An owner of a local restaurant told me he pays about 30% revenue to share to Deliveroo, as part of his agreement with them. He also runs his own delivery service, and encourages customers to use that (phoning in) rather than Deliveroo.
> An owner of a local restaurant told me he pays about 30% revenue to share to Deliveroo, as part of his agreement with them.
If they've agreed to it, what's the problem?
The parent comment was complaining about Deliveroo setting up without an agreement. When they do that they have to mark up - they can't take a 30% cut of the restaurant's price as the restaurant charges Deliveroo full price.
They’re in a position where the options are pretty much “agree to this” or “go out of business”
(To which I guess the free-market response is “That’s not a problem - an independent restaurant SHOULD go out of business if they can’t compete with a website company when it comes to websites”?)
For example, I like grocery stores because they deal with farmers and food distribution and save me from driving out to source my own produce from growers.
Sometimes they... might not. It's all relative the cut they demand.
So here, are food delivery companies worth ~30% of cost?
Yes, all sort of anecdotes are possible to drum up in this situation. Long term, across the entire food industry, can a ~30% cost be absorbed? Somebody is paying that, you or the restaurant, because it sure as heck isn't the delivery company.
Will the service provided by delivery (and advertising/marketing) increase volume to offset ~30%?
I don't think so, which means that because of their oh-so-useful help, means prices go up. This is needed because either customers pay more, restaurants make less, or somehow the delivery/advertising/marketing company drives more volume so they can turn around and immediately take that as their cut.
If the customers don't like higher prices, they'll stop spending. If the restaurants don't make profit after this new expense, they'll shut down.
> Somebody is paying that [30%], you or the restaurant
The customer is. They are the only one bringing money into the system over the long-run. The customer is paying for the ingredients, the property tax, the delivery, the lights, everything. The restaurant just handles the money.
Right, so when a middleman comes along that apparently requires a 30% cut, either the customer pays it (prices go up). Or the restaurant absorbs the cost (possibly partially).
However I am under the impression that restaurants are NOT operating at a 30% profit margin, and cannot absorb this middleman cut entirely on their own.
It remains to be seen if sales volume goes up enough to offset this. Otherwise the middleman cut will be paid by the customer and thus prices go up.
FWIW, I don't think the middleman adds enough value to demand a 30% cut. So I personally opt out of that and order directly from a restaurant and also pick up in person.
>The restaurant just handles the money.
I thought they were providing the labor for the actual service/product the customer wants. Without that, there is no product for the middleman to attach to and deliver.
I can't edit and add to my comment... so new post.
Basically what I think we're dancing around, is that perhaps the current business of model of restaurants is busted and has to change, post covid. The old model is rent a large space for indoor dining, cook/serve the food, sell high margin alcoholic drinks ;), plan for a steady stream of events/holidays (valentine's day, mother's/father's day, etc), try to locate near other office workers for a steady lunch customer base, and so on.
Maybe that doesn't work as well post-covid due to work-from-home a large shift to ordering out. I mean rent alone has got to be eating restaurants alive, when they don't need as much space now.
As far as middlemen and delivery, restaurants themselves are middlemen if you look at meat/produce being the actual materials and me, the hungry customer, wanting the spend cash for a product - but now eating at home.
Perhaps the new restaurant future is the rent smaller work spaces, or team up with other restaurants and have a booth with shared/common space, and serve mostly with delivery in mind. There's a place like this in my local large city, with a dozen or so vendors that rotate a little bit, sharing a large common area. It was packed every time I went, in the before times... not sure how it is doing now (website says they are mostly doing delivery so I suppose it is still up and running).
In which case a restaurant factors in the delivery fee/cut as an expense. Basically juggle it so part of the fee comes from not having to pay as much rent, and perhaps this delivery need is part of the new business model. Folks can still come by in person to get out of the house and save a bit, but factor in the majority of customers will order delivery.
I don't actually work in this industry so I don't know what actual numbers look like, but I do listen to the Planet Money podcast and a recent episode was about a restaurant that had to close due to high rents! It ended with the former owners wanting to open a new restaurant, but only if they owned the building.
I think it’s just too hard to organize drivers and delivery. I’ve never experienced a restaurant where their own delivery drivers are as fast, efficient, smart as Uber/etc.
I’d rather just go pick it up myself than use restaurant delivery.
I’m sure there may be exceptions somewhere, but even in Manhattan the deliveries that work for the restaurant sucked.
I think it’s that there’s no simple feedback loop.
An example is my local mom and pop pizza place. They used to have a few teenagers who would wait tables and drive deliveries. They meant well and tried hard, but it would take a long time for delivery. I’m a 15 minute walk and it would take two hours for two pizzas. If something was off I could talk to the owner and that took a long time but it was never anything bad enough to fire the poor driver, nor should they be. So the poor delivery lingered on.
They switched to Uber and deliveries went to 15-45 minutes. Not perfect but much better. Also easier to enter the order on my phone than calling it in.
