
Meals on food delivery apps can be 90% more than if bought from the restaurant - vo2maxer
https://www.nytimes.com/2020/02/26/technology/personaltech/ubereats-doordash-postmates-grubhub-review.html
======
SN76477
Food delivery in its current form will be short-lived.

It is a 4 party system where the company controlling the money is the only one
that wins.

Restaurants are asked to pay 30% of the ticket. The customer is asked to pay
more than expected for their meal, a delivery fee, and a tip. For the
customer, this can be nearly double for a simple $10 lunch.

The driver that has to deliver it gets stuck with fuel, automatic, and
typically much less than $15 an hour. All of this is happening while Doordash
has a 10billion dollar valuation.

~~~
vector_spaces
I do consulting work in the grocery business and serve as a point of contact
for software and tech purchasing for a handful of retailers and producers.

Uber Eats has been calling me every year to sell their platform to some of the
stores I work with.

Grocery _product_ margins are about 30 percent in the happy case (specialty
foods), usually much lower. Uber Eats wants 30 percent of the basket on each
sale they make.

The last salesperson who called, after I gave him that context, suggested this
would be a new revenue stream. I remarked that we would lose money on each
sale. He clarified that Uber Eats would only take 30 percent of what we sold
through their platform, not all of the sales made by the store (how generous
of them). I thanked him for clarifying and said I understood that.

He then suggested to me that customers who buy from us on Uber Eats might do
so only once, and make the rest of their purchases in store.

I asked him why they would do that, and he uncomfortably said a few words
about how Uber is working on something for grocery stores and said they would
try back later.

They have reached out to me about once a year since 2016, and pretty much
every conversation goes the same, and their pricing is the same.

It's ridiculous to me how they don't bother to understand the customers they
engage, and that they train their sales people to continue goad businesses
into working with them even after they've made clear they would lose money.
Either way, it's very clear to me that this model is indeed going to be short
lived. It depends primarily on weaknesses in labor laws and operators being
swayed by their bizarre sales pitches enough to act against their own bottom
line. In any case I certainly won't be sad to see it crash and burn

~~~
AgloeDreams
What is bizzare about all of this is that I honestly do think that when Amazon
figures Drone Delivery all out they will basically eat everyone alive in the
food delivery business. They totally will automate the storage and picking
systems, do it in warehouses (that also do normal delivery and act as Go/
Whole Foods distribution networks) and the Drone systems will be AI piloted
possibly with human oversight. (one human, 10 drones, they may also use fleets
to ease air clearance)

Once they solve all of this you chop distribution to the store, shelf
stocking, checkout staffing, picker payment, driver payment, property and
lease fees, the margin will be higher, the experience faster, the costs lower.

I bet Amazon will mass produce the drones at a rather low cost over time,
maybe produce UWB tracking devices (like Apple's Tags will use) so you can be
hand delivered products without the landing pad they currently use. It's a
real infinite game and that's okay if it all takes 10+ years.

I'm not saying this is a good thing for mankind, but might be a reality.

~~~
untog
> when Amazon figures Drone Delivery all out

This feels similar to “when self driving cars are figured out”, i.e. a much
bigger ask than it would first appear.

~~~
Fire-Dragon-DoL
In italy we used to joke over how people will stsrt buying rifles to shoot
down drones and get the packages...

~~~
AgloeDreams
I mean you can do the same with a postal truck if you like too. It's going to
be pretty easy to prosecute when someone shoots a camera-covered, GPS and
cellular connected object.

------
cik
I find the niche answer to this fascinating. With kosher restaurants (captive
audience) in my city:

1\. They increase their prices on skipthedishes and friends, in order to
account for the price difference.

2\. They add a piece of paper to EVERY ORDER indicating that if you call or
text your food would be 30% cheaper, which includes a flat $3 delivery fee,
and no need to tip the driver.

3\. Many of them run targeted sub-brands on these platforms, under 'regular'
(re: non kosher) restaurants and do the exact same thing, thereby expanding
their reach.

~~~
danShumway
> They add a piece of paper to EVERY ORDER indicating that if you call or
> text...

That's really clever, given that many of these delivery apps work by inserting
themselves invisibly in front of the business.

Having a communication channel that you _know_ will reach the customer and
that you know the delivery app can't block is a way of getting around some of
the constant fight of "how do I make my real site show up above Grubhub's when
my name is Googled?"

~~~
chrisseaton
Businesses are deluding themselves here. People use the big apps because they
don't want to install a billion different special-case apps, set up their
payments, set up their address etc etc etc, or literally phoning the
restaurant (people don't want to speak on the phone anymore, they find it
awkward.)

Hotels try to berate you for booking through a third-party but I ain't got
time to go poking around on their individual websites.

Same with taxis - 'don't use Uber, just install this local app' \- nice idea,
but I really don't have time or space for a trillion local apps for the cities
I visit all working slightly differently and needing different accounts - I
try to keep it simple. I don't care if it's 5% better or 5% cheaper - it's
100% overhead compared to a single app and I don't want it.

