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Comment by albertgoeswoof | Hacker News Reader

Currently there is a £2.50 fee for deliveries in London with Deliveroo. Even with extreme optimization a Deliveroo rider can't possibly make more than 3-4 "proper" deliveries in an hour (food gets cold fast! And when it gets returned deliveroo & the restaurant suffers) so maybe they can generate around £10/hour in revenue for Deliveroo. Then you need to take out costs for the driver, development, marketing, integration withe restaurants, etc.

So where is Deliveroo's margin on that? There isn't one, and there's no way they can pay delivery drivers as actual employees (which the law will eventually catch up with by the way), even at minimum wage you'd need to cover £15+/hour to include holiday pay, sick pay, insurance and other standard benefits.

MAYBE, delivery drones / robots will arrive before the funding runs out, but I doubt it very much.

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I have no doubt Deliveroo gets a percentage cut on the cost of the food, too. That can really add up all by itself.

Deliveroo take 30% (or at least did when a restaurant I ran looked in to it) and you can't charge extra according to their terms

Similar food delivery services get around 8-12% of each order afaik.

Don’t they get a discount on the food? That’s how a lot of the other services make it...

Looks like from the comments below they can take out 30% of the cost of the food. Assuming average of £20/order, that's £6/order, which could work.

Still doesn't seem like a great deal for the consumer / restaurant. E.g. I'm paying £8.50 of a £22.50 order purely on delivery, and I don't even get table service...

At least where I live, typically the food that is served via deliveroo is not at all the same quantity or quality as what you get for the same price in the restaurant, so that further is unfair to the consumer.

Part of the idea is that you were already paying that £6, or more, in advertising costs the restaurant pays and that Deliveroo is more efficient at customer acquisition than the average restaurant is.

I think it's also about how you don't need the front of house elements for a delivery order. No need for extra real estate for tables, wait staff, etc. All you need is a kitchen, someone to cook the food and the ingredients.

That might be the theory. In practice, even if I click the "only on Deliveroo" option, I'm looking at a list of restaurants that spend a fortune on premises and their own marketing campaigns (including at chain level); they're selling on Deliveroo not because they don't already have high marketing and premises costs (to pass on) but because they're really not expecting enough takeaway orders to justify running their own delivery operation.

I think restaurants would be happy to pay 30% for new customer, but for subsequent orders, Deliveroo should take smaller cuts. I wonder if something like this part of agreement.

Exactly. It broadens your target market. Channel takes ~1/3rd in the software industry...

Delivery start-ups appear to be built to race to IPO, much like music start-ups. There is no intent to make profit.

Do people really return their food? I usually vote with my feet. I walked away from just eat precisely because this sort of experience.

For deliveroo I just call them and they resend the food and give a credit on your account.

Kind of ruins the moment though.

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