Portland approves 10% cap on fees that food delivery apps can charge restaurants(oregonlive.com)
oregonlive.com
Portland approves 10% cap on fees that food delivery apps can charge restaurants
https://www.oregonlive.com/portland/2020/07/portland-approves-10-cap-on-fees-that-food-delivery-apps-can-charge-restaurants.html
572 comments
(Preface: I'm sure your app filters for stuff like this)
I got kinda burned when I tried to order direct from a restaurant. The last time we ate there they included a little "order online" card with a link to their website. So the next time, in the spirit of supporting businesses directly, I went to their site and ordered. They did use a third-party handler (ChowNow I think?), but I figured it was a kind of order management third-party. In fact, after placing the order, I got an additional email from that third-party handler congratulating me on ordering directly from restaurants, and that they explicitly don't charge restaurants a fee. Neat, right? Well, Lo and behold, behind the scenes they just used DoorDash to handle delivery...
That sucked because A) it was more hassle for me to sign up for Yet Another Account, and B) I have DashPass (free delivery and discounted service charge) but didn't get to use it, so it ended up costing me more even with the coupon the restaurant threw in.
Hell, there are even pizza places around me that use DoorDash for delivery. Pizza places, for goodness sake!
It's a weird world I suppose.
I got kinda burned when I tried to order direct from a restaurant. The last time we ate there they included a little "order online" card with a link to their website. So the next time, in the spirit of supporting businesses directly, I went to their site and ordered. They did use a third-party handler (ChowNow I think?), but I figured it was a kind of order management third-party. In fact, after placing the order, I got an additional email from that third-party handler congratulating me on ordering directly from restaurants, and that they explicitly don't charge restaurants a fee. Neat, right? Well, Lo and behold, behind the scenes they just used DoorDash to handle delivery...
That sucked because A) it was more hassle for me to sign up for Yet Another Account, and B) I have DashPass (free delivery and discounted service charge) but didn't get to use it, so it ended up costing me more even with the coupon the restaurant threw in.
Hell, there are even pizza places around me that use DoorDash for delivery. Pizza places, for goodness sake!
It's a weird world I suppose.
That happened to me as well here in AZ. There is a popular local cookie place that we wanted to support. Ordered a dozen cookies from their website thinking it would put more money in their pocket vs ordering from DoorDash. However, the entire delivery process was DoorDash done all via SMS. It was odd.
I have actually seen quite a few restaurants do this, where they use a third-party ordering system but then delegate to DoorDash/GrubHub for delivery. Is it maybe because the delivery service gets a smaller cut in this case? I wonder if the total fees add up to a smaller number with the two middlemen than with only DoorDash/GrubHub. Presumably, the latter can charge more if they also handle the transaction as well as bring traffic, as opposed to only handling delivery.
> Is it maybe because the delivery service gets a smaller cut in this case?
Yes, this is correct. If you order from DoorDash directly, the restaurant will pay anywhere from 15-40% of the total transaction.
Restaurants that have partnered with DoorDash for delivery logistics only will pay usually around $7 per order (this varies depending on geography and overall partner terms).
However, the key difference is that this delivery fee is almost always passed on to the customer. So from a restaurant's perspective, they are getting a great deal: Delivery logistics for customers who want delivery, but if they're using a low/no commission direct ordering service, they keep (most of) the full order margin.
Restaurants that have partnered with DoorDash for delivery logistics only will pay usually around $7 per order (this varies depending on geography and overall partner terms).
However, the key difference is that this delivery fee is almost always passed on to the customer. So from a restaurant's perspective, they are getting a great deal: Delivery logistics for customers who want delivery, but if they're using a low/no commission direct ordering service, they keep (most of) the full order margin.
> Restaurants that have partnered with DoorDash for delivery logistics only will pay usually around $7 per order
Did you mean 7 percent of the order perhaps?
Did you mean 7 percent of the order perhaps?
I got kinda burned when I tried to order direct from a restaurant.
If it's a "mom and pop joint" with 1 or maybe at most a handful of locations located in the area, skip the app and just call it in. Nothing to download or sign up for, no chance for an unseen middle-man. These non-chain restaurants are literally the "service industry", I've found I always get a higher level of service when talking to a human on the phone, at a couple of our regular places the servers that pickup ask how I'm doing, have an idea of how we like things, politely inquire about the kids, etc... A couple of them offer online ordering, but I always just pickup the phone and hand over my credit card when they bring the food out, IMO it's a better experience for all parties involved.
Edit: Caveat, I'm old enough that to-go/delivery over the phone was the only option at one point, not app first; and even before the pandemic found DoorDash and their ilk to be parasites that I wouldn't use.
If it's a "mom and pop joint" with 1 or maybe at most a handful of locations located in the area, skip the app and just call it in. Nothing to download or sign up for, no chance for an unseen middle-man. These non-chain restaurants are literally the "service industry", I've found I always get a higher level of service when talking to a human on the phone, at a couple of our regular places the servers that pickup ask how I'm doing, have an idea of how we like things, politely inquire about the kids, etc... A couple of them offer online ordering, but I always just pickup the phone and hand over my credit card when they bring the food out, IMO it's a better experience for all parties involved.
Edit: Caveat, I'm old enough that to-go/delivery over the phone was the only option at one point, not app first; and even before the pandemic found DoorDash and their ilk to be parasites that I wouldn't use.
Wow, that's really wild. Would you mind sharing the name of the restaurant? I'd love to reach out to them to understand what happened there. And thanks for posting this, that's definitely something I'll take into consideration.
Off topic, but your comment made me think of the way my view toward restaurants has changed.
If the pandemic has taught me anything, it’s that restaurants as a concept are just kind of terrible and unnecessary, at least for the bulk of the world’s unremarkable places.
If a perfect vaccine was distributed to every person on the planet right now I wouldn’t be back to visit 95% of restaurants out there.
During “lockdown” I learned to make all kinds of food and way more interesting, higher quality cocktails than 95% of bars and restaurants have, for a fraction of the price.
I learned that my restaurant visits were there to satisfy an emotional desire, and they didn’t even do a great job of that.
I learned that the desire for a “quick meal” is a farce, that homemade food isn’t really a time sink for someone deep into the habit.
My future restaurant visits will be way more sparse and deliberate. I’m going to be holding restaurants to the standard of making something that I literally can’t make at home without going to culinary school and apprenticing under a master chef.
It isn’t a noble act to support your local business if the business isn’t meeting your needs, and at this point I’m not sure how my local dive is going to be able to adapt to my modified needs.
If the pandemic has taught me anything, it’s that restaurants as a concept are just kind of terrible and unnecessary, at least for the bulk of the world’s unremarkable places.
If a perfect vaccine was distributed to every person on the planet right now I wouldn’t be back to visit 95% of restaurants out there.
During “lockdown” I learned to make all kinds of food and way more interesting, higher quality cocktails than 95% of bars and restaurants have, for a fraction of the price.
I learned that my restaurant visits were there to satisfy an emotional desire, and they didn’t even do a great job of that.
I learned that the desire for a “quick meal” is a farce, that homemade food isn’t really a time sink for someone deep into the habit.
My future restaurant visits will be way more sparse and deliberate. I’m going to be holding restaurants to the standard of making something that I literally can’t make at home without going to culinary school and apprenticing under a master chef.
It isn’t a noble act to support your local business if the business isn’t meeting your needs, and at this point I’m not sure how my local dive is going to be able to adapt to my modified needs.
Fantastic idea! If a restaurant offers delivery themselves, it's a no brainer to order directly from them. Usually it's cheaper and faster than ordering through an app. Hope this gains traction.
I dont agree on the "faster" part. Uber or Doordash manage their own delivery people and they're vastly more efficient than the restaurants' own. If you look at Yelp or Seamlesss negative reviews, you'll notice that most of them complaint about delivery service. If there's one thing that the restaurants can benefit from when using Uber or Doordash is having their reviews on those platforms based solely on the quality of food itself.
When I order delivery from a restaurant, an employee (maybe the owner’s kid) comes and delivers the food directly to my house when it’s done. It‘s generally faster than the app model where you need to wait for the driver to go to the restaurant to pick up the food, then come to your house while possibly stopping at other restaurants and/or houses on the way.
I could see how the restaurant delivery would be worse if that particular restaurant is bad at delivering. Also, the app model does seem like it should be cheaper at scale by using the deliverer’s labor more efficiently.
I could see how the restaurant delivery would be worse if that particular restaurant is bad at delivering. Also, the app model does seem like it should be cheaper at scale by using the deliverer’s labor more efficiently.
The restaurant also has a more direct incentive to actually deliver.
One Friday night here in Sydney, it was raining like crazy - so we ordered in some food from one of the online groups. 2 hours later and multiple talks with support and they were still telling us stories about how it's nearly there.
We eventually called the restaurant directly and the food had been sitting ready for 90 minutes on the counter. The service just had all their gig-economy-staff decide this isn't the gig for them in bad weather, so no one was available to pick it up and deliver it. They said we could pick it up ourselves but we didn't really feel like old food at that point so we cancelled and drove out somewhere else. Being lied to was the most annoying part.
One Friday night here in Sydney, it was raining like crazy - so we ordered in some food from one of the online groups. 2 hours later and multiple talks with support and they were still telling us stories about how it's nearly there.
We eventually called the restaurant directly and the food had been sitting ready for 90 minutes on the counter. The service just had all their gig-economy-staff decide this isn't the gig for them in bad weather, so no one was available to pick it up and deliver it. They said we could pick it up ourselves but we didn't really feel like old food at that point so we cancelled and drove out somewhere else. Being lied to was the most annoying part.
I was picking up sandwiches from a local shop and watched 3 doordash/Uber Eats drivers come right after the other to pick up the same order, but they all cancelled it because the restaurant didn't have multiple deliveries for them to pick up at the same time- ie- they were dropping off multiple houses each run. It made me realize why the food was cold last time we ordered from them! From now on I just go and pick up myself.
> the app model where you need to wait for the driver to go to the restaurant to pick up the food, then come to your house while possibly stopping at other restaurants and/or houses on the way
This is a weird set of complaints.
1. Usually, there would be some lag time between when you order the food, and when the restaurant finishes making it. This would overlap with the time required for the driver to go to the restaurant and pick up the food; the app model isn't actually introducing a delay there.
2. Restaurants that do delivery themselves also use the same driver to deliver multiple orders at once. You're definitely better off with a dedicated driver, but the restaurant is much worse off. Again, this would not appear to be related to the app model. We order pizza and pick it up ourselves, because if the pizza place delivers it, it arrives stale and we pay extra for delivery.
This is a weird set of complaints.
1. Usually, there would be some lag time between when you order the food, and when the restaurant finishes making it. This would overlap with the time required for the driver to go to the restaurant and pick up the food; the app model isn't actually introducing a delay there.
2. Restaurants that do delivery themselves also use the same driver to deliver multiple orders at once. You're definitely better off with a dedicated driver, but the restaurant is much worse off. Again, this would not appear to be related to the app model. We order pizza and pick it up ourselves, because if the pizza place delivers it, it arrives stale and we pay extra for delivery.
Restaurant deliver can be worse when the driver is overloaded and your food sits at the restaurant waiting for them to pick it up, or when the driver picks up multiple orders at once (likely) and yours is delayed or is last to be dropped off.
I've definitely had this happen on occasion. There might be interesting ways to solve this problem, like showing the level of "delivery risk" associated with an order given the user's distance from the restaurant and time of day.
> It‘s generally faster than the app model where you need to wait for the driver to go to the restaurant to pick up the food
That's not how it works. I order a lot and the driver is always there to pick it up as soon as it's ready. The driver obviously gets notified about the delivery as soon as the restaurant confirms the order.
That's not how it works. I order a lot and the driver is always there to pick it up as soon as it's ready. The driver obviously gets notified about the delivery as soon as the restaurant confirms the order.
The best part about the app is able to see where the driver is on the map. I hate being in the unknown and not knowing what's going on with my delivery.
I think sometimes those maps are faked. We've seen drivers from apps pick up multiple orders for delivery, but the map doesn't show them stopping at multiple houses, it just slows down the icon of the car.
I'm using Foodora in Sweden and sometimes I see the courier go to other places and they've even told me they had to do other drops (when I said "I saw you took the wrong way on the map"), so yes but I don't think they fake it here.
The app is a cool idea, however, I’m curious how you guys plan on managing the standardization across menu items. Replicating a single restaurant menu is an incredibly complicated problem given the amount of customization, but you also need to account for the variability of the same menu across multiple services.
This is a really good insight and a part of the delivery experience I think could be greatly improved. Different services offer surprisingly different versions of the same menu, and customers are unaware there might be better selection on a different website.
This is absolutely not the right move.
This is you self promoting your app.
Restaurants will pay more to market themselves, hire delivery drivers, and manage the logistics.
Local restaurants are hurting because of COVID. They are blaming the delivery services, whose proprietary tech, marketing spend, logistics services are the only reason 90% could maintain any revenue stream.
This is you self promoting your app.
Restaurants will pay more to market themselves, hire delivery drivers, and manage the logistics.
Local restaurants are hurting because of COVID. They are blaming the delivery services, whose proprietary tech, marketing spend, logistics services are the only reason 90% could maintain any revenue stream.
> This is you self promoting your app.
Okay, but it seems like a reasonable time to promote a relevant app that is apparently free with no ads. It's not like your post is completely free of agenda.
> Restaurants will pay more to market themselves, hire delivery drivers, and manage the logistics.
This is simply not true. Adding middle men does not make this more efficient, and I'm really not sure why you think it does.
One basic reason it's not true, is that business owners won't necessarily pay for these things at all, they may just do them themselves. Sometimes it's easier to produce effort than it is to produce cash to buy effort.
Okay, but it seems like a reasonable time to promote a relevant app that is apparently free with no ads. It's not like your post is completely free of agenda.
> Restaurants will pay more to market themselves, hire delivery drivers, and manage the logistics.
This is simply not true. Adding middle men does not make this more efficient, and I'm really not sure why you think it does.
One basic reason it's not true, is that business owners won't necessarily pay for these things at all, they may just do them themselves. Sometimes it's easier to produce effort than it is to produce cash to buy effort.
This is a pretty cynical way to see things. I’m a restaurant lover who wants my local restaurants to survive the pandemic. Why is building a product to help them “not the right move?”
Is there a Firefox version coming soon?
Next week there will be complaints that food delivery services are no longer catering to certain areas. Instead of accepting that it is just not profitable for them, journalists will label it as backslash or an act of punishment. Same thing happened in others states/cities that implemented similar rules.
The winners are people living in central areas of the city with lots of restaurants. The losers are the poorer outskirts.
I fully support the idea behind this rule. But this implementation has been proven to not work.
The winners are people living in central areas of the city with lots of restaurants. The losers are the poorer outskirts.
I fully support the idea behind this rule. But this implementation has been proven to not work.
How about you have to charge the fee to the customer. The issue isn't taking 25%. It's taking 25% from the restaurant, which means they don't have a profit margin left.
If for example the pizza is $10 at the restaurant, make that $12.50 with delivery and $10 without. That way the consumer can decide themselves if they want to pay the added amount for delivery, or if they'd rather walk/drive. Right now they charge you $10 and give the restaurant only $7.50 meaning they can't make a profit on that pizza.
If for example the pizza is $10 at the restaurant, make that $12.50 with delivery and $10 without. That way the consumer can decide themselves if they want to pay the added amount for delivery, or if they'd rather walk/drive. Right now they charge you $10 and give the restaurant only $7.50 meaning they can't make a profit on that pizza.
Doordash seems to have higher menu prices than the restaurants' own websites, so unless I'm missing something, it seems the restaurant has the ability to choose to recoup those fees from the customer if they want to.
What gets me is that Doordash is triple dipping here. There's the fee to the restaurant, which may or may not translate to higher menu item prices. There's the fixed $2-5 delivery fee which is pretty obvious. And then there's the percentage-based fee in addition to that, 10 or 11% I believe, that's kind of hidden along with the taxes.
I mean come on. Sometimes I am willing to pay a rather high price to have my food delivered. I'm not willing to have to fire up Wolfram Alpha just to determine exactly how much higher, though.
What gets me is that Doordash is triple dipping here. There's the fee to the restaurant, which may or may not translate to higher menu item prices. There's the fixed $2-5 delivery fee which is pretty obvious. And then there's the percentage-based fee in addition to that, 10 or 11% I believe, that's kind of hidden along with the taxes.
I mean come on. Sometimes I am willing to pay a rather high price to have my food delivered. I'm not willing to have to fire up Wolfram Alpha just to determine exactly how much higher, though.
There's also the 15-20% tip, of which the restaurant staff aren't getting a cent.
Don't you normally tip the driver for deliveries? I've never tipped a restaurant for take out or delivery normally...
I stopped tipping with DD.
I used to tip, when delivery was "free" (included in the menu price).
But DD jacks up the menu price (which, at least around here, is already increased to account for their own direct delivery service - they use DD to source more customers) and then adds a delivery fee - if I'm paying that much more of a premium to use a specific delivery person, I don't really feel I owe them a gratuity on top of it.
I used to tip, when delivery was "free" (included in the menu price).
But DD jacks up the menu price (which, at least around here, is already increased to account for their own direct delivery service - they use DD to source more customers) and then adds a delivery fee - if I'm paying that much more of a premium to use a specific delivery person, I don't really feel I owe them a gratuity on top of it.
Why would you tip the restaurant staff?
Because tipping restaurant staff is what normal people do when they go out to restaurants in the U.S. Those same people still prepare and package the food, even when someone else delivers it.
People tip the waiters when dining in. Depends on the location if those waiters share with the rest of the staff.
Picking up food usually has no tips. Delivery involves tipping the driver, which delivery apps already support and they don't take any fees from it.
Picking up food usually has no tips. Delivery involves tipping the driver, which delivery apps already support and they don't take any fees from it.
> Picking up food usually has no tips.
I typically tipped even when picking up food. And restaurant staff remember that, precisely because so few people do it.
I typically tipped even when picking up food. And restaurant staff remember that, precisely because so few people do it.
Who the does the tip go to? The person handing you the order?
The places I give such tips at typically give them to the kitchen and staff.
> Depends on the location if those waiters share with the rest of the staff.
Legally, any tips go solely to the individual waiter to whom the tip was given. Restaurants may not legally require a tip sharing program, either between servers, or from the servers to the cooks.
In practice, you are right.
Legally, any tips go solely to the individual waiter to whom the tip was given. Restaurants may not legally require a tip sharing program, either between servers, or from the servers to the cooks.
In practice, you are right.
I do not tip at fast food or counter-service places or when I pick up takeout. Presumably GP was comparing the delivery experience to the picking up takeout experience where someone else just happens to be picking up the takeout.
When you go to a restaurant, you sit down, occupy valuable table space, and have staff service you by bringing the food to you, filling your drinks, and providing you with napkins and cutlery. That's why you tip.
Many places charge extra for pick up.
You got a lotta Reservoir Dogs fans replying to you lol. Didn’t realize how cheap so many of the tech bros on here were.
We've asked you several times to stop posting unsubstantive and/or flamebait comments. Please actually stop.
Is it possible for me to delete my account? I emailed about this awhile back and never got a response.
When did you email? I can't find any email from you in the archives, and that's not the kind of thing we'd fail to respond to.
Sometimes legit emails go to spam, though I look over the spam folder pretty carefully too.
Sometimes legit emails go to spam, though I look over the spam folder pretty carefully too.
I don't tip for takeout. If they deliver, I tip the delivery person, but if the restaurant isn't the one delivering that's not relevant.
(I hate tips, restaurants should just charge what they need to charge. But that's not how things are done in the US, and it's hard to change the culture...)
(I hate tips, restaurants should just charge what they need to charge. But that's not how things are done in the US, and it's hard to change the culture...)
It's already 12.5$ with delivery. And even worse, a ton of other fees get added on top of it, making your order total close to 18$. Consumers are already paying enough, so they don't want to pay more. This is the reason why the Apps turn to restaurants instead. Even with that, they aren't still profitable.
Then they should cease being in business.
Couldn't the same argument be made for restaurants? If they can't afford delivery fees, or can't afford to make money without delivery they shouldn't be in business either.
Could easily be said, however you're overlooking the huge elephant in the room of restaurants being essentially forced into turning into delivery-only or delivery-first businesses due to Covid restrictions. Where I live we've only recently (like within the past few weeks) allowed restaurants to serve food to guests, and only outdoors.
This is true so long as you recognize that this is a change in the market that will make certain restaurants unprofitable. A restaurant that was financially well-off before the advent of 3rd party delivery apps may not be anymore because they have fiercer competition.
Restaurants that can absorb the 25-30% hit, for whatever reason, now have an advantage over those that couldn't. The question becomes is this a market failure that needs corrected, or the natural evolution of the food service industry? The case for the former is that you have a vibrant market of pretty high quality restaurants run by their owners as passion projects and have margins that keep the lights on. Squeezing this market because it's now "deliver or die" means that they'll either have to go out of business or reduce their costs which hurts the customer with second order effects -- they will have to reduce their rents by going to a cheaper location that's out of the way, the quality of the food will drop, and/or the staff will be squeezed.
I don't necessarily agree with capping the fee but I don't think supply-chain transparency ever hurt the customer.
Restaurants that can absorb the 25-30% hit, for whatever reason, now have an advantage over those that couldn't. The question becomes is this a market failure that needs corrected, or the natural evolution of the food service industry? The case for the former is that you have a vibrant market of pretty high quality restaurants run by their owners as passion projects and have margins that keep the lights on. Squeezing this market because it's now "deliver or die" means that they'll either have to go out of business or reduce their costs which hurts the customer with second order effects -- they will have to reduce their rents by going to a cheaper location that's out of the way, the quality of the food will drop, and/or the staff will be squeezed.
I don't necessarily agree with capping the fee but I don't think supply-chain transparency ever hurt the customer.
If you want to look at the poster child for holding back innovation in order to protect an outdated business model, then look no further than the film and TV industry. You could replace the restaurants in this story with the MPAA and the delivery apps with Netflix, and you’d have a story with exactly the same parameters, just with the heroes and villains of the narrative reversed.