~~~
danShumway
I would agree with you in theory, but the restaurants we're talking about just
take phone calls. Most local chains that are fighting with Grubhub (at least
in my area) aren't pushing their own custom apps. They just either have

A) an order form on a website, or

B) a phone number

I don't think it's unreasonable for them to say, "hey, we know you have a
working phone. Instead of launching the Grubhub app, send us a text message
and we'll knock X% off of your price."

~~~
chrisseaton
> hey, we know you have a working phone

Sounds like a rebuke. I'd be pretty offended if a business tried to call me
out like this for using an app that (presumably) they're willingly taking
orders from. If they don't want to be on there then don't, but don't have a go
at me about it.

~~~
danShumway
Part of the issue is that restaurants don't always sign up for Grubhub. When
you place an order with a food delivery service, there may not be a special
infrastructure or agreement set up -- the food delivery service may just call
the restaurant and pretend to be a customer[0]. People assume that there's a
strong relationship here, like selling a product in Walmart. Very often,
there's not.

I'm not in the food service industry, maybe it's just expected that you
monitor all of these things and manually request your restaurant to be removed
every time a new one launches. But it's not crazy to me that someone could get
fed up and say, "no, I don't need to pay attention to every VC backed startup
that scrapes my website and starts advertising with my menu on top of my own
business on Google. I just want to let customers know that a direct
relationship with me is cheaper than a relationship with a middleperson."

Is offering a discount to someone having a go at them? If I was ordering
through Grubhub, and I could save even just $5 by ordering directly, I'd want
to know the option existed. I might not take advantage of it if it was a tiny
amount of money. But I'd like to be informed; choices are nice.

[0]: [https://chicago.cbslocal.com/2020/01/13/park-ridge-
restauran...](https://chicago.cbslocal.com/2020/01/13/park-ridge-restaurant-
complains-that-grubhub-is-selling-its-food-for-delivery-without-permission/)

~~~
throwaway71719
How does the delivery service get the restaurant to foot its 30% of the bill
in that case? Do they call the order in as a regular customer and then show up
and identify as GrubHub, at that point the food has already been made and they
hold the order hostage? If so then that is beyond shady.

------
braythwayt
Anecdatum:

With skipthedishes in my town, all the big chains mark up their prices and
send smaller portions than you get in the restaurant itself.

Whereas, the smaller independents seem to charge the same amount, but they
blatantly try to get you to switch to ordering yourself by phone and picking
up yourself. They advertise deep discounts when you call them directly.

It seems obvious that the smaller places want to use meal delivery as a sales
tactic, but then convert as many customers as possible to a direct
relationship.

The big chains, on the other hand, seem to have their own major sources of
revenue and don’t appear to want any part of taking orders directly.

~~~
rs23296008n1
They're probably experimenting with their own apps as well as feeling out the
market in terms of costing. Plus its "a bandwagon to jump on". They might jump
off when they are ready however.

Another aspect is their scale. A small business can feel a delivery app taking
out a few dollars. A bigger one might be using it as a cost that might only
last a few years and seen as "research" to be recovered later.

Both can use these strategies however. The smaller businesses converting
people to call direct might end up with their own apps and deliveries etc. A
lot where I am are actively doing this. UberEats had them but I've noticed a
few are setting up their own deliveries now. Others are keeping their options
open.

------
AndrewDucker
Well, yes. If you get someone to individually drive something cheap to your
home then the cost of the delivery can be a large chunk of the final cost.

I don't know why people would be surprised by that.

~~~
eugeniub
Did you read the article? Much of the markup comes from restaurants charging
higher prices for the same items if they are delivered.

~~~
9nGQluzmnq3M
Yes, as the article explains, that's how restaurants compensate for the
delivery companies taking a fat cut of their revenue.

------
cltsang
I find it very interesting that, according to my own brief observation, almost
the opposite situation is happening in China.

In China the dominant food delivery platforms are ele.me and meituan. The food
offered there are not marked-up so ridiculously compared to dining in.

As far as I understand, this is because

1\. The demand is huge. People prefer food delivery, especially for lunch, to
save time to either play mobile games, or squeeze more hours for work. Another
reason is much more choices are available online than say within 10 minute
commute.

2\. Due to 1, food preparation is often moved to backstreet or upstairs where
rent is significantly lower.

3\. Due to 2, many sketchy food providers on the platforms are not actually
restaurants. So, they don't have to bare the cost of regulation compliance
like license or hygiene standards.

~~~
thaumasiotes
Labor costs are lower. Delivery is 100% labor costs.

(It's worth observing in passing, for those who don't know, that the URL
ele.me is the mandarin equivalent of "hungry.questionmark".)

------
atonse
And they don’t factor the harm caused to restaurant margins when these apps
take 30%.

But the convenience os hard to beat when you don’t want to take a long break.

~~~
mrgreenfur
In a effort to be nice to restaurants AND be lazy I have learned that seamless
/ grub hub do charge 30% but others do not: chow now charges a flat monthly
fee and a card processing fee, but no inflated per order charge. Not sure
about the others.

