Doordash and Pizza Arbitrage | Hacker News Reader

Doordash and Pizza Arbitrage

themargins.substack.com

1,393 pointslunchbreak514 comments

I cut this deal with my neighborhood Italian restaurant!

I texted the owner about being miffed they hadn’t told me they were on DoorDash. He replied. They aren’t. We compared pricing, and found the prices advertised are way off from what the restaurant charges.

So I placed a $5,000 order to the neighbourhood homeless shelter. DoorDash paid him over $20,000, and I get free pasta for the rest of the year. (My neighbours have also partaken.)

Glad to know it’s scaling. SoftBank has assembled a unique concentration of stupidity for itself.

What was the deal? You pay 5,000, the owner gave you back your 5,000 and kept the 15,000 as profit from door dash? The owner made a massive profit and the shelter gets free food and it didn’t cost you anything?

> The owner made a massive profit and the shelter gets free food and it didn’t cost you anything?

We’re in the midst of a pandemic. The restaurant stays afloat, nothing more. The shelter got a donation, and I got promises of comped deliveries and catering.

It cost me $5,000; it cost DoorDash over twenty thousand.

Time for some cross-platform integration: start GoFundMes to crowdfund arbitrage of SoftBank derivatives in support of local small businesses.

That’s fine, I wasn’t trying to expose you, I just wanted to understand. It looks like everyone is happy, the restaurant gets cash, the shelter gets food, and you get... a lot of pizza for the rest of your life! I don’t think I’ve eaten 5,000$ worth of pizza in my life so far haha

> I wasn’t trying to expose you

No worries. I don’t feel anyone did anything wrong here.

> a lot of pizza

Orecchiette and Nebbiolo :).

> Orecchiette and Nebbiolo

Any judge with a surname ending with a vowel would pardon you, should they get pinged by DD

Great that you're donating to the homeless!

Assuming $10/pizza...500 pizzas in my life are reasonable

$10 for a pizza actually sounds pretty cheap.

Yeah. Even in Western PA a large will set you back $20.

Depends.

A small basic pizza is $8-$10 here. Domino's always has a deal where you can get 2 medium pizzas for $6/each. (used to be $5).

But if you're buying larger, specialty pizzas without coupons/promotions then you're going to be paying more like $20/pizza.

My pizzas are usually small and plain, so I'm closer to the $10 mark.

In the SF Bay Area a 14" pizza from Round Table or better is $20+. Trash pizza is still $5 each or whatever, yes, but where do those savings come from? How do they maintain the price when flour is in such short supply?

In Italy $10 / pizza is a medium-high price already.

Generally, €10 for a pizza is the average one in EU. Only in UK people is prone to pay an average of 18 pounds for it, which is sick.

DoorDash loses money, but it’s not like they care anyway

This seems very unethical. The fact that you don't like Softbank or DoorDash or the gig-economy or that you're sending pizza to homeless people is irrelevant. The fact is you're exploiting a bug to personally benefit at the expense of investors.

Why wouldn't you apply the same principals of ethical hacking, where you would notify the party of the exploit?

It's nog a bug, it's a feature. Doordash uses investment money to evaporate competitors, take over the market and then raise prices for restaurant owners once they gain control. It's a tried and proven concept.

Paying part of the meal is part of that strategy. They know full well that large orders and large amounts of transactions cost them more money and they're betting on nobody actually doing this. They're selling products below the cost of production at this point, something that I would argue should not be allowed in ethical capitalism. Investors know fully well what they're investing in, and of not, they've either not kept their responsibility on reading about the company they're investing in, or the company itself is pulling massive investment fraud.

Play shit games, win shit prices. If they don't want to lose money like this, maybe they should have a business strategy that isn't oriented about purposely losing money to bankrupt competitors. They easily could've set a reasonable limit of say $200 dollars to their cheaper transactions but they chose not to.

Would I go full ethical when finding exploits for an inherently unethical company? Would I dutifully report flaws to companies selling "adult supervision" apps used by controlling spouses? Would I give "bank phishing on demand" websites a 90 day trial period? I don't think so. Making such software is perfectly legal (in many jurisdictions) but is rarely ever ethical. Ethics would need to come from two sides for me to consider responsible disclosure. I have flooded several phishing databases with fake information, got some of them over their resource limit and shut down as well, and I don't feel the smallest bit of regret.

Just a note: it's not a tried and proven concept.

Predatory pricing hardly works in economic theory and is working disastrously for a lot of the companies trying it (eg. Ubers financials)

Where I live, one company has taken over all meal delivery nationally. After destroying the competition, this company had started raising prices each year. They ask for a percentage (13%, rising each year) in an industry where the margins are already very thin.

They money grab got a lot worse after they pushed out all the alternatives and just like with Google, everybody has to play by their rules or they'll be mostly undiscoverable for a large portion of the general public. Their delivery people are still underpaid, but by increasing their percentage of the bill they take for themselves they're now turning a profit. It's gotten to the point where companies are not even allowed to lower their prices when people use other delivery systems (or the restaurant's own personnel) which are cheaper.

The company only got this large because they could afford making losses for many years. Now other companies such as Doordash are trying to cut into the market as well, using hundreds of millions of foreign cash flows and putting business owners under even more pressure. Had there not been a company doing this since 2014, Doordash or any of its competitors would have taken the market regardless.

Rappi?

This is the biggest problem with the reality of predatory pricing compared to the theory of it: after years of undercutting your competitors, you're finally ready to jack up prices and take a profit....just as a new competitor comes in with a new infusion of cash and undercuts your artificially inflated price. (Remember, you can't just turn any old profit, you need a large enough profit to offset the years of purposefully selling at a loss.)

Surely at some point the competition (assuming a lack of innovation to drive down prices) will realize THEY don't want to be the ones who lose money for years only to get unseated when they're ready to jack up prices? How many times can this cycle repeat?

It only works if you have an easy path to monopoly once you price your competitors out. A company like WalMart or Amazon can leverage their returns to scale on logistics to actually price out Mom&Pops. That way, even after the drive the small stores out of business it’s just not worth it for anyone else to try to cut in unless they can also operate at WalMart scale and afford to bleed money for a while until WalMart gets tired of undercutting them.

But there are no appreciable logistical or operational efficiencies in how these delivery services operate. And there aren’t any barriers to entry. The workforce is completely fungible so they aren’t locked in. And just the fact that delivery services are popping up like mushrooms suggests it doesn’t take much to start one up.

In theory they could eke put some advantages to scale that keep out upstarts by using machine learning to optimize delivery routes or something. But I doubt that gets them the kind of efficiency gains they would need to actually turn a profit. From what I’ve seen, it looks like their main attempt to freeze out competition is just coming from flooding your search engine hits. I don’t know how sustainable that is either.

Predatory Pricing absolutely works... when you have a working business model and capital to back it up.

Walmart and McDonalds are masters of this approach.

Uber is a long-term play at disrupting cabs/transportation cartels and incorporated self-driving cars into a non-literal roadmap. They're in it for the long play, and even if they hemorrhage money for a while longer it may, in fact, play out in their favor.

Of all the ways I can imagine self driving cars becoming a reality, Uber creating a fleet of honest to goodness self-driving taxis seems to be about the most far fetched.

On balance of probability, I think that is just a bullet point to keep the juicy AI flavoured investment funds flowing.

How can you call McDonald's predatory pricing? They have been cheap and profitable for decades.

At best you could try to argue that they make their money fleecing dumb "business owners" who pay for franchises.

> How can you call McDonald's predatory pricing? They have been cheap and profitable for decades.

Their pricing and food is a gimmick, didn't that movie The Founder and the subsequent articles from various outlets pretty much lineout how Mcdonald's actual business model relies on Property Management and franchising? [1]

The food, competitively priced (questionable food costs and sources are the bigger story not told) or not is only the hook/marketing costs to get you to show up in Corporate's business model, the real money is in leasing the property and the brand name to the Local owner.

Personally speaking, I had the misfortune of eating at Mcdonalds during this COVID shutdown on more than one occasion as grocery stores were closed by the time I got off work.

And other than nostalgia for what was once a haven of my childhood, I cannot bring myself to put that stuff into my body without feeling nausea afterward. Everything is overly sweet, or salty; I remember the pickles and the fries from the happy meal being pretty decent as a kid in the 90s that went down with the Hi-C orange soda, having had one of those value-meals ($15 is hardly a value mind you) as an adult with the same items was atrocious.

1: https://medium.com/@alexcjensen/forget-burgers-mcdonalds-is-...

Walmart and McD don't do predatory pricing -- they just have lower prices while being profitable.

Predatory pricing is intentionally setting loss-making prices to drive out competition to then hike prices to profitable levels.

Notice this isn't what "ultra returns to scale" businesses are doing -- they're just profitably pricing low.

American Airlines famously killed upstart after upstart that attempted to fly out of Dallas Love Field. They kept a lease on two gates, but left them unused almost all of the time (AA generally flies out of the larger Dallas-Fort Worth International Airport). Whenever any new company tried to start new service out of Love field, American would open those two gates, match routes exactly to the startup, and charge substantially less, clearly incurring a loss for each plane flown. As soon as the new company was driven into bankruptcy, AA would again shutter those gates, leaving them available to crush the next company that tried to start at Love Field. See, e.g., Legend Airlines.

