get around than LA or NY.

That probably explains why their model has the driver taking on the liability then.

The driver doesn’t take on any liability at all, it’s all backed by the company. I’m not sure why you’re so keen to shit on this business when you don’t seem to know anything about it or the market it operates in.

Relax, I'm not attacking you or the business - you said this: "because with them the driver pays for the order, and then the customer pays the driver" which seems like a liability for the driver. It makes sense in a region that floods regularly.

They just handle the transaction. The system is technically exploitable from a driver perspective. Earlier this year a group of drivers were arrested for defrauding the company with hundreds of fake orders.

Every pizza chain.

They make money selling pizza (super high margin), not at delivery.

It's a distinction without a difference. It's not like they lose money by offering the delivery service, so they've found some model where delivering food is profitable, it's just that the model involves a tight coupling with the food producer.

It might be more accurate to say that food delivery as a separate business from producing it is hard to profit on.

Unless you’re Papa Johns and you tack on a delivery fee that doesn’t go to the driver.

Unit economics on food delivery sucks (if that’s your only business)...too many inefficiencies with travel to/from (time wasted w/empty hands).

Food delivery as part of a QSR can be profitable but most businesses don’t track margins efficiently enough to know the difference.

Too late to edit my original comment to clarify: the incumbents are profitable, have enough revenue to recycle into buying up new competition in existing and different markets, keeping the their position and business model alive.

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