Food Delivery App: nobody wins
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Bullshit.
As I said in another thread:
Everybody wants to be fair to the restaurants, but remember that Doordash and Grubhub were around and successful well before COVID-19. Many restaurants built their business models around this overhead successfully. The model was built for small square footage restaurants that were primarily used for carry-out with little or no dine-in options. Rather than have their overhead going into real estate, the overhead is going into delivery.
Now you have the large sit-down restaurants having to go this route. These restaurants have enormous overhead in table-space. That's the majority of their costs of doing business. When you pick-up your food at these restaurants, 40% of the revenue is going to pay for empty air right now. It's their business model and it doesn't work in the new reality. So these restaurants are being hurt because they have double the overhead, between having to pay for the empty and useless space and having to pay the DoorDash fees as well. That is not the fault of DoorDash.
Their model is built around delivering $12 worth of burritos from Chipotle, not $75 worth of Chicken Piccata from that quaint Italian Place down in Old Town... Doordash's Chipotle and Five Guys business model tries to go the route of picking up 4-5 orders then delivering. The customers buying the two burritos are understanding of that. The expensive sit-down restaurants need you the drivers to pick the food up as soon as the food is available and deliver it straight to the customer as fresh as possible. That $75 customer has higher expectations. The problem for the Doordash driver is that the number of deliveries he can make is reduced, limiting his tip potential. So they need the 40% from the sit-down restaurants as much or moreso than they do from the Chipotles of the world.
By limiting the amount these services can charge, you will see them have to make cuts in service hurting both types of restaurants.
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You have the same overhead ordering from grubhub or the restaurant itself. The difference is that the overhead from the delivery service is paying a living and breathing human being to make a living. The overhead you pay to the sit-down restaurant goes to pay for empty air in a restaurant that pays most employees half of minimum wage.
You aren’t saving the sit down restaurant. Without a severe change in business models, they are mostly going to go under anyway.
This guy is bitching aboutGrubhub? Don’t use them. Build your own competitive delivery service and app... Otherwise, don’t agree to a service then use that service to badmouth them. I kind of hopeGrubhub sues the crap out of him.
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A 30% fee means $3 on a $10 Gyro order. The driver has to drive to the restaurant, get the food, drive up to 10 miles to deliver said food, find parking (possibly pay for parking) and in cities, often have to take the food to the 17th floor. It could easily take him 30 minutes to deliver a $10 Gyro that he earns $3.00 on (actually $2.50, the app developer has employees to pay to keep his business, too).
Don’t penalize Grubhub for the poor business choices of these other restaurants.
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@LuFins-Dad said in Food Delivery App: nobody wins:
A 30% fee means $3 on a $10 Gyro order. The driver has to drive to the restaurant, get the food, drive up to 10 miles to deliver said food, find parking (possibly pay for parking) and in cities, often have to take the food to the 17th floor. It could easily take him 30 minutes to deliver a $10 Gyro that he earns $3.00 on (actually $2.50, the app developer has employees to pay to keep his business, too).
Don’t penalize Grubhub for the poor business choices of these other restaurants.
That’s a lot of labor for someone. Custom, hot and narrow delivery wind. Doesn’t sound like a scalable business. Imagine giving an investor pitch.
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@Mik said in Food Delivery App: nobody wins:
I've not used them since the lockdown started, but then we have eaten very, very little restaurant food. I have no issue with paying about 10% for the delivery, plus tip. How the restaurant and DoorDash hash out their arrangement is not my concern.
And that model worked great at high volume. What people fail to realize is that restaurants can’t cut enough costs to earn the same margin on each order and therefore can no longer subsidize the true delivery costs.
You didn’t hear restaurants bitching before coronavirus. I don’t blame them but at the end of the day each order costs a lot more when the fixed costs are spread over fewer orders.
A little ECON 101 would help a lot of people understand why the lockdown is about to take a lot of companies down soon. The naïveté of thinking Congress can print enough money to save everyone is, well, breathtaking.
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Some have raised their prices to cover the overhead, even as much as 50%. I have no issue with that either. They have to have a business model that works. Ultimately it comes down to each business owner finding the model that gets them through. There isn't anything we can do.
"My pronouns are FA/FO." - Mik, 2024
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@Mik said in Food Delivery App: nobody wins:
Some have raised their prices to cover the overhead, even as much as 50%. I have no issue with that either. They have to have a business model that works. Ultimately it comes down to each business owner finding the model that gets them through. There isn't anything we can do.
Here's the thing, Restaurants have always been a high-risk low reward business. Even in the best of times, many restaurants fail. Recently, many of these places have relied on volume. Those days are gone. So the restaurants are going to have to adjust or die. I personally have little interest in writing laws and civil codes to protect an industry instead of letting the market do it's job and force the necessary corrections.
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The Economist had a good take on delivery economics last year
https://www.economist.com/business/2019/08/01/the-foodoo-economics-of-meal-delivery
TLDR - they’re abysmal. Lots of folks chasing the same pie. The name of the game is all VC cash right now. But the end game requires pricing power and jacking up the price.
Restaurant prices are pretty inelastic - current situation non-withstanding.
Even when on an expense account - I would hesitate sometimes when a burrito with guac and tip rang up $30.
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Xenon - I’ve seen that movie before.
https://www.tapatalk.com/groups/the_new_coffee_room/viewtopic.php?p=1026984#p1026984
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@jon-nyc Tell me about it. That was one of the things I consoled myself with when it came to cost-of-living back in SF.
Tons of products and services were subsidized by VCs.
In-restaurant dinner subscriptions, Downtown valet parking services, ride-share competitors, etc...
Keep an eye out for early stage companies getting early stage funding rounds. Profit off their inevitable Bag Area trials to build scale.
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This one was my favorite. Luxe parking. I had very variable parking demand because I didn’t have my own car.
https://www.google.com/amp/s/mobile.reuters.com/article/amp/idUSKCN1BN134
I think they got something like $60M before they figured out you can’t charge $50 bucks for something that normally goes for $500