Right, so then the startup should sell nonrefundable tickets several weeks in advance. As soon as American starts flying those routes below cost, move your own planes to a different route, book all your passengers with nonrefundable tickets on the American flights and pocket the difference. As soon as they stop, start flying those routes again.

There is presumably some regulatory burden preventing someone from doing this. Maybe you can't move planes from one route to another so easily etc. But then that's how the company does it. Without that method of forcing the new competitor to incur unrecoverable costs, they can't do it.

It's theoretically possible to have a natural market barrier like that, but in practice to be a barrier that large it's nearly always a regulatory compliance issue. The law says you can't sign up customers on long-term contracts, preventing new competitors from locking in customers at the current price rather than the below-cost price. The law says an ISP has to serve the whole city and not just one neighborhood, increasing the startup capital required by a factor of a hundred. The law prohibits adversarial interoperability, so you can't distribute your own apps unless you can manufacture your own phones.

Most monopolies don't come from natural causes.

Can you imagine how furious people would be if they found out their airline put them on their cheaper competitor's flights and kept the difference? Rationality be damned, they'd be out for blood. I can hear the screaming already. Good luck.

This happens every day.

Really? How do I learn more about this?

Codeshare agreements, for example British Airways sells Vueling (budget airline) flights under BA flight numbers.

My original comment said its not okay to steal from a company even if you don't like that company. Your post is a lot of words about why you don't like that company. You don't directly address my claim that its unethical to steal from a company even if you don't like the company.

And then you make a weird point that software can be unethical (e.g. phising software) and this somehow applies to Doordash. Just to get this straight, making peer to peer scheduling software used for deliveries is unethical? And because of that, its okay to steal from their investors (including many US investors and pension funds)?

My comment also stated that it's not stealing if you order from a business that decided to operate in a way that causes them to lose money if you order with them.

Investors know that the company they're investing in will lose a lot of money and the know about the business practices that basically give away money in order to gain popularity. It's not their money anymore after they gave it to the company. It's true that if the company goes bankrupt they lose out, but they can prevent losing that money by not investing on companies handing out free cash.

The software itself is not unethical, the business practices Doordash/Uber/Yelp/etc. follow to make their software popular are. The problem is that these companies seemingly can't make a profit without using huge investments to crush the local competition. If they were to act ethically, I would have no problems with these companies.

Also, taking away future profit is not stealing, it's part of the risk of doing business. Don't stuff your money into risky business ventures if you don't want risk.

It's quite sad that pension funds are investing in these predatory businesses but protecting their investments because they're too big to fail undermine the entire concept of competition in capitalism.

> My original comment said its not okay to steal from a company even if you don't like that company.

Your original comment said it was wrong to exploit a bug, to which the parent poster retorted that this was a feature and not a bug.

Here, you've gone further to claim that this behaviour is stealing, and I'd like to explore that for a minute: what possible moral or legal right does Doordash have to an operating profit when it deliberately operates at a loss?

By all accounts, this below-cost pricing is predatory behaviour on Doordash's part, not the customer's: they seem to break into a market by offering delivery at a subsidized rate, then they take data based on those rates and try to strike fee arrangements with restaurants. At first glance, it seems like they sell themselves based on inflated numbers from the discount period, without disclosing that they were in fact offering customers a discount.

I see no ethical fault in beating a (sophisticated!) predator at their own game, but where do you reach the alternative conclusion?

I think it is a bug. I think they relied too heavily on automation and scraping to get a list of all the restaurants, menus and prices. From the original article:

> My first thought: I wondered if Doordash is artificially lowering prices for customer acquisition purposes.

> My second thought: I knew Doordash scraped restaurant websites. After we discussed it more, it was clear that the way his menu was set up on his website, Doordash had mistakenly taken the price for a plain cheese pizza and applied it to a 'specialty' pizza with a bunch of toppings.

So I don't think its a feature.

> what possible moral or legal right does Doordash have to an operating profit when it deliberately operates at a loss?

It doesn't have an operating profit whether you exploit the bug or not. Doesn't mean its okay to steal from them. Even if they do deliberately lose money (e.g. first Uber ride free up to $10), exploiting it is unethical (e.g. tricking Uber into thinking you're on a new phone).

The rest of your argument is again, why you don't like Doordash or why Doordash is unethical. I won't address this point because I think its unethical to steal from an unethical company so their ethics is irrelevant.

If I think Walmart is unethical, is it okay shoplift from their stores?

Arguing from the position where you define the ethical framework and then refuse to engage in any discussion about whether that framework is correct is kind of tautological.

In this case a homeless shelter ended up with a lot of pizza (which I'm presuming they consented to receiving), a local business got a cash injection and the OP got some perks. Under your ethical framework a bunch of silicon valley types had to find some other way of pissing $20k up the wall.

I know which outcome I prefer, though I personally wouldn't have done it.

This is the crux: does it count as stealing to accept the offer of a contract which causes the offering party to lose money?

My answer is no. They offered the service at a certain price, you accepted it. Whether either party profits or not is not part of the contract.

So no theft has taken place. If you want to claim that's it's unethical to take the free money that they're offering, you need to provide a justification for why that is. The onus is on you.

The only way I can see you attempting to justify it is by saying that it involves taking advantage of unforeseen consequences of the contract. But as has been pointed out, they fully intended to lose money, so that doesn't work.

> If I think Walmart is unethical, is it okay shoplift from their stores? You've made a false equivalence here, a more correct question would be: "If Walmart prices a gallon of milk at $0.25, either by mistake or for the purpose of getting people to buy milk at Walmart and not their local grocer, and I buy 100 gallons to give to people who can't afford milk right now, is that unethical?" ...to which the answer is, no, that's not unethical, you paid the price listed on the tag and Walmart (conceivably) paid the dairy farm their usual rate, so the only company hurt was the one that made the mistake or predatory pricing move.

Would it have crossed the line if the OP had tweaked the Italian places website (say for example setting a 0 height div) to include fake prices intended for the scraper to misinterpret?

For me I think it would have. Which makes me pause to consider whether I find the whole scheme too close to the ethical boundary.

I disagree. In the case of this submission, the restaurant was getting negative reviews due to poor delivery (e.g. not keeping food warm) - all of which were the fault of DoorDash, and the restaurant had no control over it.

Doordash is exploiting and harming the restaurant so that Doordash can make money. I think it's totally fine to make changes to your own site to thwart this. Doordash is in full control of this. They're the ones scraping the site, and they're the ones who should pay the price if they do a poor job.

I think that is a fair point which I wasn't really accounting for. Doordash should really get permission from restaurants before inserting themselves as a middle man, even on a trial basis.

Also, it occurs to me that if the artificially low prices resulted in doordash recieving more orders than would be usual, I doubt they would have disclosed that in their dealings with the restaurant. Though that is hypothetical and still suffers from the two wrongs don't make a right issue.

How do you define "stealing"?

On Wall Street this is called arbitrage.

If you don't want to lose money on sales, don't sell for less than your cost. People buying your product is not "stealing".

Name me one time in the last twenty years that this "tried and proven" concept has worked?

I'm confused. Doordash is knowingly reselling an item for 75% off and someone bought many of the items. No one was defrauded; everyone in the transaction was paid what they wanted to charge, and everyone got what they paid for. What is unethical here? Are you saying it's unethical to take advantage of a sale?

what's unethical is that doordash is undercutting competitiors who can't offer such deals.

in germany, reselling something for less than what you paid for (predatory pricing) is illegal (unless it's already devalued because it's old or used)

What makes it unethical is the "quid-pro-quo". If he didn't expect to get free food for life it would be OK.

Interesting take, but I think the compensation only takes it from an act of charity down to exchanging favors, which isn't unethical in itself. The very act of buying a pizza is a quid pro quo. This money for that pizza.

15000 minus the actual cost of the food.

This reminds me of the scene in Silicon Valley where Richard bankrupts a similar delivery service that's not profitable in a specific use case by ordering a huge amount of Pizzas.

This really makes me happy but I hope you delete this before it becomes mainstream and DD catches on.

I hope it goes mainstream and they all go under because nobody wants to pay their crazy prices while not actually supporting a restaurant

I mean if anything their prices are crazy low. I can buy about 30 minutes of a real human's time to deliver me food for about $3. With pizza joints and Chinese takeout it's averaged into the prices but not with these delivery apps. I've seen a few inflated prices but almost every restaurant around here is just charging the same as they always have.

A delivery service that supported the restaurant would be way way more expensive.

I can’t where I live. My $20 takeout order is $40 from any app. Entrees are several dollars higher, then there’s a delivery fee then a service fee then the tip for the driver.

> delete this before it becomes mainstream

ignoring the fact that this post itself is top of HN and going viral?

I don't really think going viral on HN === mainstream ;)

DoorDash engineers are on here too. Unless they want to keep quiet about it ;)

That's capitalism as its finest.

Saudi money (via SoftBank) is paying for poor people's food (and also subsidizing their transportation, via Uber).

Frankly, after all these years I still don't get it. Are the Saudis that gullible? How much more they need to lose to understand they're being duped?

Matt Levine's column Money Stuff touches on these questions every once in a while.

