
The foodoo economics of meal delivery - sien
https://www.economist.com/business/2019/08/03/the-foodoo-economics-of-meal-delivery
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contingencies
The _Financial Times_ also did a feature this weekend, see
[https://www.ft.com/content/af232e7a-b516-11e9-8cb2-799a3a8cf...](https://www.ft.com/content/af232e7a-b516-11e9-8cb2-799a3a8cf37b)
.. international print version was different. Both _Economist_ and _FT_
probably prompted by market research announcement.

Here in China, consolidation continues but there remain quite a number of
smaller players. It's a brutal space, very high capex, very low USP, thin
margins, no return unless you scale. Basically the main players exist through
VC and eyeball trading. You have to wonder what security they have against eg.
Tencent/WeChat just sidestepping them. Especially as there is a lot of history
of nasty backstabbing marketplace-takes-your-model in China, eg. we saw Qunar
do this to hotel reservation networks (I used to run one). One area of
resistance to commodified last mile delivery seems to be large chains, like
KFC/McDonalds, who offer their own delivery drivers in a bid to retain
control, customer ownership and margins. A major play right now for delivery
operators seems to be ghost kitchen establishment and operator partnerships.

We anticipate entering the Chinese consumer food retail market within the next
two quarters with closer-to-consumer, robot-produced, personalized cuisine
cooked to order in an autonomous kiosk format (wholly owned and operated).

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RandallBrown
KFC uses Grubhub for delivery, unless something has very recently changed.

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seanhandley
Not just GrubHub. They partner with Just Eat.

I'm an employee at stuart.com and we handle a lot of their deliveries.

~~~
RandallBrown
I should have clarified that in the US they use Grubhub.

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neonate
[https://outline.com/Ucz9Tm](https://outline.com/Ucz9Tm)

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quickthrower2
Shame. The article seems a bit weak - nothing on the actual costs and margins
involved.

Homejoy is the poster child of why these "middle man for the gig-working
class" type businesses are going to struggle (in general) with perhaps the
occasional winner takes all. If borrowing money becomes more expensive most of
these kind of businesses will die as funding dries up.

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lacker
“Struggle in general with an occasional winner takes all” sounds bad.

But think about a market like... search engines. They struggle in general;
almost all of them from the 90s died. There was just the occasional winner,
Google, that took it all.

If you think about it that way, a market that can support even a single
“winner taking all” is pretty promising and exciting.

~~~
9nGQluzmnq3M
The market and economics of search engines are wildly different from those of
food delivery.

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Rothnargoth
"The restaurants in particular are restive, not least because food is already
a low-margin business."

Coupled with the recent survey from US Foods that 28 percent of food couriers
admit to eating food from their deliveries(1) are some of the reasons for the
consolidation in the food delivery industry.

(1) [https://www.usfoods.com/our-services/business-
trends/2019-fo...](https://www.usfoods.com/our-services/business-
trends/2019-food-delivery-statistics.html)

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p1necone
Dear delivery drivers: have a chip - I don't mind.

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TylerE
I do.

Cars (or worse... bikes/mopeds) don't have hand wash sinks.

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anguswithgusto
IMO, this is a more sophisticated article on the unit economics of food
delivery. (However, it is a little older): The Food Delivery Death Star (2016)
[https://medium.com/@review/the-food-delivery-death-
star-85f9...](https://medium.com/@review/the-food-delivery-death-
star-85f9a121313)

~~~
cookie_monsta
Agreed, that is a better article, but even so - every time I read about this
space I get more confused. I get that very smart people are throwing large
sums of money at it, so there's obviously some logic that I'm not getting. For
example, the Medium piece says that Uber has a lucrative monopoly, but then
goes on to say that it loses 700M per quarter. How is that lucrative? And
self-driving cars are held up as the solution to thin margins but to me it
seems that the only saving grace for these companies is that they get drivers
to bring their own cars, do their own maintenance, pay their own insurance,
etc. Considering how expensive driverless cars will inevitably be when they
first appear and the sheer number that these companies will require to
actually replace their contractors/partners/whatever they call their drivers,
2030 seems a very optimistic target for profitability. But then I'm just some
schmuck - surely the VCs have all had those thoughts and are ploughing on
regardless because they know something else?

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ian0
An anecdote from Indonesia. One of the large on-demand companies moved into
food delivery a few years back. Originally, the only cost was the (subsidised)
price of transport borne by the consumer. There was no contract with
restaurants. A driver pulled up and ordered a takeaway just like a consumer
would.

However after awhile, most businesses began to see a good proportion of their
sales (& a lot of new customers) from these drivers. When the on-demand
company started contracting restaurants with a mandetory 20% markup to the
price of food, it was a no-brainer for the restaurants to go along with it. As
a result, this food delivery business now subsidises the core rideshare
business.

At the end of the day it's eyeballs that matter, to both the restaurant and
the on-demand company. And this is where the great divide between the super-
apps and the delivery startups come into play. Trying to compete with one of
these big apps is like trying to compete with Amazon with some niche e-comm
site. Its possible, its just very, very difficult. And of course doesn't have
anywhere near the same potential value.

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erulabs
One of the best lessons I’ve learned: a 1% chance of making 10B is worth 100M.
This took a disturbing amount of time for me to digest, but it’s absolute
truth. Food delivery has a very slim chance of working, but oh baby if it
works.

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Zenst
One of those rare times in which the title of the article sums up the article,
and in a way that is just brilliant.

~~~
jankyxenon
Especially if you're punjabi

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statguy
[https://www.google.com/amp/s/www.urbandictionary.com/define....](https://www.google.com/amp/s/www.urbandictionary.com/define.php%3fterm=Fuddu&amp=true)