If the apps charge too much the restaurants should leave. If that means they end up not delivering what consumers want then they should change their business model or go out of business. If the delivery apps can’t survive under those conditions then they should change their business model, or go out of business.
The hospitality industry has always been ultra-competitive and low margin. Bad restaurants go under all the time. The only thing that is different now is that they have somebody else to point the finger at. The other thing I think they all miss is that without these apps, most of the businesses would have had to immediately go under when Covid hit. Those services were the only thing that gave them a shot of keeping the lights on, and for the ones that can’t find a way to make things work, consumers can do without them.
If the apps charge too much the restaurants should leave. If that means they end up not delivering what consumers want then they should change their business model or go out of business. If the delivery apps can’t survive under those conditions then they should change their business model, or go out of business.
The hospitality industry has always been ultra-competitive and low margin. Bad restaurants go under all the time. The only thing that is different now is that they have somebody else to point the finger at. The other thing I think they all miss is that without these apps, most of the businesses would have had to immediately go under when Covid hit. Those services were the only thing that gave them a shot of keeping the lights on, and for the ones that can’t find a way to make things work, consumers can do without them.
Yes, of course, and they often do go out of business.
Yes, but the restaurants have been put out of business by government order. This is effectively a Fifth Amendment “taking” and should be compensated.
Sadly they don't.. Not as of yet.
They got tons of VC money to burn before they have to answer to anyone.
> The issue isn't taking 25%. It's taking 25% from the restaurant, which means they don't have a profit margin left.
I mean, that's not really an issue.
Money is fungible, which means there's no real difference between "charging the customer" and "charging the restaurant" aside from who the customer blames for the higher price.
I mean, that's not really an issue.
Money is fungible, which means there's no real difference between "charging the customer" and "charging the restaurant" aside from who the customer blames for the higher price.
The ChowNow app doesn't handle delivery, only online ordering. If the restaurant delivers, they do it themselves. The nice thing about ChowNow is that they just charge a monthly fee to the restaurant, plus any credit card fees. More affordable for the restaurant than a 30% cut of each order.
How much more extra do you think customers will pay? There is already a $15 minimum on most apps. There is the 15% flat service fee they charge customers. Then there is the delivery fee that can range from $0.99 to $7.99. Then there's the tips. And to top it off, the apps charge the restaurant as well. Sometimes as high as 25%. If you shift these costs to the customers, its almost a 50-60% premium. I don't think their business will survive.
Exactly what happened in SF. Uber Eats stopped delivering to Treasure Island as a result:
"The Order limits our ability to cover operation costs, so we have had to revise the areas Uber Eats can deliver to in the city. Unfortunately, this means we cannot continue to serve customers in Treasure Island. The Mayor’s Emergency Order limits the commissions we charge restaurants for access to our platform and delivery services."
"The Order limits our ability to cover operation costs, so we have had to revise the areas Uber Eats can deliver to in the city. Unfortunately, this means we cannot continue to serve customers in Treasure Island. The Mayor’s Emergency Order limits the commissions we charge restaurants for access to our platform and delivery services."
To some extent this seems like grandstanding. They charge a delivery fee. If the delivery fee doesn't cover delivery, then charge a higher delivery fee. That comes from the customer, not the restaurant.
And base that delivery fee on distance between the restaurant and the customer as well. They can solve it they want to. People in treasure might be willing to pay a higher fee than to not get any delivery at all. It’s political posturing and pressure tactics.
In that other fold of the multiverse, the headline could be that uber is charging people extra in Treasure Island, which contains a lot of subsidized low-income housing.
They already do that for taxi rides, right? A longer taxi ride doesn't get magically cheaper because it's going to/from low income housing. It's all transportation, and transportation gets more expensive for a longer distance.
Well who would click on that article?
[deleted]
* If the delivery fee doesn't cover delivery, then charge a higher delivery fee.*
Why doesn't that reasoning apply to restaurants? If the fees cut into their profits too much, then they need to raise prices.
There is no free lunch here (ha!). The customer is always going to be paying for both the food and the delivery. There's no benefit in micromanaging the internal transactions.
Why doesn't that reasoning apply to restaurants? If the fees cut into their profits too much, then they need to raise prices.
There is no free lunch here (ha!). The customer is always going to be paying for both the food and the delivery. There's no benefit in micromanaging the internal transactions.
Because the restaurants aren't allowed to charge higher prices to their higher cost delivery customers. Which doesn't stop the food delivery places from charging higher prices, of course. And taking a cut, and collecting a delivery fee, etc etc.
Restaurants in Australia do charge higher price on Ubereats and Menulog, I am surprised its not the same in the US.
I’d wager they have clauses that prevent them from charging a lower price for direct customers. In which case the restaurant has to charge everyone a higher price. In what world does that benefit anyone but the intermediaries?
It’s the exact same as credit card processing fees. Except that’s 3% and this is 30%
It’s the exact same as credit card processing fees. Except that’s 3% and this is 30%
> Why doesn't that reasoning apply to restaurants?
More opaque. The honest approach would be for the menu prices to be the menu prices, and the cost of the delivery should be obvious.
More opaque. The honest approach would be for the menu prices to be the menu prices, and the cost of the delivery should be obvious.
That makes no sense to me. Why can't they charge people ordering from Treasure island higher?
Some semi-related reasons I can think of
1. If people knew what it actually cost to get food delivered (as opposed to hiding the delivery fee by increasing per item costs or charging the restaurant a cut), they wouldn't order
2. Part of their business model is to waive delivery fees, like if you buy the subscription for unlimited delivery. However even if you have unlimited delivery they still make money from service fees and restaurant commissions. If all of that cost gets charged as a "delivery fee", the $20 subscription for unlimited free delivery becomes unsustainable.
3. As others have mentioned, they're probably doing it in part just to make a point
1. If people knew what it actually cost to get food delivered (as opposed to hiding the delivery fee by increasing per item costs or charging the restaurant a cut), they wouldn't order
2. Part of their business model is to waive delivery fees, like if you buy the subscription for unlimited delivery. However even if you have unlimited delivery they still make money from service fees and restaurant commissions. If all of that cost gets charged as a "delivery fee", the $20 subscription for unlimited free delivery becomes unsustainable.
3. As others have mentioned, they're probably doing it in part just to make a point
They can, but they don't want that increased charge to be shown to the customer, they want the restaurants themselves eating that cost so the prices stay artificially low from the end users perspective.
Because the city made it illegal, obviously. Just like Portland. They're not going to operate at a loss. All you're doing is criminalizing deliveries that cost more than 10%.
> Because the city made it illegal
That just seems as PR from food delivery apps. AFAIK the city put a limit on how much the restaurants can be charged, there is no limit on how much a person ordering the food can be charged.
That just seems as PR from food delivery apps. AFAIK the city put a limit on how much the restaurants can be charged, there is no limit on how much a person ordering the food can be charged.
The city made it illegal to charge the restaurants - not to add a higher delivery fee.
[deleted]
I don't understand why people in central areas of the city order delivery. There are 10 amazing restaurants within easy walking distance of me, why order delivery when I can walk for 5 minutes instead?
5 minute walk then 20 minute wait then 5 minute walk back.
When you're earning $50+ an hour, which many in cities are easily clearing, it starts to make a lot of sense to pay someone else to do your waiting for you.
When you're earning $50+ an hour, which many in cities are easily clearing, it starts to make a lot of sense to pay someone else to do your waiting for you.
I hate this line of reasoning and so do many economists.
It’s not the “opportunity cost” you should be measuring. It’s the “opportunity cost of the next best alternative.”
If I am an hourly worker making $50 and going to get food would be an hour that I wouldn’t be working, then yes it is worth $50 to not spend it going to get food.
But if I am choosing between watching Netflix and going to get food. The next best alternative pays $0. From a purely financial view it makes sense to get food.
It’s not the “opportunity cost” you should be measuring. It’s the “opportunity cost of the next best alternative.”
If I am an hourly worker making $50 and going to get food would be an hour that I wouldn’t be working, then yes it is worth $50 to not spend it going to get food.
But if I am choosing between watching Netflix and going to get food. The next best alternative pays $0. From a purely financial view it makes sense to get food.
> It’s not the “opportunity cost” you should be measuring. It’s the “opportunity cost of the next best alternative.”
Opportunity cost is exactly that: the next best alternative.
> But if I am choosing between watching Netflix and going to get food. The next best alternative pays $0.
If you could be spending that time earning $50, and you choose to watch Netflix instead—all else being equal—then obviously watching Netflix is worth more to you than the $50. Going to get food thus implies foregoing at least $50 worth of leisure time. The fact that no one is paying you to watch Netflix is irrelevant; monetary compensation is not the sole (or even most signficant) measure of economic value.
Opportunity cost is exactly that: the next best alternative.
> But if I am choosing between watching Netflix and going to get food. The next best alternative pays $0.
If you could be spending that time earning $50, and you choose to watch Netflix instead—all else being equal—then obviously watching Netflix is worth more to you than the $50. Going to get food thus implies foregoing at least $50 worth of leisure time. The fact that no one is paying you to watch Netflix is irrelevant; monetary compensation is not the sole (or even most signficant) measure of economic value.
I agree that monetary compensation is not the sole economic value. But still “how much you could be making that hour” is also irrelevant in most cases.
That’s the entire point.
That’s the entire point.
No it is highly relevant. I’m “making” happiness by watching a film on Netflix instead of getting dressed, getting in the car, struggling to find parking, waiting for the order, and then driving back.
This is an economic decision just One that not easily seen by dollars. I value a movie more than running errands.
This is an economic decision just One that not easily seen by dollars. I value a movie more than running errands.
And that still doesn’t have anything to do with the original thesis - “if I make $50/hour when I am working. That means I should value my time at $50/hour”. The opportunity cost is not $50/hour if you wouldn’t have been using that hour to work.
> The opportunity cost is not $50/hour if you wouldn’t have been using that hour to work.
It is at least $50 per hour if you could have been using that time to work. Anything else that you choose to do instead of working is prima facie worth more to you than the $50 you could have been earning. The opportunity cost—the next best alternative—is either working and earning $50 or else something you value even more than $50.
You are attempting to claim the opposite: that if someone can make $50 per hour working, but chooses to do something else, then that time is somehow worth less than $50 per hour. This makes no sense at all. This would presume that the person knowingly and deliberately chooses the option which is less valuable from their own point of view.
It is at least $50 per hour if you could have been using that time to work. Anything else that you choose to do instead of working is prima facie worth more to you than the $50 you could have been earning. The opportunity cost—the next best alternative—is either working and earning $50 or else something you value even more than $50.
You are attempting to claim the opposite: that if someone can make $50 per hour working, but chooses to do something else, then that time is somehow worth less than $50 per hour. This makes no sense at all. This would presume that the person knowingly and deliberately chooses the option which is less valuable from their own point of view.
If I am a salaried employee, no matter how much time I work, over 40 hours a week, it would not earn me more money.
The only reason that I would work around 40 hours a week instead of slacking off is because ethically, that’s what I agreed to do.
Most people aren’t in a position where they could put in every waking hour into pursuits that generate money.
What percentage of people that post on HN are working hourly billable jobs?
The only reason that I would work around 40 hours a week instead of slacking off is because ethically, that’s what I agreed to do.
Most people aren’t in a position where they could put in every waking hour into pursuits that generate money.
What percentage of people that post on HN are working hourly billable jobs?
Overtime pay exists, even for many salaried positions. Short of that, if you routinely put in extra productive hours you should expect a higher salary. And you could always take on a second job, switch jobs, or do some work around the home yourself instead of paying someone else to do it for you. There is no shortage of opportunities to trade some leisure time for extra cash.
For tech workers who dominate HN and are the first to say that their free time is worth whatever their total comp is, how many get overtime pay?
How many people who put in extra time actually get recognized by their company for doing so at their equivalent hourly rate?
How many people who put in extra time actually get recognized by their company for doing so at their equivalent hourly rate?
Most simply, some people value their leisure time as much or more than their hourly wage.
I find this become more true the more someone is compensated and the more they have to work.
I find this become more true the more someone is compensated and the more they have to work.
I have no problem with that. Just don’t wrap it in some BS about opportunity cost and how much their time is worth.
There are three concepts that HN commenters don’t understand
- “Monopoly” and anti-trust
- the legal concept of censorship.
- opportunity costs.
There are three concepts that HN commenters don’t understand
- “Monopoly” and anti-trust
- the legal concept of censorship.
- opportunity costs.
I don't understand why economists would hate it. The opportunity cost doesn't have to be dollars - it could be in universal "utility measure" units. If I value the utility measure of what I'm giving up to get food > than I value the utility measure of the cost of delivery, I don't want to give up that utility to go get food.
I am not saying that money is the end all be all.
I am saying that the intellectually honest reason is that “I have the money to spend on doing things I don’t want to do myself”. Not, “Because I make $50/hour, for 8 hours a day, my time is worth $50 and every hour I get back in my life is worth $50/hour”.
I am saying that the intellectually honest reason is that “I have the money to spend on doing things I don’t want to do myself”. Not, “Because I make $50/hour, for 8 hours a day, my time is worth $50 and every hour I get back in my life is worth $50/hour”.
It's not a decision you make every single time you order food. It's lifestyle.
Put in just your 9-5 then bail or put extra time and effort in to your career. Many high earners in cities are doing the latter. You take the time you'd be using not only be getting your food but cleaning, mowing, looking after your car; all of the work that isn't your job, and use it to earn more instead. The higher you earn, the more this makes sense to do.
Hours are interchangeable. Sure if you order food at 7:30, get it delivered at 8, and you spend 7:30-8 watching Netflix then yeah the next best alternative for that half an hour was $0. That's not where the trade off happened though. It's when you left work at 6 instead of 5. It's when you answer that phone call or email you otherwise wouldn't have later that night. It's going out for drinks the next day with that weird guy you shared an office with until he left a few weeks ago to work at a company you really want to move to.
Put in just your 9-5 then bail or put extra time and effort in to your career. Many high earners in cities are doing the latter. You take the time you'd be using not only be getting your food but cleaning, mowing, looking after your car; all of the work that isn't your job, and use it to earn more instead. The higher you earn, the more this makes sense to do.
Hours are interchangeable. Sure if you order food at 7:30, get it delivered at 8, and you spend 7:30-8 watching Netflix then yeah the next best alternative for that half an hour was $0. That's not where the trade off happened though. It's when you left work at 6 instead of 5. It's when you answer that phone call or email you otherwise wouldn't have later that night. It's going out for drinks the next day with that weird guy you shared an office with until he left a few weeks ago to work at a company you really want to move to.
I just want to make sure I'm following your train of thought correctly regarding this object.
So, say, an hourly contractor who orders delivery so they can get back to work sooner still makes sense to you, right?
So, say, an hourly contractor who orders delivery so they can get back to work sooner still makes sense to you, right?
If he would get more hours in during that time instead of going home earlier, then you could value the time saved against how much it would cost.
If he makes $50 an hour and he can get an extra hour in working, if it is cheaper for him to order food then yes it makes economic sense.
On the other hand if he were at home watching Netflix and he spent the money set aside for his utility bill to eat out and his lights got cut off , the opportunity cost wasn’t the $50, it was that he could have had lights.
If he makes $50 an hour and he can get an extra hour in working, if it is cheaper for him to order food then yes it makes economic sense.
On the other hand if he were at home watching Netflix and he spent the money set aside for his utility bill to eat out and his lights got cut off , the opportunity cost wasn’t the $50, it was that he could have had lights.
Alright. Just wanted to make sure I was following your train of thought.
Thanks for taking the time to elaborate. You have a good one.
Thanks for taking the time to elaborate. You have a good one.
This is maybe a reasonable argument for lunch on a workday, but doesn’t really apply for dinner or on weekends. There’s a counter argument to be made that for many people their productivity and creativity increases when interspersed with a bit of walking, change of environment, sunlight, etc. Anyway it’s largely a matter of preference. There’s are certainly occasions where it’s nice to relax and order door-to-door delivery regardless, although I’m never personally willing to pay the insane fees that apps like Uber Eats charge.
Don't you see? My time is too valuable to do anything vaguely unpleasant. The entire economy would suffer if I had to pick up my own food.
I'm probably going to get downvoted for this, but yes - that's spot on. It's exactly that kind of attitude I've seen far too often in the culture of well-paid tech workers.
Their lives are all about optimization of time resources / time management, and everyone should bow to their needs - if it results in them shaving off some minutes here and there.
After all, they're making $300k/year working on important products, so it's only natural that every corner that could be cut, should be cut - even if it means driving people out of business.
When confronted with the logic, they regurgitate the same "But you see, my time is worth $xx, 24/7/365 - so 30 mins saved on task x is a net profit for me" (even though, in fact, they would not be working during those 30 minutes)
Their lives are all about optimization of time resources / time management, and everyone should bow to their needs - if it results in them shaving off some minutes here and there.
After all, they're making $300k/year working on important products, so it's only natural that every corner that could be cut, should be cut - even if it means driving people out of business.
When confronted with the logic, they regurgitate the same "But you see, my time is worth $xx, 24/7/365 - so 30 mins saved on task x is a net profit for me" (even though, in fact, they would not be working during those 30 minutes)
> "But you see, my time is worth $xx, 24/7/365 - so 30 mins saved on task x is a net profit for me" (even though, in fact, they would not be working during those 30 minutes)
You're right. If their leisure time were merely worth as much as their regular wages then they ought to be working those 30 minutes instead. Since in fact they made the opposite choice, they clearly value their leisure time more than what they would have earned by spending that time working.
You're right. If their leisure time were merely worth as much as their regular wages then they ought to be working those 30 minutes instead. Since in fact they made the opposite choice, they clearly value their leisure time more than what they would have earned by spending that time working.
We all pay people to do things that we could do ourselves that we would rather not do.
Every time we eat out, pay a lawn service to cut our grass, have someone else wash our car.
Yes. It is dumb though to justify it based on how much you get paid hourly. They don’t understand the real concept of opportunity cost.
Every time we eat out, pay a lawn service to cut our grass, have someone else wash our car.
Yes. It is dumb though to justify it based on how much you get paid hourly. They don’t understand the real concept of opportunity cost.
> It is dumb though to justify it based on how much you get paid hourly.
imo my time is actually worth many multiples of what my employer pays me for it.
imo my time is actually worth many multiples of what my employer pays me for it.
That’s fine. You can value your time however you want. But don’t pretend it’s done grand economic principle.
But your time is only “worth” monetarily what the market will pay for it.
But your time is only “worth” monetarily what the market will pay for it.
> Their lives are all about optimization of time resources / time management, and everyone should bow to their needs
You make it seem like they have a gun to the heads of the landscaper they hired to do a job, in which the landscaper now has money to do whatever want to do it with it.
To your other claim about not “working” during those 30 minutes. You are working every single minute of the day. It might not be for a paycheck, it is probably for your mental sanity by chilling out with a drink waiting for some food to arrive.
That was purely an economic decision that they value doing X over doing Y. That’s done with every transaction done throughout life.
You make it seem like they have a gun to the heads of the landscaper they hired to do a job, in which the landscaper now has money to do whatever want to do it with it.
To your other claim about not “working” during those 30 minutes. You are working every single minute of the day. It might not be for a paycheck, it is probably for your mental sanity by chilling out with a drink waiting for some food to arrive.
That was purely an economic decision that they value doing X over doing Y. That’s done with every transaction done throughout life.
You sew your own shirts and milk your own cow I presume?
Takeout is 15-20 minutes, delivery is 40-60. Call ahead, and the food will be ready by the time you get yourself together, walk out the door, and arrive at the restaurant.
Right, but you can be doing other things during those 40-60 minutes
I usually spend that time distracted with thoughts of where is my delivery, why is my delivery late, I'm so hungry, why did I even order delivery? The walk is a lot more pleasant.
Walking around is usually one of the highlights of my day. Walking down the block isn't a chore, it's a pleasure. Delivery is cold by the time I get it half the time, I want stuff done well I've got to do it myself.
You're explaining why you don't use delivery, but not why "it doesn't make sense".
Would people really rather have cold food that costs more than walk for 10 minutes?
Other people may have a combination of:
- better delivery options
- an aversion to walking, or no walk-able options
- higher risk tolerance for lukewarm food
People differ in more than physical appearance.
- better delivery options
- an aversion to walking, or no walk-able options
- higher risk tolerance for lukewarm food
People differ in more than physical appearance.
In a central area of a city? Absolutely.
Speaking from when I lived in the middle of a major city:
I am working and/or enjoying highly limited relaxation time. I am willing to pay a premium to have the food arrive, and have the time surrounding "getting food in hand" be minimized, so as to minimize work interruption or maximize current recreational activity.
It's essentially the opportunity cost argument, applied to utility measure rather than literal dollars.
I am working and/or enjoying highly limited relaxation time. I am willing to pay a premium to have the food arrive, and have the time surrounding "getting food in hand" be minimized, so as to minimize work interruption or maximize current recreational activity.
It's essentially the opportunity cost argument, applied to utility measure rather than literal dollars.
If you aren't being paid hourly, this is utterly fallacious.
If you are being paid hourly, you should be billing for thinking while walking down the street or taking a shower. That is some of your most productive time.
Also as another commenter mentioned, cold food. Furthermore, avoiding all of the extra zero-use plastic waste they throw in the bag by default.
If you are being paid hourly, you should be billing for thinking while walking down the street or taking a shower. That is some of your most productive time.
Also as another commenter mentioned, cold food. Furthermore, avoiding all of the extra zero-use plastic waste they throw in the bag by default.
Most high earning people have the ability to influence their pay through expending time and effort.
Don't confuse spending time or effort with achieving results.
Call ahead?
Amusingly, you have to spend the same amount of time exercising, to work off the health effects of eating restaurant food.
We're moving from an age of consumers going to the good/service and to the good/service going to the consumer. In particular younger generations see delivery as a norm. It's less about being lazy or having high expectations and more a case of it being baked into the culture of younger generations now.
