One cost advantage to delivery is that you can prepare the food in conditions so horrifying that nobody would eat it if they saw it in person. Some of the Deliveroo-exclusive restaurants in London are like this, inside shipping containers.
Such as using Gutter Oil (not limited to delivery), a practice where cooking oil is retrieved/derived from random unsafe sources such as sewers, a practice thought to be common in parts of China:
'Common' in 'parts' is weasel-wordy with a tinge of orientalism.
Whether gutter oil exists in any capacity whatsoever, it'd be merely a brief encounter with rural Chinese principles and the commercialism of the developed world; therefore it won't stick around for long as China becomes more developed.
If I could edit my comment I would replace "common in parts" with "found in some areas". I used the phrase "common in parts" because it has been found in multiple cities[1] (in fairness, early 2010s), however I logically believed that it would be unlikely for this to be in every region of China, as it is a vast country with various cultures and levels of development. Some sources I've found claim it is a more common practice than others.
Slightly related, but a downtown restaurant can't have it's kitchen in the outskirts.
But the opposite can be true.
There was an article posted on HN in the last six months or so about "virtual restaurants" where established restaurants drive a van or drop a shipping container into a parking lot after hours and set up shop exclusively for delivery purposes in urban areas. The restaurants that actually bother to be part of the neighborhood were pissed about it.
> Slightly related, but a downtown restaurant can't have it's kitchen in the outskirts.
That seems intuitively obviously true...but it's not, entirely; food needs to be finished on site, of course, but central kitchens for restaurant chains (or groups, where the individual restaurants are branded differently) are a common thing, and very often are located in lower rent outskirts than where many of the supported restaurants are.
If your dinner comes out of the kitchen faster than you think it should, there's a chance it, or is ingredients, were bulk cooked in a central kitchen somewhere else during lunch, then shipped to the restaurant and just assembled or spruced up before being presented to you.
Another sign of this is if the building doesn't seem to have enough space for a kitchen of a size needed to serve the number of seats in the dining room.
One of the great things about working at Google is the availability of reasonably tasty, healthful food, with minimal effort. Not having to plan for food helps free up mental energy for other things.
Now, don't me wrong, I'm an excellent cook, and we cook dinner at home most nights of the week. But if there were a food delivery service (via drone, robo-van, whatever) which could delivery me reasonably tasty, healthful cafeteria-style food at a price cheaper than I can make myself (since they can prepare in bulk), I'd be tempted to subscribe.
> so horrifying that nobody would eat it if they saw it in person
Is that because of food safety or the way employees are treated? I can't imagine its that different than how supermarket ingredients are prepared - most people wouldn't like the insides of a chicken slaughterhouse, commercial fishing boat etc either.
The reason this would work in Beijing or for that matter anywhere in Asia is how the delivery itself works. The delivery guys use scooters or motorcycles in a densely populated area which reduces the cost of delivery. Food delivery startups are not able to scale up in markets like US where delivery guys are expected to use their own cars, pay for gas and high insurance while delivering you $10 dollar food. How are these companies supposed to make profits?
> Food delivery startups are not able to scale up in markets like US where delivery guys are expected to use their own cars, pay for gas and high insurance while delivering you $10 dollar food. How are these companies supposed to make profits?
I'm not sure how you figure that is the case. Pizza delivery has been a thriving business almost everywhere in the US for decades. Domino's is a booming $10 billion pizza chain built on delivery (sales up over 50% in three years, for a 60 year old business).
You'll find that most every college town even has numerous food delivery options (restaurants & shops that deliver) and that that has been the case for decades.
I was going to disagree but apparently that's about right. (Not the same as margins of the overall business but materials are fairly cheap.)
Pizza probably has the benefit of being a food that's not all that easy to prepare at home both because of dough and oven. There are alternative options like the flatbread crusts you can buy but, for the most part, it's a meal that people tend to gravitate to ordering.
I remember one Pizza place putting up a sign several years back that they had to raise the price of their Pizzas by $2 because wheat had gotten expensive. They even posted the article from the newspaper next to it talking about the spike in wheat prices. The last line of the article stated that the jump in price for wheat was expected to add around 4 cents to the cost of a large Pizza.
It takes 15min to prep the dough. Depending on your climate leave it in the fridge or a cool oven to prove. There is a lot of leeway if you’re only after a tasty pizza. So you can prep dough the night before.
