The problem with third-party delivery platforms
lifehacker.com
lifehacker.com
As the article itself states, restaurants don't like using these services but support them regardless, because the alternative is no orders.
You get a confirmation of what you ordered and a receipt for your taxes, and you don't have to use a phone. You don't even need to speak the local language.
I phone the restaurant, then walk to their storefront, and hand them cash or card. I know what I want to eat, where I'm getting it from, when they're open, how long it'll take to prepare, how long it will take me to walk there, how much it will cost, and how much I will tip. If I need customization, then I use my words when I'm speaking to them on the phone.
For some restaurants, particularly food carts, no phoning ahead is necessary. Yesterday I walked to get Italian food, and the chef was able to prepare my order interleaved with other orders that were going out for delivery, with only a 5min wait.
For comparison, I've tried Grubhub, Eat24, and others. I stopped ordering from them because they mistreat their drivers, delivery times are horrible, the fees are unreasonable, they don't put in the effort to learn the layouts of the cities that they operate in, and I'm pretty sure that they take their drivers' tips. I'm not willing to be a part of that sort of system.
From the conversations I've had with chefs and restaurant owners, they do not even "support" the delivery services; they all feel strong-armed into being customers.
It is easier to call and place an order than most any app or website for follow-up orders at least.
This should be a standard feature of any restaurant ordering system.
> We didn’t have a choice, we caved. Revenue from these platforms made a difference for our business
Ok, I assume it's a positive difference...
> even more aware of the amount of money that we get withdrawn from our account just to have our name on their site.
Wait, so you're losing money? I don't get it.
I hardly ever use any of these apps because the mark-up is insane, and it's rarely quicker than just picking the food up myself. I also don't trust any of them after the doordash tipping fiasco. And, I have no doubt that choosing to order from the restaurant directly means more money for the restaurant.
But, either the apps are bringing in more sales than the restaurants can drum up on their own, and it's therefore mutually beneficial, OR the restaurants are losing money on every app sale, in which case they should pull out. Am I wrong?
while mutually benefitial, i can understand how a restaurant don't want to become a commodity in a platform they don't control.
The food delivery apps unify food delivery into a single platform from which the customer orders, and thus, every restaurant is now in heavy competition with every other restaurant directly. Customers comparing prices is the number one thing that decreases restaurant profits. Therefore, while the sales are up due to these apps, they cannot keep the same margins as before.
Being commoditized in someone else's platform is not a great business strategy.
Before corona, me and my wife would be at the mall and order thru grab or gojek for the store 10 feet away because it was cheaper lol
Or just complain, like most of the places around me.
More than likely to be better IMO--if it's not better then the food delivery app is going to be out-competed by some other one that is better. Providing the app and its infrastructure is the app company's core business. It's not the restaurant's core business. And network effects mean the app has a strong incentive to be a centralized platform and to commoditize its complements, which are the individual restaurants.
Then you can allow open competition between different delivery platforms, which effectively makes ordering and delivery more commoditized. This will allow restaurants to run more efficiently - they only need to be good at their core competency of making the best food, at the lowest possible price. The delivery will cost the minimum (as each app that compete on price of delivery cost will get more customers).
The end result is good for consumers.
> which effectively makes ordering and delivery more commoditized.
It would be great, but I'm not holding my breath for this to happen anytime soon, though maybe restaurants will be more amenable to something like this now because of the current investor/debt funded platforms.
The hard part is recruiting, training, and managing the drivers. This requires you to hire lots of employees to communicate with the drivers and support them in real time during peak periods (around supper time and weekend evenings).
You can’t automate this stuff away because the drivers are dealing with all kinds of complex, real-world problems. Stuff like addresses of houses that don’t exist, drivers getting lost trying to find apartment suites or even restaurants within a complicated building, aggressive dogs or angry/drunk people, people denying they ordered anything and their contact numbers pointing to a different city...
The Google model of seeing customer support as a problem and automating it into nonexistence doesn’t work here. You’re dealing with hot food that’s cooling fast and hungry people who can’t wait very long and drivers who need to complete a bunch of deliveries in a night in order to make it worth their time.
[0] https://www.vice.com/en_us/article/pa75a8/worker-owned-apps-...
And unfortunately people trust mobile apps more than they do websites, so unless you expect every local pizza shop to have its own mobile app (and expect customers to have enough brand loyalty to install it), that's not going to change.
You're not wrong, but you're missing some of the nuance to how the relationship has evolved.
Even if there's a benefit, a service like Grubhub can easily become parasitic as they grab more of the market. It's getting to the point that you'll get basically zero delivery orders if you try to go your own way and hire your own delivery drivers, and expect people to use your website or -- god forbid -- call you on the phone to place orders.