------
ipunchghosts
Who cares? Some people wish to pay for convenience. Let the market figure out
what that is worth.

~~~
Jommi
Well this convenience could be shown as a single fee, the delivery fee. Adding
to the price might seem non transparent and an example of clouding the
consumers judgement.

------
kentosi
"I focused my tests on DoorDash, Postmates, Grubhub and Uber Eats, the four
largest delivery apps in the United States."

I'm stumped. I live in NYC and all my friends use Seamless. I even have
colleagues that will describe these companies mentioned as a "Seamless clone".

~~~
phonon
Grubhub owns Seamless

------
lowercased
what I want is a simplish way to text a restaurant my main basic wants, have
them call me back via voice to confirm and make any adjustments, then I go
pick it up. or... maybe delivery (I don't live in an area where delivery is
huge but maybe that a gotta-have in some places).

I don't like calling because I'm always put on hold - call me back within 2-3
minutes, when you're actually calling me, vs me interrupting you. confirm the
basics of what I texted you, but if you have a special going, or i ordered a
'wrong' size, etc. fix it. confirm price. send back via text.

you can 'own' the relationship then, without a middleman. you can confirm via
voice, do your upsells, warn me of any delays, etc.

~~~
grayed-down
Absolutely agree!

I even do this with a local Chinese restaurant. We email them our order and
they'll call back if there's a question. They only called back once on a
pretty big order.

~~~
lowercased
FWIW, I text in an order to our local burger place now and then, as I'm a
regular, they know me, and I get the same thing every time. Normally it's
something like "regular - I'll be in in 15 min". If there's a problem, they
text back with "no" or "wait" or "30 min" or whatever...

"Food ordering" outside of "food delivery" should be a separate category.
"Food ordering" businesses, imo, likely have a wider audience.

------
hamilyon2
I don't really understand what this article is about. There is a market
opportunity. Companies see it and move into new market. More people's needs
are fulfilled than before.

Market economy works! Not news.

~~~
braythwayt
This is a site devoted to business as much as technology.

The details of HOW markets work are vital to understand for people doing
business in a market. For example, understanding how the revenue is
distributed amongst all the participants in a value chain is relevant and
highly interesting.

Thus, the article, the upvotes, and the discussion.

------
justanotherc
This is why I have never ordered UberEats. Plus cold McDonalds is gross. Its
not hard to order takeout and run down the road myself.

To be honest I don't really get why this whole trend is so popular.

~~~
jmpman
I use it on business trips if I’m not scheduled to go out with customers. Uber
back to the hotel, order some Grubhub and enjoy a quality meal without having
to go to a restaurant by myself. Much better quality/variety than room
service.

~~~
ghaff
I suppose it depends on the type of places you travel to. I haven't ordered
room service in decades but I'd much rather walk or take a short drive from
the hotel and get out than hang out in my room with semi-hot takeout.

------
pmoriarty
As pricey as they are, they'll likely be doing some brisk business soon as
more and more people stay home and order out in the wake of the COVID-19
outbreak.

------
ryanmercer
Pretty much. I'll be like oh nice that's 6$ and I'll add that for 3$ and great
"Your total: 74.95, would you like to tip 20%?"

------
grayed-down
I found this great food delivery app. It's you!

How it works is, you actually call and speak to someone at the restaurant you
want to order from. They take your order, and at a pre-arranged time, you get
into your car and go pick it up and bring the food to where you want to eat
it.

Warning: This app is not for everyone

------
alberto-m
(small typo in the post title: "90% more than" should be "90% more expensive
than")

------
Fnoord
Isn't it misleading to mention sales tax in the inclusion? You're always going
to pay for it anyway, right (I am not from USA)? Why not simply either avoid
mentioning it in the comparison, or add it everywhere (which is a long term
fix).

------
Fire-Dragon-DoL
Really? I tested this the other day and with the required tip, i ended up
paying basically the same. I was actually pretty annoyed by the fact (I have a
2 years old, so eating at the restaurant takes some parenting effort)

------
phillipseamore
Completely ignores cost of travel and value of time. Factor that in and the
additional cost is either comparable or less.

~~~
wil421
If you had to drive 30 mins round trip in the largest truck with the worst
MPGs, you still wouldn’t be anywhere close to 90% of the meal.

~~~
ses1984
Time is scarce.

~~~
chooseaname
Only when mismanaged.

------
theGreatgame
It would be great if Hacker news could add tags to these posts letting us know
when there is a paywall.

~~~
snarfy
" Are paywalls ok?

It's ok to post stories from sites with paywalls that have workarounds."

There is no workaround. HN hasn't honored their own policy in years. At this
point I can only assume there is a referral deal.

~~~
trevyn
Archive.is works: [http://archive.is/GbUIH](http://archive.is/GbUIH)

------
Izmaki
Dear NYT: if all I can see when I visit your article is your advertisement and
a request to create an account to continue, I'm closing the tab again.

~~~
cmauniada
Try this if you are using chrome:

[https://github.com/iamadamdev/bypass-paywalls-
chrome](https://github.com/iamadamdev/bypass-paywalls-chrome)

I think there is also a firefox addon by the same developer.