I work for a takewaway / food delivery company and it's facinating listening to what our customers are saying. I heard one parent say that their kids have sometimes ordered ice cream on a delivery platform rather than look to see if there's any in the freezer first. It's quickly becoming the norm to the point where peoples literal first thought is "can I order it?" rather than "can I go and get it?".
I work for a takewaway / food delivery company and it's facinating listening to what our customers are saying. I heard one parent say that their kids have sometimes ordered ice cream on a delivery platform rather than look to see if there's any in the freezer first. It's quickly becoming the norm to the point where peoples literal first thought is "can I order it?" rather than "can I go and get it?".
I think Amazon Prime is a big cause of this mindset. It's become so much easier to order things on Amazon and wait two days than it is to think about going to the store and looking for the item you want.
Sounds incredibly wasteful, no matter the economics involved.
Because those parents are bearing the costs of their childrens eating habits, rather than the kids feeling the cost.
Once the long promised delivery drones are finally here, it’s actually less wasteful. So the younger generations are just adapting to the yet to come future :)
I'm not defending it, it's just the trend I'm seeing.
Cause people are lazy/committed to something else/working too much/sick/what ever else? They wouldn't be ordering delivery at all if they weren't. They would make their own food.
Because my time is worth more to me than that. It's not so much the travel... it's the waiting once you get there for the food to actually be ready (or conversely, waiting at home first and risking it not being hot when you get there).
I prefer to pick up the food myself, so that I can be reasonably assured that it's hot when I sit down to eat it. I've gone so far as to buy an insulated pizza delivery bag so we can eat hot pizza at home.
For me, the prospect of lukewarm food kills the delivery experience for me, even if delivery were "free" (not itemized to me).
For me, the prospect of lukewarm food kills the delivery experience for me, even if delivery were "free" (not itemized to me).
- There is a pandemic going on
- Not everyone is physically able
- Not everyone is physically able
Depression, chronic fatigue, disabilities, anxiety...?
Maybe because some people are completely quarantined and unable to leave their homes.
If you have enough discretionary income, why not circulate it and help expand the econony? I'd never have a problem with any of my neighbors spending money, and especially not locally.
My barber (well masked up and a face shield) was seeing fewer customers. I was getting my haircut less since I was at home and spending less in gas. I was giving him double the amount that I usually pay for a haircut when he reopened.
I’m also tipping delivery drivers a lot better these days.
I’m also tipping delivery drivers a lot better these days.
Sick in your apt with covid for one.
Because they’re lazy and can afford it.
[deleted]
>The winners are people living in central areas of the city with lots of restaurants. The losers are the poorer outskirts.
Not sure this holds in most US cities. Outskirts are usually wealthier suburbs and lots of Urban Cores are quite poor.
Not sure this holds in most US cities. Outskirts are usually wealthier suburbs and lots of Urban Cores are quite poor.
This has been changing dramatically over the last decade+, but I guess I don't know which tendency currently dominates
If food delivery services suspend service in Portland tomorrow, I would find it pretty hard to believe it isn't political maneuvering to prevent other localities from doing the same.
They won't stop delivering in Portland, they'll just stop delivering to certain areas that are more out of the way.
Or just be more transparent and charge a higher delivery fee.
I mean by this logic the food delivery services are also proven not to work based on the ridiculous fees for a commodity service.
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
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-a...
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
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-a...
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.
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.
> we guarantee that only over-capitalized predatory businesses can compete in the space.
Assuming you can't make money at 10%, why would even a well-capitalized company that's OK with having a loss leader enter that market? The Uber strategy has been to enter a market fast, drive competitors out (possibly taking a loss), then (and looking at their earnings, this never happened, probably because there's a competitor in most of their markets) raise prices and finally turn a profit. If you can never turn a profit, why would you enter the market?
Assuming you can't make money at 10%, why would even a well-capitalized company that's OK with having a loss leader enter that market? The Uber strategy has been to enter a market fast, drive competitors out (possibly taking a loss), then (and looking at their earnings, this never happened, probably because there's a competitor in most of their markets) raise prices and finally turn a profit. If you can never turn a profit, why would you enter the market?
> If you can never turn a profit, why would you enter the market?
Because you can still raise money, sell your company, and make money in the process. An extreme form would be a pyramid scheme where early investors make lots of money, leaving later investors with the problems.
Because you can still raise money, sell your company, and make money in the process. An extreme form would be a pyramid scheme where early investors make lots of money, leaving later investors with the problems.
Because they want to make a bet on the future being different. Or they just want to pump up the company's value enough that the initial investors can get out with their cash and leave the shareholders/acquirer holding the bag.
If the delivery companies start shifting the burden to consumers, or if they start forcing bicycle couriers to comply with the rule, or if they can successfully contest it in court, then it makes sense to some degree to stay in the fight.
If the delivery companies start shifting the burden to consumers, or if they start forcing bicycle couriers to comply with the rule, or if they can successfully contest it in court, then it makes sense to some degree to stay in the fight.
Because you’re funded by investors who have been lied to about eventual automation.
Netflix delivered DVDs at a loss to build a brand and content licensing for their streaming service.
Netflix delivered DVDs at a loss to build a brand and content licensing for their streaming service.
Was that really the case? Netflix delivered DVDs for a decade before it started online streaming.
If I remember correctly Netflix’s original business model was more like a gym membership than brand building for an online platform that was a decade in the future.
If I remember correctly Netflix’s original business model was more like a gym membership than brand building for an online platform that was a decade in the future.
AFAIK Netflix still delivers DVD's at profit.
[deleted]
>Netflix delivered DVDs at a loss
source? I've never heard that one before
source? I've never heard that one before
Isn't the 10% cap making the end game of monopoly and higher prices impossible though?
Only if they don't change it in the future in response to "market forces", or if they start charging consumers fees directly or some other workaround and then the city council has to retract this guidance because people are complaining about the higher prices.
The restaurant should get paid regular price for their food and maybe even a little extra to cover boxing it nicely for delivery, keeping it warm. The delivery company should charge the customer the price they need pay to have it delivered to them. I expect the 10% max fee if around the margin the restaurant is making so I'm not sure this fixes anything.
Food delivery is an awesome service but it costs money, consumers should expect to pay a higher right for food and grocery delivery in the long term.
And delivery companies should expect smaller margins for coordinating it.
Food delivery is an awesome service but it costs money, consumers should expect to pay a higher right for food and grocery delivery in the long term.
And delivery companies should expect smaller margins for coordinating it.
You think all of that hasn't been tried already? Why would the delivery services leave free money on the table if it worked? Consumers would not pay those high costs in enough numbers to make it work so we end up with this model. It's a very price sensitive market.
OTOH, maybe the restaurant should get paid less for the food because the patron isn't tying up a table, isn't using the restroom, isn't consuming any water/ice, isn't creating any linen/silver/plates/glasses that need washing.
I'm just repeating what another comment said. The 10% cap doesn't include the delivery fee. It's about the price of the food. Delivery services can't charge more than $55 for $50 worth of food but they can still charge $10 for the delivery if that is what it costs.
> "consumer advocacy and anti-monopoly are practically the opposite thing."
Only true in the short term. Long term, monopoly prevents competition and is bad for consumers.
Only true in the short term. Long term, monopoly prevents competition and is bad for consumers.
They aren’t forcing prices lower. The companies are free to charge a higher delivery fee.
You realise free shipping on ebay and amazon is.. anything but free right?
Maybe that's whats next -- online only restaurants. Food made in a warehouse.
Deliveroo already does something a little like that:
https://foodscene.deliveroo.co.uk/promotions/deliveroo-editi...
They take existing, established chefs or restaurants and clone the cuisine so that the food can be produced in a larger kitchen, potentially reaching a wider delivery area.
https://foodscene.deliveroo.co.uk/promotions/deliveroo-editi...
They take existing, established chefs or restaurants and clone the cuisine so that the food can be produced in a larger kitchen, potentially reaching a wider delivery area.
It's funny you explained that concept way better in a single sentence than that whole 'explainer' 10 paragraph page on Deliveroo's site.
"We combine our customer insight, logistics experience and relationships with restaurants all over the world to bring an Edition to you." blah blah.
Generic corporate speak is so overrated.
"We combine our customer insight, logistics experience and relationships with restaurants all over the world to bring an Edition to you." blah blah.
Generic corporate speak is so overrated.
A turnkey solution for delivery-only restaurants
https://www.cloudkitchens.com/
https://www.cloudkitchens.com/
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
Then local depots could store them in thermal insulators.
Not sure if anyone would ever eat a pizza that has stored below freezing point
> Not sure if anyone would ever eat a pizza that has stored below freezing point
DiGiorno would like a word.
DiGiorno would like a word.
I keep a stock of various Totino's pizzas in my freezer at all times.
Portland already has them. Started infesting the city last year: https://www.wweek.com/restaurants/2019/11/12/at-delivery-onl...
Or in the vehicle that delivers it to you, like Zume Pizza.
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....
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....
"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.
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.
> 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.
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.
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.
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.
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.
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.
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.
Healthcare premiums were steadily marching higher from the 1970s onwards, and continued to do so post-ACA at about the same annual growth rate.
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.
Except it didn't.
See Exhibit 1 at https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2018..... The "sky high" jump you portray doesn't exist. It's been a quite steady annual rise.
If pre-existing conditions were the primary cause for premium increases, the ACA's one-fell-swoop removal of them would've had far more significant impact on that chart.
See Exhibit 1 at https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2018..... The "sky high" jump you portray doesn't exist. It's been a quite steady annual rise.
If pre-existing conditions were the primary cause for premium increases, the ACA's one-fell-swoop removal of them would've had far more significant impact on that chart.
Limits on pre-existing conditions mainly affect individual policy pricing, corporate health insurance are already pooled and because of that always had fewer pre-existing condition limits.
The whole reason for health insurance in the first place is for healthy, wealthy, or young people to pay for unhealthy, poor, or old people.
That’s the whole reason for any kind of insurance. It’s a mechanism for lucky people to pay the costs of unlucky people. And even lucky people pay for it it because you never know how your luck will change.
If you take your idea for a pricing model to the extreme, everybody pays pretty much what they need to cover their own costs, which could be extremely low or extremely high. This is no different than if nobody had insurance at all.
That’s the whole reason for any kind of insurance. It’s a mechanism for lucky people to pay the costs of unlucky people. And even lucky people pay for it it because you never know how your luck will change.
If you take your idea for a pricing model to the extreme, everybody pays pretty much what they need to cover their own costs, which could be extremely low or extremely high. This is no different than if nobody had insurance at all.
No, that’s the reason for government to provide necessary medical care to those who can’t afford it.
Insurance is pooling of risks so participants in the pool are insured against medical costs they can’t afford.
Insurance is pooling of risks so participants in the pool are insured against medical costs they can’t afford.
The difference is statistically, most people are going to get old. Lucky is if you either don’t need insurance when you’re young or you live to be old.
That's fine, just pay a fair price for the service.
I always tip well, and I am not going to pay Grubhub more than they charge... that isn't going to help the situation.
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.
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.
Then it seems like a good legal remedy might involve labeling requirements for advertising by third-parties?
This cap... is not that.
This cap... is not that.
If a restaurant doesn't comply, wouldn't this be fraudulent representation?
AFAIK last time it came up people mentioned that they were allowed to do that because of a clause in their EULA
https://news.ycombinator.com/item?id=20321705
https://news.ycombinator.com/item?id=20321705
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.
Otherwise google maps and Apple Maps is sitting right there not charging any fees for the phone number.
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.
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.
maybe it has something to do with GH buying Eat24 from Yelp for stock?
¯\_(ツ)_/¯
actually it was all cash nm https://qz.com/1045776/grubhubs-purchase-of-yelps-eat24-may-...
actually it was all cash nm https://qz.com/1045776/grubhubs-purchase-of-yelps-eat24-may-...
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.
If people don’t understand that a middleman adds cost as an adult, then that is an education issue.
>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.
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.
> The solution to that is using google maps or Apple Maps or duck duck go or a phone book.
You can try.
https://www.yelp-support.com/article/How-did-the-information...
> Yelp provides Apple with access to some of our business page information
You can try.
https://www.yelp-support.com/article/How-did-the-information...
> Yelp provides Apple with access to some of our business page information
Yelp also provides DDG results.
"The solution is high-resistance individual actions to address a situation with no societal benefit created by a company with more money than you can even begin to visualize."
This is the sort of thing one says to either feel very, very clever about themselves or because they don't want things fixed. Which is it?
This is the sort of thing one says to either feel very, very clever about themselves or because they don't want things fixed. Which is it?
I don’t consider using a browser or google maps or Apple Maps to search name and phone number of a restaurant to be high resistance.
If people want to give their money to middlemen because they are too lazy to call or use a search website, that is their problem. We don’t need laws around every single idiotic behavior people do, and if they find value in paying an app maker an extra $10, so be it. I’ll continue to do the common sense thing and spending 30 seconds calling them because I can’t afford $10 to door dash for what is a useless service to me.
How much money they may or may not have is irrelevant.
If people want to give their money to middlemen because they are too lazy to call or use a search website, that is their problem. We don’t need laws around every single idiotic behavior people do, and if they find value in paying an app maker an extra $10, so be it. I’ll continue to do the common sense thing and spending 30 seconds calling them because I can’t afford $10 to door dash for what is a useless service to me.
How much money they may or may not have is irrelevant.
Apple Maps returns results from Yelp, which sometimes have GrubHub's interposed phone numbers in them. So your very own solution doesn't work.
You are falling for the okeydoke.
Break these assholes' backs and we are all in a better place.
You are falling for the okeydoke.
Break these assholes' backs and we are all in a better place.
"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.
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.
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.
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.
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.
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.
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.
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>.
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>.
I'd rather pay the 10% than touch facebook with a 10-foot pole.
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.
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.
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.
They'd likely expect a couple bucks tip for a curbside pickup, though.
Sounds like a restaurant that doesn't want to stay in business.
> 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.
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.
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-stati...
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-stati...
> 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.
My mother did that all day long when we were children.
She also didn't have a choice because delivery apps didn't exist
mchanson(2)
>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.
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.
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?
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.
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.
_sbrk(6)
So as I understand it Deliveroo and Uber eats charge 25% of the food costs, plus delivery fees on top.
Uber eats I know is losing money and Deliveroo are losing a few hundred million per year on revenues of about $500m. Basically cutting the food percentage like this to 10% would imply delivery services are permanently unprofitable?
Why have all these restaurants signed up if 25% is so unfair?
Uber eats I know is losing money and Deliveroo are losing a few hundred million per year on revenues of about $500m. Basically cutting the food percentage like this to 10% would imply delivery services are permanently unprofitable?
Why have all these restaurants signed up if 25% is so unfair?
It's doubtful that these services are actually spending 25% of each food order on providing the service. The money goes to expansion, marketing, loss leaders, and other supposedly temporary overhead. They're hoping that when they reach scale and have eliminated competitors, they'll turn a tidy profit, the way Amazon did.
It's not at all clear that they really need to spend that much money on their expansion or that they're doing so ethically, but either way, don't weep at their losses. That's not the reason they're charging so much.
As for the restaurants, they're in a bind. The services that deliverers provide should be much cheaper at scale. They need somebody to do delivery and to take online orders, both of which are a hassle to set up yourself. Not impossible, but you'd expect economies of scale if you're effectively sharing a driver pool and software development cost with all of your competitors.
If your competitor has a delivery service and you don't, you'll lose a lot of business. If you develop it yourself, you pay the overhead. If you buy in to the services, they have a lot of power to set prices where they want.
I don't know why the delivery services aren't forced to undercut each other's prices to get the businesses. Customers don't seem to care which service they use; they have all of the apps anyway.
It's not at all clear that they really need to spend that much money on their expansion or that they're doing so ethically, but either way, don't weep at their losses. That's not the reason they're charging so much.
As for the restaurants, they're in a bind. The services that deliverers provide should be much cheaper at scale. They need somebody to do delivery and to take online orders, both of which are a hassle to set up yourself. Not impossible, but you'd expect economies of scale if you're effectively sharing a driver pool and software development cost with all of your competitors.
If your competitor has a delivery service and you don't, you'll lose a lot of business. If you develop it yourself, you pay the overhead. If you buy in to the services, they have a lot of power to set prices where they want.
I don't know why the delivery services aren't forced to undercut each other's prices to get the businesses. Customers don't seem to care which service they use; they have all of the apps anyway.
If you have nobody using your delivery service, you can't maintain deliver-ers. You're running a three sided marketplace in which you need to have both minimum wages and work for your delivery folks, enough orders for the restaurant to bother, and enough restaurants and ok enough prices for the consumer.
That's why it's expensive. That's why you need marketing who doesn't just take out a facebook ad but literally visits and calls restaurants, IT teams to literally teach the basics to restaurants, and an ops team who can assist your delivery folks when a restaurant runs out of onion rings or accidentally slips an allergen into an order. All of that adds up real fast because you need all of those services running at all the times the business is running.
Nobody is going to order from a delivery service that only gives you two options. Nobody is going to deliver for a service that only gives you two or three delivery runs a night.
> economies of scale if you're effectively sharing a driver pool and software development cost with all of your competitors.
The software is so cheap as to be fungible here. It's the drivers who have geographical restrictions, dynamic shifts (gig economy) and also the freedom to not take orders. If you're a runner and you know Chik-fil-a has horrendous lines all the time, you may just never want to run those orders - and in the gig economy, that's a viable choice for you. The delivery service still has to handle those cases (pay more on them, offer incentives, argue with the restaurant for a way to get orders to drivers more easily, etc).
> I don't know why the delivery services aren't forced to undercut each other's prices to get the businesses.
Delivery services don't generally struggle to get customers, they struggle to get and keep drivers.
That's why it's expensive. That's why you need marketing who doesn't just take out a facebook ad but literally visits and calls restaurants, IT teams to literally teach the basics to restaurants, and an ops team who can assist your delivery folks when a restaurant runs out of onion rings or accidentally slips an allergen into an order. All of that adds up real fast because you need all of those services running at all the times the business is running.
Nobody is going to order from a delivery service that only gives you two options. Nobody is going to deliver for a service that only gives you two or three delivery runs a night.
> economies of scale if you're effectively sharing a driver pool and software development cost with all of your competitors.
The software is so cheap as to be fungible here. It's the drivers who have geographical restrictions, dynamic shifts (gig economy) and also the freedom to not take orders. If you're a runner and you know Chik-fil-a has horrendous lines all the time, you may just never want to run those orders - and in the gig economy, that's a viable choice for you. The delivery service still has to handle those cases (pay more on them, offer incentives, argue with the restaurant for a way to get orders to drivers more easily, etc).
> I don't know why the delivery services aren't forced to undercut each other's prices to get the businesses.
Delivery services don't generally struggle to get customers, they struggle to get and keep drivers.
> Delivery services don't generally struggle to get customers, they struggle to get and keep drivers.
You might be missing a step there though. They struggle to get and keep drivers at a price that consumers are willing to pay, which is obviously tightly related to the problem of getting customers.
If they paid $100/hr, they'd have more drivers than they knew what to do with. They only struggle with getting drivers because of the economics of the customer.
You might be missing a step there though. They struggle to get and keep drivers at a price that consumers are willing to pay, which is obviously tightly related to the problem of getting customers.
If they paid $100/hr, they'd have more drivers than they knew what to do with. They only struggle with getting drivers because of the economics of the customer.
I think these things are a bit difficult to regulate though as how can the next Grubhub or whoever raise the cash to scale a competitor if you start down this road. I say on things like this let the market decide but force them to be clear about costs per order being +30% including delivery costs.
Also these delivery services effectively provide advertising for the restaurants. If you’re not on the platform, you might as well be invisible.
That's solving a problem they themselves created, though.
People were able to find restaurants and place take-out orders before these apps existed. It's just harder now because these apps have spent big on SEO and marketing to push them down the search result list.
People were able to find restaurants and place take-out orders before these apps existed. It's just harder now because these apps have spent big on SEO and marketing to push them down the search result list.
They haven't. Grubhub just scrapes business listings and pretends restaurants sign up.
https://www.theverge.com/2020/1/29/21113876/grubhub-seamless...
https://www.theverge.com/2020/1/29/21113876/grubhub-seamless...
If restaurants haven't signed up, then how are they getting fees from delivery services?
Like what the other person said, they increase the prices and then most people blame the restaurant. A local restaurant I get pickup from is $8.95 pre tax, curious I looked to see what delivery was and it is $11.65 pre tax and then a $4.00 delivery fee
In at least some cases ... the prices you see on grubhub may be higher than the actual prices the restaurant is charging. E.g $17.99 vs $14.99
So the restaurants are getting the option of delivery and the increased customer base and advertising... for absolutely no change to themselves? And the customers who use delivery are the ones paying for it? And if they don't want to pay it they can still go straight to the restaurant who will again make the same money? Sounds like a win to absolutely everyone involved.
What is everyone's problem? Why do we want to interfere with this?
What is everyone's problem? Why do we want to interfere with this?
It's falsifying the restaurants prices. Grubhub shouldn't be able to say a dish costs $15 when it actually costs $10. It's a false statement that harms the restaurant.
Sure, they will get some deliveries but what about the people that would buy at $10 but not $15? And what about the people that won't dine in because they think prices are 50% higher than they are.
GrubHub is skimming valuable customers while discarding others. That's good for them but ultimately harmful for the restaurant.
Sure, they will get some deliveries but what about the people that would buy at $10 but not $15? And what about the people that won't dine in because they think prices are 50% higher than they are.
GrubHub is skimming valuable customers while discarding others. That's good for them but ultimately harmful for the restaurant.
It is unethical only if Grubhub says “I will deliver joe’s 12$ burger to you for a 4$ delivery fee” when the burger costs actually 9$. There’s nothing wrong if they say “I will bring you Joe’s burger for 16$ including delivery.”
In general we don’t expect resellers to reveal their cost of goods sold.
In general we don’t expect resellers to reveal their cost of goods sold.