Until WeWork really blew up, it wasn't too hard as an investor to keep up the impression that the track record of Softbank was good enough.

(That's not to say that you couldn't re-interpret the track record in a negative way, even before WeWork. But nothing really forced you to.)

They've only really known oil for 3 generations, so yes.

And they're also desperate. The future where the world doesn't need their oil (or they've run out) isn't a distant future anymore. It's coming, and coming faster and faster. They need to diversify anyway they can if they want to avoid going back to just being a desert. And so they're jumping at pretty much any deal they see

It's not coming and coming -- it's here. Prices are negative, and they need at least something like ~$60/barrel to keep their government running and closer to $80/barrel to keep their whole country running.

But yeah, I agree with your main point: they're jumping at deals and chasing big wins, a la Dubai. Cuz they don't really have any other choice.

Sheikh Rashid's quote [1] kind of sums up the desperation of several countries in the Middle East to somehow diversify out of oil: "My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel"

1: https://en.wikipedia.org/wiki/Rashid_bin_Saeed_Al_Maktoum

Sheikh Rashid was born in 1912. The quote talks about his great-grandson. That generation has been alive for a while and comfortably drives Land Rovers.

>The future where the world doesn't need their oil

We'll need oil for plastics even if we stop using it for transportation, and Saudi oil is just about the easiest/cheapest to extract, so we'll be using their oil for a long time, but it won't be as grotesquely profitable for them as in the past.

Yes. Though we don't really "need" oil for that. You can make plastics out of any source of carbon and hydrogen.

Oil is just convenient, because you need less energy to make the plastic than if you start with eg water and CO2.

That the whole shooting match right there. "just convenient" is meaningless - we don't make anything unless the cost/benefit works out. If we didn't have oil, it'd be safe to say we'd never have adopted ubiquitous plastic at all.

Some people can make a profit playing at casinos (more so in the past than now).

Does that make casinos dumb? No, just imperfect.

The place where these companies intend to make their profit is on charging for the credit card transaction.

I've always dreamt of having a post of mine read in court.

Hi judge!

In this case DD is essentially acting like a ticket scalper. And since DD screwed themselves, is there even a law broken?

No idea, I'm not a lawyer. But in the original post he mentioned that he "cut a deal" with the restaurant, which to me suggests that he got the $5k back, possibly in cash, from the restaurant. If he then pockets to tax he saved, that smells like tax evasion.

He then tweaked his story to say that this cost him $5k. Why did he say he was cutting a deal then?

I think he’s saying the owner will comp him deliveries. Not pay him back.

Ah, I overlooked the "free pasta for the year", thank you

You make a great point. They also mention they are an options trader on wall street, so $5000 easily could be throwaway money for a double-good cause

The person who posted the comment about $5000 pasta is not the same as the person who wrote the article (who mentioned trading).

Haha, thank you, I wasn't thinking

I don't understand how this works.

If your order to doordash cost $5000, why did they pay the restaurant $20,000? That would suggest their prices are 4 times cheaper to the customer. But I thought everyone complained they were more expensive.

Surely DD are still keeping their commission from your order?

What have I misunderstood?

Doordash seems to provide two different services.

1) Doordash has some deal with the restaurant, gets a commission on sales, fees, whatever.

2) Doordash has no deal with the restaurant, charges customer $x+y, buys food from restaurant at $x.

In the second case, Doordash may be charging much more than the menu price, if it things it can find customers who will pay it.

I think the trick here is that Doordash isn't charging the customer $x + $y, but $x - $y. X minus Y. That is, they're subsidizing the delivery - in order to generate demand, and then come to the restaurant with the data to convince them to sign up for 1). This was actually mentioned at the bottom of the article.

So in this story, 'JumpCrisscross paid $x-$y = 5k for an order to a homeless shelter, but the real, restaurant price for that order $x=20k, which means DoorDash has just subsidized the transaction for $y=15k. The restaurant got an extra $20k of business that day, and 'JumpCrisscross bought $20k worth of food for a shelter at 1/4 the price.

And the best part, they could probably do it again :).

EDIT: Reading the article again, it seems to me Doordash is supposed to be charging the customer $x in the lead generation phase; so perhaps the -$y part is a scrapper error.

Or the -$y is marketing costs.

DD says to Pasta House, see? Look, with DD we facilitated an additional $20k of revenue for you on this day. You should enter into an agreement with us so that we can make this a more seamless process.

In most cases, Pasta House isn’t aware that those orders were drastically under cost and don’t represent actual demand.

It is exactly the opposite of your #2, check out the article.

Did you read the article? This was covered there, though as a less extreme price difference.

if you ever apply to YC, this is your YC story.

I wish I could vote a hundred times. What a great thing to do.

How much do you pay for pasta?

5,000$ of pasta would last me and my family until the end of my days.

At ~1-1.2 euros for half a kilo it's around 90 years worth of pasta (based on an average of 28 kilos per person per year in Italy)

I doubt he ordered dry pasta. Most likely he ordered 10 or so of every pasta dish on the menu.

What restaurants let you order dry pasta beside the ones in food halls?

Home Room in Oakland is delivering TP and dry pasta with delivery orders right now.

I predict we'll see a lot more of that kind of thing with reduced occupancy at restaurants. Come in for a meal, leave with a week's groceries.

Shrimp scampi at the deli by me is like $16. Ordering for a family of 4 with just 2-3 meals a week would easily cost $5k+

shrimps are way more costly than pasta

And even eating shrimps 3 times a week, with 5,000$ of shrimps a family of 4 could eat shrimps for a year.

Why wouldn't the pizza place order $100K worth of pizza from themselves to themselves? They don't even have to make it.

I can only assume that such a large order would be eventually flagged by the system. But I imagine ordering 50 pizzas every night can be relatively "normal"(feeding the night shift or whatever).

A Doordash delivery guy actually has to pick up the food though right?

This also does probably provide some legal cover as well.

He can pick up empty boxes and then immediately hand them back as the delivery address is the restoraunt address, no?

If the food delivery driver is knowingly not delivering any food, but is paying for the "food" anyway... that seems pretty close to fraud.

If you order a shitload of real food and the pricing works out well for the restaurant, it's weird but it is still following the rules that DoorDash set out.

But if Doordash never made an agreement with the restaurant in the first place, like in the article, the restaurant has no obligation to follow any of Doordash's rules.

That doesn't mean they won't fall afoul of some state or federal laws in doing that.

Right but this thread is about the driver pretending they picked up food that never existed. IANAL but sounds like fraud on the driver's part.

Why does the food not have to exist? You can deliver actual food and toss it for that kind of money

Nobody saw the episode of Bagpuss [1] where the mice just role out a cookie, and then take round the back of the "factory" and deliver it again? Apparently we've been waiting 46 years for this particular innovation to have a real world opportunity!

[1] https://www.imdb.com/title/tt0771367/

> texted the owner about being miffed they hadn’t told me they were on DoorDash.

Why would someone do this?

If you knew the owner well enough to have their number, it doesn't seem totally crazy.

"Had no idea you did delivery! Boss just put in an order for a work event! See you Friday?"

I've been thinking about this comment a lot today. It's cool that you have relationship with the owner of a local restaurant! I know the owners of a local coffee shop pretty well and it's been really interesting (and a bit depressing) discussing the economics of owning a small business with them.

And when you know your local business owners by name, opportunities like this emerge.

... so you basically used Doordash's algorithms to make Softbank donate $15k to your local homeless shelter?

That's fucking awesome. Way to go, man.

It's funny when this happens in our industry. It's called a security vulnerability. And if someone were to write a blog article about finding it, but also exploiting the fault several times over for their own financial gain, we'd be all up in arms over it, right?

Even if the exploited party itself it shady as hell. Say they were a credit card scammer, someone found a way of conning them for money, does that for a while to make some $$$, and then proudly writes a blog article exposing them.

Maybe I'm missing something though. That's looking at it rationally (?), but part of me also feels like, screw Doordash.

Nobody intentionally includes security vulnerabilities in a product. This is something that Doordash knows they are doing and have decided to do, not something they are doing accidentally.

Even taking a negligent security posture is not the same as intentionally including a flaw.

This reminds me of a post I submitted a few weeks ago on HN.

A friend of mine works for a restaurant group in NYC and they like many they have had to respond by offering delivery to folks in order to keep some revenue flowing. He and I were chatting and he mentioned that lately, a large majority of high value ($500+) orders were fraudulent with the fraudster ordering things that can be resold such as high-value wine, liquor, etc that isn't necessarily perishable. He says that the scams work like this:

1. The order comes in via Caviar usually with a ridiculous amount of booze. It is usually a courier delivery but he says looking back, some have been picked up by 'customers'.

2. There are some instances where the order gets canceled either by the scammer within the 2 min grace period post ordering of from the actual customer who had their account phished/received some sort of alert/and stopped the transaction.

I am intrigued by this because there is obviously someone on the receiving end that's ending up with a boatload of high-end booze and then offloading it somehow while Caviar eats the dispute later on and still pays the restaurant out.

Literally, thousands of dollars a week of fraudulent booze orders are being fulfilled to people fraudsters using phished accounts with valid cc's. The consumer eventually realizes the charge, disputes it, and gets their money back leaving Caviar with the bill.