Finishing off and cooking is another 15min and you could do multiple pizzas so this scales well.
I make them all the time because I can split the work into 2 short sessions. And if you like simple pizzas, they are super cheap to make and easy to portion control.
I could probably get better at it if I did it more often but I've pretty much moved to baking store-bought flatbread in a 500 degree oven which works fine for those times I actually want to make a pizza at home (which isn't all that often).
Jimmy John's makes delivery work (entirely without pizza) as one prominent example, with 2,800 locations. It has been one of the keys to their success.
Isn't limiting zone delivery standard - where I live every chain has a zone - usually 10-15 mins away fron the place. And there aee whole parts of the city they don't deliver.
Probably need drone delivery for it to work in the US. So we might have to wait for a world where houses come with drone dumbwaiters disguised as chimneys.
"I think the Dugarts ordered something wrong. Or a lot of things"
That's the only explanation that Mom could come up with. The drones had been buzzing overhead all day long. Dad was getting really annoyed when they kept coming at night. Like clockwork, every two minutes, for nine hours and counting.
One would come, drop off the medium sized box on the little 'Apiary TM', fly away, and hit the powerlines.
ZAAAAP.
The lights in the house would flicker, but nothing much past that. The drones, about a meter wide, with eight propellers and those little sick legs, started piling up in the Dugart's and Garcia's back yards. There were hundreds piled up now.
The cops came, and the firefighters too. Eventually PG&E guys came out to shut down the power, but they found that the line was the only one that was providing electricity to the Firehouse. So, to power was kept on. For safety reasons.
ZAAAAP.
Another one dropped the package, flew up, and promptly killed itself. Mrs. Dugart wouldn't tell Mom what was in the boxes. Her face got real red when I asked her. Must be something embarrassing.
Mom said that they tried calling it in, but the hotline directed them to an email to send. So, the cops sent an email. The reply email said it may take two weeks for a response. So the cops drove off. Then the firetrucks left.
ZAAAAP.
When Mrs. Dugart was tols to take her "Rookery TM" down, she thought it was a good idea. Then one of the drones tried to deliver the package to our house. Mrs. Dugart got really embarrassed then. So she put the little platform back up, this time with a tilt so that the packages would just slide off once delivered. She ran around trying to pick them all up just as soon as they landed, dodging the falling drones in her backyard.
I don't really know overall, but at least where I live there seems to be cons.
1. At street level it's easy for people outside the house to grab things from it (without having a theft drone, ha ha).
2. In my neighborhood houses often have porch coverings or are too close together for there to be good drone landing places at windows.
3. There are no people to accidentally run into on roofs (usually).
Of course in an apartment complexes and such not everyone has a roof, and people can't just grab stuff outside of the ground floor so a window ledge would make sense.
population density, speeds (in suburbs near the big metro areas, you are still going to be at a much higher speed) which mean not so safe riding speeds, weather (main reason why car is needed for delivery), lack of low cost 2-wheelers are the supporting infra (for maintenance or sales).
I think e-bikes + delivery can make a dent, but only in the super dense cities where ebikes/escooters are popular/available.
Population density and delivery demand. But you probably need deliveries/hour/employee higher than is sustainable to make pricing palatable with "free shipping syndrome" and all.
Just an anecdote on the price and quality of delivery in China -- I've lived in China for a total of 1.5 years on and off. I've yet, to date, cook a meal myself. 饿了么 and 美团 are so convenient that you can order just about any meal and have it delivered in 20 minutes. Unlike the massive fees and wait time in the US, you'll normally get the meal still hot for less than 5RMB (less than 1USD) for the delivery.
- People prefer to stay indoors. Air pollution that reduces your lifespan exists in cities like Beijing and Hebei - even Shanghai (certain months during winter time). Extreme heatwaves during summer time that has the city cooking in 40-50C....it gets so hot that people sleep outdoors on sidewalks! (Shanghai will supposedly be unlivable in 30 years due to extreme heatwaves)
- cheap(-ish) labor, although now labor costs matches that of Mexico
- shitty food sanitary conditions, now with no storefront. Have fun figure out whether your cheap delivered food was cooked with gutter oil or not.
- questionable food ingredient quality. tons of fake stuff abounds.
it gets so hot that people sleep outdoors on sidewalks
Off topic, but I find it funny how society has changed so much in so little time.