> It is unethical only if Grubhub says “I will deliver joe’s 12$ burger to you for a 4$ delivery fee” when the burger costs actually 9$
That's exactly what Grubhub is doing.
That's exactly what Grubhub is doing.
GrubHub describes themselves as a delivery service company, not a reseller. With resellers, I can comparison shop. GrubHub tries to make that difficult at best.
[deleted]
Is Grubhub the one marking up the prices, or are the restaurants doing it (to recoup their Grubhub fees)?
Finally a reasoned critique I can agree with.
Took you long enough, thread!
Took you long enough, thread!
> It's falsifying the restaurants prices.
It's marking them up... yeah. Is that a problem? Do you realise when you go to a store all the products are 'falsified' by marking them up on top of what the producer sells them to the retailer for?
It's marking them up... yeah. Is that a problem? Do you realise when you go to a store all the products are 'falsified' by marking them up on top of what the producer sells them to the retailer for?
Imagine Google Shopping marks up all BestBuy items by 50 percent. And then you decide to never shop at BestBuy, whether it be in person or online, because Google’s marked up pricing lead you to believe that BestBuy’s prices are outrageous.
No, because since the beginning of retail stores that is how it has worked and everyone understands that. For food delivery it has always been that you buy from the restaurant and pay menu price + delivery charge. Grubhub et.al. have come along and used that understanding along with an implied relationship to the restaurant to deceive the customer.
I don't really get it.
Doordash or whatever says 'for $x we will put a WhateverBurger burger into your hand'. As long as that's what they achieve, this seems fundamentally honest to me.
As a consumer I don't really care where that $x goes to - Doordash, WhateverBurger, delivery person... doesn't seem my business to interfere in people's private financial agreements.
The diner gets offered a deal and can take it or not.
The restaurant gets offered a deal and can take it or not.
The delivery person gets offered a deal and can take it or not.
Seems to me like everyone is acting ethically here, and everyone is accepting a deal they're presumably happy with. If they aren't, they can turn it down and go elsewhere.
Doordash or whatever says 'for $x we will put a WhateverBurger burger into your hand'. As long as that's what they achieve, this seems fundamentally honest to me.
As a consumer I don't really care where that $x goes to - Doordash, WhateverBurger, delivery person... doesn't seem my business to interfere in people's private financial agreements.
The diner gets offered a deal and can take it or not.
The restaurant gets offered a deal and can take it or not.
The delivery person gets offered a deal and can take it or not.
Seems to me like everyone is acting ethically here, and everyone is accepting a deal they're presumably happy with. If they aren't, they can turn it down and go elsewhere.
>Doordash or whatever says 'for $x we will put a WhateverBurger burger into your hand'. As long as that's what they achieve, this seems fundamentally honest to me.
What percentage of customers do you think understand that Grubhub is marking up their food?
>If they aren't, they can turn it down and go elsewhere.
That's precisely the problem. Some of the restaurants customers are turning it down and going elsewhere because Grubhub has misrepresented their prices.
What percentage of customers do you think understand that Grubhub is marking up their food?
>If they aren't, they can turn it down and go elsewhere.
That's precisely the problem. Some of the restaurants customers are turning it down and going elsewhere because Grubhub has misrepresented their prices.
> What percentage of customers do you think understand that Grubhub is marking up their food?
Why do they need to care about the markup? If the burger price seems like a good deal, go for it, otherwise don't.
> Some of the restaurants customers are turning it down and going elsewhere because Grubhub has misrepresented their prices.
Well then that seems like the situation is fixing itself due to everyone's free ability to do what they want? So why are we complaining?
Why do they need to care about the markup? If the burger price seems like a good deal, go for it, otherwise don't.
> Some of the restaurants customers are turning it down and going elsewhere because Grubhub has misrepresented their prices.
Well then that seems like the situation is fixing itself due to everyone's free ability to do what they want? So why are we complaining?
>Why do they need to care about the markup? If the burger price seems like a good deal, go for it, otherwise don't.
Why don't you answer the question?
>Well then that seems like the situation is fixing itself due to everyone's free ability to do what they want? So why are we complaining?
In what way is the situation being fixed?
Why don't you answer the question?
>Well then that seems like the situation is fixing itself due to everyone's free ability to do what they want? So why are we complaining?
In what way is the situation being fixed?
Is the markup similar for all restaurants? If Joe's burger is $5 marked up to $6, and Fancy Joseph's burger is $10 marked up to $12, isn't any marketing/signalling value of the price maintained?
> Doordash or whatever says 'for $x we will put a WhateverBurger burger into your hand'. As long as that's what they achieve, this seems fundamentally honest to me.
That's not what they do, though. The receipt shows line items with a cost for the food, a fee for the service, and a delivery fee.
The problem is there's an additional fee for the service hidden in the supposed cost of the food; customers don't actually know what Doordash's cut really is.
That's not what they do, though. The receipt shows line items with a cost for the food, a fee for the service, and a delivery fee.
The problem is there's an additional fee for the service hidden in the supposed cost of the food; customers don't actually know what Doordash's cut really is.
> customers don't actually know what Doordash's cut really is
But why would you care? I don't need to know the bill of materials for all my transactions. When I buy a coffee I don't expect to know how much they paid for the beans.
But why would you care? I don't need to know the bill of materials for all my transactions. When I buy a coffee I don't expect to know how much they paid for the beans.
That doesn't seem like a good comparison, the burger is not a "bill of materials" it's a final product available directly to customers by the restaurant, consumers would definently care that they are being sold a marked up burger that is available to them for 25% cheaper. If a delivery company charges me 70 dollars to deliver a flat screen tv that's fine, but if they charge me 70 dollars but also markup the price of the TV 25% I'd consider that pretty dishonest and would at least want to know that I have the option to save 25% by managing delivery on my own.
I care because they're explicitly listing a fee for the app that doesn't accurately reflect what that fee is.
If you wanna say "delivering a pizza will cost you $20" and leave at that, fine. If you tell me the Grubhub fee is $5 and it's actually $10, I'm upset.
If you wanna say "delivering a pizza will cost you $20" and leave at that, fine. If you tell me the Grubhub fee is $5 and it's actually $10, I'm upset.
That is fundamentally not what Doordash says.
Doordash or whatever says 'for $x we will put a $y WhateverBurger burger into your hand,' but $y is already higher than a WhateverBurger costs. People are left thinking that $x isn't that high a cost for delivering a $y burger, but the actual delivery cost is $x plus some percentage of $y, so both the numerator and denominator are falsified.
They're lying about their value proposition.
Doordash or whatever says 'for $x we will put a $y WhateverBurger burger into your hand,' but $y is already higher than a WhateverBurger costs. People are left thinking that $x isn't that high a cost for delivering a $y burger, but the actual delivery cost is $x plus some percentage of $y, so both the numerator and denominator are falsified.
They're lying about their value proposition.
> Doordash or whatever says 'for $x we will put a $y WhateverBurger burger into your hand,' but $y is already higher than a WhateverBurger costs.
So add $x and $y together. If that price works for you go for it, if not, don't.
A markup plus a fee is already a common thing. It's done so that there is a minimum to cover expenses plus something that can vary with higher value items because you can get more profit from people who are willing to pay for more luxury items. It's not strange or unusual or a foreign concept to anyone already living in a Western economy.
I don't see why you'd care how they arrive at the final price. Just look at the final price.
So add $x and $y together. If that price works for you go for it, if not, don't.
A markup plus a fee is already a common thing. It's done so that there is a minimum to cover expenses plus something that can vary with higher value items because you can get more profit from people who are willing to pay for more luxury items. It's not strange or unusual or a foreign concept to anyone already living in a Western economy.
I don't see why you'd care how they arrive at the final price. Just look at the final price.
What I think you're missing is that price is (or has been) an incredibly valuable input signal when determining the value of a previously-unknown restaurant. if I'm in the mood for a $20 meal, I know to avoid places that offer $40 meals, and vice-versa. My expectations for a $15 lunch are different than my expectations for a $25 lunch. Most people use price as an important signal, communicating something about the restaurant or meal.
These vendors are distorting that signal by misrepresenting the price. If it were clean-cut, and the original price were still visible, and the delivery as a separate 15-20% fee, then fine, I could do exactly what you suggest. Is it or is it not worth it to have this delivered right now?
But it's not. Let's say I see an arbitrary restaurant serving the kind of food I'm in the mood for, say Vietnamese food. I can then look and see the price to know roughly what quality of food to expect: Is it closer to $10 or $30 for an entree, since those are two very different things.
The total price might not even matter to me. But if I order a $20 entree with an extra delivery fee, and what shows up is a $10 entree, then that's a problem and most people will believe that the restaurant offers terrible value, because they were lied to by the intermediary.
That's the issue. It's not "am I will to have my In-N-Out burger delivered for $6 extra," it's "with Doordash lying to me about these restaurants I've never been to, I have no idea whether this is worth doing or not until I've already paid and accepted delivery."
These vendors are distorting that signal by misrepresenting the price. If it were clean-cut, and the original price were still visible, and the delivery as a separate 15-20% fee, then fine, I could do exactly what you suggest. Is it or is it not worth it to have this delivered right now?
But it's not. Let's say I see an arbitrary restaurant serving the kind of food I'm in the mood for, say Vietnamese food. I can then look and see the price to know roughly what quality of food to expect: Is it closer to $10 or $30 for an entree, since those are two very different things.
The total price might not even matter to me. But if I order a $20 entree with an extra delivery fee, and what shows up is a $10 entree, then that's a problem and most people will believe that the restaurant offers terrible value, because they were lied to by the intermediary.
That's the issue. It's not "am I will to have my In-N-Out burger delivered for $6 extra," it's "with Doordash lying to me about these restaurants I've never been to, I have no idea whether this is worth doing or not until I've already paid and accepted delivery."
[deleted]
A restaurant is a brand and a brand gets to determine the pricing of their products. Pricing is one of the ways customers relate to the brand's identity. Having a 3rd party, which may still add value to both the brand and end-user, interject and abstract from the brand's determined prices is unethical, period. These delivery services should really be increasing their delivery fees to cover their costs, but they know customers will not go for a higher line item fee, so they choose to obscure it through price inflation that is not obvious to the customer. Now the customer may think the price of an item is always higher, so they may avoid the location in a future dine-in experience. This is harmful.
> A restaurant is a brand and a brand gets to determine the pricing of their products.
But that’s just not true. Branded products vary in price on different retailers. A can of Coca-Cola can be wildly different prices in different places. Are you not used to this as a consumer?
> Having a 3rd party, which may still add value to both the brand and end-user, interject and abstract from the brand's determined prices is unethical, period.
I don’t understand - have you never bean to a supermarket or a department store before? They sell other brands in their store. Do you not realise they’re also marked up?
But that’s just not true. Branded products vary in price on different retailers. A can of Coca-Cola can be wildly different prices in different places. Are you not used to this as a consumer?
> Having a 3rd party, which may still add value to both the brand and end-user, interject and abstract from the brand's determined prices is unethical, period.
I don’t understand - have you never bean to a supermarket or a department store before? They sell other brands in their store. Do you not realise they’re also marked up?
I am very aware of how wholesale and retail pricing works - but that is a very different distribution channel, and customers enter supermarkets and department stores well aware of this. Restaurant pricing is based on (with maybe some outlying exceptions) a direct-to-consumer distribution model - something you seem be be having an impossible time understanding. I'm fine with delivery companies marking up the prices - as long as they are transparent about it - which they are not. it's deceitful to the customer experience, and I think you are intentionally playing dumb here.
I’m pretty sure that in most countries, a store can’t just sell another company’s products without entering an agreement with them. This agreement allows the company to set a minimum and maximum price for the product.
Imagine you’re selling chocolate that you want people to associate with luxury/wealth. To achieve this you might want to limit resellers to be 5 star hotels and luxury stores rather than the 1 dollar store.
Imagine you’re selling chocolate that you want people to associate with luxury/wealth. To achieve this you might want to limit resellers to be 5 star hotels and luxury stores rather than the 1 dollar store.
> I’m pretty sure that in most countries, a store can’t just sell another company’s products without entering an agreement with them.
Of course you can. What makes you think you can't?
Of course you can. What makes you think you can't?
The fact that your company’s product end up being represented by the store and its actions. Mistreating employees and customers, discrimination, bad customer service/return policy, terrible product placement, etc. There are so many ways a store can hurt your company’s reputation by association.
But I mean there just isn't any law like you think there should be.
People are free to resell any goods they own (exceptions for things like controlled substances, other things with regulations etc.)
People are free to resell any goods they own (exceptions for things like controlled substances, other things with regulations etc.)
Look up 'grey market'. Lots of companies try to do what you suggest, but in the US there are very few laws that support such a business model.
I don’t know what countries are like that, but that’s certainly not the case in the United States.
It is, even amazon bans resellers sometimes.
>What is everyone's problem? Why do we want to interfere with this?
Because customers who order through Grubhub/Doordash blame the restaurant for issues such as high prices and wrong orders instead of Grubhub/Doordash. So on one hand, the restaurant gets increased business but on the other they never interact with the customer directly and so their business' reputation depends on Grubhub/Doordash/etc to not fuck up, which is unlikely.
Because customers who order through Grubhub/Doordash blame the restaurant for issues such as high prices and wrong orders instead of Grubhub/Doordash. So on one hand, the restaurant gets increased business but on the other they never interact with the customer directly and so their business' reputation depends on Grubhub/Doordash/etc to not fuck up, which is unlikely.
That's a messaging/marketing issue, which we regulate all the time.
It would be better and fairer to legislate that GrubHub and others must be clear about where their pricing comes from rather than legislating what their prices should be.
It would be better and fairer to legislate that GrubHub and others must be clear about where their pricing comes from rather than legislating what their prices should be.
That's what this does.
They can still charge whatever they want for their fee. They just can't hide their fee in the list price of your sushi.
They can still charge whatever they want for their fee. They just can't hide their fee in the list price of your sushi.
What? Are we reading the same article? As far as I can tell this new rule caps fees at 10%, it doesn't say anything about charging whatever they want, while being more transparent or disclosing the fees more clearly.
The headline says "Portland approves 10% cap on fees that food delivery apps can charge RESTAURANTS". There's no cap on what they can charge customers.
Legal: "Your pizza is $10. Our fee is $3, delivery is $5. Total bill $18." Restaurant gets $10.
Not legal: "Your pizza is $10 (but we quietly take $3 of that). Our fee is $3 (but we hid an extra $3 in the pizza!). Delivery is $5. Total bill $18." Restaurant gets $7.
Legal: "Your pizza is $7. Our fee is $6, delivery is $5. Total bill $18." Restaurant gets $7.
Legal: "Your pizza is $10. Our fee is $6, delivery is $5. Total bill $21." Restaurant gets $10.
Legal (but not great for business): "Your pizza is $10. Our fee is $600 because 'fuck you, we have VCs to pay', delivery is $5. Total bill $615." Restaurant gets $10.
Legal: "Your pizza is $10. Our fee is $3, delivery is $5. Total bill $18." Restaurant gets $10.
Not legal: "Your pizza is $10 (but we quietly take $3 of that). Our fee is $3 (but we hid an extra $3 in the pizza!). Delivery is $5. Total bill $18." Restaurant gets $7.
Legal: "Your pizza is $7. Our fee is $6, delivery is $5. Total bill $18." Restaurant gets $7.
Legal: "Your pizza is $10. Our fee is $6, delivery is $5. Total bill $21." Restaurant gets $10.
Legal (but not great for business): "Your pizza is $10. Our fee is $600 because 'fuck you, we have VCs to pay', delivery is $5. Total bill $615." Restaurant gets $10.
Am I the only who one thinks it's weird they itemize their service price into two types of delivery fee? Just say pizza $10, delivery $8. Restaurant gets between $9-$10.
Option implies that restaurants can opt in/out which for cases like GrubHub isn’t possible.
These apps can lead to poor experience and perception of the restaurant due to the delivery short comings and customers tend to transfer any unhappiness with the delivery as being the restaurants fault (eg late delivery and cold food).
These apps can lead to poor experience and perception of the restaurant due to the delivery short comings and customers tend to transfer any unhappiness with the delivery as being the restaurants fault (eg late delivery and cold food).
> Option implies that restaurants can opt in/out which for cases like GrubHub isn’t possible.
Should a manufacturer have the right to say that you can't re-sell something that you bought from them fairly? That doesn't sound great to me. If Doordash fairly buy the food then they can sell it to me (as long as they follow food regulations). That sounds fine, doesn't it?
Should a manufacturer have the right to say that you can't re-sell something that you bought from them fairly? That doesn't sound great to me. If Doordash fairly buy the food then they can sell it to me (as long as they follow food regulations). That sounds fine, doesn't it?
If the reseller is pretty much pretending to be the manufacturer, and goes on yelp and change the manufacturer's phone number to their own.. I don't know if they have the right, but it's pretty scummy.
It shouldn't have the right to restrict re-selling but sure it's ok to have the right to not sell to somebody anymore.
They've already got that right.
I think people get lured in by no delivery fee and reduced prices originally so they order at basically the normal price. But then once the introductory prices go away and the fees go up they get mad at the restaurant, not the delivery service
Actually many times it works agaisnt the restaurant. It misleads consumers into thinking they have high prices for real and many times their own reputation is harmed because these apps use call centers to place the orders and fuck up royally.
There are plenty of “proxy shipping” services that operate under this model. They don’t conceal the fact that they are a third party unaffiliated with the provider.
In addition, most restaurants will not just accept takeout orders from a random person that shows up on a bike, it’s an organized partnership. I wonder how they even achieve that.
In addition, most restaurants will not just accept takeout orders from a random person that shows up on a bike, it’s an organized partnership. I wonder how they even achieve that.
[deleted]
> most restaurants will not just accept takeout orders from a random person that shows up on a bike
Why not?
Why not?
A variety of pedestrian reasons:
- they don’t have the appropriate packaging, ie don’t actually do delivery
- it’s inconvenient for their order pipeline / system
- they can’t vouch for the carrier handling, is the food going to arrive still hot? A shaken mess?
- is the carrier going to add or remove something before it reaches the customer?
Any of those can be damaging for the restaurant, losing a customer, or even downright dangerous in the case of incorrect handling.
- they don’t have the appropriate packaging, ie don’t actually do delivery
- it’s inconvenient for their order pipeline / system
- they can’t vouch for the carrier handling, is the food going to arrive still hot? A shaken mess?
- is the carrier going to add or remove something before it reaches the customer?
Any of those can be damaging for the restaurant, losing a customer, or even downright dangerous in the case of incorrect handling.
I don't think most restaurants have a takeout service in the first place.
> Sounds like a win to absolutely everyone involved.
Let's pare it down to only you and the unsolicited service - You come home from work and the neighbor kid from six blocks down you've never met bills you for mowing your lawn while you were away.
Let's pare it down to only the unsolicited service and the business - Hi, we put out a bunch of ads that say we're you and have a bunch of customers lined up ready to order. We'll tell you who they are for a 10% service fee. Also we lied to your customers about your prices.
Imagine you bought a new car two months ago, then find out the sales person was just some guy who hangs out on the lot, told you he works for the dealership, and charged you a 10% markup over the dealership's actual price. Imagine your elderly neighbors fell for a door-to-door roofing scam that works the same way.
Let's pare it down to only you and the unsolicited service - You come home from work and the neighbor kid from six blocks down you've never met bills you for mowing your lawn while you were away.
Let's pare it down to only the unsolicited service and the business - Hi, we put out a bunch of ads that say we're you and have a bunch of customers lined up ready to order. We'll tell you who they are for a 10% service fee. Also we lied to your customers about your prices.
Imagine you bought a new car two months ago, then find out the sales person was just some guy who hangs out on the lot, told you he works for the dealership, and charged you a 10% markup over the dealership's actual price. Imagine your elderly neighbors fell for a door-to-door roofing scam that works the same way.
But Doordash don't charge for an unsolicited service. They aren't charging the restaurant at all in this case. They're paying the restaurant's full price for food. Like anyone could.
Then they charge the customer for an additional service actually rendered - the delivery. They charge this as a delivery fee and a markup that they can vary on more expensive items. This is pretty normal for a retail business to do.
Then they charge the customer for an additional service actually rendered - the delivery. They charge this as a delivery fee and a markup that they can vary on more expensive items. This is pretty normal for a retail business to do.
The Grubhub UX makes a specific claim, though: "Restaurant X charges $10 for a burger, and we will deliver it for $5".
When they're marking the item price up, that claim is false. Given these apps' SEO juice and ubiquity, users are left with the false impression that Restaurant X sells a pretty expensive burger.
When they're marking the item price up, that claim is false. Given these apps' SEO juice and ubiquity, users are left with the false impression that Restaurant X sells a pretty expensive burger.
Do they really specifically say 'Restaurant X charges $10 for a burger'? Or do they just say 'the burger costs $10'?
Like when you shop on Amazon - they say 'the TV is $x and our delivery fee is $y' - really the manufacturer charged them < $y but they mark up and then also charge a delivery fee, don't they?
Nobody looses their mind at this.
Like when you shop on Amazon - they say 'the TV is $x and our delivery fee is $y' - really the manufacturer charged them < $y but they mark up and then also charge a delivery fee, don't they?
Nobody looses their mind at this.
Grubhub positions themselves as a delivery service, not a reseller. Receipts list the price for the item, Grubhub's fee, and Grubhub's delivery fee. I'm sure they're quite careful with exactly how they word it to avoid legal issues, but the implicit claim is pretty clear: "here's the restaurant cost, and here's our cost".
I would be upset if Amazon had brick-and-mortar stores and they sold me a $100 TV with a $10 delivery fee online, but that same product was available for pick-up at $90. I'd be fine with it sold in-store for $100.
We do flip out when these sorts of pricing tricks are used. One I can recall: Best Buy ran a bestbuy.com intranet in-store to wiggle out of online deals. https://www.engadget.com/2007-03-03-best-buys-secret-intrane...
I would be upset if Amazon had brick-and-mortar stores and they sold me a $100 TV with a $10 delivery fee online, but that same product was available for pick-up at $90. I'd be fine with it sold in-store for $100.