Consumers often don't realize the charge, I believe, until it's too late. Tech-illiterate old folk getting hit by the latest leak of information from <take your pick of large company>.

Well, since DoorDash is listed as the copyright holder on the bottom of www trycaviar com it looks like DoorDash is just bleeding their $400mm series F out under a different name.

Maybe have them try the arbitrage themselves per the article and put the profit _and_ the booze directly in their pockets... (/s?)

DoorDash purchased Caviar from Square last August: https://techcrunch.com/2019/08/01/doordash-is-buying-caviar-...

I assume DoorDash doesn't want to alienate loyal Caviar customers and so is continuing to operate it independently, similar to how Grubhub and Seamless merged seven years ago but still run two different websites (albeit with identical design).

I bet the person physically receiving the wine/goods is some gullible, naive person who has been social engineered into thinking they're working for a legit business.

It's like the 419 emails where they are trying to "recruit a remote working employee in our finance department" where your job is actually to receive fraudulent ACH wire transfers and send the money to some overseas destinations, go to a bitcoin ATM and buy bitcoin to send to the scammer, etc.

If the scammers are reasonably intelligent and have put a degree of thought into how to not get caught doing this, they'll introduce multiple layers of abstraction between the physical delivery of $450 bottles of liquor, and the point at which that booze is turned into (gift cards, bitcoin, ethereum, etc) and ultimately in their hands. They're probably calculating on taking at least a 20-35% haircut on the revenue before the somewhat-cleaned-up cryptocurrency or gift cards makes it to them.

Or, it is the age of social distancing. Just order it to a random address and steal it off the porch/lobby area.

Majority of the liquor ordered using a phished account goes here – so sketchy: https://www.google.com/maps/place/101+bowery+st/@40.7176021,...

How do you know that?

From what I can gather, it is a ring of people behind this operation likely getting a commission for each 'drop' back at base

https://www.google.com/maps/place/101+bowery+st/@40.7176021,...

So money laundering

Clearly the hotel business is a thin cover. One reviewer mentions dust as though the room hadn't been used recently.

The reviews are incredible.

https://www.tripadvisor.ca/Hotel_Review-g60763-d267183-Revie...

So that's where the Bowery King is in hiding.

Told the police about it? Someone would be eager to chase that case.

Cops aren’t ever eager to take on cases.

Yeah, they aren't interested in pursuing this. Phish on.

Appears local law enforcement already knows about it:

https://news.ycombinator.com/item?id=23222004

Appears likely that someone that has access to the hotel’s customer CC data might be behind this and the local police are aware of it too...

“Not only is this hotel horrible, our guests had their credit card stolen and $500 worth of purchases made on it!!! Reporting this place to the police. Do not even go near this hotel. Total crooks, denied everything when confronted but they were caught red handed” [1]

...makes you wonder what is really going on.

[1] https://www.tripadvisor.ca/Hotel_Review-g60763-d267183-Revie...

There are fences (shady stores) in shady locations that will buy booze, baby formula/diapers, and over the counter medicine like daily Anti-acids. If you order liquor or wines that people sing/rap about you can find a place to sell it.

The scammers just need to find a fence which is pretty easy if you know where to look. They’ll even tell you what is the best stuff to get.

Yeah, the scammers ordering their stuff are only getting the good stuff. Don Julio, 1942, Johnny Walker Blue, high-end wines, etc.

Last week I noticed that my credit card number had been stolen. But only for UberEats, I had tons of UberEats transaction of $30-$50. It's not my UberEats account that was stolen because I logged in in my account and I had not ordered anything. So looks like there's a market to get those stolen CC and use it to order a bunch of stuff from restaurants. Perhaps you're right, it's to order things that can be resold (wine, etc).

And because it's the pandemic, i'm sure lots of people wouldn't notice those extra charges to their credit card right away because they already order through those apps. I haven't used UberEats in a year so it was easy for me to notice.

I love this story, especially about ordering dough pizzas.

It reminded me of this twitter thread: https://twitter.com/meslin/status/1225834920611848192?lang=e...

In which the author tries to order the Uline "box of boxes", a box of twenty-five (25) 6" x 9" x 6" boxes, only to have Amazon deliver a 6" x 9" x 6" box containing some random product. The collection product from Uline has the same bar code as the box itself, so the pick up robot would scan the shelf for the box, find something that SOME OTHER VENDOR had put into a 6x9x6 Uline box, and pick that to satisfy the query.

Adding automation to a process that any human with visibility to the whole process would say, "Wait, that can't be right." ends up in misbehavior.

The automated system should say "weight, that can't be right". Works fairly reliably in supermarkets, especially if you allow a bigger margin of uncertainty on sku weight. Or verify the volume/shape - or both, like volumetric weight that shipping companies use. I'm guessing amazon has some system to automatically assign boxes based on the dimensions of stuff that's being picked.

Not all distribution centers validate weight, don't recall if Amazon does but I would be surprised if they don't. High speed scales are expensive.

A few people got a box of rocks instead of a $4k camera awhile back, one guy got two boxes of rocks after returning the first.

Thinking about this more, I'm surprised this couldn't be caught when the items got delivered to Amazon. I find it extremely unlikely that a picking robot accidentally found an item with the same barcode if they weren't already in the wrong place.

Seems like when the items arrived at the fulfilment centre, they got mis-scanned and ended up comingled. Presumably that's the stage where you can check weight and volume - eg does this item fit with the known dimensions.

This check must be made somewhere otherwise people wouldn't bother returning high value electronics with rocks inside (presumably someone does a cursory check of weight before the inventory gets comingled again).

It's not unusual for warehouses to deal with items with multiple barcodes.

For a technology example, you might get a network card with a UPC barcode, but also a MAC address barcode, and a manufacturer's part number barcode. A wholesaler/ manufacturer sells boxes of 20 items to resellers? The outer box will have a barcode. That box got sent by courier? Three barcodes on some mailing labels.

So at a goods-in station, the usual response to "multiple barcodes, some don't make sense" is "Keep trying until you find one that does make sense"

Those multiple barcodes also confuse the crap out of self-check-out stations. Once it picks up on the wrong one, it throws a fault that the attendant has to come back out of, so you can't just back out scan the right one.

What baffles me is that the store/software can't build a dictionary of "known misdirection" barcodes, like "this is the shipping carton not the product itself, fault and tell the user to rescan, but don't just lock up" when they're seen.

Scanners in distribution centers contain a barcode hierarchy that filter out unused barcode types. For example, after something has been picked, a UPS label might be applied to it. Subsequent scanners will be programmed to only read either the internal routing label or the UPS label (or both and let the software handle it).

The scanners in supermarkets are made by the same companies and I would assume run on the same software. However, it might be more difficult to ensure a specific type of barcode is used on 100% of products in the store. So if you see the scanner picking up the wrong barcode at the check-out aisle, it is most likely either the scanner is not programmed correctly, or the scanned barcode is the same type as a valid barcode used somewhere else in the building.

As far as handling faults, that would probably be done on the POS system, not the scanner itself. The scanner software is perfectly capable of handling errors in different ways (for example, sending a specific code to indicate two different non-matching barcodes were read in the same pass), but from a functional standpoint, the scanner is 'dumb'.

Weight can easily be gamed by adding a bag of water.

Verifying shape would be difficult without knowing what to expect beforehand, but can also be gamed.

You won’t get the precision of supermarket weighting if you are dealing with diverse restaurants with a dynamic menu.

Unless I'm missing something, this thread is talking about the automated system making a mistake on its own. No one is trying to game the system.

> Works fairly reliably in supermarkets

No it doesn’t.

Not just because they can be badly calibrated, but also because the range of weight they have to deal with must make it hard to manage any sane range.

The only SCO I’ve seen doing a decent job at dealing with weight use a binary check (“was there any product at all added to the to total weight of the basket ?”) and they still miss products like lollipops or anything too light to pass the range.

Sure much more reliable system could be built, especially at Amazon’s engineering scale. But so far supermarkets are mediocre at best at this game.

Works great in any supermarket I've been to with a self-scanning systems and that's been the standard in my country for many years now.

“Unexpected item in bagging a area” gets me every time.

Same. Have to have a clerk unlock the machine 3 times on bad days. It feels like the shop doesn't want me to shop there.

It used to be like that the first couple of years but the newer systems never give me that and feel very accurate.

I used to pickup lunch from Tesco most days. Occasionally you'd find one item that must have been weighed wrongly at the input stage. It would cause an issue every time you checked out. Usually got fixed within a couple of days.

I wonder if they built in correlation of items which on a mis-weighed basket.

I haven't heard that phrase in years. There were some growing pains when self-checkout systems were first introduced, but every one I've interacted with in recent memory has been re-calibrated to be much more permissive.

Speaking for France, a lot of supermarket who introduced self-checkouts have further invested in developing scanning apps operated by the client on their phone as a parallel solution. Basically a low-tech amazon-go solution, where the client is its own casher.

Those bring their own set of issues, can be difficult to understand and use from the customer, yet they still felt way easier to deal with than the SCO experience.

