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> 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?

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.

Exactly, think of these apps as more of a lead generation service, or a search engine even, and being on their platform, even losing money, is akin to taking out search engine ads. Sure, perhaps the first few times people you lose money, but you might gain more long term by having repeat customers, who may even order directly once they see how much they spend in service fees at the end of the receipt. I know I definitely have.

I'm open to the possibility that GrubHub and others are a net negative for the industry on balance. But I'd still like to know what the actual margins are for the restaurants on app orders before I make up my mind about that.

> more sales than the restaurants can drum up on their own, and it's therefore mutually beneficial

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.

Well... they can wake up and smell the 90s by spending the cash to have a website. I'll bet that one month of paying grubdash costs more than getting a website up.

Or just complain, like most of the places around me.

Even if they have a nice, modern website, there's still credit card handling. Many customers will be put off by having to enter their CC details into yet another website. Things like Stripe alleviate this to some degree, but it's still a hurdle.

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.

This is why I use these services. I’d prefer to give my CC info to a single company and not trust it to who knows how many fly by night CC processing companies in use by individual restaurants

A lot of the places I order from that have a website and do delivery end up using a third-party (mostly Doordash) to do their deliveries anyway.

Funny thing is, if the website/app is crap, as a someone ordering, you will still want to use the food delivery service infrastructure from the app anyways because their system is likely to be better.

> their system is likely to be better

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.

what ought to happen is to have the ordering/delivery tranaction be under some open protocol (i.e., each restaurant runs their own ordering service/api that talks on an open protocol, pehaps even just delegate this to a B2B SaaS for a monthly cost, like a telephone line!).

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.

The delivery part is where all the overhead occurs. Developers think these services are trivial and making a killing on the markup because they can imagine writing the app and backend themselves. That’s not the hard part!

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.

Sounds like the restaurants need to form their own Visa [1] so that they might retain more.

[1] https://www.wikipedia.org/wiki/Visa_Inc.

We're seeing this from the worker side already [0]

[0] https://www.vice.com/en_us/article/pa75a8/worker-owned-apps-...

> i.e., each restaurant runs their own ordering service/api that talks on an open protocol

> 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.

I feel like the fact that prices are a lot higher across the board on delivery apps than at the restaurant itself disproves that theory.

At least in Jakarta, this is the opposite of the case. The big banks (and investors) have found out that its easier/safer to lend money to these delivery platforms who then pass on deals to people who buy from all the little shops (and big chains) on their platforms, than to all these little mom and pop shops, while still paying full price for the orders at pick up.

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

How long has this been going on? Perhaps the delivery platforms in Jakarta are still running in 'land grab' mode? The situation you've described (selling to you for less than their cost) obviously isn't sustainable forever.

For about a 2 years now, and yeah I know it isn't sustainable forever, but I know I'll be spending less if the prices go up.

Business side it's 30% cost... so you pay 30% to Grubhub for that hour and they nickel the customer too... Honestly I've worked with someone who basically would put a card in each Grubhub order saying 'Call us for a 10% discount, use code "PHONE"'

I read it as using these service providers will make them loss less money comparing to solely relying on phone orders. If the restaurant has enough cash, they might accept a temporary loss to ride out the pendamic.