We do flip out when these sorts of pricing tricks are used. One I can recall: Best Buy ran a bestbuy.com intranet in-store to wiggle out of online deals. https://www.engadget.com/2007-03-03-best-buys-secret-intrane...
[deleted]
I'm generally sympathetic to this perspective, but the problem is that the restaurant receives the reputation hit when GrubHub delivers late, cold, overpriced food. Customers don't understand what they're buying, and when something goes wrong, they leave bad reviews on Yelp et al.
This seems like an information problem rather than a pricing problem. As long as the customers understand the relationship between GrubHub and the restaurant, I don't see any problem with GH charging whatever the market will bear. But right now they seem to be deliberately misleading the customer by listing fake prices separate from the delivery fee.
This seems like an information problem rather than a pricing problem. As long as the customers understand the relationship between GrubHub and the restaurant, I don't see any problem with GH charging whatever the market will bear. But right now they seem to be deliberately misleading the customer by listing fake prices separate from the delivery fee.
Are you sure these companies are getting an increased customer base? These services are giving them advertising but also giving advertising to all their competitors so I would assume it cancels out to a degree. Also the negative reviews for high prices or food being served cold probably hurt more than they help
What's wrong with that? If the restaurants are getting the price they want to charge, and if the customers are prepared to pay the higher price, seems everything's OK?
I agree that it's scammy that grubhub etc. is pretending to be the restaurant. But if they made it clear, we are a delivery service giving you access to this restaurant, if you want to order this food you can do so for $17.99, I think everything would be fine with that business model.
I agree that it's scammy that grubhub etc. is pretending to be the restaurant. But if they made it clear, we are a delivery service giving you access to this restaurant, if you want to order this food you can do so for $17.99, I think everything would be fine with that business model.
If, but that’s not what they are doing. So there’s everything wrong with that.
Understood. But then the law should ban pretending to be someone else (it probably does, but evidently not effectively enough). Having a cap of x% on fees won't solve this problem. It will solve another problem which wasn't a problem in the first place.
they charge the user.
So people are willing to pay over inflated prices for takeaway? That’s capitalism for you...
A number of anti-competitive business practices, such as offering delivery for restaurants without telling them.
Previous discussion: https://news.ycombinator.com/item?id=23216852
Previous discussion: https://news.ycombinator.com/item?id=23216852
There’s a really interesting liability question that comes along with that. If I order food from a restaurant via a delivery service that has no contractual relationship with them, and happen to get sick, who’s on the hook for that? I, legally, have no business relationship with the restaurant in that circumstance.
Not a lawyer but in this case it seems like the delivery company is placing the actual end order with the restaurant on your behalf and is acting as the proxy, so any issues you would take up with the delivery company.
The delivery company may or may not have the ability to rectify issues at the end of the month with the restaurant depending on their relationship.
The delivery company may or may not have the ability to rectify issues at the end of the month with the restaurant depending on their relationship.
Yeah, agree. And in the case of the companies that are reselling restaurant food without the restaurant’s permission/agreement, the “delivery” company is probably on the hook.
Legally, do you have a business relationship with a company you buy a product from on Amazon?
That’s an interesting comparison! I admit it I took business law a long time ago, but I think the answer is: it depends. You’d also need to dig deep into the TOS for both the consumer side and the seller side. But ignoring the specific details, here’s my general thought process:
- products sold directly by Amazon: you have products sourced through (nominally) a legitimate supply chain, where there are legal agreements for Amazon to be a distributor of the products. If the product is faulty, Amazon is likely protected by those agreements and the liability will likely ripple back to the OEM. But, Amazon sold the product to you, and depending on consumer protection laws in your jurisdiction, may ultimately be responsible if, say, the manufacturer goes out of business.
- Fulfilled by Amazon: this gets trickier. In this case, it’s relatively clear that you’re not purchasing the product from Amazon, but rather from a company that has stored their product in Amazon’s warehouse. It seems to me that Amazon is less likely to be on the hook for this.
- Third-party sellers: Amazon is mostly just a catalogue and payment processor in this situation, not to different than Etsy. Most likely the seller is on the hook here and not Amazon. Depending on how the seller came to acquire the product (legit supply chain or other), the manufacturer may or may not be on the hook via the distribution-agreement ripple. (For example, an independent company that refurbs broken phones and resells them on Amazon is unlikely to create liability for Samsung)
In the delivery case, we’ve got an unlicensed (health inspector-wise) company distributing prepared food from a vendor they have no formal agreement with. If someone were to get sick, it seems pretty reasonable for the restaurant to shrug and say “we followed proper food handling protocols, maybe the liability should go onto the unlicensed company that bought our food, did who knows what with it, and resold it without our permission”.
- products sold directly by Amazon: you have products sourced through (nominally) a legitimate supply chain, where there are legal agreements for Amazon to be a distributor of the products. If the product is faulty, Amazon is likely protected by those agreements and the liability will likely ripple back to the OEM. But, Amazon sold the product to you, and depending on consumer protection laws in your jurisdiction, may ultimately be responsible if, say, the manufacturer goes out of business.
- Fulfilled by Amazon: this gets trickier. In this case, it’s relatively clear that you’re not purchasing the product from Amazon, but rather from a company that has stored their product in Amazon’s warehouse. It seems to me that Amazon is less likely to be on the hook for this.
- Third-party sellers: Amazon is mostly just a catalogue and payment processor in this situation, not to different than Etsy. Most likely the seller is on the hook here and not Amazon. Depending on how the seller came to acquire the product (legit supply chain or other), the manufacturer may or may not be on the hook via the distribution-agreement ripple. (For example, an independent company that refurbs broken phones and resells them on Amazon is unlikely to create liability for Samsung)
In the delivery case, we’ve got an unlicensed (health inspector-wise) company distributing prepared food from a vendor they have no formal agreement with. If someone were to get sick, it seems pretty reasonable for the restaurant to shrug and say “we followed proper food handling protocols, maybe the liability should go onto the unlicensed company that bought our food, did who knows what with it, and resold it without our permission”.
In the Amazon case, different courts have said different things.
You're right that if Amazon sold it directly they're definitely liable. But even if a third party sold it, there's an argument (which some courts have accepted) that Amazon is the "real" retailer. Substance over form.
Note that Amazon doesn't even give FBA sellers the customer address anymore. They're effectively a retailer who just pays suppliers on consignment.
You're right that if Amazon sold it directly they're definitely liable. But even if a third party sold it, there's an argument (which some courts have accepted) that Amazon is the "real" retailer. Substance over form.
Note that Amazon doesn't even give FBA sellers the customer address anymore. They're effectively a retailer who just pays suppliers on consignment.
I don't see how that is anti-competitive. I buy my favorite sandwiches through these services because the deli doesn't offer delivery services. They are providing me with a service and i am paying for it higher prices and a delivery fee. Deli still gets the same amount of money if i walked in and bought it. Its like expedited passport services where you pay someone to go stand at the passport office line instead of doing it yourself. No one calls those services anti-competitive.
If that's the extent of what the delivery service does, that's fine.
When the delivery service makes its own website/phone number, pretending to be the restaurant and intercepting its normal business, or starts doing deliveries without notifying the restaurant (potentially hurting the reputation of the restaurant), that's where the issues emerge.
https://www.saddlebackbbq.com/how-google-doordash-grubhub-co...
Previous discussion: https://news.ycombinator.com/item?id=23194727
https://www.buzzfeednews.com/article/venessawong/grubhub-pho...
When the delivery service makes its own website/phone number, pretending to be the restaurant and intercepting its normal business, or starts doing deliveries without notifying the restaurant (potentially hurting the reputation of the restaurant), that's where the issues emerge.
https://www.saddlebackbbq.com/how-google-doordash-grubhub-co...
Previous discussion: https://news.ycombinator.com/item?id=23194727
https://www.buzzfeednews.com/article/venessawong/grubhub-pho...
Honest question, how is that anticompetitive?
The Grubhubs of the world have substantially better SEO juice; if they start offering delivery for your restaurant, their listing is probably going to wind up above yours.
Once a substantial portion of a restaurant's orders come in this way, they can cut off the flow at will. "Sign a contract with us, or these folks will go elsewhere".
Once a substantial portion of a restaurant's orders come in this way, they can cut off the flow at will. "Sign a contract with us, or these folks will go elsewhere".
Can't the company just deliver the food?
If delivery isn't a core part of the business and there isn't something for the delivery driver to do when there are no deliveries, having staff to do those deliveries isn't viable.
At my local pizza place, the delivery drivers are also wait staff and cooks (not primarily, but are able to serve in those capacities). When there are no deliveries, they're working (and getting paid) - the majority of the time, they're a pizza place and doing deliveries. Dominoes excels at doing this at scale.
But if you're the local sit down brew pub delivery isn't part of your standard thing. You can't hire a person to be a driver with the expectation that they'll do one delivery a night... and then what do you do on the nights they don't work?
A restaurant that isn't set up with deliveries being a primary source of getting to food to the customer - which includes having the staffing levels/tasks for delivery high and low - the economics of it doesn't favor adding staff to do it.
Note that deliveries also take a certain commitment of capital to make sure that the packaging for the food is appropriate for take away and that the delivery vehicle has the proper things to make that work (keeping food hot or cold as appropriate).
Having staff that can meet the demand as appropriate is key there for customer expectations. If you call for delivery and the wait time is 2h because they only have one driver that does an out and back each time - that's not going to be good.
So they could... but it an investment in staff that needs to be flexible in time and task, in packing for takeout, and in vehicle equipment. Unless this is to add a reasonable bit to revenue, the additional planning and logistical difficulty isn't worth it.
At my local pizza place, the delivery drivers are also wait staff and cooks (not primarily, but are able to serve in those capacities). When there are no deliveries, they're working (and getting paid) - the majority of the time, they're a pizza place and doing deliveries. Dominoes excels at doing this at scale.
But if you're the local sit down brew pub delivery isn't part of your standard thing. You can't hire a person to be a driver with the expectation that they'll do one delivery a night... and then what do you do on the nights they don't work?
A restaurant that isn't set up with deliveries being a primary source of getting to food to the customer - which includes having the staffing levels/tasks for delivery high and low - the economics of it doesn't favor adding staff to do it.
Note that deliveries also take a certain commitment of capital to make sure that the packaging for the food is appropriate for take away and that the delivery vehicle has the proper things to make that work (keeping food hot or cold as appropriate).
Having staff that can meet the demand as appropriate is key there for customer expectations. If you call for delivery and the wait time is 2h because they only have one driver that does an out and back each time - that's not going to be good.
So they could... but it an investment in staff that needs to be flexible in time and task, in packing for takeout, and in vehicle equipment. Unless this is to add a reasonable bit to revenue, the additional planning and logistical difficulty isn't worth it.
I'm not sure how this law is a problem. There's nothing saying that the delivery services can't increase their delivery fee to make up for the amount they're skimming from the restaurant. The restaurants have a hard time competing if they don't offer delivery, but they make little to no money off the deliveries due to the high fees.
The delivery companies hide their true costs by making the delivery fee seem cheap. This law simply shows the true cost of the service to customers.
If the only way these companies can survive is by leeching money from restaurants with extremely slim margins, they simply shouldn't exist.
The delivery companies hide their true costs by making the delivery fee seem cheap. This law simply shows the true cost of the service to customers.
If the only way these companies can survive is by leeching money from restaurants with extremely slim margins, they simply shouldn't exist.
FOMO? Most of my small business customers that experiment with new tech are simply scared of losing what they have, or envious of competitors who seemingly have more. "My competition is using it so maybe we should too?" is a common phrase heard. Add "delivery services" to the list of failed VC funded tech gambles (see Groupon) that cost small businesses dearly.
Wait. So delivery apps pay restaurants 25% less for their food. Don't they also charge customers more for the food, even before they add on service fees, delivery fees, and a tip?
At least this is what I've seen recently. I look at a restaurants menu, and it will have a dish for $9. When I try to order it, Postmates & Uber Eats say the same thing is $14 (though they both agree on the price). This isn't just one restaurant. This is most restaurants I've checked in Pittsburgh.
In this example, I would probably never go to the restaurant for the $14 meal. I'd go once a week for the $9 meal. This seems bad for consumers because it's tricking you on how much the food costs and how much delivery costs.
At least this is what I've seen recently. I look at a restaurants menu, and it will have a dish for $9. When I try to order it, Postmates & Uber Eats say the same thing is $14 (though they both agree on the price). This isn't just one restaurant. This is most restaurants I've checked in Pittsburgh.
In this example, I would probably never go to the restaurant for the $14 meal. I'd go once a week for the $9 meal. This seems bad for consumers because it's tricking you on how much the food costs and how much delivery costs.
> So delivery apps pay restaurants 25% less for their food.
No, delivery apps charge you extra and pretend it's part of the restaurant cost. If you can buy your burrito at the restaurant for $8, the delivery service is going to show you a price of $10 on the order screen (and add in their $4 delivery fee, etc).
No, delivery apps charge you extra and pretend it's part of the restaurant cost. If you can buy your burrito at the restaurant for $8, the delivery service is going to show you a price of $10 on the order screen (and add in their $4 delivery fee, etc).
This is only half true. Uber in particular has a loose rule that says any prices you display online have to match what's posted on Uber Eats. I say it's loose because restaurants just raise their prices on Uber Eats anyway and not post their full menu prices online.
Citation: my family runs a restaurant that has slightly higher prices on Uber Eats despite the rule against it. It wasn't Uber that set those prices though, it was us. It still doesn't fully offset the 30% haircut we're taking though.
Citation: my family runs a restaurant that has slightly higher prices on Uber Eats despite the rule against it. It wasn't Uber that set those prices though, it was us. It still doesn't fully offset the 30% haircut we're taking though.
> Why have all these restaurants signed up if 25% is so unfair?
Here is my impression of the problem: Say the restaurant was taking $10 for each order, making $3 in profit per order. i.e, cost is $7.
Before delivery apps: 100 orders/day. Total profit $300.
After delivery apps: 200 orders/day, cost $7, sale $7.5 (-25% fee), $0.5 profit per order. Total profit $150.
After delivery apps, if you don't sign up for the app and agree to their 25% fee: 50 orders (because people are mostly using the app now), total profit $150.
If true, it is a lose-lose for restaurants. Their profit margin is going down either way. On top of that their costs are likely going up, since they have to serve more orders.
Here is my impression of the problem: Say the restaurant was taking $10 for each order, making $3 in profit per order. i.e, cost is $7.
Before delivery apps: 100 orders/day. Total profit $300.
After delivery apps: 200 orders/day, cost $7, sale $7.5 (-25% fee), $0.5 profit per order. Total profit $150.
After delivery apps, if you don't sign up for the app and agree to their 25% fee: 50 orders (because people are mostly using the app now), total profit $150.
If true, it is a lose-lose for restaurants. Their profit margin is going down either way. On top of that their costs are likely going up, since they have to serve more orders.
Why can't the delivery services just raise the delivery fee?
because they're all competing with each other by burning through VC money to monopolize the market
> Why have all these restaurants signed up if 25% is so unfair?
Because these delivery services are Moloch[1].
The value these services provide is to customers, not businesses, and the service they provide to customers is pretty minimal. But it's a slight convenience for customers. That means that if one restaurant uses a delivery service, and their competitor doesn't, the first restaurant's ordering experience is slightly easier than their competitors', which gives them an advantage. Let me reiterate that, because it's important: if and only if one restaurant uses a delivery service and their competitor doesn't, using the delivery service gives that company a competitive advantage.
So what happens is first one restaurant starts using a delivery service, and they have a competitive advantage, because none of their competitors are using the delivery service. But one by one, their competitors notice, and start using the delivery service. Finally, there's only a few restaurants left not using a delivery service, and by this point, they have to use a delivery service, or they can't compete.
So let's go back to the competitive advantage here: if a restaurant uses a delivery service and their competitor doesn't, using the delivery service offers a competitive advantage. But that's not the situation we're in any more: the restaurant is just using the same delivery service everyone else is, so none of them get a competitive advantage from using it. Instead, the entire restaurant industry has just let this middle man into their business that provides no competitive advantage, but charges rent.
The rational thing, of course, is for restaurants to create a united front and all agree not to buy into the delivery services in the first place. However, it only takes a few short-sighted restaurants breaking rank for a short-term profit, for that to all fall apart. Cooperation at this level has to have teeth, because there are incentives to not cooperate. But in the US, there's a strong faction of people who think any regulation is bad, so regulation that actually solves the problem won't happen. The best that can be done is to limit the problem with measures like this 10% regulation.
Ultimately, the best solution that can work without regulation might be local delivery service cooperatives, which allow businesses which don't have the delivery throughput to maintain their own delivery staff to pool resources, while not giving up a large percentage to rent-seekers outside their community.
[1] https://web.archive.org/web/20200528004232/https://slatestar...
Because these delivery services are Moloch[1].
The value these services provide is to customers, not businesses, and the service they provide to customers is pretty minimal. But it's a slight convenience for customers. That means that if one restaurant uses a delivery service, and their competitor doesn't, the first restaurant's ordering experience is slightly easier than their competitors', which gives them an advantage. Let me reiterate that, because it's important: if and only if one restaurant uses a delivery service and their competitor doesn't, using the delivery service gives that company a competitive advantage.
So what happens is first one restaurant starts using a delivery service, and they have a competitive advantage, because none of their competitors are using the delivery service. But one by one, their competitors notice, and start using the delivery service. Finally, there's only a few restaurants left not using a delivery service, and by this point, they have to use a delivery service, or they can't compete.
So let's go back to the competitive advantage here: if a restaurant uses a delivery service and their competitor doesn't, using the delivery service offers a competitive advantage. But that's not the situation we're in any more: the restaurant is just using the same delivery service everyone else is, so none of them get a competitive advantage from using it. Instead, the entire restaurant industry has just let this middle man into their business that provides no competitive advantage, but charges rent.
The rational thing, of course, is for restaurants to create a united front and all agree not to buy into the delivery services in the first place. However, it only takes a few short-sighted restaurants breaking rank for a short-term profit, for that to all fall apart. Cooperation at this level has to have teeth, because there are incentives to not cooperate. But in the US, there's a strong faction of people who think any regulation is bad, so regulation that actually solves the problem won't happen. The best that can be done is to limit the problem with measures like this 10% regulation.
Ultimately, the best solution that can work without regulation might be local delivery service cooperatives, which allow businesses which don't have the delivery throughput to maintain their own delivery staff to pool resources, while not giving up a large percentage to rent-seekers outside their community.
[1] https://web.archive.org/web/20200528004232/https://slatestar...
The socialist busybodies in Portland want to "do something", so apart from rendering these businesses unprofitable, they are also going to put more of the relatively less skilled workers out of work, while at the same time lower the quality of life for consumers who will now be forced to find less convenient or more expensive ways to eat.
The cap can be adjusted or even removed down the line. Maybe 10% is too low, too high, or maybe it's just right. It's an experiment worth trying.
What experiment? Don’t delude yourself. Experimenting is over once the government steps in.
Nothing is as permanent as a temporary government measure
[deleted]
Can I recommend Voat?
You are the only one on this page making any sense... HN has become a socialist dystopia. I looked through your comments and I can tell you right now that we will welcome you at Voat with open arms. There is zero censorship also.
You are the only one on this page making any sense... HN has become a socialist dystopia. I looked through your comments and I can tell you right now that we will welcome you at Voat with open arms. There is zero censorship also.
There are legitimate abuses of market power. But this is not one of them.
Nobody's forcing restaurants to enter these partnerships, there's competition, and delivery people still need to be paid.
There are two obvious outcomes here: either food delivery apps will restrict delivery to profitable orders only (stop working for some restaurants, require higher order minimums, etc.), or they'll stay to avoid bad press but then this is essentially the city blackmailing investors to subsidize food delivery.
It's one thing for COVID-19 to restrict business services, and deeply unfortunate that businesses wind up closing. It's another thing entirely to force businesses to continue operating but at a loss.
If Portland or other cities believe it's a necessary public service to provide subsidized food delivery, then they ought to pay for it themselves through tax dollars. Either hire city-employed deliverypeople and make them available to restaurants, or pay GrubHub etc. to do it through a normal business contract.
But capping food delivery rates to far below what they were pre-pandemic is not a fair approach.
Nobody's forcing restaurants to enter these partnerships, there's competition, and delivery people still need to be paid.
There are two obvious outcomes here: either food delivery apps will restrict delivery to profitable orders only (stop working for some restaurants, require higher order minimums, etc.), or they'll stay to avoid bad press but then this is essentially the city blackmailing investors to subsidize food delivery.
It's one thing for COVID-19 to restrict business services, and deeply unfortunate that businesses wind up closing. It's another thing entirely to force businesses to continue operating but at a loss.
If Portland or other cities believe it's a necessary public service to provide subsidized food delivery, then they ought to pay for it themselves through tax dollars. Either hire city-employed deliverypeople and make them available to restaurants, or pay GrubHub etc. to do it through a normal business contract.
But capping food delivery rates to far below what they were pre-pandemic is not a fair approach.
> There are legitimate abuses of market power. But this is not one of them.
I’m curious. How long does a company need to lose money on each unit of work they do, funded by endless foreign vc money, before it’s clearly an abuse of their financial power and destructive for the market?
No company can compete fairly against people willing to lose billions just for market share.
I’m curious. How long does a company need to lose money on each unit of work they do, funded by endless foreign vc money, before it’s clearly an abuse of their financial power and destructive for the market?
No company can compete fairly against people willing to lose billions just for market share.
Except money is never endless. And consumers are benefiting in the process from cheap prices.
So as long as consumers are benefiting, and the situation can't go on forever, where's the abuse?
Abuse is generally a characteristic of natural monopolies, etc. Not merely a competitor with deep pockets. That's just healthy competition for the good of consumers.
So as long as consumers are benefiting, and the situation can't go on forever, where's the abuse?
Abuse is generally a characteristic of natural monopolies, etc. Not merely a competitor with deep pockets. That's just healthy competition for the good of consumers.