When I was growing up in New York, if it was hot, many people in the neighborhood would sleep outside — especially people in apartment buildings. You'd see dozens of them snoring away on fire escapes.
Now those same families probably can't imagine living without air conditioning, even though the city is so much safer today.
The norming of AC in so many places has been quite the shift. I live in an old house in Central-ish fairly rural Massachusetts and I sometimes get funny looks from people when I tell them I don't have AC. (I do have a small window unit I use for sleeping for a week or two in a typical summer when it gets uncomfortably hot to sleep.)
When I was an undergrad and spent a couple summers in the city in the Boston area, no AC at all.
I got many funny looks from hotel staff on a recent trip for asking how to switch off air conditioning, or asking them not to turn it on when they showed me to my room. Apparently most tourists prefer to sit in a fridge.
If I've been walking round outside at 32–35°C, there's no way I want to be in a room at 16–18°, let alone sleep in one. I usually set it to 28° and slept without any bedclothes.
I'm very much in the same boat as you. It's a pet peeve of mine that every building now seems to have a completely different climate to the outside world. I'll never get how people don't understand - or don't want to go through - the process of acclimatisation. If it's 30C outside, having the AC on at 20C all day is of course going to make 30C seem unbearably hot!
As a student I lived in the North of England in Newcastle, where temperatures averaged around 0C in the winter and because we couldn't afford heating the house was often around -2C. I would still walk around in t-shirt and shorts without problem. I later moved in with a group of girls who had the heating knocked up to 25C all year round, and within a week stepping out of the door felt like jumping into an ice bath. Rapid temperature change mess up so many of our bodily processes that I'm amazed it's discussed so little. If I don't sleep with a window wide open I know I'll struggle to get even a single cycle of REM sleep, and almost all of the people I've convinced to try sleeping with a window open and the heating off have told me their sleep improved ten-fold after a couple of weeks.
I second this. I lived for a semester in shanghai and one of my Chinese friends owned a small restaurant (not a proper fancy one, but also no fast food, idk how to call it) in the shopping mall on the peoples square.
Besides the occasional customer, almost everyone ordered by app, resulting in a constant flow of delivery scooter drivers coming and going. She told me that restaurant owners lower prices on the app because app orders are more convenient to them.
This is all made possible by the low wage costs of those delivery drivers, which, as a side effect, also 'pollute' scooter lanes in shanghai (something locals complain about).
I hope this will be more widespread globally in the future, and then probably done by delivery robots
Meituan's head, Wang Xing, "calls Facebook Inc. a copycat for imitating other online services." But then the article goes through his past work:
1. "...in 2003, he dropped out, inspired by Friendster, a Facebook precursor, to create a social network for China."
2. "Their 2007 effort, a popular Twitter look-alike called Fanfou..."
3. "In 2010 he created Meituan in the mold of Groupon..."
4. "...he plans to introduce an Amazon Prime-like subscription service."
I myself don't care if you copy an idea. In fact it seems unavoidable, because "there is nothing new under the sun," "everything is a remix," and "ideas are just multipliers." What differentiates your business is your execution. Apple did not come up with new ideas. They took old ideas and did them really, really, really well. They didn't invent the graphical user interface. The iPod was not the first MP3 player. The iPhone was not the first smartphone. The iPad was not the first tablet computer.
How does this work? If the food costs 80% less on the app than at the register, either the restaurant is losing the lion share of its massive margins (unrealistic) or they’re just subsidizing it with investor money. But that would seem to be impossibly high subsidizing. Is it simply that in China you can quadruple down on Amazons strategy of promising profitability later? The article doesn’t explain this well and even goes to say that this guy is the conservative spender with founding money. If it is the latter... this feels like a terrible strategy.
The places that sell food on there have optimized to keep costs down ==> no physical locations except for a kitchen, no waiters, etc. They're literal food factories that optimize for food delivery capacity and probably only buy a few main ingredients in bulk and shorten down their menu selection to minimize costs even further.
They are only restaurants in name. Also I've noticed that these kind of "restaurants" are also appearing in Western food delivery apps too where the price + delivery is actually cheaper than buying from a physical restaurant, I once experienced this buying shawarmas on a food delivery app.