We've had this for years with Waitrose, who just give you a scanner that you can take round the store. I think more recently they let you do it on the phone. Then you just pay at a special checkout and leave. They also have no-scale checkouts where you scan and leave (these are still attended). Usually if you buy something very expensive it'll flag up for a "random" check which always happens to be the expensive item.

The handheld scanners are easy to use. All it has is a trigger for scanning (which everyone knows how to do), scroll buttons, and a delete button if you make a mistake.

I hated the weight check at Tesco when I lived in the UK. It unnecessarily locked up my self service checkout a few times per week and in general made things slower.

Compared the AH in the Netherlands where you just scan the barcode on all your things and they really don't care about the weight or where you put them after scanning.

I'm sure there will be a tiny percentage extra fraud that Tesco may catch with this, but given the choice I don't shop there due to the shitty user experience. That's got to cost them more in lost revenue than the fraud they stop.

Yes, it's really annoying. It's that bad that I normally just queue for some personal touch with the cashier :)

For vast majority of things amazon sells, a system checking if the weight is within a pound or 25%, whichever is greater, would almost never have a false positive.

So a pound is 453g.

I checked my order history and my last orders are around:

- 350g

- 600g

- 200g

- 500g

- 5kg

- 120g

a box with empty packing would fit within a pound for most of these. I don't intend to nitpick your back of the enveloppe calculation, just that it's not as simple as it seems.

I don't know if I am the typical amazon shopper, but on my 35 orders in the last 6 months the above pattern is repeating with mainly very small items (like cables, dongles etc.) and one big heavy package from time to time.

I think an important part of the equation would be knowing the weight of the boxes you're using as well.

At that level of detail, it also requires the seller to give an exact weight for the goods they are selling, and update it each time it differs by even dozens of grams.

It can be done, just not sure the parties involved are willing to commit to that level of accuracy.

This is called a "tare weight", FYI.

I just had a package from Amazon that literally weighed less than the product that was supposed to be in it. I peeled off the shipping label and found another one underneath that was labeled "weight error". Someone had apparently intercepted it, overridden whatever check was going on, and sent it out anyway.

Weirdly, Amazon still made me mail back the underweight one (I would happily have paid the correct amount for the smaller quantity to save the trouble of remailing) and a few days later sent out the correct one. You'd think in this case they have a record of the actual weight of the package and could sort things out instantly, but apparently not.

A couple of months ago Amazon shipped me a completely empty, sealed envelope labeled as 1 pound. At least Amazon support immediately shipped me the correct item.

Hah that box story is hilarious.

The actual automated fix should be during stock intake I assume. We ship international parcels with DHL etc and it's a clear stipulation there are NO BARCODES at all on the box apart from the mailing barcode that we generate. Being Amazon, nothing probably happened because they have more money than they need, but I assume they have similar rules and would be justified to ding the suppliers for this cost.

But Amazon isn't intentionally trying to lose money here.

I hadn't realized that cardboard boxes were that expensive!

Reading the title, I anticipated this was going to be something along the lines of getting Domino's delivered for less than their delivery fee. (Side note, does anyone actually order franchise pizza on an app? They all already deliver for far less)

But this was far more interesting. The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen?

I'm not familiar with the reimbursement model. I'm assuming the driver pays with a credit card, and Doordash reimburses this amount. Regardless, there will now be database entries for a customer paying $160 and Doordash reimbursing $240.

What happens in a company that allows $80 to vanish like that? Unless this is an incentive (I'm doubtful this was deliberate). Wouldn't one of the first things you do is validate your financials? In which case, is the driver getting screwed here? (They charge the customer $160, and reimburse the driver for only that amount)

If not, this opens up a huge potential for fraud. There is a semi-popular YouTube video where some young British folks set up a 'restaurant' in their home kitchen and successfully list on a delivery app. They deliver several orders (reimbursing the customer of course). If it's trivial to get listed, and potentially with the wrong prices, then it's trivial to launder money this way.

Set up a fake restaurant, deliver little/nothing to a known party, profit. Now, maybe it would become obvious if you made the same orders or within the same time frame. But again, trivial to generate randomness.

What protection do these companies actually have against fraud? By nature, they're assuming trust, and this is exploitable.

> Side note, does anyone actually order franchise pizza on an app? They all already deliver for far less

Seen it done a number of times at campuses as the GPS helps the pizza guy find you. Although the pizza guy usually has a very good idea of where the residences are anyway.

Anyone know if it would be considered fraud and/or illegal to exploit this? I would consider doordash and grubhubs tactics of falsely representing themselves as restaurants to be more unethical. It would be great if someone could scale a solution that would take those arbitrage opportunities and pass them on to the drivers and the restaurants.

Yes, it's fraud.

In general, knowingly obtaining money, goods or services you know you are not entitled to is fraud/illegal.

Here's an example of someone going to jail for knowingly exploiting a glitch: https://www.inquirer.com/philly/hp/news_update/20071026_N_C_...

It seems like it would depend on who's initiating the action.

While the restaurant preparing "partial" pizzas to ship to coordinated orders is obviously fraud, I'm not so sure "Asking the restaurant owner about their costs, then independently ordering a large number of pizzas" qualifies.

It's not your responsibility if Doordash has shit code and auditing. And given VC-onomics, it's not even clear how you would be certain this isn't "operating as intended."

> While the restaurant preparing "partial" pizzas to ship to coordinated orders is obviously fraud

Does Doordash allow customer menu modification requests? "No cheese, no tomato sauce, no onion" etc. That would also then fall under shit code and auditing :)

> While the restaurant preparing "partial" pizzas to ship to coordinated orders is obviously fraud

How so? They're making the pizzas the way the customer wants them. The 'objective' tastiness is none of the delivery middleman's business. And there's nothing wrong with offering a bad pizza for $24, as long as the customer knows what they're getting.

Well, if the restaurant reimburses the customer after, it probably would become a problem.

Way around this: private owner places his own orders as customer, pockets profits as owner. That might be legitimate - but remember: if you take legal advice from the Internet, you get what you paid for.

Why does it matter if the owner is reimbursing their non-owning customers? Restaurants do that all the time.

(IANAL) My gut says coordination would be be evidence of both (a) premeditated intent & (b) knowledge that actions constituted fraud.

One could place a personal order (or 100) innocently.

One looks substantially less innocent when coordinating with a third party to place orders and transfer money around.

While that speaks to the severity of the crime (if one were proven), as you noted, it doesn't in any way impact whether that behavior is a crime at all.

But who's defrauding who? If the doordash website says I can buy a dough pizza for $19, then doordash has to get me a dough pizza for $19 when I buy one. No fraud is happening, doordash is fulfilling the requirements of the contract they make with all their customers.

If anything, the one who's committing fraud is doordash, because they're putting in "takeout" orders with the restaurant and presenting them as "delivery" orders to the customer.

In the example from TFA, Doordash says you can buy a pizza for $16 and charges you $16. The restaurant menu price is $24, and Doordash pays $24 for the pizza. That's... the starting place. (As screwy as it is)

Now, if I order a dough pizza for $16, in coordination with the restaurant, and Doordash pays $24 to the restaurant, and the restaurant gives me a dough pizza, and then the restaurant makes it worth my while, what do we have?

Doordash has been paid $16, and spent $24 + (cost of delivery) = (-) SoftBank money

The restaurant has been paid $24 and spent ~$1 (cost of dough pizza [1]) = ~$23 profit (minus labor)

I paid $16 (let's ignore tip). The restaurant reimburses me for that (me: $0, restaurant: $7) to make it worth my while, and then splits profits with me (me: $3.50, restaurant: $3.50).

So at the end, Doordash: -$8 - delivery cost, restaurant: $3.50, me: $3.50.

It's the reimbursement of the customer that seems... suspect.

The way to ethically monetize this would be for restaurants to target Doordash misprices, and "sell" coupons (a food box, containing only a paper coupon), good for future food orders directly through the restaurants. Then encourage all their customers to buy as much as possible.

[1] We'll say we return and recycle the boxes, being environmentally conscious citizens

Getting something for cheaper because of marketing-driven pricing, wasting time dealing with empty shells you don't want, reimbursing the customer...

You have all those elements when backblaze was shucking drives en masse, but nobody would say that was fraud in any way. https://www.backblaze.com/blog/backblaze_drive_farming/

If you intentionally sell a product for cheaper than you buy it to build market share (I think it's fair to call this intentional when they process the payment and don't bother changing the listed price), and you're willing to sell a whole lot of that product to someone, you can't cry foul when someone profits off that.

What you're describing isn't fraud, it's arbitrage: buying low, selling high. Just because Doordash are a bunch of idiots for selling stuff for way less than it's worth doesn't make it illegal for me to trade with them in good faith on their own terms and profit.

Nobody's lying to anybody, no price fixing is happening, or anything. Doordash agreed to sell a product at a price to any of their users, and they are fulfilling the promise they made, end of story.

This depends on whether you think the pizza restaurant's customer is doordash.

You could make a good argument that this was the case. The restaurant sells to doordash, who paid for a pizza with toppings.

Doordash is buying it, but I think it makes more sense as "a pizza for Bob" than just "a pizza". I think it would be strange to ignore everything Bob says if he calls in asking for the pepperoni to be on one side.

Though none of this matters if there's a 'special instructions' box. Have a code word for bread pizza.

