What do the economics look like for the old Pizza or Chinese delivery places in a pre-app world?
I think the old world was restaurants squeezing delivery drivers. Now it's the app squeezing both the restaurant and the delivery driver.
Not so sure about pizza, but the tip issue probably comes into play there again. The customer covered the delivery cost and a 15% tip is more than most delivery fees in my area even on small orders.
Delivery driver: Paid a portion by restaurant, paid a portion by tips
Telephone: $60 / month utility bill
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Today:
Restaurant: Keeps 60-70% of order
Delivery driver: Paid a portion by Uber, paid a portion by tips
Uber: Paid 30% + delivery fees, service fees
See the problem?
But other than that, there is essentially no marginal cost to the delivery infrastructure, you pay part of the driver cost directly (via tip), they at most take a cut to go to drivers (minimum) wages, but that's a fixed cost not % of checks.
1. From what I understand restaurants doing delivery largely were breaking even on it considering the costs - there was no third party looking to take 20-30% of the gross.
2. Again anecdotally, I suspect the old school pizza/chinese delivery places are more efficient in terms of deliveries per driver per hour. What I see with a lot of UberEats/Grubhub etc is drivers waiting a lot at restaurants, bouncing around a bunch to pick up one or 2 orders each. Vs the old-school pizza model of a driver being able to pick up a bunch of orders at once.
Precisely this! It's amazingly inefficient to dedicate an entire person (and their 1000kg car) for the delivery of a single 2kg takeaway meal.
Uber tries to "solve" the problem by giving drivers two orders at the same time, but their implementation is terrible:
1. Sometimes the restaurant doesn't have both orders ready at the same time, so one of the orders is growing cold and soggy.
2. Uber's dispatch system has such a strong preference for batching deliveries together that a driver will often get assigned two orders that are going in opposite directions from the restaurant!
3. The high-volume restaurants (like McDonald's) have managed to exempt themselves from the double-delivery system [for the obvious reason that customers hate getting cold food!].
Thing is when I did we kind of optimized for the trip costs / payout. Deliveries only happened (for free) for orders over a certain value. During peak times (around dinner) we’d also batch orders. I’d often go out with 3 or 4 deliveries at a time and come back in about an hour with $30 or so just in tips. The 3 hours or so of dinner rush basically paid for the rest of the day.