My favorite Onion article of all time is "Taco Bell's Five Ingredients Combined in Totally New Way". It's from 1998, as true today as it was then, and short enough I will quote it in its entirety:
> With great fanfare Monday, Taco Bell unveiled the Grandito, an exciting new permutation of refried beans, ground beef, cheddar cheese, lettuce, and a corn tortilla. "You've never tasted Taco Bell's five ingredients combined quite like this," Taco Bell CEO Walter Berenyi said. "The revolutionary new Grandito, with its ground beef on top of the cheese but under the beans, is configured unlike anything you've ever eaten here at Taco Bell." The fast-food chain made waves earlier this year with its introduction of the Zestito, in which the beans are on top of the lettuce, and the Mexiwrap, in which the tortilla is slightly more oblong.
This is commonly done in most industrial food service verticals. It will be called product innovation, reformulation or some other R&D adjacent term. Large food companies have the equivalent of a commodities trading desk built-in.
The trigger to act commonly occurs when a key ingredient is hit with a supply related crunch. Avian flu just tripled the price of powdered egg whites? Guess we're using another binder for our ToasterOvenPastryTart. Another popular alternative is to stealthily decrease portion sizes.
I really don't get the whole negativity about "dark kitchens". There is nothing wrong in theory with a delivery-only restaurant, and there are clear cost savings that can be passed on to the consumer.
Articles such as the ones you cited talk about the stifling "windowless boxes" but restaurant kitchens have never been windowed comfortable places. At least in the UK these kitchens are subject to the same hygiene and labour laws as any other place where food is prepared. They seem to want to imply that "dark kitchens" flout these laws but I've yet to see any evidence.
In third countries with lax food safety regulation i feel they matter. When there are more layers of separation between you and your end customer i think its human nature that you will be little less vigiliant / anxious about seeing a cockroach or rat in your kitchen. At some point it isalmost anonymous like an internet crime.
dumb article, no pictures of the kitchens. Who tf cares if their food was made in a container vs. the back of a restaurant as long as it's sanitary? Guess where the meat in your supermarket comes from or the processed food you eat? Not a particularly appetizing, homey environment there either
That article doesn't make any claims about the quality or the labor except to quote a chef saying that "conditions in a container kitchen are probably better than in many traditional restaurant kitchens."
This doesn’t answer the question because it’s relative to the price of buying at the restaurant. Who is losing the 80% of normal cost? Is it the restaurant or the delivery company?
> If the food costs 80% less on the app than at the register, either the restaurant is losing the lion share of its massive margins (unrealistic) or they’re just subsidizing it with investor money.
Or the materials cost is low, the unit labor cost of prep is low, but the unit labor cost of handling in house transactions and service is high, and in-house service and takeout are charged similar prices because having separate prices posted in the restaurant depresses in-house service volume and takeout unit profit without improving takeout volume to match.
(I suspect it's a little of this plus some investor business-building subsidy.)
I wonder if these are everyday prices or promotional ones. You could conceivably discount food items for someone's first few orders in order to acquire users (rather than offering a discount, free delivery, etc.).
At the end of the day, though, many of those users will churn. I'm happy to pay when VCs subsidize my orders...sounds like a cooked meal + delivery costs less than what the restaurant is paying in food costs. The unit economics of that model are not sustainable.
If you have restaurant or takeout place you need to pay for pest control, cleaning. You have to be in accessible part of the town. With delivery you don't need those.
80% less, I don't believe that. 1) apps will have promotions, vouchers can be used for discounts, from app, not restaurants; 2) delivery doesn't occupy tables in your restaurant, it is the 'extra' money you can make; 3) sometimes restaurant will sell for a small loss or no profit to promote their names.
Cooking for yourself is an underrated skill. Many young people can't cook an ordinary meal. Just think of how many dust bunnies and ass hairs are in the average take-out.
With good planning and recipe selection this doesn't have to be true. Soups, stews, pasta, beans, chili etc. can all be cooked in bulk and frozen with no waste. They can incorporate leftover ingredients from other cooking and can be quite cheap.
I think the point is that if you the median American and you value your non-working time at your hourly wage of $27/hr then you're better off not spending, say 4hr a week, cooking/meal-prepping since you can get a months worth of food for way less than $432.
You should really only cook your own meals if:
* You enjoy it.
* You value/need your money more than your time.
* It's difficult to meet your dietary goals with purchased food.