Your case is more clear cut because that is a glitch in the website. It seems that in this case Doordash is offering a promotion. Calling that fraud would be like calling taking advantage of reward points fraud.

It gets dicier when the restaurant starts shipping out plain pizza dough.

Not if the customer ordered plain pizza dough

That's not how this works. The glitch is that there's a particular menu-item mispriced by Doordash. You can't just order arbitrary things at arbitrary prices, and when the restaurant takes an order for X and delivers Y, it's taking a step towards making a material false statement to obtain something of value.

This made me wonder: what if a restaurant puts a pain dough "pizza" for $30 on their menu?

Of course, no one would order it. But in this situation, an aggregator could offer it and the restaurant owner could take advantage of that.

It smells like fraud, except that every individual step seems legitimate (albeit weird). I'm pretty sure you're allowed to charge ridiculous prices for common goods if you so choose...

It still requires the aggregator to offer it for less that $30 (at least the cost of dough less). Which, at least in this case, seems to requires a scraping error.

What restaurant doesn't allow alterations?

"I want a supreme pizza, hold the pepperoni, sausage, peppers, onions, olives, sauce, and cheese".

Meanwhile, door dash never asked for the restaurant to participate in the "promotion," so screw them... They are offering to deliver boxes of dough at deathly inflated prices, with no other agreements with the restaurant. How is taking advantage of that "service" fraud?

Exactly. That's the real problem. Even if it's just a "trial". Somehow getting a delivery number on the restaurant's listing without their knowledge or consent is abuse. Good thing they get punished for it.

It doesn't seem like fraud when they are still delivering an actual pizza; that's basically just leveraging a sale. It becomes more dubious when they aren't delivering the finished good.

> The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen?

It kind of happens by default if your goal is "growth at any cost".

The video you mention is likely this one, and it's actually even more extreme: https://www.youtube.com/watch?v=bqPARIKHbN8

The fake restaurant in their garden shed, which never took customers or delivered any food, climbed up to #1 best restaurant in London (!) in TripAdvisor's rankings, purely on the strength of fake reviews and fake photos (artfully arranged closeups of bleach tablets etc). For kicks and video gold, they did open for their last night, serving 1-pound microwave meals from the supermarket.

I saw that video a year ago... pretty epic.

While that is a good video (and demonstrates manipulation of TripAdvisor), I'm pretty sure the commenter means this one: https://www.youtube.com/watch?v=k47u9tduwb8

This video features (a) delivery and (b) reimbursement, both mentioned in the original comment but not present in your video.

I gave a lecture in marketing at an university using that story.

To this day it is one of my favorites.

is it actually real though? I imagine it'd be really difficult to pull it off. what if somebody who reviews restaurants would go there on, say, Monday? or at lease, even if they don't get in, just try to check out the place from 'waiting area' or at least outside.

Youtube videos have reputation for being fake, I wonder if this is actually true.

>does anyone actually order franchise pizza on an app

I do. I find the app to be a much nicer experience. I see all the available coupons/deals in a list instead of the 1-2 deals the phone person wants to guide me towards. With an app I can start and order and my family/friends can have an extended conversation to figure out exactly what we want on our pizza, what sides/drinks/etc. And in a pinch, we can completely start the order over from scratch if we change our plan mid-way. It would be rude to hold someone on the phone for that. Plus the app gives better real-time update on the status of my order. I know when it leaves the oven, when it gets picked up by the driver, etc.

I imagine the OP meant through the DoorDash app? Recently, I've used the Dominos, Papa Johns, or Pizza Hut apps, which are, you know, fine enough, they get the job done, but critically: there's no surcharge beyond what you'd pay over the phone.

I would be confused why anyone would buy a chain pizza like this through DoorDash (or a similar service). Beyond the one tenuous benefit of not having to install another app; is it really worth the extra surcharge? Are they even listed in these apps?

You may be right, and if so then I agree that it doesn't make sense to order PJ's, Domino's, or Pizza Hut through a generic app. My (perhaps incorrect) interpretation was based on the fact that I've never seen one of the big chains available in the generic delivery apps.

In the UK the three big pizza chains (Dominos, Papa Johns, Pizza Hut) are on the two big delivery apps (Uber Eats, Deliveroo). I’ve never ordered any of them via it for reasons outlined upthread, with the additional reason that not only is delivery more expensive the chain-specific voucher codes are not available.

> In the UK the three big pizza chains (Dominos, Papa Johns, Pizza Hut)

I don't know why but I am saddened by this. I mean, even in the UK they are the biggest?

Yeah, and big chain apps and mobile sites, while not amazing at times, all work pretty well now.

Outside of a few odd situations now and then, most big chain apps (if they typically take mobile type orders) .. offer a competent experience.

Other benefit is if you sing up for some "club" or email list you'll often get a coupon or etc.

> I would be confused why anyone would buy a chain pizza like this through DoorDash (or a similar service). Beyond the one tenuous benefit of not having to install another app; is it really worth the extra surcharge? Are they even listed in these apps?

Papa Johns is listed on Deliveroo. I often order PJs through Deliveroo when I'm hungry and don't want to think too much.

It costs more in money, it costs less in cognitive load. I know what I'm getting as far as the food is concerned, PJs is remarkably consistent, and I don't need to bother signing up for a new account with someone, working out payment details, etc.

You'd be surprised how many people like myself exist. Not everyone has every aspect of their financial life fully optimised. This is one area where I definitely have room for improvement.

In the mean time, Deliveroo ensures that when I'm exhausted at the end of a long week, I'm only a few clicks away from repeating my last PJs order and my Friday lunch pizza will arrive with minimal effort.

Not sure how Deliveroo works. But I would think the issue here is you may miss out on coupons, promotions and deals chains like Papa Johns usually have. If we say saving yourself 5 bucks using a promo code on a weekly ordered pizza, on a yearly basis this comes out to almost 300/year of savings.

>The fact that Doordash scrapes prices, and apparently doesn't verify... how does this happen?

In the article they say:

> We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform.

I'm totally guessing, but I would bet they do an audit of the numbers after the trial period and would have caught it then.

Google tracks outclicks, so setting a lower price at first is a cheap enough SEO tactic.

Yes, it has been exploited exactly like you described. An example that I remember - Foodpanda in India. I guess fraud costs are massive for all the food delivery startups.

source: http://www.livemint.com/Companies/rYKC6HjnShogjE62jO5lpK/The...

That may explain why individual restaurants fare better at delivery; obviously they would catch a fraud immediately and are therefore immune to it.

The driver pays with a Doordash prepaid-reloadable card. When the driver GPS-checkins at the restaurant they're picking an item up at, the card is loaded with the exact balance the restaurant is "supposed to charge"

This mechanism reminds me of Moviepass.

This is basically the same backing service, corporate-issued "cards"

At that point door dash still thinks the pizza will cost much less, so if it's only the total the customer paid that's authorized, then how does the full cost of the order get paid?

The amount is calculated off of what DD thinks, not based on what the restaurant charges.

Yes, this causes a significant amount of driver support issues where they have to live chat in because their red card is declining.

The driver is instructed to not give the restaurant receipt to the diner.

In the article it makes clear that doordash calls the restaurant from their call center to make the order and gets the correct total verbally. Ostensibly this is what gets loaded to the delivery worker’s card.

Since this was part of a “demand test” door dash is more interested in capturing a large number of orders than per order profitability. Once their digital marketing muscle has doordash originating 10%+ of orders to the restaurant they have the leverage to negotiate a per order fee from the restaurant along with an agreement to force the restaurant to manage their prices on door dash, shifting liability to the restaurant for incorrect pricing online.

> Once their digital marketing muscle has doordash originating 10%+ of orders to the restaurant they have the leverage

How would they know what percentage of orders isc coming through them?

I wonder to what extent the back end software supporting this is identical to, or similar to, what Moviepass created.

Think of something similar to https://stripe.com/issuing (Postmates apparently uses this, same industry).

Doordash's are debit mastercard, iirc.

From the title I expected a story of how Doordash is running a pizza arbitrage scheme. Using an expensive restaurant name, and having the drivers go to a cheap pizza place to get the pie.

Pedantically, that wouldn’t be arbitrage, it’d just be fraud. Arbitrage would involve exploiting differences in price for the same good/commodity, i.e. not substituting a different item...

>If it's trivial to get listed, and potentially with the wrong prices, then it's trivial to launder money this way.

If it's trivial to launder money this way then it is a really good idea to build your own food delivery service and start doing all sorts of money laundering through it.

After reading more about how these delivery companies function, we stopped using Door Dash a few days ago. We found it very convenient during the pandemic, but we like our local restaurants and we thought we were helping them out by ordering delivery pretty often. So now we just order it as take-out and then we go pick it up ourselves. Screw Door Dash.

We came to the same conclusion a couple weeks ago. As a bonus, you're eliminating a person/environment from the loop (the delivery driver & their car), thereby reducing your Covid-19 attack surface.

Edit: I have also both read about & seen firsthand food delivery drivers with someone else in the car. It's almost certainly someone from the same household, but still, that's potentially yet another unknown, potentially untraceable person in the loop.

I've had amazon deliveries where it appears the whole family was in the car. Kind of heart breaking to think that a family of 4 has to drive around so I can get my AA batteries same day. We need drone deliveries.