It's amazing how many commenters have not read the article. This is not a cap on the total price of delivered food, but rather a restriction on the delivery service misrepresenting the price of the food itself. The obvious outcome is that the delivery services move their total fee into the appropriate line item labeled "Delivery Fee".
Also, there is an apparent lack of competition in this space, given that restaurants end up signing contracts that allow delivery services to setup fraudulent phone numbers to capture customers that would otherwise have a direct relationship with the restaurant.
Presumably the ordinance only applies during Covid times because afterwards the restaurants will regain a fair amount of bargaining power with their dine-in customers. Currently a restaurant can only see so many orders coming from a delivery service, and has no way of knowing how many of those customers would have been direct if not for the front running.
Also, there is an apparent lack of competition in this space, given that restaurants end up signing contracts that allow delivery services to setup fraudulent phone numbers to capture customers that would otherwise have a direct relationship with the restaurant.
Presumably the ordinance only applies during Covid times because afterwards the restaurants will regain a fair amount of bargaining power with their dine-in customers. Currently a restaurant can only see so many orders coming from a delivery service, and has no way of knowing how many of those customers would have been direct if not for the front running.
Huh? I don't understand what you're saying at all.
This is a cap on the commission charged. The article doesn't say anything about total price or about misrepresenting prices. Where are you getting that? Why are you saying people aren't reading the article?
And the fraudulent number thing is a separate issue, totally unrelated to level of competition. It's scummy but irrelevant to this particular issue.
Competition exists because there are multiple mainstream food delivery services and restaurants have been delivering food on their own for decades.
This is a cap on the commission charged. The article doesn't say anything about total price or about misrepresenting prices. Where are you getting that? Why are you saying people aren't reading the article?
And the fraudulent number thing is a separate issue, totally unrelated to level of competition. It's scummy but irrelevant to this particular issue.
Competition exists because there are multiple mainstream food delivery services and restaurants have been delivering food on their own for decades.
(the critical detail is contained in the full headline - "can charge restaurants")
The commission is the cut of the "food price" that the delivery service gets from the restaurant, in addition to charging the customer-facing "delivery fee". So if the customer sees "Pizza $20, Delivery $5", and the restaurant is paying 30% to the delivery service, the actual breakdown is "Pizza $14, Delivery $11". It's misleading to say that the pizza costs $20 when $6 of that is actually a hidden delivery fee.
How this falls out depends on whether the listed food price was the same as the restaurant's list price, had been inflated by the delivery service. But continuing the example, with the cap we'd expect to see the explicit delivery fee go up to ~$10 (if customers will bear it), and the food price to end up between $14 and $20 depending on the market for the food itself.
> And the fraudulent number thing is a separate issue, totally unrelated to level of competition
My point there is that the services are only allowed to do this in such a misleading way by the restaurant signing a contract allowing them to do so (otherwise it would be straightforward fraud). Despite the presence of many delivery services, it would seem they're all pushing similar scummy terms. This is an indicator of a lack of competition.
The commission is the cut of the "food price" that the delivery service gets from the restaurant, in addition to charging the customer-facing "delivery fee". So if the customer sees "Pizza $20, Delivery $5", and the restaurant is paying 30% to the delivery service, the actual breakdown is "Pizza $14, Delivery $11". It's misleading to say that the pizza costs $20 when $6 of that is actually a hidden delivery fee.
How this falls out depends on whether the listed food price was the same as the restaurant's list price, had been inflated by the delivery service. But continuing the example, with the cap we'd expect to see the explicit delivery fee go up to ~$10 (if customers will bear it), and the food price to end up between $14 and $20 depending on the market for the food itself.
> And the fraudulent number thing is a separate issue, totally unrelated to level of competition
My point there is that the services are only allowed to do this in such a misleading way by the restaurant signing a contract allowing them to do so (otherwise it would be straightforward fraud). Despite the presence of many delivery services, it would seem they're all pushing similar scummy terms. This is an indicator of a lack of competition.
> It's misleading to say that the pizza costs $20 when $6 of that is actually a hidden delivery fee.
No it's not. While some delivery sites do list higher prices than in-restaurant (arguably misleading), that's not the norm. And as long as they don't, then if a pizza is $20, then if you're eating in-house $6 of that is going to dining space, tables and chairs, plates and utensils, dishwashing, etc. If it's delivery, the $6 is going to the delivery service, which includes listings, website maintenance, etc. All businesses spread their costs out among customers in different ways. There's nothing misleading about it.
And again, "scummy terms" in no way implies lack of competition. Not sure where you got that idea from? Tons of industries are full of scummy terms while competition is thriving. Scummy terms have nothing to do with lack of competition and everything to do with which marketing funnels and pricing strategies turn out to be most effective. It's mainly about consumer psychology.
No it's not. While some delivery sites do list higher prices than in-restaurant (arguably misleading), that's not the norm. And as long as they don't, then if a pizza is $20, then if you're eating in-house $6 of that is going to dining space, tables and chairs, plates and utensils, dishwashing, etc. If it's delivery, the $6 is going to the delivery service, which includes listings, website maintenance, etc. All businesses spread their costs out among customers in different ways. There's nothing misleading about it.
And again, "scummy terms" in no way implies lack of competition. Not sure where you got that idea from? Tons of industries are full of scummy terms while competition is thriving. Scummy terms have nothing to do with lack of competition and everything to do with which marketing funnels and pricing strategies turn out to be most effective. It's mainly about consumer psychology.
Yet take-out is also the same price and doesn't require any of that overhead. Although you are saving on a "tip", which is yet another weird fee attributed to a third party rather than waitstaff just earning straightforward wages - cost-responsibility-dodging is rampant in this industry. What's probably driving this dispute over commissions is that restaurants still need to pay for that dining space during Covid, so they're fighting over that "spare" $6.
> All businesses spread their costs out among customers in different ways. There's nothing inherently "hidden" about it.
The restaurant is front and center as being the provider of the food. The delivery service is explicitly stating that this food costs one specific price, and delivery another specific price. Meanwhile this breakdown is false and arbitrary, with a seeming goal of misleading customers about how much getting your food delivered actually costs.
> And again, "scummy terms" in no way implies lack of competition. Not sure where you got that idea from?
Effective market competition generally results in reasonable terms, due to many meetings of minds. A lack of reasonable terms shows there is not effective competition over the relationship. If a restaurant could instead sign up with a delivery service that didn't front-run their customers, they wouldn't take to writing exasperated blog posts about it.
> All businesses spread their costs out among customers in different ways. There's nothing inherently "hidden" about it.
The restaurant is front and center as being the provider of the food. The delivery service is explicitly stating that this food costs one specific price, and delivery another specific price. Meanwhile this breakdown is false and arbitrary, with a seeming goal of misleading customers about how much getting your food delivered actually costs.
> And again, "scummy terms" in no way implies lack of competition. Not sure where you got that idea from?
Effective market competition generally results in reasonable terms, due to many meetings of minds. A lack of reasonable terms shows there is not effective competition over the relationship. If a restaurant could instead sign up with a delivery service that didn't front-run their customers, they wouldn't take to writing exasperated blog posts about it.
I mean, shipping prices when shopping online also aren't the exact cost of shipping your package. "Free" shipping when you hit a minimum order is still being paid for in the price you pay per-item. Pretty much no prices magically reflect true costs anywhere. Delivery is no different. I don't know why you think delivery deserves to be super-transparently-related-to-costs when literally nothing else is in business except sales tax. (Pizzerias also make a tiny or no profit on cheese pizza but waaaay more on toppings, and cinemas make most of their profit from popcorn and sugar water, not your movie ticket. By your logic, all these are equally misleading.)
And your idea that competition results in "reasonable terms" is just wrong, I'm afraid. You're stating this as fact when it's not. There's tons of competition in airfares and in signing up for credit cards, but they're full of scummy terms. And restaurants objectively have lots of choices of delivery services to sign up with. In fact, there has never been a time in human history when they had more choices for delivery. Those are facts.
And your idea that competition results in "reasonable terms" is just wrong, I'm afraid. You're stating this as fact when it's not. There's tons of competition in airfares and in signing up for credit cards, but they're full of scummy terms. And restaurants objectively have lots of choices of delivery services to sign up with. In fact, there has never been a time in human history when they had more choices for delivery. Those are facts.
Pretty much no prices magically reflect true costs anywhere.
In general, sure. But the combinations generally simplify the transaction rather than obscuring it. Shipping cost can be built into product price. People balk when a product cost gets hidden in the shipping price.
As I said, the specific problem here is a delivery service purporting to charge one price for delivery, while hiding the actual cost of their service within the purported price of the food. That's borderline fraudulent.
Your whole argument is to keep insisting that there is nothing wrong with this. But it's akin to soliciting collections for charity, and then taking 20% of the donations as your administrative fee. Just because some money went where you said, does not mean you're entitled to allocate the rest how you see fit. We've also seen similar play-fast-and-loose-with-customer-money behavior from this industry where tipping a worker caused their wage to be reduced.
Since our argument has consisted of mostly talking past one another, I have to ask - what exactly is so repellent about making delivery companies disclose the actual price of their service?
> In fact, there has never been a time in human history when [restaurants] had more choices for delivery. Those are facts
I'm not disputing your "fact", I'm disputing your framing. If we were talking about orders from a restaurant's own website, being handled by a contracted delivery vendor, it would be appropriate. But the Silicon Valley nouveau-middleman business plan is to become popular and capture entire markets through network effects. It's disingenuous to frame signing up with a given service as some isolated choice, when those services actively work to inject themselves into existing customer relationships.
And sure, there is general competition between services. It's just not competition that results in reasonable market terms. Just like your examples of airlines and credit cards, market failure generally invites regulation, which is exactly what we're seeing here.
In general, sure. But the combinations generally simplify the transaction rather than obscuring it. Shipping cost can be built into product price. People balk when a product cost gets hidden in the shipping price.
As I said, the specific problem here is a delivery service purporting to charge one price for delivery, while hiding the actual cost of their service within the purported price of the food. That's borderline fraudulent.
Your whole argument is to keep insisting that there is nothing wrong with this. But it's akin to soliciting collections for charity, and then taking 20% of the donations as your administrative fee. Just because some money went where you said, does not mean you're entitled to allocate the rest how you see fit. We've also seen similar play-fast-and-loose-with-customer-money behavior from this industry where tipping a worker caused their wage to be reduced.
Since our argument has consisted of mostly talking past one another, I have to ask - what exactly is so repellent about making delivery companies disclose the actual price of their service?
> In fact, there has never been a time in human history when [restaurants] had more choices for delivery. Those are facts
I'm not disputing your "fact", I'm disputing your framing. If we were talking about orders from a restaurant's own website, being handled by a contracted delivery vendor, it would be appropriate. But the Silicon Valley nouveau-middleman business plan is to become popular and capture entire markets through network effects. It's disingenuous to frame signing up with a given service as some isolated choice, when those services actively work to inject themselves into existing customer relationships.
And sure, there is general competition between services. It's just not competition that results in reasonable market terms. Just like your examples of airlines and credit cards, market failure generally invites regulation, which is exactly what we're seeing here.
I disagree with this move. Why should we force a cap rather than let market competition improve prices?
I believe it's better to fix shady practices. If I pay 25% to Uber, I want to know I paid 25% to them and not the restaurant. Then I can decide if the time savings is worth that 25% or not.
I believe it's better to fix shady practices. If I pay 25% to Uber, I want to know I paid 25% to them and not the restaurant. Then I can decide if the time savings is worth that 25% or not.
> I believe it's better to fix shady practices. If I pay 25% to Uber, I want to know I paid 25% to them and not the restaurant.
Isn't this what this does? It's a cap on the hidden cut these apps take from what the bill shows as the restaurant's revenue.
Instead of taking 30% of my $10 pizza, Uber/Grubhub/etc. now have to decide to put that $3 in the fee they show to the user if they want that revenue.
Isn't this what this does? It's a cap on the hidden cut these apps take from what the bill shows as the restaurant's revenue.
Instead of taking 30% of my $10 pizza, Uber/Grubhub/etc. now have to decide to put that $3 in the fee they show to the user if they want that revenue.
I think the parent commenter would prefer a law that requires ordering platforms to list their cut separately, but doesn't actually cap how big that cut can be. That would give customers more information to choose for themselves whether to use a given ordering platform.
This largely does that, by my reading.
The delivery apps aren't forbidden from charging the customer a sky-high fee. They're just not permitted to hide it in the supposed cost of food.
Before: Pizza ($10), Grubhub fee ($2), delivery fee ($3), but the Grubhub fee is actually $5 because they're taking 30% of the restaurant's revenue behind the scenes.
Now Grubhub has to accurately show their fee as $5 if they want that revenue still. The restaurant either makes more money to stay afloat, or can charge less for the pizzas if they're doing fine.
The delivery apps aren't forbidden from charging the customer a sky-high fee. They're just not permitted to hide it in the supposed cost of food.
Before: Pizza ($10), Grubhub fee ($2), delivery fee ($3), but the Grubhub fee is actually $5 because they're taking 30% of the restaurant's revenue behind the scenes.
Now Grubhub has to accurately show their fee as $5 if they want that revenue still. The restaurant either makes more money to stay afloat, or can charge less for the pizzas if they're doing fine.
Sorry, which article are you reading? I'm not seeing anything about forcing third-party delivery platforms to list out their fees separately in the linked article, or in the Portland ordinance itself: https://www.portlandoregon.gov/auditor/article/763323
The law sets a cap on fees (including delivery fees!) of 10% of the menu price, and prohibits delivery companies from withholding wages or tips from delivery staff.
The law sets a cap on fees (including delivery fees!) of 10% of the menu price, and prohibits delivery companies from withholding wages or tips from delivery staff.
Read the order closely.
> “Purchase Price” means the menu price of an online or phone order. Such term excludes taxes, gratuities, and any other fees that may make up the total cost to the customer of an online order.
> It shall be unlawful for a Third-Party, App-Based Food Delivery Platform to charge a Restaurant a fee (including, without limitation, any delivery fee) for the use of its services that totals more than 10% of the Purchase Price of the order made through the Third-Party, App-Based Food Delivery Platform
Nowhere does it say they can't charge customers a huge app/delivery fee.
> “Purchase Price” means the menu price of an online or phone order. Such term excludes taxes, gratuities, and any other fees that may make up the total cost to the customer of an online order.
> It shall be unlawful for a Third-Party, App-Based Food Delivery Platform to charge a Restaurant a fee (including, without limitation, any delivery fee) for the use of its services that totals more than 10% of the Purchase Price of the order made through the Third-Party, App-Based Food Delivery Platform
Nowhere does it say they can't charge customers a huge app/delivery fee.
> It shall be unlawful for a Third-Party, App-Based Food Delivery Platform to charge a Restaurant a fee (including, without limitation, any DELIVERY FEE) for the use of its
services that totals more than 10% of the Purchase Price of the order made through the Third-Party, App-Based Food Delivery Platform.
Do delivery apps charge "delivery fees" to restaurants as well as to the customer? Yes, the ordinance applies to restaurant charges, but this provision reads ambiguously to me, as I don't know if third-party platforms charge the restaurant a delivery fee while also charging the customer a (possibly different) delivery fee.
Do delivery apps charge "delivery fees" to restaurants as well as to the customer? Yes, the ordinance applies to restaurant charges, but this provision reads ambiguously to me, as I don't know if third-party platforms charge the restaurant a delivery fee while also charging the customer a (possibly different) delivery fee.
I don't see what you find confusing in that wording.
They can't charge a restaurant a big delivery fee. Whether they are or not currently is immaterial; that wording prevents them from going "fine, we won't charge commission, we'll just tack on a different fee that replaces it".
Legislation often includes these sorts of "we know you think this is a loophole, it isn't" wordings.
They can't charge a restaurant a big delivery fee. Whether they are or not currently is immaterial; that wording prevents them from going "fine, we won't charge commission, we'll just tack on a different fee that replaces it".
Legislation often includes these sorts of "we know you think this is a loophole, it isn't" wordings.
This is a cap on the invisible fee that Uber and other companies charge to restaurants. It is not transparent or visible on the consumer end that a restaurant is only getting 75% of the listed food prices.
This is, in effect, forcing these delivery companies to be more transparent about their pricing. Instead of charging a restaurant an invisible 25% it will be capped at 10% and the delivery companies will have to move the remaining 15% onto the consumer. Or I guess they can eat the 15% but they can't make money as it is, so I doubt that.
I would be fine if it was instead just a total price transparency law. I think consumers should know exactly where their bill is going. However, these delivery companies are extraordinarily shady and I believe they would leave no stone unturned to obfuscate the fact that they are secretly ripping off restaurants. I think capping the invisible restaurant fee at 10% is the simplest approach to reach the same desired end result.
This is, in effect, forcing these delivery companies to be more transparent about their pricing. Instead of charging a restaurant an invisible 25% it will be capped at 10% and the delivery companies will have to move the remaining 15% onto the consumer. Or I guess they can eat the 15% but they can't make money as it is, so I doubt that.
I would be fine if it was instead just a total price transparency law. I think consumers should know exactly where their bill is going. However, these delivery companies are extraordinarily shady and I believe they would leave no stone unturned to obfuscate the fact that they are secretly ripping off restaurants. I think capping the invisible restaurant fee at 10% is the simplest approach to reach the same desired end result.
Exactly. This is not a cap on prices, it's a cap on hidden prices. When the restaurants have to raise their prices to compensate for Uber's fee, Uber doesn't take the hit, the restaurant does.
This forces Uber to more clearly tell the customer how much their convenience costs, but it can be anything Uber wants.
This forces Uber to more clearly tell the customer how much their convenience costs, but it can be anything Uber wants.
> Why should we force a cap rather than let market competition improve prices?
This is an extremely simplistic perspective on the matter.
Competitors have proved that they are willing to lose money on the short term, because the goal is to dominate the market in the long term. This has a name, and it's "dumping".
On top of that, these services are saturating and cannibalizing the food delivery market share, not by driving restaurants out of business, but their delivery services. At some point in time, the perception of such services would be that they are the only available options, giving restaurants no chance to compete, even when they are the actual providers or manufacturers of the goods.
This is an extremely simplistic perspective on the matter.
Competitors have proved that they are willing to lose money on the short term, because the goal is to dominate the market in the long term. This has a name, and it's "dumping".
On top of that, these services are saturating and cannibalizing the food delivery market share, not by driving restaurants out of business, but their delivery services. At some point in time, the perception of such services would be that they are the only available options, giving restaurants no chance to compete, even when they are the actual providers or manufacturers of the goods.
In addition, food delivery is not a basic need, it's a luxury.
If a luxury delivery service drives Lamborghinis and charge 200 to wealthy people, so be it. If a Toyota Corolla wants to charge up to 25% for your local pasta restaurant, so be it.
If a luxury delivery service drives Lamborghinis and charge 200 to wealthy people, so be it. If a Toyota Corolla wants to charge up to 25% for your local pasta restaurant, so be it.
This ordinance does nothing to regulate consumer prices themselves. Food delivery is a basic need for restaurants during this time. Increased price transparency, which is really the only effect of this ordinance, makes markets function better.
This cap is only in effect during and up to 90 days after the current state of emergency; this isn’t forever.
One can argue that food delivery isn’t really just a “luxury,” but probably best in terms of preventing spread during the coronavirus pandemic.
One can argue that food delivery isn’t really just a “luxury,” but probably best in terms of preventing spread during the coronavirus pandemic.
Well, except for times like the past few months in which delivery and takeout (which is also done through third-party platforms) proved to be an essential service across the world.
When I take a flight, I don't demand to know how much the airline is paying the pilots and flight attendants. When I buy food from a restaurant, I don't demand to know how much the restaurant is paying the waiters and cashiers. I also don't know how much the restaurant paid for the food they cooked.
That's true of any company/workers/suppliers. People only know and care about how much they end up paying. As long as there's a minimum wage, people don't know, and usually don't care how much a company pays their workers/suppliers.
That's true of any company/workers/suppliers. People only know and care about how much they end up paying. As long as there's a minimum wage, people don't know, and usually don't care how much a company pays their workers/suppliers.
I don't think that's a good analogy because having a pilot or not is not optional.
A better analogy would be extra baggage. I appreciate being able to save $25-$50 in domestic flights by not bringing an extra bag.
A better analogy would be extra baggage. I appreciate being able to save $25-$50 in domestic flights by not bringing an extra bag.
Unlike asking people to pay for baggage, this law doesn't change how much the customer ends up paying.
Indeed. Let the market discover the proper price for this service.
The market can't discover this when consumers are misled by the delivery services. 10% is reasonable. Let the delivery service add a fee to recover their cost rather than take the food provider's profit. Otherwise, these food providers are going to go out of business (and be bought by the delivery services).
The market determines what is reasonable, not you (or any one person). "Recover their cost"? What is this, communist Russia?
So what if the food providers sell off to the delivery services? Perhaps it will result in a better match for the market demands. Preserving jobs isn't the goal of capitalism, profit is. Those businesses who try to go too far toward extreme profit usually fail when smaller, more nimble upstarts dig the foundations out from under the bigger ones.
So what if the food providers sell off to the delivery services? Perhaps it will result in a better match for the market demands. Preserving jobs isn't the goal of capitalism, profit is. Those businesses who try to go too far toward extreme profit usually fail when smaller, more nimble upstarts dig the foundations out from under the bigger ones.
What market competition? Uber is buying Postmates. Both businesses lose money. The only reason to do so is to decrease competition.
> I disagree with this move. Why should we force a cap rather than let market competition improve prices?
Because the demand for delivery services on behalf of restaurants is inelastic right now -- they are relying on delivery for their revenue, and it's difficult to manage that in-house. This leads to price gouging.
Because the demand for delivery services on behalf of restaurants is inelastic right now -- they are relying on delivery for their revenue, and it's difficult to manage that in-house. This leads to price gouging.
[deleted]
Most people couldn't care less how much the restaurant or the the driver is making from an order. Believing the market will regulate itself to a point where the restaurant and the driver receive a fair cut while the customer pays less and the gig app makes a profit is almost childish. The scales are not balanced in this equation. A company that has virtually infinite money to burn is in a position to burn the whole market to the ground and rebuild it on it's own terms if it wished. And in fact that's what has been happening.