My costs are less than 200 a month cooking for myself and family (buy in bulk friends), also I spend time with my family, listen to podcasts and clean while cooking, so directly assigning my wage to the cost per hour of cooking does not tell the whole story.
Another factor is health. Maybe in a large city is there is healthy, cost effective take-out but where I live the options are pizza and Chinese food after 8pm.
Is it really true that you can have all your food cooked for you and delivered to you at less than $432/mo in the US? I haven't lived there for a long time but that's only $14.40 per day which sounds like a pretty restrictive budget.
Note that families also benefit from economies of scale when cooking (buy ingredients in bulk and assign the work to the lowest income earner).
> Alibaba is betting it can undercut Meituan to death. Both companies are spending billions in an escalating war of subsidies that might persuade even Jeff Bezos to cut his losses.
To me, that's the major reason. Meituan is loosing HUGE each month due to subsidies. Don't forget the food delivery giants in Chinese markets with highly concentrated population with billions of subsidies. It only works in selective Chinese Megacities with very cheap human labor and relative cheap and convenient of electric vehicles. It won't work in anywhere else in the world (probably not even in India).
It is the case in India too with a bunch of food-delivery startups that have mushroomed in the last few years. Lot of discounts, cash-backs and what not. This will not last long but a great time for consumers, for now.
A friend of mine in Indonesia started something similar. They had 3 people. Their food delivery business basically existed on instagram. Their menu and everything was on there, they took orders over the phone or through instagram, they cooked everything up at home and delivered it themselves by motorcycle. Apparently they were making decent money, but because of local customs regarding women working and such, were not able to continue.
I'm guessing there were no such things. I asked about rules, my friend was just kind of confused why there would be rules like that. Apparently it was fairly common to sell food grown and cooked in your home to people, At least the town my friend lived in. There was another group of their friends they competed with that ran a similar business, apparently my friend's chicken was better though, at least she said so. Their food always looked delicious. She'd send pictures. It looked better than most takeout or delivery available to me.
While you can sell food cooked from your own kitchen, but you can't just do whatever you want, you will for example get in trouble if you sell something that make people sick.
Food is cheap in China to begin with. The place in an underground garage nearby sells CNY 18 meals - a bow of rice + some stew. Downside? Completely full during lunch hours.
In a company I worked before, before the food delivery craze, we were regularly ordering fancy restaurant quality catering into office for like CNY 200 for 20 people. And that in Shanghai.
Nowadays, everybody just orders whatever they want themselves.
Same thing is happening in India. But I have noticed that sometimes you will get cheaper food by calling the food joints.
One side affect of this whole food delivery is that we are eating more from restaurants compared to before when we used to go and eat maybe once in 15 days.
Add to it there are always deals going on from the delivery companies.
Well, Meituan is still losing money according to this article. I am guessing they're still branding and building loyalty before they defer to increasing their costs and generating money through other ventures?
For some reason these retro vaporware (aesthetic, not software) graphics are something Bloomberg thinks are good but are almost always just little vanity projects that provide no value and end up being distracting.
I really don't know who thought it was a good idea but I'm sure it's fun work for the artists.
> A deliveryman who would give only his surname, Yang, says he generally makes $15 to $30 a day, and as little as 75¢ for a short trip.
Honestly this makes me skeptical of an AI delivery person unless it starts in high cost of labor countries like the USA. It would be silly to try to beat the low human labor costs of China or Southeast Asia.
I wonder if this will be some small type of advantage for Western companies going forward.
Surely an AI delivery will eventually win in all markets, but who's going to risk trying to build it when the max theoretical benefit is a few dollars per day per worker replaced? In the US the benefit might be 20x that much [1], making the risk worth investing in.
[1] assuming a hypothetical hyper efficient drone deliverer costs $15 / day and a SE Asian delivery worker costs $20 / day, that's $5 / day potential. An American delivery worker that costs $100 / day leaves $85 / day potential, or almost 20x as much.
Yes. More specifically, the Communist Party of China is very proud of its ideological roots going back to Marx, Lenin and Mao. They call their economic system socialism with chinese characteristics. But they don't see the current stage to be the full realization of socialism, but as being in the beginning stage of building socialism.
That's like asking whether the USA considers itself capitalist, when it has all sorts of socialized things, like police, fire dept, sewage, roads, etc.