Can I choose option C? :). I don't want drones buzzing around my neighborhood. I am 100% willing to pay for professional delivery drivers.

To be fair, I guess, the days of random people driving junky old compact sedans filled to the roof with Amazon packages seems to be gone in my area. All the Amazon deliveries are now done by a guy driving a large Sprinter van painted glossy gray with Prime written on the side.

I'm in Canada so we don't yet have the Amazon branded delivery drivers. In my city, many Amazon packages are delivered by a company called Intelcom. It's people driving around their own cars, delivering packages.

Not for nothing, but more than drone deliveries, we need to make sure families like this have access to daycare for their kids.

That's an interesting point. You might be able to argue that subsidizing day care - particularly if you could bring higher standards/efficiency along for the ride - could have a greater economic impact than subsidizing college. It would certainly win out in short term effects. [Although I do think most of a bachelor's degree should be attainable from home for little to no cost.]

When my parents brought me to Canada, my dad briefly worked as a pizza delivery driver and me and my mom would often ride with him just to keep him company. Not sure if that's the case here, but they might just be spending time together.

> We need drone deliveries.

Yes, obviously that will solve the problem that family faces.

I've seen plenty of couriers with their families inside riding around with them delivering food. Sometimes just a guy and the younger son? who hops out, picks up the food, and the dad drives off to deliver the item. It makes me sad.

Friend of a friend has the same issue, works for Instacart or one of the grocery delivery services. With their kids in the car. And they spend their days waiting in grocery store parking lots as that maximizes their throughput.

Make sure you're calling the right number

https://www.eater.com/2019/8/6/20756799/yelp-grubhub-phone-n...

Very important note (near the bottom of the post) on why Doordash did what they did:

> Note 1: We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform.

It doesn't fully explain why they priced a $24 pizza at $16. I wouldn't be surprised if they're subsidizing purchases, but just skipping fees doesn't explain that.

Lets them inflate the order count for the pitch.

"My second thought: I knew Doordash scraped restaurant websites. After we discussed it more, it was clear that the way his menu was set up on his website, Doordash had mistakenly taken the price for a plain cheese pizza and applied it to a 'specialty' pizza with a bunch of toppings."

Web-scraping is hard man, especially with mom-and-pop restaurant websites that are often exported straight from microsoft word or some ancient "platform" that got reconfigured 20 times over.

As article pointed out it picked up full-toppings pizza as plain cheese.

But they still paid full price to the restaurant! Someone in doordash knew the real price at some point then!

The full price was paid because a door dash card was used to pay for the order on pickup.

Which should have triggered some sanity check indicating that their scraped data is way off.

Maybe there are so many triggers that they can't keep up.

In the end you need someone to look at those alerts, maybe they just got missed.

They wanted high orders for the negotiation when getting a new restaurant signed up.

"Hey in the last month we delivered X amount of your food! If we don't list you then you'll lose those sales."

Surely it's cheaper to just pay someone to do data entry at that point.

Cheaper, less sexy, and doesn't justify the jobs of several dozen engineers, a few managers and a director.

If you're the director, which would you go for?

But that would that get VC funding? It's not their own money they are spending.

It could be so easy to game this.

Table Column A, menu items, lowest to highest in cost.

Table Column B, prices, highest to lowest in cost.

Naive scraper associates rows as menu item and cost.

You use CSS, etc., to rearrange things correctly. People looking at your site get info as intended, scrapers have problems, and it's only a dark pattern to them.

They are taking a loss on every order, but they are hoping to make up for it with volume.

You can't make up for it in volume if each order makes a loss and you get no benefit from having more orders (they still pay each time the full price to the restaurant!)

(that's the joke)

Can you imagine getting that call "Hi, little Pizza place, we've been fraudulently impersonating your business, dragging your brand through the mud and pissing off all your customers selling your pizza at a loss, clearly we're the sort of people you need to do business with"

I think there's a huge grey area between "hire a 3rd-party person to pick up your food and deliver it to you" and "impersonating your business."

Like DD, GrubHub, or whatever aren't pretending to be the restaurant (shady website bullshit notwithstanding). They're just saying that they can buy and drive the food to you on your behalf.

Absolutely they are. They'll set up phone numbers and answer as though they're your restaurant. They'll set up websites (which I think you allude to? "they aren't pretending to be the restaurant... other than setting up a website pretending to be the restaurant"). They'll pretend to be the end customer if they have to.

Wow, that was great. And honestly good on them for profit-taking on this arbitrage.

The author likes to pin this on zero-interest rates ("ZIRP") and that certainly explains why the system is awash with cash but I'd say he's missing a key point here.

When I moved to NYC (~10 years ago) I didn't order delivery at all. Honestly it's a huge pain. To call someone up and try and communicate an order to someone who probably doesn't have the best grasp of English (no offense intended here). I just couldn't be bothered.

What changed was Seamless came along and suddenly I could order food and not have to talk to anyone. It was (and is) amazing. In NYC at least the restaurants are still handling deliveries (with Seamless anyway) so there's still that control. Seamless/Grubhub seem to charge exorbitant fees but that's another issue.

As an aside, this is a key factor in my use for Uber/Lyft: the fact that the process is seamless (pardon the pun). You order a car without talking to anyone, it arrives and it drops you off. There's no awkward payment step. No dealing with a machine that's broken. No card skimming. It just reduces friction.

This is the promise of food delivery platforms: they benefit the consumer in terms of discovery, convenience and the seamlessness of ordering and payment. You might point out that people get cold pizza because UberEats drivers don't have the bag and you're right. But that's not an unsolvable problem.

Oh and this is the first I'd heard of Grubhub replacing Yelp phone numbers with their own call center. More evidence that Yelp is a cess pool that needs to be flushed. It's sad Grubhub is engaging in this. We have enough rent-seekers. Thanks anyway.

I honestly don't know if I'm living in a different world than everyone else but I've been ordering food and taking cabs all my life and I've never had to deal with any friction. Like, you call the pizzeria, tell them what you want and then some college student delivers your stuff, and if you order for more than 20 bucks it doesn't cost you anything. Not even being facetious, but what problem do these apps solve?

I also don't know how "not having to talk to someone" is a perk.

Yeah, it seems like you didn't grow up in a big city?

I bet you have the same accent as most of the people you deal with. I do not, having moved halfway around the world, and doing things over the phone is often surprisingly painful.

> taking cabs

It all depends on where you're hailing and where you're going to. Also on what you look like. Drivers don't like some locations and appearances.

"Not having to talk to someone" is generally a perk for introverts.

I dunno, even at physical restaurants or cafes I often have issues where they didn't hear my order correctly. Just today I had a guy repeat my order (thank you to people who do this, it's the only way) and he'd forgotten the cheese. Phone calls to ethnic restaurants (as with GP, no offense intended) are another layer of trouble. With my local noisy Indonesian restaurant we had a 50% miss rate on our orders so usually just go in person now.

Written text is just so much nicer. And I can send the link to family still in the office or whatever and co-ordinate.

I almost never have problems making custom food orders in the USA, even when the order taker is not a native English speaker.

"I'd like a cheeseburger, only lettuce and ketchup."

But when I visited Australia, I had a much harder time placing the same order. Most of the order takers there were not native English speakers, and I learned pretty quickly that the difference between American English and Australian English was bigger than I realized.

Language is interesting.

Growing up as a kid in a small town I thought I knew what Chinese people sounded like, but they were mostly Australian born (China wasn't really "open" at the time). Going to France and the USA and hearing their accents was confusing. It was close enough to be familiar yet very different at the same time since the same base accent got mixed up in different ways.

Anyway, yeah. I'm also a soft speaker which is my problem, but it doesn't mean that's not a valid reason to prefer text! I don't avoid speaking to people, I just prefer not to and I find it simpler and more certain I'll get what I need that way. Others want to pick up a phone.

DD, UberEats and the like screw up orders too. I've had a few errors even though "i didnt have to talk to anyone"

At least you get an audit trail ;)

I think it's only happened a couple of times in my few decades but dealing with "Where is the X?" "You didn't order that!" is annoying.

Also a fan of the Chinese restaurants like Din Tai Fung with the menu that you pass around and everyone ticks off what they want. It's so easy to coordinate a group of 10 that way.

> I also don't know how "not having to talk to someone" is a perk.

For us introverts it is.

It is indeed a perk for an introvert like me, but having to chose between empathy for another human and my discomfort, I prefer the former.

Yes, it will cause me anxiety to talk to someone, and go pickup an order. But if I was to avoid that and use an app, I'd be dipping my hand into their pockets and stealing money for a middleman. So I end up calling my preferred restaurant and picking it up myself.

But are you stealing money for a middleman? From what I can tell, the delivery is paid from a mix of an extra fee for the customer and some cash from investors, not from the restaurants.

I also struggle with phone calls (or even ordering in house). Apart from the empathy side that you mention my reasoning is also that confronting the anxiety and getting used to it is the only way to manage it.

I rather face the discomfort from time to time and learn to handle it than being paralised in situations when there's no other way and you can't avoid it.

I'm an introvert and please don't include me in the tiny subset of introverts who consider this a perk.

There's a spectrum within introversion, and this sounds more on the edge of that spectrum.

