Meals on food delivery apps can be 90% more than if bought from the restaurant
nytimes.com
nytimes.com
It is a 4 party system where the company controlling the money is the only one that wins.
Restaurants are asked to pay 30% of the ticket. The customer is asked to pay more than expected for their meal, a delivery fee, and a tip. For the customer, this can be nearly double for a simple $10 lunch.
The driver that has to deliver it gets stuck with fuel, automatic, and typically much less than $15 an hour. All of this is happening while Doordash has a 10billion dollar valuation.
For a delivery driver to show up in a BMW would be... very unusual.
I was not aware of that. I can see the logic (“we’re providing a service for your business”, etc.) but it feels like double dipping. Especially since it seems as though that cost is passed straight onto the customer anyhow.
I remember using waitersonwheels.com in the mid 90's and it wasn't any better than what's available now. Also, I know waiter.com has been around a long time and makes very good money. Perhaps the SF Bay Area is a unicorn where there are so many people with disposable income that their time is worth more than overpaying for things that it can sustain many delivery services? I don't think the business model would work in rural Michigan but it would work anywhere with high property values and/or high incomes.
I apparently have a few more these days through a couple of the online delivery apps although I haven't used them yet.
Users don't want to have to keep multiple apps on their phone, or remember that the local Olive Garden uses OnlineFood but that the Greek place uses FoodNGo. We can have them order through the restaurant's web site and let them make the decision, but they're going to get frustrated if the drivers are fragmented across the different services. If every driver has every app, then it's really just adding overhead.
All people and restaurants want is somebody to get the food from point A to point B, without a lot of differentiation. Much like ride share services replacing taxis: people don't really care what they get, and multiple taxi services don't provide useful differentiators. I really think that taxis might have survived better if they had come together to develop an app instead of letting somebody else take that space.
As for prices... people are willing to pay to save time. If they really wanted to save money, they'd cook. People go to restaurants so they don't have to cook, but they still pay the time to go and sit and wait. Faced with a choice of $20 Olive Garden + $20 delivery fee, and wait at home playing video games, or $40 at the steakhouse sitting at a table waiting for their food, it might be a tossup. Lots of people do that today. If all they wanted was calories, they'd spent $5 at McDs.
Why would consumers care about this? For decades (centuries even!) restaurants managed to make delivery work with their own delivery people. And admittedly pooling delivery people is effective for restaurants that don't do a lot of delivery volume, but there's still really a lot of room for fragmentation.
> All people and restaurants want is somebody to get the food from point A to point B, without a lot of differentiation
Here's the thing though: there's a lot of differentiation! In my experience, delivery that's managed by restaurants tends to be orders of magnitude better than from the apps. The app delivery services bundle a bunch of deliveries together in such a way that your food sits around at the restaurant, then goes all over the city, then eventually reaches you an hour after it was made. This kind of thing rarely happens for me when restaurants manage delivery themselves.
> People go to restaurants so they don't have to cook, but they still pay the time to go and sit and wait
I mean... some people go to restaurants for this reason, I suppose, especially at the low-end of the market. But it's really hard for me to believe this is the primary reason people go to restaurants. If it were, you'd expect restaurants to be quite different.
I'm somewhat of minimalist with trying to keep a low number of apps on my phone but whenever I see my friends phones they have hundreds of apps
Uber Eats has been calling me every year to sell their platform to some of the stores I work with.
Grocery product margins are about 30 percent in the happy case (specialty foods), usually much lower. Uber Eats wants 30 percent of the basket on each sale they make.
The last salesperson who called, after I gave him that context, suggested this would be a new revenue stream. I remarked that we would lose money on each sale. He clarified that Uber Eats would only take 30 percent of what we sold through their platform, not all of the sales made by the store (how generous of them). I thanked him for clarifying and said I understood that.
He then suggested to me that customers who buy from us on Uber Eats might do so only once, and make the rest of their purchases in store.
I asked him why they would do that, and he uncomfortably said a few words about how Uber is working on something for grocery stores and said they would try back later.
They have reached out to me about once a year since 2016, and pretty much every conversation goes the same, and their pricing is the same.