Any time the food is cold or off, it’s easy to rate and get fixed.
It’s like taxis vs Uber rides. Taxis did have some advantages, but it way better now. Generally Uber drivers make more than taxi drivers, but there were some owner operator taxis (super rare at least in NY where almost all cabs are owned by big firms) who are losing out.
Have you... actually ordered from a restaurant that's done self-delivery for more than 5 minutes?
I've never, not even once, seen the same driver from one of these services.
This is a huge problem, because every mapping service directs them to an automated exit-only gate that nobody anywhere has the power to open for them -- certainly not if they just sit there for 5 minutes helplessly then chuck it out the window and drive off.
On several occasions I did not even receive a call, text, or any other indication to expect to find my food a thousand yards away sitting in the rain in a parking lot.
They are delivery dilettantes, with no knowledge of their delivery area, no oversight, no guidance.
Most of them have no fixed delivery area, they just follow the next call until they end up two hours away in another county they didn't even realize existed within the borders of their fine state until that evening.
I have received orders so delayed there were legitimate food safety concerns -- upwards of 3 hours from the time of preparation.
3 of the 4 delivery services I have tried did not take responsibility for so much as a single one of these failures to deliver.
2 of them charge more than double menu price for most items on most menus because they added the full base price of an item to (the full base price of an item plus the full upgrade price of an item) in an intentional and deceptive manner.
I informed them of this repeatedly and went up a completely scripted escalation chain that very obviously started in another jurisdiction and very obviously said exactly what I was later informed after requesting a point of contact for service of process was absolutely not their policy (specifically: they have my money now so I can go and find something convenient with which to fuck myself)
I have to conclude that either you've been trying to order take out from the hardware store and been sorely disappointed that your pizza never arrived or must live in alternate reality filled with sunshine, rainbows and GrubHubs that aren't openly defrauding their delivery partners, customers, and shareholders
> Have you... actually ordered from a restaurant that's done self-delivery for more than 5 minutes?
Yes, of course. Aside from the example I gave where I used their self-delivery for 10 years before switching to this new gen.
And I suppose I’ve ordered from about 500 self-delivery restaurants, although I don’t keep a log.
It sounds like you’ve had some bad experiences and they aren’t like mine. I have had really bad experiences with doordash and grubhub where they wouldn’t fix problems, but Uber is about 75% responsive that is so much better than self-delivery.
From first principles it seems like self-delivery can’t compete unless they are really into delivery. Because they can’t scale well beyond their drivers on hand and it’s not possible for them to send out 10 orders at once, etc
I have used several delivery services, and my experience in two major metro areas has been that they are virtually indistinguishable from restaurants that have delivery people. The single biggest difference is that they tack on their own fee- a minor inconvenience since they take the orders online and so are less likely to get it wrong.
Why? Because I wanted the meal I paid for to be on time and hot? For the record, I tip extremely generously on the delivery apps as I recognise the importance the riders are doing during the pandemic.
I will never ever willingly tolerate that two hour delivery again. At any price or discount. It was a week night and we were starving by the time the food arrived and it screwed up our routine for the day.
I would pay a reasonable premium to have that meal delivered to me on time and hot.
So really, deliveroo/uber eats created entirely new business. A friend who runs a restaurant said he thought they were the devil and was never going to join them until the pandemic but he said he is now a believer. Adapt or die.
As for drivers earning a liveable wage, I am for that and maybe regulation is required, who knows but you bet your ass the more efficient business with huge economies of scale will have more power to pay their drivers properly than indie mum n dad restaurants.
> bet your ass the more efficient business with huge economies of scale will have more power to pay their drivers properly than indie mum n dad restaurants.
The only thing we've seen these "economies of scale" doing the last decade is the exact opposite, namely using all their muscles to pay workers as little as possible.
The broader picture is that all of the money to pay the driver comes from the customer. If the driver-restaurant system isn’t creating enough value for the customer to pay them a living wage, they won’t get it. Either they’ll get a lesser wage, the company will go out of business, or both.
That anecdote was immediately relatable to many of us who have gotten late, soggy, cold food delivery.
No. Your premise seem to be that this anecdote is correct and that that is the inevitable result of non gig-job delivery. I'm pretty sure that there's a lot of anecdotes out there with bad Uber Eats deliveries too.
I did (and do) not argue it’s inevitable, but it is quite common in my experience.
My solution to their failure is to go pick it up myself, including purchasing some of those red insulated delivery boxes for our family use. It makes takeout much more enjoyable when the timing is predictable and the food almost as high-quality as if served on-site.
As a customer, my concern is with a goods and services I’m buying. The restaurant’s relationship with its employees, food suppliers, and power company is their concern, not mine. If a restaurant wants to pay $100/hr or any other legal wage, that’s their business, not mine.
It’s inarguably self-centered but entirely practical. I can’t review the employee handbook, employee promoter score, supply chain sustainability reports, and corporate social responsibility policies of everyone I order so much as an $8 pizza from.