[deleted]
Hah, that's hardly the beginning of their shady practices.
On its face, this is really a bad idea. Price caps never lead to good market outcomes in a competitive market. You end up with an imbalance where the people who are willing to pay more aren’t getting served and demand isn’t getting met and you are reducing the supply where the suppliers could have made more money. This isn’t good for either side.
However, if this means that the supplier can’t charge the restaurants but can charge a higher delivery fee and it’s explicit. That seems like a win. A free market operates more efficiently when all parties have enough information.
However, if this means that the supplier can’t charge the restaurants but can charge a higher delivery fee and it’s explicit. That seems like a win. A free market operates more efficiently when all parties have enough information.
This feels like capping extortion. The real problem in my opinion is the delivery apps masquerading under a restaurants name online, and then then charging for it. When I order online, I have no idea if i'm ordering from the restaurant directly, or if i'm ordering from some app that's registered a website under their name, and has better SEO.
Seems like a solid move, given the capture of the market by the food delivery apps, and their shady business practices (like the thread from a while ago where a delivery service was making fake websites for restaurants, without their knowledge or consent).
Why have this expire post COVID though?
Why have this expire post COVID though?
On paper it looks good, and given the players in the arena, there’s not much competition, especially since there’s a high bar of entry for new competition.
Perhaps the idea behind not imposing such regulations is a free market argument, in which the most efficient price won’t be selected for, thereby not producing the optimal supply/demand.
I would argue against this point that we would be assuming perfect competition, and given the anti competitive behavior of gig economy companies in this space (such as buying restaurant domain names, making fake websites with phone numbers they own to trick people into thinking they’re ordering directly) and lack of competition, this seems appropriate for now.
Though the policy timeline should be extended, I don’t believe it should be indefinite. When the aforementioned issues are resolved, I’d agree with the free market side.
In China, if I recall correctly, they have a food economy such that it’s cheaper to order take out, and have the food delivered, than actually cooking. We have inefficiencies In the infrastructure, less population density, and lack of competition that prevents us being in a similar boat.
Perhaps the idea behind not imposing such regulations is a free market argument, in which the most efficient price won’t be selected for, thereby not producing the optimal supply/demand.
I would argue against this point that we would be assuming perfect competition, and given the anti competitive behavior of gig economy companies in this space (such as buying restaurant domain names, making fake websites with phone numbers they own to trick people into thinking they’re ordering directly) and lack of competition, this seems appropriate for now.
Though the policy timeline should be extended, I don’t believe it should be indefinite. When the aforementioned issues are resolved, I’d agree with the free market side.
In China, if I recall correctly, they have a food economy such that it’s cheaper to order take out, and have the food delivered, than actually cooking. We have inefficiencies In the infrastructure, less population density, and lack of competition that prevents us being in a similar boat.
Why not enforce regulations that prevent bad actors from pursing anti-competitive behavior? It's harder, and much less flashier than mandating a cap, but it retains much more of the free market integrity. Pricing is a genuinely hard problem, and mandating it from above is an exercise in pure folly.
> I would argue against this point that we would be assuming perfect competition, and given the anti competitive behavior of gig economy companies in this space (such as buying restaurant domain names, making fake websites with phone numbers they own to trick people into thinking they’re ordering directly) and lack of competition, this seems appropriate for now.
I agree that the ideal solution would be hitting the anti-competitive behaviors directly, rather than an rate cap. The overall issue is the pressure that a large delivery company can exert on individual small business restaurants, with the solution being coordination between restaurants to ensure they all get a good deal, or strong competition between the delivery services.
I agree that the ideal solution would be hitting the anti-competitive behaviors directly, rather than an rate cap. The overall issue is the pressure that a large delivery company can exert on individual small business restaurants, with the solution being coordination between restaurants to ensure they all get a good deal, or strong competition between the delivery services.
> In China, if I recall correctly, they have a food economy such that it’s cheaper to order take out, and have the food delivered, than actually cooking.
Is this true?
Here in London, a typical delivered meal would cost ~$20, whereas a weekly shop and cooking probably takes 5 hours/week, but costs only ~$2 per meal.
Is this true?
Here in London, a typical delivered meal would cost ~$20, whereas a weekly shop and cooking probably takes 5 hours/week, but costs only ~$2 per meal.
I believe so in some areas, but only because they are using kitchens/ingredients that cost less than restaurants or stores, IE located in bad areas, conditions/treatment worse for cooks, payment less for cooks, etc. Not something that should be supported but something that technology unfortunately makes possible and convenient
This is just reflective of inequality. I don't know about China specifically but in other asian countries that I know, most locals buy their ingredients at the market, and grocery stores target richer less price-conscious consumers. So it's certainly possible that the markup that the grocery store applies is greater than the cost of cooking and delivering the food, but that doesn't mean that it's cheaper than buying the ingredients at a market and cooking it yourself.
How is that in the US there are always monopolies everywhere? Where I live, there are at least 10 different car sharing apps, and there is an app that lets you see which app offers better rates for a given destination. I think it has something to do with regulatory culture.
In this case, it's that the parent comment is just wrong. There are at least five different food delivery apps in Portland that I'm aware of.
>Seems like a solid move
Are any of these food delivery companies even making money? What will capping their fees do except make them lose even more?
Are any of these food delivery companies even making money? What will capping their fees do except make them lose even more?
Food delivery worked for decades when it was done by the restaurant itself so worst-case scenario we wouldn't lose much as these companies go bankrupt and we go back to restaurant-provided delivery.
In fact, with all their tech and economies of scale, I'm surprised food delivery services are doing worse in terms of per-unit profitability than the low-tech restaurant-provided ones despite already charging excessive fees.
I guess the reason is that the various venture capital firms poisoned their own well by subsidizing the services and competing at below-cost pricing.
In fact, with all their tech and economies of scale, I'm surprised food delivery services are doing worse in terms of per-unit profitability than the low-tech restaurant-provided ones despite already charging excessive fees.
I guess the reason is that the various venture capital firms poisoned their own well by subsidizing the services and competing at below-cost pricing.
You're right, and that's why I'm genuinely confused by what's going on. Restaurant delivery used to be a healthy market that didn't need to eat up external capital. Now we have a situation where:
- Restaurants say they are paying too much.
- Delivery companies are losing money.
- Customers are paying fees to the sites in addition to the delivery cost we used to pay.
What gives? It seems these can't all be true.
- Restaurants say they are paying too much.
- Delivery companies are losing money.
- Customers are paying fees to the sites in addition to the delivery cost we used to pay.
What gives? It seems these can't all be true.
Add to that drivers complaining that they're getting exploited.
But yes, all of those can be true. Paying someone for 30 to 45 minutes of their time is expensive.
But yes, all of those can be true. Paying someone for 30 to 45 minutes of their time is expensive.
> Paying someone for 30 to 45 minutes of their time is expensive.
Definitely, but this was also the case before Uber Eats et al.
Definitely, but this was also the case before Uber Eats et al.
It's not the same though, because the costs are reduced by two things at places like Pizza joints and Chinese restaurants. First, every trip by a driver would include multiple deliveries, which is very rare with Uber Eats style delivery. Secondly all of the drivers would wait and drive back to a single restaurant, eliminating the time needed for a driver to drive to the restaurant from their spot.
Not to mention that crazy high costs of developing, running and maintaining slick apps that work for all restaurants, restaurant and customer acquisition, and tech support. Those costs have to be made up somehow.
Not to mention that crazy high costs of developing, running and maintaining slick apps that work for all restaurants, restaurant and customer acquisition, and tech support. Those costs have to be made up somehow.
A single or unified marketplace and a convenient paying process can easily capture the whole market, especially if the fees are shown to be artificially small or even zero.
Requiring market places to advertise the actual fee (i.e. anything that doesn't go to the restaurant directly) would probably help here: I might be willing to pay a 5% extra for the convenience, but at 30% I might think twice. It would both improve competitions between marketplaces and marketplace vs direct order.
Of course I'm sure that companies will do anything to game it (for example shifting costs to restaurants to fees not directly connected to the orders themselves).
Requiring market places to advertise the actual fee (i.e. anything that doesn't go to the restaurant directly) would probably help here: I might be willing to pay a 5% extra for the convenience, but at 30% I might think twice. It would both improve competitions between marketplaces and marketplace vs direct order.
Of course I'm sure that companies will do anything to game it (for example shifting costs to restaurants to fees not directly connected to the orders themselves).
In NYC I'm guessing most restaurants paid illegal immigrants in cash to deliver for them. Not sure about elsewhere. That lowers the cost a lot versus having a legitimate delivery business with legal workers and taxes.
You missed out on:
- VCs continue to pour money into the delivery companies
... that is all that is required for this to continue. If that stops, presumably a whole bunch of these firms will fail and that will be the end of that.
- VCs continue to pour money into the delivery companies
... that is all that is required for this to continue. If that stops, presumably a whole bunch of these firms will fail and that will be the end of that.
I didn't miss that, but usually the VC money ends up in someone's pocket. I'm thinking of all the meal kits and rides I got for next to nothing thanks to VCs and win-the-market-at-all-costs strategies.
With food delivery, it feels like everyone is getting screwed.
With food delivery, it feels like everyone is getting screwed.
To be fair, in the case of Uber, at least in London there's always someone paid to stand near the metro stations distributing Uber Eats vouchers.
Of course, Uber's objective is to acquire you as a customer and not give you free food, so it's limited to new accounts only and presumably they check credit card and phone numbers to prevent multiple accounts being created.
However, if you try hard enough, you can indeed take advantage of it and automate the process assuming you have a good source of phone numbers and non-fraudulent credit card numbers.
Of course, Uber's objective is to acquire you as a customer and not give you free food, so it's limited to new accounts only and presumably they check credit card and phone numbers to prevent multiple accounts being created.
However, if you try hard enough, you can indeed take advantage of it and automate the process assuming you have a good source of phone numbers and non-fraudulent credit card numbers.
My only theory on what the VCs are thinking is something like: "eventually, efficiencies in delivery costs will occur, perhaps due to the number of participants shrinking allowing better driver routing or new technology coming available (drones, automated delivery vehicles, who knows) - at that time, the dominant players will become massively profitable".
But I don't really get it.
To be clear, the people doing well out of this are the delivery customers who are receiving a subsidy from all other participants.
But I don't really get it.
To be clear, the people doing well out of this are the delivery customers who are receiving a subsidy from all other participants.
At least in my part of the US, restaurant-provided delivery was only available from a tiny subset of the restaurants currently delivered from by the third-party services. If a cap has an effect of removing the third-party services, I'm not sure why things wouldn't return to the earlier state of limited restaurant choice.
What place did all or even many restaurants have delivery of their own?
Only like maybe 5% of the restaurants offered delivery on their own, mostly pizza chains and Chinese places.
Only like maybe 5% of the restaurants offered delivery on their own, mostly pizza chains and Chinese places.
If I recall food delivery wasn't the only duty a delivery driver had. Between deliveries drivers were working in front of house, in the kitchen, food prep, and cleaning. They were employees with a scheduled shift and not contractors trying to gig on it.
The restaurant I regular order it's family run and either the father or son will deliver to us.
What we have now is a lot of abstracter layers of services, payment processors, workers, cloud computing, and VC. All these layers add a cost in an industry that can't afford the overhead. Unlike software and services, restaurants are high capital, high labor intensive businesses with low margins.
The restaurant I regular order it's family run and either the father or son will deliver to us.
What we have now is a lot of abstracter layers of services, payment processors, workers, cloud computing, and VC. All these layers add a cost in an industry that can't afford the overhead. Unlike software and services, restaurants are high capital, high labor intensive businesses with low margins.
On the other hand, with a delivery service where the driver delivers for multiple restaurants, the downtime of the driver can be reduced to near-zero, so I don't think that is the problem.
I suspect it's also that small restaurants just paid an illegal immigrant in cash to deliver for them which lowered the costs.
I'm just reading more that this business model was never going to work the way it is right now given the thin margins in restaurants and the cost of delivery drivers.
With automation, it might change the economics. I think that's what everyone's betting on. I think the Ubers and all are just trying their damndest to not completely drown until driver automation reaches a certain stage. They obviously can't openly say that because there would be revolts from their drivers.
With automation, it might change the economics. I think that's what everyone's betting on. I think the Ubers and all are just trying their damndest to not completely drown until driver automation reaches a certain stage. They obviously can't openly say that because there would be revolts from their drivers.
>They obviously can't openly say that because there would be revolts from their drivers.
Uber at least has been quite explicit about that. It's somewhere between delusional and what's known in the vernacular as "lying" but investors who are either naive or are cynically bought into the greater fool theory lap it up.
Delivery specifically can work in dense areas but it mostly relies on local kids or family members working for peanuts and can't really pay for overpriced SV engineers or VC yachts.
Uber at least has been quite explicit about that. It's somewhere between delusional and what's known in the vernacular as "lying" but investors who are either naive or are cynically bought into the greater fool theory lap it up.
Delivery specifically can work in dense areas but it mostly relies on local kids or family members working for peanuts and can't really pay for overpriced SV engineers or VC yachts.
I believe this is a power granted by the state of emergency, when that ends, the power to mandate it ends. At that point they'd have to pursue other legislative avenues.
> Why have this expire post COVID though?
Because COVID has entirely transformed the economics of owning a restaurant. It might be worthwhile revisiting this in the future when eating in restaurants is available (and safe).
Because COVID has entirely transformed the economics of owning a restaurant. It might be worthwhile revisiting this in the future when eating in restaurants is available (and safe).
... because we generally think the free market is a good idea?
IMO this is misguided. The reason that restaurants are struggling is because they're unable to provide the value they once did, but they're still bearing a lot of the costs that used to provide it.
All of these restaurants are paying rent on their dining rooms, when they're only using the kitchens. The customer experience, paid for by waiter wages and dining room rent, is now being provided by the delivery companies. The whole customer interaction, from taking the order, to processing the payment to bringing the food to the customer has been taken over by the delivery companies, and that's a huge part of the cost and the value of the meal.
Restaurants can't reasonably expect the delivery companies to just eat all of their substantial costs because the Restaurant has a stranded asset that used to provide that service. Really, it should be the landlords that are taking the hit because all of that prime dining space now has the same value as some tiny cloud kitchen off a back alley.
All of these restaurants are paying rent on their dining rooms, when they're only using the kitchens. The customer experience, paid for by waiter wages and dining room rent, is now being provided by the delivery companies. The whole customer interaction, from taking the order, to processing the payment to bringing the food to the customer has been taken over by the delivery companies, and that's a huge part of the cost and the value of the meal.
Restaurants can't reasonably expect the delivery companies to just eat all of their substantial costs because the Restaurant has a stranded asset that used to provide that service. Really, it should be the landlords that are taking the hit because all of that prime dining space now has the same value as some tiny cloud kitchen off a back alley.
I disagree - large cuts to delivery services were hurting restaurants long before COVID, and the predatory practices of the likes of Grubhub and DoorDash have been well documented here on HN in the past.
I don't doubt that restaurants are paying big fees to the delivery companies, but the delivery companies are still losing money on every order. The predatory pricing is that they're charging too little, not too much. That's how you get this pizza arbitrage stuff. Now some of the other practices of the delivery companies like setting up fake web pages for restaurants are really objectionable, but I think that what's happening now is a separate problem.
Ultimately though, the problem of the pandemic is that restaurants need customers to pay for both the dining room and the delivery, and that's just too much money. If you're running a cloud kitchen, you don't expect to be able to get the same amount of money for a meal as a sit down restaurant, but the sit down restaurant is now providing the same product as the cloud kitchen.
Ultimately though, the problem of the pandemic is that restaurants need customers to pay for both the dining room and the delivery, and that's just too much money. If you're running a cloud kitchen, you don't expect to be able to get the same amount of money for a meal as a sit down restaurant, but the sit down restaurant is now providing the same product as the cloud kitchen.
Are any of these food delivery app services actually making profit right now, or are they just burning VC capital? A news podcast I listened to yesterday made the statement that every food delivery company is doing deliveries at a loss. This seems problematic for making delivery a viable business without forming a monopoly to get the scale required to make things profitable.
drivers bringing restaurant food to individual houses doesn't really seem like something that scale helps. More people using the service requires more drivers.
It could scale if there's enough people ordering food from the same geographic location to the same geographic location at around the same time.
Imagine a bunch of ghost kitchens next to each other in an industrial park, offering discounts to certain neighborhoods if they agree to order in a certain time frame.
Imagine a bunch of ghost kitchens next to each other in an industrial park, offering discounts to certain neighborhoods if they agree to order in a certain time frame.
Brazilian iFood already does this. You can order a 1.85 USD meal (with no extra fees) a day in advance. It arrives at a predefined time in a generic iFood package. I've never seen such an unappetizing dish in my life, including what I've seen children be fed in a really poor orphanage I used to volunteer in.
I really hate the distopic future we're heading into.
[deleted]
That's likely the only path to profitability; making deliveries more efficient by saying we'll deliver your food, but it'll be sometime between 5-8pm.
So several hours old food that's sounds like its going to be really delicious NOT
No. If the delivery service knows that they need to send 4 orders to a single neighbourhood, instead of sending a driver back and forth 4 times, they instead can have the restaurant prep the 4 meals at the same time and send the driver to that neighbourhood once. Pizza places do this all the time. You'll often see them with multiple delivery bags in their car.
more order flow means you can pool orders together more efficiently. i.e. several people in the same neighborhood order food from the same restaurant within a few minutes.
Nope, they don't make any profit even when charging 30% fees. So this 10% cap will probably cause them to withdraw from the market.
I've had delivery takeaways in British towns and cities for 2 decades, well before the likes of ubereats and deliveroo.
Those companies do their own deliveries and manage to make enough money to not even charge more for delivery (or offer a collection discount) - although usually a minimum cost of say £20.
Why can't VC companies do it that efficently?
Those companies do their own deliveries and manage to make enough money to not even charge more for delivery (or offer a collection discount) - although usually a minimum cost of say £20.
Why can't VC companies do it that efficently?
Honestly, those delivery companies are probably underpaying their employees for delivery. I've worked at a pizza delivery company, and including tips, I earned about $140 a day (inflation adjusted, post-taxes) for delivering pizza all over town. It was certainly not enough to provide for a long-term living, given the vehicle upkeep costs and gas.
If I worked that full time, I could easily afford my apartment and other expenses. (Castletown, Isle of Man.)
Now, if I still lived in London? Different story.
Certain restaurant types (high margin, food well suited for delivery) and locales (high population density) seem well suited for delivery. The local steak house? Probably not, for a number of reasons:
- The main profit generator at many sit down venues, drinks, are unlikely to be ordered.
- Impulse add-ons, especially dessert, are less likely. Even with dark pattern upsells on apps. Dining out has many minutes or hours during which additional ordering opportunities are available. Ordering out is a single discrete event.
- On platforms that don’t work with the restaurant, the option of a higher margin delivery-only menu doesn’t exist. Items with low or negative margin can go out the door that otherwise wouldn’t.
- Delivery services seemingly take more for merchant processing than many restaurant chains I’ve helped secure acquiring for. Likely due to much higher chargeback/fraud on digital apps than through traditional delivery or in-restaurant. This is a killer on a low margin vertical such as dining.
Now, if I still lived in London? Different story.
Certain restaurant types (high margin, food well suited for delivery) and locales (high population density) seem well suited for delivery. The local steak house? Probably not, for a number of reasons:
- The main profit generator at many sit down venues, drinks, are unlikely to be ordered.
- Impulse add-ons, especially dessert, are less likely. Even with dark pattern upsells on apps. Dining out has many minutes or hours during which additional ordering opportunities are available. Ordering out is a single discrete event.
- On platforms that don’t work with the restaurant, the option of a higher margin delivery-only menu doesn’t exist. Items with low or negative margin can go out the door that otherwise wouldn’t.
- Delivery services seemingly take more for merchant processing than many restaurant chains I’ve helped secure acquiring for. Likely due to much higher chargeback/fraud on digital apps than through traditional delivery or in-restaurant. This is a killer on a low margin vertical such as dining.
My only real comment here is that you do also have to put anywhere between $5,000 to $15,000 into your car yearly. Between elevated maintenance costs, additional fuel (somewhere around a tank every 2-3 days), and replacing the vehicle when it fails, it eats into the money pretty quickly.
At least, that was my experience.
At least, that was my experience.
No disagreement. The car would actually eat more of my budget than housing.
When I think of "Uber", 'well-compensated employee' is not something that comes to mind.
In personal opinion territory: And that’s a damned shame. Contract drivers should be able to survive on their full time work (and afford any of the externalities pushed on them by Uber) like any other full time worker.
Individual restaurants don't do many of the things delivery app companies do: offer an multiplatform app, have a sales team, 401k matching, expensive MBAs, software engineers, and lawyers, etc... A lot of overhead, and how can they really save money? Compare that stuff to just hiring a delivery person for near minimum wage.
Often the person doing deliveries also does other work in the restaurant when there's no deliveries to do. They clean, fold napkins/silverware, etc. The delivery person probably makes more money than an uber eats driver, and it almost certainly costs the restaurant less.
Yeah, it's less convenient for consumers, but at least it won't drive your favorite restaurant out of business.
Yeah, it's less convenient for consumers, but at least it won't drive your favorite restaurant out of business.
And my local Chineese has a phone number, prints a new menu delivered round the estate every year or so.
Maybe throwing billions of dollars of AWS scale microservices isn't always the solution
Maybe throwing billions of dollars of AWS scale microservices isn't always the solution
It's a harder problem, though. I can order from practically any restaurant at any distance on ubereats.
It's trivial for me to concoct an order that will take ~1h to deliver. With a $15/h minimum wage, that means ubereats needs to charge $15 in fees before making any money just to cover labor.
It's trivial for me to concoct an order that will take ~1h to deliver. With a $15/h minimum wage, that means ubereats needs to charge $15 in fees before making any money just to cover labor.