It's ridiculous to me how they don't bother to understand the customers they engage, and that they train their sales people to continue goad businesses into working with them even after they've made clear they would lose money. Either way, it's very clear to me that this model is indeed going to be short lived. It depends primarily on weaknesses in labor laws and operators being swayed by their bizarre sales pitches enough to act against their own bottom line. In any case I certainly won't be sad to see it crash and burn
Once they solve all of this you chop distribution to the store, shelf stocking, checkout staffing, picker payment, driver payment, property and lease fees, the margin will be higher, the experience faster, the costs lower.
I bet Amazon will mass produce the drones at a rather low cost over time, maybe produce UWB tracking devices (like Apple's Tags will use) so you can be hand delivered products without the landing pad they currently use. It's a real infinite game and that's okay if it all takes 10+ years.
I'm not saying this is a good thing for mankind, but might be a reality.
This feels similar to “when self driving cars are figured out”, i.e. a much bigger ask than it would first appear.
But self driving cars are WAY harder than drone delivery. You have whole human elements to them. Drone delivery is 'exit, turn, go straight, don't hit objects, find target, drop item, repeat home', whereas we have already solved 'don't hit objects.' which absolutely can't be said about self driving cars.
The whole thing is just absurd. $25 for a cold $8 hamburger?
1. They increase their prices on skipthedishes and friends, in order to account for the price difference.
2. They add a piece of paper to EVERY ORDER indicating that if you call or text your food would be 30% cheaper, which includes a flat $3 delivery fee, and no need to tip the driver.
3. Many of them run targeted sub-brands on these platforms, under 'regular' (re: non kosher) restaurants and do the exact same thing, thereby expanding their reach.
That's really clever, given that many of these delivery apps work by inserting themselves invisibly in front of the business.
Having a communication channel that you know will reach the customer and that you know the delivery app can't block is a way of getting around some of the constant fight of "how do I make my real site show up above Grubhub's when my name is Googled?"
Hotels try to berate you for booking through a third-party but I ain't got time to go poking around on their individual websites.
Same with taxis - 'don't use Uber, just install this local app' - nice idea, but I really don't have time or space for a trillion local apps for the cities I visit all working slightly differently and needing different accounts - I try to keep it simple. I don't care if it's 5% better or 5% cheaper - it's 100% overhead compared to a single app and I don't want it.
It’s not 5% though. It’s more like 50-100%. I’d wager you’re in the minority and most people are not willing to pay a premium if they could avoid (or maybe even knew about it).
A) an order form on a website, or
B) a phone number
I don't think it's unreasonable for them to say, "hey, we know you have a working phone. Instead of launching the Grubhub app, send us a text message and we'll knock X% off of your price."
Sounds like a rebuke. I'd be pretty offended if a business tried to call me out like this for using an app that (presumably) they're willingly taking orders from. If they don't want to be on there then don't, but don't have a go at me about it.
I'm not in the food service industry, maybe it's just expected that you monitor all of these things and manually request your restaurant to be removed every time a new one launches. But it's not crazy to me that someone could get fed up and say, "no, I don't need to pay attention to every VC backed startup that scrapes my website and starts advertising with my menu on top of my own business on Google. I just want to let customers know that a direct relationship with me is cheaper than a relationship with a middleperson."
Is offering a discount to someone having a go at them? If I was ordering through Grubhub, and I could save even just $5 by ordering directly, I'd want to know the option existed. I might not take advantage of it if it was a tiny amount of money. But I'd like to be informed; choices are nice.
[0]: https://chicago.cbslocal.com/2020/01/13/park-ridge-restauran...
No it's the 'hey' and slightly accusatory sounding 'we know you have a working phone.'
A shawarma place near my last job did the same with Ritual orders, whenever the owner noticed a regular he would ask them to just call the restaurant instead of ordering on the app.
This is very wise. Money and orders from Uber Eats aren't your revenue, they are a little recoup on your ad campaign. They're basically treating the service like a more successful Groupon.
With skipthedishes in my town, all the big chains mark up their prices and send smaller portions than you get in the restaurant itself.