People very often to use these apps to figure out what they want to order. The other way around ("hey, I really want Bob's Pizza tonight, lemme open up Grubhub and see if they're on there") is becoming less and less common.
So restaurants are forced to be on these platforms to get any takeout business at all, but find that they have to work twice (or more) as hard to make up for all the fees the platform charges. And the platform can get away with it, because they've squeezed out the option of self-delivery for most places.
> I hardly ever use any of these apps because the mark-up is insane, and it's rarely quicker than just picking the food up myself.
I wish there were more people like you, but it seems like you're a dying breed.
They advertise their regular menu + specials on FB. To order, you send a text in the afternoon with your order + pickup time between 5pm and 8pm, in 15 minute blocks. The restaurant calls you a few minutes later to confirm and take your card.
This is a clunky process, but that’s fine - they’re new at this, and I’d rather them get the max amount of the sale than have fees drained by third-party apps.
But it occurs to me that we’ve missed an opportunity in North America (and maybe elsewhere?) to build a platform that works like WeChat, where you could conduct this simple menu-selections-payment transaction, perhaps with some chat in between, using a ubiquitous interface.
Same scenario with booking a hair appointment, paying for small home services, etc. There is an interaction that includes chat, scheduling, possibly invoicing and payment, but this can involve up to one app per activity.
The channel is the unifying abstraction, it should own the entire interaction, including presenting the few widgets that are required to implement the workflow. I know that most chat apps have some variant of this capability, but the landscape is totally balkanized.
A corollary of this approach is that payment and workflow widgets should be commodified and thus extract a minimal amount from the transaction.
We have many apps per category, each with a special-purpose channel. We should have one channel with many possible simple interactions that can be delivered through it.
I think the challenge is that the capability needs to work seamlessly across the Google and Apple platforms, without becoming chat app n+1.
I don’t know the history of WeChat - curious how it became so ubiquitous.
Also:
> The restaurant calls you a few minutes later to confirm and take your card.
This is really bad, and one of the reasons. For example, I would use Apple Pay only on platforms I don't trust, and giving a card/cvv over the phone is 10000% one of them.
The main point is that there is an opportunity to unify this experience over a ubiquitous channel that would include seamless menu, schedule and payment steps.
I can see a mom & pop store having some trouble doing that (but even they probably know a high schooler who could do it in a day). I wouldn't expect a serious fine dining restaurant to have trouble with something that basic, especially when takeout just became their only business.
I feel like a lot of the work in something like Deliveroo is marketing, dispute resolution, money and payment management, inventory / menu tools (and transcription?).
If everyone paid cash, restaurants typed in their own menus, and left marketing to some other third party, is the rest just craigslist-for-food? “1995 ... written in Perl”.
I’m hesitant of coming off as “this could be built in a weekend” but the reason why most things cannot be built in a weekend is because they are the publicly visible front of a machine designed to be worth $1bn through analytics, marketing, ad tech revenue, content moderation etc. Drop all that and the front end is much simpler.
You forgot 'delivery'. Many people don't mind paying an extra $10+ to have someone else pick up their takeout meal.
It’s not a very coherent idea other than the usual “crush the rent seekers! [Deliveroo]” I guess.
UberEats is more popular than ever, but it's not even close to helping Uber as a company avoid mass layoffs in the coming weeks. The UberEats division was losing hundreds of millions of dollars last year. Likewise with DoorDash.
Restaurants complain about the fees which is fair but they've failed to mention how much money and time they would've spent on hiring multiple drivers to fulfill orders as well as a digital system to allow people to place orders online. By all means, if these apps suck, then hire your own drivers like restaurants have done in previous decades. Furthermore, platforms like this apps allow restaurants to be far more visible than if they just used their social media presence.
IMO, the biggest flaw with restaurant delivery is that it's hugely inefficient. You can't optimize it like UPS/Fedex can with packages, and people don't buy as much in one go as you would with a grocer. So companies like UberEats need these fees to allow them to actual remain viable and so that they can keep spending on things like development, marketing/sales, etc. Like it or not, delivery is expensive.
When I was growing up we'd get pizza delivery from a local pizza shop. Depending on the day of the week and the time we'd call, our pizza could arrive in a half hour or two hours. Sure, a part of the was the capacity of the kitchen, but a big part was also their delivery capacity. They had two guys each driving a car. They could batch deliveries to some extent so each driver would drop off more than one before returning to the restaurant, but while that gave them better throughput, it gave them worse latency.
