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Comment by philfrasty | Hacker News Reader

I want to better understand the value-proposition / niche of services like Deliveroo compared to classical online food-delivery companies.

If I wanted to order food online for the last 10 years I could simply order through various services that connected me to local restaurants.

- First question: why is there a niche for services like Deliveroo at all? If a local restaurant does not offer delivery there are hundreds of other restaurants that do. I am completely indifferent in choosing one.

- Second question: it seems the value of Deliveroo is in (?) building the infrastructure to deliver the food rather than restaurants themselves. This seems much easier to do for existing platforms that already have signed up all the local restaurants and build this on top to aggregate all restaurants.

What is the scenario here? $900 Mio. [1] in funding sure is a statement.

[1] https://www.crunchbase.com/organization/deliveroo

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In London, before Deliveroo, we had Just Eat and Hungryhouse (and we still do). I would say that the big difference between those two and Deliveroo for consumers is the selection of restaurants: the former offer a huge array of 'normal' takeaways - Indian, Chinese, Thai, pizza, that sort of thing. Deliveroo has fancy stuff - hipster burger places, my local high-end 'modern British' restaurant, the nice sandwich deli down the hill (who offer a roast beef sandwich with "incredibly slutty gravy mayo"). I remember when i realised that i could punch some buttons on my computer and get a fresh crèpe Suzette delivered (from Le Mercury in Islington, i think).

(That said, looking on Deliveroo now, i see a lot of the usual suspects (including such not-quite-so-high-end options as KFC and Papa John's), so perhaps the perception is greater than the reality.)

I think that market differentiation goes hand-in-hand with owning the delivery infrastructure, because those high-end restaurants don't have their own delivery infrastructure. Delivery isn't part of the business model of a high-end sit-down restaurant, or part of the core competency of the people running a hipster burger startup (cooking and managing the Instagram account at the same time is hard enough!). Pure information brokers like Just Eat can't get you food from those places, but logistics operators like Deliveroo can.

I suspect this is why the existing platforms didn't do this - they already have complicated businesses built around the information bit, and didn't want to take on the complexity of also running logistics.

As for why this is worth 900 megabucks, well, that's easy: interest rates are at record lows, and there are tax breaks on venture capital.

Delivery isn't part of the business model of a high-end sit-down restaurant, or part of the core competency of the people running a hipster burger startup (cooking and managing the Instagram account at the same time is hard enough!)

Haha, so true, even in Shenzhen! We have Baia Burger Concept, a local hipster burger chain with an instagram fetish... and instagram is banned in China!

> high-end restaurants don't have their own delivery infrastructure

The New York City analog is Caviar. High-end restaurants love them because they pay real chefs to help design the interior of their delivery trucks and train their delivery people. They also develop special packaging for every restaurants menu. For example, ramen comes with the broth separated from certain toppings separated from the food, the broth in a relatively thermally sealed container and the noodles allowed to sweat (to keep from getting soggy).

In London, before Deliveroo, we had Just Eat and Hungryhouse

You are forgetting Deliverance, which always had great food from actual restaurants. They were (are?) more corporate-focussed then consumer tho', e.g. people in the City working late would call for food on the company Deliverance account.

I've never come across them. There's also Seamless, which i think is also focused on corporate clients (i only found out about them at work!), but i don't know how recently they came to London.

To answer your first question: it's a better experience. Local restaurants have terrible websites with no photos and sketchy payment forms. Their delivery usually involves having cash for a tip. If there's a problem with your order, it's unlikely it'll be resolved.

With services like Deliveroo and others, your payment information is managed by a central third party, delivery quality is generally quite good, you get ETAs for your food, there's real customer support, the app/site is modern and easy to use with pictures and search, and you never need to keep cash on hand.

If every local restaurant had a system as effective as Domino's, I could see these services being in trouble. But that will almost certainly never be the case.

This is the real driver behind these sites. For a $6-7 delivery fee, they provide online ordering with an easy-to-read menu, a solid payment processor (I don't have to read my CC# off over a phone), and order-tracking that lets me schedule around the exact minute the food is going to arrive.

Most restaurants are largely unwilling or unable to provide a well-executed delivery service. I'm more than happy to pay an additional gratuity for the logistical system these delivery-services add.

This "Most restaurants are largely unwilling or unable to provide a well-executed delivery service. I'm more than happy to pay an additional gratuity for the logistical system these delivery-services add." is why there's still significant headroom in the space; to invest and drive more efficiencies. It's like my pals in the digital ad space who talk about 8% as the best conversion rate they can achieve.

You're definitely not alone in thinking that there's still a lot of headroom left. It seems like there is a new delivery platform popping up at least once a year, and they're all fairly similar iterations of each other.

In my view, the problem is that "local restaurants" have to pay very high rent if they want to be close enough to their customers to support delivery. It's the same problem if you want to be a janitor -- it costs too much to live near where you work. This in turn limits Deliveroo's business, if there are not enough restaurants within delivery distance of a potential customer base.

So perhaps the problem statement is that janitors are willing to commute long distances, but hot food isn't.

The niche here is that they get to bake the costs of things like rent and taxes out of the cost of goods sold.

I’m sure that these places get to skimp on safety regulations and other external scrutiny. If a kitchen only has a little space heater, there’s almost certainly a bunch of other shitty behavior that is probably illegal. If it’s mobile, I have no doubt that they “forget” to record revenue on the production side.

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