Whereas, the smaller independents seem to charge the same amount, but they blatantly try to get you to switch to ordering yourself by phone and picking up yourself. They advertise deep discounts when you call them directly.
It seems obvious that the smaller places want to use meal delivery as a sales tactic, but then convert as many customers as possible to a direct relationship.
The big chains, on the other hand, seem to have their own major sources of revenue and don’t appear to want any part of taking orders directly.
Another aspect is their scale. A small business can feel a delivery app taking out a few dollars. A bigger one might be using it as a cost that might only last a few years and seen as "research" to be recovered later.
Both can use these strategies however. The smaller businesses converting people to call direct might end up with their own apps and deliveries etc. A lot where I am are actively doing this. UberEats had them but I've noticed a few are setting up their own deliveries now. Others are keeping their options open.
I don't know why people would be surprised by that.
Most delivery only makes sense if you're buying a big meal, because the marginal cost of delivering a second pizza is almost zero.
Of course, this is also why tipping by percent is stupid system for delivery.
In China the dominant food delivery platforms are ele.me and meituan. The food offered there are not marked-up so ridiculously compared to dining in.
As far as I understand, this is because
1. The demand is huge. People prefer food delivery, especially for lunch, to save time to either play mobile games, or squeeze more hours for work. Another reason is much more choices are available online than say within 10 minute commute.
2. Due to 1, food preparation is often moved to backstreet or upstairs where rent is significantly lower.
3. Due to 2, many sketchy food providers on the platforms are not actually restaurants. So, they don't have to bare the cost of regulation compliance like license or hygiene standards.
(It's worth observing in passing, for those who don't know, that the URL ele.me is the mandarin equivalent of "hungry.questionmark".)
But the convenience os hard to beat when you don’t want to take a long break.
I'm stumped. I live in NYC and all my friends use Seamless. I even have colleagues that will describe these companies mentioned as a "Seamless clone".
I don't like calling because I'm always put on hold - call me back within 2-3 minutes, when you're actually calling me, vs me interrupting you. confirm the basics of what I texted you, but if you have a special going, or i ordered a 'wrong' size, etc. fix it. confirm price. send back via text.
you can 'own' the relationship then, without a middleman. you can confirm via voice, do your upsells, warn me of any delays, etc.
I even do this with a local Chinese restaurant. We email them our order and they'll call back if there's a question. They only called back once on a pretty big order.
"Food ordering" outside of "food delivery" should be a separate category. "Food ordering" businesses, imo, likely have a wider audience.
Market economy works! Not news.
The details of HOW markets work are vital to understand for people doing business in a market. For example, understanding how the revenue is distributed amongst all the participants in a value chain is relevant and highly interesting.
Thus, the article, the upvotes, and the discussion.
To be honest I don't really get why this whole trend is so popular.
edit: Side note about their customer service, there seemed no easy way to contact them during my delivery. I tried to contact the driver but the call was declined twice. Uber kept telling me that "the food may be experiencing delays, wait until it arrives before contacting us."
It's also extremely convenient.
Unless you are advocating for: spending time to drive there, order, get lucky enough to find a seat, spend more time there eating and finally spend time driving back.
Honestly, the $5 is a huge time saver for most people and they gladly pay it. Those who rather save the money, can perform all the steps above.
How it works is, you actually call and speak to someone at the restaurant you want to order from. They take your order, and at a pre-arranged time, you get into your car and go pick it up and bring the food to where you want to eat it.
Warning: This app is not for everyone
57.5 IRS mileage rate * 20 mph average over 30 minutes = $ 5.75
30 minutes US minimum wage = $3.625
Total: $9.375
This would be 90% of a $10.42 meal.
Because the article addresses exactly those issues.
It's ok to post stories from sites with paywalls that have workarounds."
There is no workaround. HN hasn't honored their own policy in years. At this point I can only assume there is a referral deal.
Either post directly the archive.is version or find another source, it's only gonna promote article-skipping and comments based on headlines.
https://github.com/iamadamdev/bypass-paywalls-chrome
I think there is also a firefox addon by the same developer.