I suspect this is the real answer.
It probably takes at least twice as long as an equivalent uber ride. The delivery person needs to find somewhere to park twice and spend time waiting in line.
It probably takes at least twice as long as an equivalent uber ride. The delivery person needs to find somewhere to park twice and spend time waiting in line.
The issue is that there is a race to the bottom in terms of price. Effectively chasing margins in an already margin squeezed industry.
If you think about what a food delivery platform is doing - they are trying to service convenience for customers - they need to deliver on speed at the lowest cost possible. How do you do this when your task is labour intensive and there are few barriers to competitors? You’ve got to drive price down.
Likely there will be a period of consolidation until one service rules a region and then maybe a slow grind back up to profit.
If you think about what a food delivery platform is doing - they are trying to service convenience for customers - they need to deliver on speed at the lowest cost possible. How do you do this when your task is labour intensive and there are few barriers to competitors? You’ve got to drive price down.
Likely there will be a period of consolidation until one service rules a region and then maybe a slow grind back up to profit.
If thats true, there is not a market to withdraw from ...
They're not profitable with 30% fees; they won't be profitable with 10% fees, but they won't withdraw, they'll just adjust their burn rate in the hopes that eventually they'll dominate the market through undercutting prices that they can start to jack them up again through other channels, or bully municipalities into changing these rules.
I mean, they're free to recoup the losses by charging a more realistic delivery fee directly to the customer.
I went to order Taco Bell on Doordash last night and the fees were crazy high. I added everything I wanted for me and my family and the cost was something like $60. So I packed up the kids and we drove to Taco Bell. It ended up costing $30. There was a $6.99 delivery fee and each item had $1-2 tacked onto the cost. I guess if they charged a $30 delivery fee at least I wouldn't have gotten "tricked" into getting all the way to the cart before bailing out.
If we were going to limit profits, we should target visa/MasterCard/amex instead.
They are a true oligopoly taxing the entire economy and have acted in a highly anti-trust fashion. Limiting their fees to something like 0.1% of the transaction is plenty to not lose money and would put back something like 2.8% of every transaction back into lower prices or into the businesses hands.
They are a true oligopoly taxing the entire economy and have acted in a highly anti-trust fashion. Limiting their fees to something like 0.1% of the transaction is plenty to not lose money and would put back something like 2.8% of every transaction back into lower prices or into the businesses hands.
The actual benefits to consumers/businesses is going to be much less than 2.8%. For one, actual interchange fees today is nowhere near 2.9% like you suggest. It's not a flat rate, and varies wildly depending on the credit card type and merchant category[1]. For instance, a supermarket might get charged around 1.5% if the customer is using a basic credit card, or 2.1% if the customer is using a top end rewards credit card. I suspect that the weighted average of interchange rate across all consumer spending is probably under 2%. Of that 2%, a big part of it is probably also being passed to consumers via cash back/rewards programs. In Europe where interchange fees are capped, their cash back/rewards program are significantly worse than the ones in US. Combining all these factors, I'd say that the total savings to businesses and customers combined is probably under 1%.
[1] https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-in...
[1] https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-in...
I think you're looking at that market from the wrong angle. Competition in the credit card world pushes transaction fees up, because the competition isn't over the fees, it's competition to see who can offer the best credit card rewards. Cash back, airport lounges, travel points, concierge services...
This reminds me of Ticketmaster vs. Pearl Jam in the 90s where the band exposed that Ticketmaster takes a much bigger cut that ticket holders didn't see in addition to a small 'ticket fee' that the ticket holder did see. I remember during that time that the general consensus from music fans was that Ticketmaster was an evil and greedy company.
Restaurant customers really need to change their perceptions and understanding of restaurant economics before it collapses under the current pressure – many will not return for a long time, if ever.
Restaurant customers really need to change their perceptions and understanding of restaurant economics before it collapses under the current pressure – many will not return for a long time, if ever.
I dont really see why its my responsibility as a consumer to police if business deals resturants engage in are "fair". That is the resturant's job. Its part of running a business. Actually its the main part. If the deal doesn't make financial sense - then the business shouldn't make the deal. If the business cannot survive neither taking the deal nor not taking it, then the business is not viable and it should go out of business.
At most i support a law requring that resturants can set different prices for uber eats than for walk in customers
At most i support a law requring that resturants can set different prices for uber eats than for walk in customers
How would restaurants have a choice, here? As far as they know, Uber Eats/Doordash/etc are just "regular customers" but are really just scalping the restaurant's product.
Scalping product AND funneling all the blame on their fuckups onto the restaurants. It's a american rent seekers dream gig.
If they were just regular customers, than there would be no need for the 10% cap. The cap would be 0% because regular customers dont negotiate massive discounts; they pay regular price.
The sad thing is I don’t believe that situation has changed - if anything they take an even larger chunk, and even figured out a way to profit multiple times from the same ticket by owning the reseller platforms.
>I remember during that time that the general consensus from music fans was that Ticketmaster was an evil and greedy company.
Sure, but it didn't translate into anything concrete. Pearl Jam suffered a lot by not being able to book major concert venues and pretty much stopped touring for a while. Ticketmaster went on to bigger and better things to where it's pretty much the only game in town for most artists/concert venues.
As video game pricing has shown, consumers don't give a shit about fair value when it comes right down to it.
What's really needed for the restaurant industry is for a co-op model where a bunch of restaurants in a city/locality pool together their resources to hire a fleet of delivery drivers and a common ordering platform.
A simple online-ordering system, plus a map that shows the location of the driver is all that's really needed. Craigslist makes tens of millions with a minimalist interface. No reason why you couldn't build a relatively cheap site like that for this co-op model.
Unfortunately no one has the incentive to build this platform for them. Because you can't return billions to your VCs this way.
Sure, but it didn't translate into anything concrete. Pearl Jam suffered a lot by not being able to book major concert venues and pretty much stopped touring for a while. Ticketmaster went on to bigger and better things to where it's pretty much the only game in town for most artists/concert venues.
As video game pricing has shown, consumers don't give a shit about fair value when it comes right down to it.
What's really needed for the restaurant industry is for a co-op model where a bunch of restaurants in a city/locality pool together their resources to hire a fleet of delivery drivers and a common ordering platform.
A simple online-ordering system, plus a map that shows the location of the driver is all that's really needed. Craigslist makes tens of millions with a minimalist interface. No reason why you couldn't build a relatively cheap site like that for this co-op model.
Unfortunately no one has the incentive to build this platform for them. Because you can't return billions to your VCs this way.
When I hear things like, "many will not return for a long time, if ever" I think about forests and how wildfires are ultimately a Good Thing® for clearing out crowded ecosystems and paving the way for new growth.
I'm too ignorant of all the moving parts to confidently make that analogy, but I can't help but wonder if this sort of collapse could be a net positive thing. I think there are opportunities here for all the participants, even if some of the incumbents will not survive.
I'm too ignorant of all the moving parts to confidently make that analogy, but I can't help but wonder if this sort of collapse could be a net positive thing. I think there are opportunities here for all the participants, even if some of the incumbents will not survive.
Why does it have to be a percentage? Taking the food from point A to point B costs the same whether it's sardines or caviar. I never understood this...
Seems like charging for the distance traveled and even the time of day would make a lot more sense
Seems like charging for the distance traveled and even the time of day would make a lot more sense
It's a cap. It's not a statement of how _much_ you can charge, just what the maximum charge can be. How much you actually charge can be based on the things you mention, but you can't charge any more than that 10%.
Also, a maximum %age is easier to regulate, while the factors you mention are significantly harder to regulate. Moreover, %ages don't need readjusting to account for inflation.
Also, a maximum %age is easier to regulate, while the factors you mention are significantly harder to regulate. Moreover, %ages don't need readjusting to account for inflation.
It's a symbolic gesture, not a reasoned policy initiative.
The cynic in me
> noted that the city rule has a provision that drivers’ pay can’t be reduced because of the fee caps
This seems impossible to enforce right? The city can't reasonably have any insight into why driver fees change.
> noted that the city rule has a provision that drivers’ pay can’t be reduced because of the fee caps
This seems impossible to enforce right? The city can't reasonably have any insight into why driver fees change.
If delivery costs the same as an average Uber ride, say, $10, it makes every order under $100 unprofitable. An average food order is way below that, I think. So the math doesn't add up.
If delivery costs the same as an average Uber ride, say, $10, it makes every order under $100 unprofitable.
What you pay as an Uber passenger is not even remotely close to what Uber pays its drivers. So a $10 cost for a food delivery may not be realistic.
How much an Uber trip costs Uber depends on a lot of factors, but I can tell you from experience that very often if a passenger paid $10 for a trip, the driver saw far less than $5 of it. That's why they're always angling for tips.
When I drove for Uber, a very common run was from the airport to a specific large convention hotel. The trip was maybe five miles. The passengers often complained about having to pay $25-$40 or more for the short trip. As a driver, I got maybe $3.50 out of it.
What you pay as an Uber passenger is not even remotely close to what Uber pays its drivers. So a $10 cost for a food delivery may not be realistic.
How much an Uber trip costs Uber depends on a lot of factors, but I can tell you from experience that very often if a passenger paid $10 for a trip, the driver saw far less than $5 of it. That's why they're always angling for tips.
When I drove for Uber, a very common run was from the airport to a specific large convention hotel. The trip was maybe five miles. The passengers often complained about having to pay $25-$40 or more for the short trip. As a driver, I got maybe $3.50 out of it.
What's the big difference for a driver? It's still the same time, same gas and miles put on the car. True, the food won't throw up in his car, but he should get out of the car to pick up the order, often has to wait at the counter.
I live in Jersey City and in March the mayor instituted an executive order capping delivery commissions to 10%. The effect of this was every Uber Eats order had a $3 "Executive Order Surcharge" for deliveries in Jersey City. They just removed the surcharge after the NJ legislation/governor passed a law making the cap state-wide.
When I found out that local delivery service here is charging around 30% fee my mind was blown. I asked my friend who owns a small restaurant how he puts up with it and he basically said he has no choice, especially during covid. This made me think I should go out more and support the local businesses more as my country opened up already. Well my favorite mexican place was actually charging 30% more for me to eat in person there so it was actually cheaper to sit at home and have food delivered, I was almost tempted to sit down there and order via the app.
The whole restaurant industry is so messed up with coupons and all sorts of marketing tricks and manipulations that I just wish there was static price with single delivery fee so I could enjoy my meal and get over it without having to be constantly vigilant to not feel ripped off. I hope more places follow Portland.
The whole restaurant industry is so messed up with coupons and all sorts of marketing tricks and manipulations that I just wish there was static price with single delivery fee so I could enjoy my meal and get over it without having to be constantly vigilant to not feel ripped off. I hope more places follow Portland.
I wonder if there would be a market for something that presented the user with a food-deliver-app type interface, but in actual fact is just interfacing with an API on the restaurant's behalf (in lieu of the restaurant having a custom delivery order page).
Basically a middle man to replace restaurant's own custom ordering systems (which are often janky, and all act differently). The delivery would still be done by the restaurant's employees, but the service would handle billing the customer, building the UI, and so on.
Such a service could charge a far lower fee to the restaurants, since they would not need to employ, ensure, etc. drivers. I doubt the customer would care either way, as long as the UI is just as convenient as the existing food delivery services.
Basically a middle man to replace restaurant's own custom ordering systems (which are often janky, and all act differently). The delivery would still be done by the restaurant's employees, but the service would handle billing the customer, building the UI, and so on.
Such a service could charge a far lower fee to the restaurants, since they would not need to employ, ensure, etc. drivers. I doubt the customer would care either way, as long as the UI is just as convenient as the existing food delivery services.
The problem is that you're basically creating a brand arbitrage opportunity. Big corporates are going to do their own things, premium brands are going to get courted by Uber Eats & Door Dash with special deals and cuts, so you end up with small independents who don't draw in big business - there's all sorts of screw ups both good faith and bad that are going to impact your brand, not theirs.
IMO the apps should be forbidden from billing restaurants at all. Force them to bill delivery customers directly, keep their hands out of small businesses' pockets, and let the consumer decide how high a fee they're willing to pay for the convenience of ordering via app.
IMO regulation should be there to protect the smaller 'people' (small family businesses, or actual people) from abuse by larger entities, or to encourage socially beneficial change (which usually tends to benefit the smaller players anyway).
So this seems a win on my part.
So this seems a win on my part.
Some restaurants just raise their prices to compensate for delivery fees.
One extreme example is a burger restaurant in SW Seattle that charges $6.80 for a burger if you buy it in the restaurant and $12.00 if you order it on a delivery app.
One extreme example is a burger restaurant in SW Seattle that charges $6.80 for a burger if you buy it in the restaurant and $12.00 if you order it on a delivery app.
They should charge a fee based on how efficiently the restaurant gets the food to the delivery driver, because having the driver spend 20 minutes parking and waiting in line is probably why delivery is so expensive but that delivery person's wasted time doesn't otherwise cost the restaurant much.
With a normal uber ride you have to walk out to the curb to meet the driver, who does not have to find somewhere to park. If they brought the orders out to the curb like when an uber arrives rather than having drivers park & wait maybe that would make delivery far less expensive.
With a normal uber ride you have to walk out to the curb to meet the driver, who does not have to find somewhere to park. If they brought the orders out to the curb like when an uber arrives rather than having drivers park & wait maybe that would make delivery far less expensive.
One thing I've always wondered about these delivery/rideshare "experiences": why didn't they just sell the software on a subscription service? Like a shopify or slack or something. Why did they also have to replace the drivers? Aside from being suspicious labor wise, it seems like a bloated way for software engineers to start a business, especially because they don't know how labor works for taxi fleets/ restaurants across the globe. Why not just make the businesses your customers instead of the end users?
Expect longer wait times for food delivery in Portland.
Price caps, fee caps, rent caps, and "price gouging" bans produce shortages. [0]
This is an economic fact as strong as the law of gravity.
[0] https://fee.org/shows/audio/words-numbers/the-law-of-demandi...
Price caps, fee caps, rent caps, and "price gouging" bans produce shortages. [0]
This is an economic fact as strong as the law of gravity.
[0] https://fee.org/shows/audio/words-numbers/the-law-of-demandi...
It's outrageous how these companies have taken charge over individual businesses.
Some restaurants don't even know that they're listed on these delivery services and get their search results more or less hijacked by internet savvy delivery startups with infinite money.
In other cases they feel as though they have no choice due to the popularity of the online ordering services, and they get into contracts they don't really understand and have their already razor-thin margins eaten into.
Some restaurants don't even know that they're listed on these delivery services and get their search results more or less hijacked by internet savvy delivery startups with infinite money.
In other cases they feel as though they have no choice due to the popularity of the online ordering services, and they get into contracts they don't really understand and have their already razor-thin margins eaten into.
>>Portland approves 10% cap on fees that food delivery apps can charge restaurants
Now all they have to do is force delivery apps to deliver at that price point. But since they can't do that, they'll simply skip Portland. Maybe 30% is too much, but 10% is way to little. The company, drivers etc have to share that $5 off a $50 order and a lot of that is cost (car, gas, insurance)
Now all they have to do is force delivery apps to deliver at that price point. But since they can't do that, they'll simply skip Portland. Maybe 30% is too much, but 10% is way to little. The company, drivers etc have to share that $5 off a $50 order and a lot of that is cost (car, gas, insurance)
If the restaurants don’t want the app then why don’t they decline? Why is the government involved in setting rates? This never ends well.
How many times and places do price controls need to be tried before these idiot government functionaries realize that for any such policy there are winners and losers. Here the losers are those who cannot be profitably served under a fixed cost limit, and so who will not be given the option to pay for delivery as a result.
I feel super guilty ordering from food delivery apps. But I seem to have no choice if I want delivery.
I'm in the same boat. I was even given a large gift card recently for SkiptheDishes (Canadian food delivery app) by co-workers so I'm forced to use it. I want to support local restaurants, but I'm starting to question whether my order is actually a lose for them.
I read this article and actually looked up my city councillor and emailed him. I asked if council had considered this and told him I would support this type of move.
I read this article and actually looked up my city councillor and emailed him. I asked if council had considered this and told him I would support this type of move.
No your order is not a loss. Just because Skipthedishes takes 30% does not mean you placing an order is losing the restaurant money.
I can't believe all the crypto hype has led us to bogus "defi" ponzis instead of a widely adopted protocol for transport and delivery that cuts out these middlemen idiots.
Oh and ticketing too, venues and artists pay an absurd amount to Ticketmaster etc. Needs to stop.
Oh and ticketing too, venues and artists pay an absurd amount to Ticketmaster etc. Needs to stop.
In my view the sales tax is at least as big a problem as the delivery fees. Delivery fees cover things like healthcare for gig workers, etc. Sales tax pays for the police who kill people.
Isn't the SV way to just thumb your nose at local authorities? AirBNB and Uber seem to have done well doing it... I wonder how well Portland will do with enforcing this.
Why are they only setting the price on food delivery?
Let's see if they roll this into their prices
Sad to hear, people really need to learn the concept of "voting with your dollar"
So if you're a Portland resident and you see a fee above 10%, what do you do?
I'd like to see this rule applied only if the delivery provider insists that the menu prices be the same with or without delivery.
Personally I think a provider of any 'value add' service being able to dictate the price without their service is insane.
Personally I think a provider of any 'value add' service being able to dictate the price without their service is insane.
Is this not the case? It looks like it's a cap of 10% on what the app can charge the restaurant. It doesn't say one way or another, but I don't see any restriction on what the app can charge the consumer. The big problem isn't so much the size of these fees, the big problem is that these fees are hidden. Like you, I'd rather see a 0% cap, requiring the app to charge the customer directly.
Some services, like Airbnb for example, specifically say a house owner is not allowed to put a different price on Airbnb Vs some other site. That means the house owner must charge bookings not via Airbnb a higher price than normal to recoup the fees paid on Airbnb bookings.
That should, in my opinion, be outlawed.
That should, in my opinion, be outlawed.
Oh geez.... welp. Guess I can say goodbye to delivery..
Price controls on food. What could go wrong?!
[deleted]
How about let the free market decide?
Does this need to be a law really?
still seems high to me
considering the food delivery apps don’t make money, I don’t see how this will help anything
They should have just banned food delivery services.
Oh wait, they just did.
Oh wait, they just did.
Surely this price control won’t cause any unintuitive deadweight loss...
There was a word in the past for current SF technology companies that are taxing others for passage through their "lands".
Robber Baron
I suggest we update the Wikipedia to add "technologist" behind "industrialist" on the title.
Robber Baron
I suggest we update the Wikipedia to add "technologist" behind "industrialist" on the title.
Please do not update Wikipedia in the manner you have described. The update you describe would change the Wikipedia pages in question to be ideological in nature, but Wikipedia's preferred ideology is to attempt neutrality. Such an edit would be seen mostly by Wikipedia editors, who may be somewhat sympathetic, but would nevertheless revert your changes.
Wikipedia is not an effective venue to litigate whether technology companies are good or bad. Thank you for not wasting Wikipedia editors' time.
Wikipedia is not an effective venue to litigate whether technology companies are good or bad. Thank you for not wasting Wikipedia editors' time.
In a country where tipping of 20% is the norm ... there is all of sudden a cap of 10% on what the delivery guy can make?
That's not what this is...? It's a cap on the commissions UberEats/Doordash/whatever can charge on an order. To, hopefully, prevent the commission structure from causing places to lose money on orders ($10 order with 20% Doordash; costs the restaurant $8.50; Doordash charges $2 commission; restaurant loses $.50 on the order)
It caps the fee that the delivery service can take.
You can still tip the delivery person as much as you like.
You can still tip the delivery person as much as you like.
It's not even that. They can still put a $500 delivery fee on the bill, if they want. They just can't hide it in the food costs anymore, and take it out of the restaurant's cut.
[deleted]
It's a cap on what the delivery company can charge the restaurant, not including what they charge the person doing the actual order.
Do you believe that the full delivery app fee goes to the delivery worker?
Who is the delivery worker? Is it the guy on the scooter? The app developer in the office? The marketing guy brought your attention to the take-away place and caused you to make the order?
Since all these services are operating at the loss, the "delivery worker" might actually get more than the full fee.
Since all these services are operating at the loss, the "delivery worker" might actually get more than the full fee.
I think 'delivery worker' is a clear term that identifies the worker that brings the food to someone's door. It's certainly the term that identifies, of all the people on your list, the one in the most fragile position.
But in any case, my point is that the cap is not on how much that person can make, but on how much these companies can charge.
But in any case, my point is that the cap is not on how much that person can make, but on how much these companies can charge.
The problem with showing a $10 delivery fee on top is that it drops conversion rates by a lot.
But by increasing the prices of each menu item by 20% (to cover the app's cut) and having a palatable $3.99 delivery fee (so the total cost to the customer is the same), you can increase sales.
Amazon and other online retailers figured this out a long time ago. Moving some of the shipping fees into the price of the product can boost sales.
But by increasing the prices of each menu item by 20% (to cover the app's cut) and having a palatable $3.99 delivery fee (so the total cost to the customer is the same), you can increase sales.
Amazon and other online retailers figured this out a long time ago. Moving some of the shipping fees into the price of the product can boost sales.
Price controls create shortages. They always have and always will. You can't just create by fiat the economic outcomes that you'd prefer. You have to create the conditions under which those outcomes become natural. If you want to limit monopoly pricing of food delivery services, limit monopolistic behavior by breaking up large players. Don't allow one company to dominate an industry and then arbitrarily cap its revenue to some number that feels good.
For those who want to help, I built a chrome extension similar to Honey that shows a local restaurant's direct ordering website as you're about to order from that restaurant thru a third party service. If direct ordering isn't available, it will also show you if that same order is cheaper elsewhere. If you have a favorite local restaurant that accepts direct orders, please help us add them to our system by filling in this form: https://platerapp.app.link/JACVBOFUY7
For those interested in checking out the extension, it can be downloaded here: https://platerapp.app.link/tDSD3mUTY7 (it doesn't collect browsing history or sell personal info or anything of the sort)