Meanwhile, with Grubhub, Postmates, etc., you have a fleet of always-ready drivers -- effectively an unlimited number -- who are ready to take a single order, go pick it up as soon as it's ready, and deliver it directly to you. That's terribly inefficient on a per-driver basis, but it's great for the customer.
I personally don't mind the variability in timing in the old system all that much. Sure, there are some times when I really want food now (but even then, the fastest deliveries on these platforms is usually around 45 minutes), but for the most part I don't care if it's going to take another 30-60 minutes. But a lot of people really do value the speed, and, more importantly the predictability. If you want to eat at 6pm and know that the delivery time is nearly always 45-60 minutes, you can pretty much eat at 6pm. If the delivery times vary from 30 to 120 minutes, you order at 5pm and live with eating anywhere between 5:30 and 7:00. Yeah, this is seriously a "first world problem", but plenty of people have gotten addicted to the predictability and seamlessness of it all.
It's really unfortunate, because at the end of the day it means we value convenience over the health of our local businesses.
I feel like what's often overlooked is how much so many of these delivery services have lost money
Oftentimes the difference isn't between ordering through a third party and directly from the business, but ordering takeout at all.
There's too much benefit to me as a consumer to using third party services over ordering directly from businesses. You don't have a right to more of my money because someone else created value that you couldn't or wouldn't.
Like I said. The alternative is not me getting better service or product or whatever. It's buying from them at all.
What about good old cash?
>a more browsable and legible menu with consistent layout across other restaurants.
Couldn't you use these menus to decide what to order and then order by phone directly from the restaurants? Once I couldn't make an order at an online shop, so I ordered the things in my shopping cart via phone. It wasn't that fast because there were a lot of small things, but it worked.
I could go through the steps manually. But why would I willingly increase the friction to making a purchase for myself?
I don’t want these things to show up in aggregators. I want it built into the OS. With a couple of voice commands or taps I can be on my way.
I do feel like this will come. Apple has started an Apple connect program with some gyms. I feel they will do the same with restaurants. I’ve heard rumors about native applets that will load from QR codes. I can easily see “Apple Connect” certifications on restaurant windows and counter tops that lets you load the restaurant app quickly and easily, discovering it exactly where you use it.
Far fetched maybe! But I can dream.
It allows the middleman (who legitimately did some service by making so many restaurant choices available) to insert himself into every transaction, turn themselves the one you have a relationship with, and extract margins from the actual provider of the main service who becomes a commodity.
Ordinarily I would buy the theoretical point that certainly a service is being performed. But given the evidence and tactics about how much service is being performed versus being charged for -- that places like Grubhub/other platforms extract 20% commissions and put out their own phone numbers to masquerade as the restaurant's -- I would be glad to see them die a painful death as a result of this crisis.
Order directly from the restaurant, and be sure that's actually what's happening.
Your phone order will almost always be considered less important.
I thought this was such a fabulous idea, I bought a domain name for it: https://inmytown.org/ As usual, I just haven't done all the other hard work. But, in the old days last year, I thought it would be cool for local shops to have an online presence so that online shoppers could see where to buy stuff and place orders and then pick it up. So, have an e-commerce platform for shops, restaurants, delivery would be great. Try and keep money local instead of shaving 10-20% off of all transactions and sending them to big tech. Does anyone want to help me build this? Totally committed to non-profit and great apps for local companies.
Also, maybe they could found a bank too that has a payment system. I'm not sure if this is realistic but I really don't like middlemen.
https://www.vice.com/en_us/article/wjwebw/yelp-is-sneakily-r...
- Marketing
- Delivery
- Payment services
Delivery platforms has economies of scale when it comes to delivery, marketing, payment that the individual restaurant does not have.
Therefore they are (in general) a good deal even for the restaurant. Also their convenience increases the general demand for food services.
(*)Market is efficient and all theory aside, it matters who owns the customer as the rest of the value chain will be put on a race to the bottom.
Is there a service provider that doesn’t try to be a lead-gen middleman for restaurants? Like a Squarespace or Wix or Shopify but for food stores that do delivery?
There's a reason pizza is #1 in delivery.
Once the cheese has cooled down it tastes better.
And let's face it, small local food shops have the same problem as restaurants - they're too small to have their own websites for ordering. So everyone is ordering groceries from the big chain supermarkets - or Amazon Fresh. All of that money is going straight to giant corporations instead of local businesses.
This is a good opportunity for some small producers to keep going. We ordered from one place I saw on insta that had a stall in a food market hall which is closed, and now they're doing delivery orders from their flat. There's no way this person could organise relationships with drivers and payment processors all on their own without using a platform.