Hacker News Reader

Comment by Spivak | Hacker News Reader

Look I don't really understand this sentiment. This whole situation is absolutely shitty for everyone involved but I don't think the 30% cut is unreasonable.

Say I pay ~$20 dollars total for a delivery including tip. My usual Indian takeout order. A real human spends 30 minutes picking up and delivering my order and makes ~$7 (or a little less than $15/hr but not really since they're not getting a steady stream of deliveries). $4 of that order was my tip for the driver so the delivery service and the restaurant now have to divide up the remaining $9 which is already less than 70% of the menu price of what I ordered.

Unless people start getting okay with paying way more for delivery it's gonna continue being a "squeezing water from a stone" situation.

View on HN

30% is totally reasonable for the cost of delivery. As you point out people hate paying for delivery in spite of the marked increase in cost/service. Where things get complicated here is that a lot of takeout services will require businesses to offer items at the same price given to pickup/takeout orders. This constrains the restaurant's pricing while providing a large benefit to the delivery service. If the restaurant could just charge 30% more for people using the delivery service then fine. Instead they need to either make take out customers pay more which usually means making your neighbors and long term customers pay more to subsidize a large well funded company.

You might think so but I'm seeing a number of local restaurants offering free delivery if you call in your order directly so it would appear 30% is not, in fact, a reasonable cost for delivery. At least for some restaurants.

Isn’t this because it’s already priced in? The price floor for a world without delivery services isn’t lower than it is now.

Restaurants make up for the 30% charged by apps by increasing the prices of the foods offered through the app.

None of the apps require businesses to offer items at the same price, and if they were to try an do so most restaurants would simply leave that app for one of their many competitors.

I think that's the actual complaint: the stone squeezing is happening at the expense of everyone but the customer or Grubhub. It'd be more sustainable for the actual businesses or the delivery persons if Grubhub took less of a cut or charged more of a delivery premium. (Implied: I value the sustainability of restaurants as more important than preserving the convenience/luxury of food delivery, and for edge cases where it's more of a necessity I'm sure we can come up with ways to address that.)

30% may not seem unreasonable to you as a customer and from the perspective of paying the delivery driver, but it can be deadly for the restaurant. Restaurant margins are low as it is, and an extra 30% cost on every order puts a lot of them in the negative.

You can argue that is a free market and restaurants are free to not participate if the cost is too high. Some do, at least some of the popular local spots around me are NOT on any delivery app. But most restaurants also can’t afford to not have this sales channel, especially during COVID. So now they are left in the shitty position of choosing between losing a lot of their orders and losing money on a lot of orders and hope dine in comes back soon.

It's unclear that restaurants are free to opt out. Grubhub "growth hacked" by listing restaurants that didn’t agree to be listed. The issue comes when customers aren't aware, and complain about delivery problems and seek refunds from the restaurant, who didn't agree to do delivery with Grubhub.

https://www.theverge.com/2020/1/29/21113876/grubhub-seamless...

I wonder how that would even work from an ordering / delivery / fee perspective. If the restaurant has no partnership then there presumably isn't any integration. So if the restaurant does offer pickup, these platforms would what? Call the restaurant to place an order and then send a driver to pick it up? In this case I'd assume there wouldn't be any cut taken from the restaurant. I mean a drive can't really go to the restaurant and demand 30% off because they're picking up for grubhub.

It's not just the 30%, though. One restaurant's monthly statement[0] showed them not quite breaking even after all of the fees and charges were applied.

That said, I completely agree with the rest of your comment. We just don't want to pay what things are worth.

[0] https://www.eater.com/2020/5/1/21243966/giuseppe-badalamenti...

For anyone who doesn't want to read the above article, GrubHub took 64% of the gross, which wasn't enough to break even on just food costs.

Anyone claiming that GrubHub is only taking a 30% delivery fee and ignoring all of the other charges they tack on to reduce restaurants' income is simply lying.

Grubhub deductions were 64% of the gross. But "promotions" was 231$ which is 22% of gross. Promotions are discounts offered by the restaurants.

edit: reading further, grubhub auto-opts in the restaurants into this promotion. That's scummy, but also exists due to US auto opt-in. I believe in Europe, this wouldnt fly as they need you to explicitly opt-in, not explicitly opt-out after they implicitly opt-in. Scummy, but the american way

edit2: i think the verge, incorrectly reported in late march that restaurants "must" opt-in. from the perks program T+C. "Your participation in the Perks10 Program (the “Program” formerly known as “Supper for Support”) is optional. By electing to opt in each restaurant location identified to the Program, "

so 42% for both "advertising/marketing" (grubhub is providing the order to the restaurant). and delivery. If you link to grubhub from your restaurant's website. The advertising/marketing fee is waived

I just want the cost on the screen to be a reflection of the actual costs to bring food to my door. Let me make the judgement on whether I want to pay the delivery surcharge. Don’t obfuscate the true cost and silently punish the restaurants.

I think the only reason this model works is because people don’t actually know what is happening. I think if people knew GrubHub was running restaurants out of business they would consider alternative options.

Besides the matter of whether the cut they take is unreasonable or not, there's the matter of user experience.

Ordering on the phone is very easy. I don't need to make an account, don't need to get out my credit card, don't need to fill out my name, email address, etc. All the restaurants I order from seem to have systems that remember the address associated with incoming phone numbers, so after the first call I don't even need to tell them my address. If I order from a restaurant frequently enough, I often don't even need to tell them what I want, because they remember that too. It frequently goes "Hey, Big Joe's Pies, same as usual?" Yep. "Paying cash?" Yep. "Okay it'll be about 20 minutes." How can fidgeting around with an app compete with that?

Restaurants didn't previously have to pay this 30% charge on everything they make, because they had dine-in to balance it. Margins were already razor thin, and then the virus hit and now the only way to do business is to fork over 30% of your income to a third party, whose value add is likely not 30%.

Reply on news.ycombinator.com