Full disclaimer: I too originally had trouble with calling to order pizza. But in retrospect it wasn't introversion: I just wasn't used to initiating conversations with strangers on the phone. The solution was trivial: Script the "opening lines" before calling. After a few of these, it all became natural.

If the vendor can just get it right with minimal interaction on my part, I usually prefer not to interact.

In my experience, though, this is rarely true of restaurants, especially the less expensive ones. I usually won't even do drive-through, under the experience-informed observation that they're less likely to mess it up if they know I'll be standing at the counter checking their work.

This is a misunderstanding of what it means to be an introvert. Introverts are capable of talking to people. The inability or disinclination to place an order for food delivery is a sign that you are disabled, not introverted.

Not even being able to talk to somebody is a negative feature if you have dietary restrictions. A friend is vegan, and she often skips over items which could be vegan with a slight substitution which is not offered via the app, but which would be easy to ask for if she could just talk to a human.

Being able to get food delivered from places that don't deliver.

I don't think the apps really add anything substantial for restaurants that have their own delivery network.

Yes. I used Yandex Taxi in Kazakhstan. I don't speak Kazakh nor Russian, but was able to get around in Almaty that way.

I have done the same with Uber in Poland, and with countless services in Germany before I learned German.

I really appreciate consuming a service at my pace, especially when there is a language barrier, a large order or alcohol involved.

This is like the iPhone SE conversation - there was always a big group of people who would tell you that the reason they buy the iPhone SE is because it's the smallest iPhone. But its very clear that the company making iPhones is certain that people buy the iPhone SE because it's cheap.

It's the same here. Everyone will always tell you that these knew gig economy companies are so much better! Their service is better, they're quicker, you don't have to deal with people, you can order whenever you want etc. etc. But actually, it's probably going to turn out it's just cheap.

It's very likely these services are basically used by 90% of people because they're cheap, and they're cheap because they're losing money to gain market share. The problem is that once they need to turn a profit, they have to drive up margins and now that $16 pizza needs processing fees and costs for the delivery driver - now it's $22. Or more importantly, your $8 starbucks order is now $13. So the second that the prices reflect the true costs these businesses are going to shed customers like you wouldn't believe. Oh and in order to try and curb those costs you're going to see some guy in a broken down car do a tour of the city delivering everyone else's food before yours gets to you.

People here (UK) use these apps even though they're more expensive than when the restaurant handles the delivery. I never paid for a delivery in my life before Deliveroo/UE, but the user experience is so much better with them that it's hard not to.

For example, it's a little bit confusing how to find my place, so something as simple as not having to explain it every time I call up (and inevitably have it transcribed incorrectly) makes a huge difference in friction.

I think you're both right, there are two separate types of customers making the same choice. One group is more price-conscious, the other is more effort-conscious. I'm personally in the other group - I have less time and patience than money to spend on deliveries, so I'll pick an option based on seamlessness. E.g. I've been ordering food for years on aggregator websites instead of calling the restaurants, because this way I can input my order on a computer (vs. talking to a busy person in a noisy room over crappy cellular connection, which often enough ends in errors), and I can prepay the order. I don't carry much cash on me, and I don't enjoy the hassle of using it. And while some restaurants will allow paying by card on recepit, it usually involves one or two payment terminals shared between a bunch of drivers, which leads to longer delivery times and all sorts of other problems (I've had drivers forget or not be informed about the need to take a terminal with them). I'll gladly accept 10-20% higher price to avoid dealing with any of that.

It's a similar story for rideshares; I think the major benefit they offer over regular taxi is seamless payment that (almost) always works, and is always available.

I'm happy to pay delivery fees to the restaurant. I'm less happy to pay fees to drive returns for growth-obsessed venture funds.

My Uber experience in London is never seamless you always end up calling them as they can't find you or wait on the wrong side of the road. Suddenly cancel when they are nearly where you are waiting. Black cabs is seamless with the right app

Just some back-of-the-napkin math if you wanted to do this "right".

Let's say you hire drivers as employees and pay them $15/hr plus tips and reimburse them for mileage. You charge a $4.99 delivery fee. Drivers work set shifts and are paid hourly whether they are making deliveries or not.

That means each driver needs to be making at least 4 deliveries an hour or you're losing money. That's not even really counting for mileage or any other benefits like health insurance or retirement (not that jobs like this usually provide this, but people seem to think that they should).

When I lived in DC, driving anywhere could take at least 15 minutes. Getting 4 different trips from a restaurant to somewhere reliably every hour would be difficult. Obviously, drivers can pick up multiple orders and take them in one round trip, but you're at the mercy of what orders happen to come in and where they happen to be located. It seems like it would be very hard to make that sustainable.

Of course, Domino's and lots of other places do it, but they probably aren't paying $15/hour and they also have one central location and more predictable demand. It's more feasible if drivers always go back to one central hub rather than having to get orders from random different restaurants all over the city.

> Domino's and lots of other places do it, but they probably aren't paying $15/hour and they also have one central location and more predictable demand.

One thing to note about Dominos is that people pay at the door, so they would need to look the delivery guy in the face as they stiff him on the tip. Not required for the delivery apps and fewer people tip there.Because people tip, you can pay lower wages.

I had a relative who worked as a Chinese food delivery guy for a while and he did it exclusively for tips. The restaurant did not pay him at all.

When ordering with the app, a lot of pizza places now (since social distancing started) allow adding the tip (or lack of) when placing the order.

I typically order from Papa Johns and their website/app had tipping for years. I never tip in person except on holidays. Just not a fan of cash.

In the UK tipping delivery drivers is basically unheard of, except maybe if they're delivering on Christmas Day or something. Despite that people I know who've worked as drivers for Dominos say its one of the best unskilled jobs available, the pay is good, it comes with some benefits if you're working enough hours, and they generally take care of their employees.

> In the UK tipping delivery drivers is basically unheard of

For you it might be.

I tip delivery drivers and I received tips when I worked. Tips made up >20% of my pay.

Rich people generally would not tip, poor people would.

Did you pay income tax over those tips?

Are HMRC paying you for this comment? :)

As someone who delivered pizza for a long time, I can assure you that folks who don't tip absolutely do not care about having to look you in the face or not.

If it's an existing restaurant that has excess kitchen capacity they probably don't need that many deliveries per hour as he customer isn't paying for a table and that margin can go towards paying the driver.

A bunch of delivery 'drivers' here in sunny Sydney just use a bicycle - and they're often just students or backpackers etc making a couple of bucks in the afternoon while getting fit. They're happy to make $10 an hour which would normally be illegal under Australian employment laws.

It's hard for a local pizza shop to compete with this kind of thing and the sheer scale of Uber Eats.

Unfortunately in the US you get people screaming that those drivers are criminally underpaid and are being exploited by heartless capitalists. Because of course random Internet commenters are better able to judge the drivers' priorities and desires than the drivers themselves.

Are you seriously arguing that the drivers would rather be underpaid than get paid a fair wage?

The argument is not that these people shouldn’t be able to find work, but that they should get paid fairly for the work they do.

I am arguing that they would rather be paid some wage rather than have no job available.

A backpacker who just wants to make enough money to get to their next destination probably doesn't want to deal with the overhead of taking on a full-time job and is happy to have the flexibility in exchange for less money.

Fair is determined by the two people who are party to the transaction. If they both agree to it, then they consider it to be fair. If it is unfair, they are free to decline. The opinions of unrelated third-parties about whether a transaction is "fair" are irrelevant.

How many transient backpackers actually work for these companies to fund their immediate journeys and what do they have to do with a debate on localized externalities that they never experience?

No idea. It is probably not anywhere near the number of salaried employees who bully local governments into passing wage laws they will never experience the unintended consequences of. Yet somehow they still feel entitled to decide for other people what working arrangements they should be allowed to make for themselves.

Same question, what does A have to do with B? I've had enough herring today.

Let's assume for a moment that people are not helpless imbeciles who need us to tell them what to do and that they choose the best option available to them, within the constraints of their life. Let's further assume that they are more familiar and better equipped to balance the constraints of their lives than we are.

Then we can deduce that if we remove the option they have chosen by making it illegal they will necessarily be left with a worse option. Since if there had been a better one, they would have taken it.

If we feel that the best option they have is not good enough because it makes us feel bad or whatever, then the question we should ask is "How can we make better options available?", not "How can we take away the best of the available options?"

Legislating a price floor does not magically change the underlying economics of a business. It just makes the jobs below that floor go away.

> Let's assume for a moment that people are not helpless imbeciles who need us to tell them what to do and that they choose the best option available to them, within the constraints of their life.

That's a big assumption to make, especially on the lower end of the socioeconomic spectrum; desperation often leads to suboptimal decisions:

https://www.pbs.org/newshour/economy/poverty-makes-financial...

https://www.theatlantic.com/business/archive/2017/01/underba...

https://news.ycombinator.com/item?id=16461773

> Legislating a price floor does not magically change the underlying economics of a business. It just makes the jobs below that floor go away.

It may make some of those jobs go away. The price of the product/service will go up a bit, which will reduce a demand a bit, so the market will get oversaturated supply-side until some of the companies in it scale down or close up. Those who lose jobs will be worse off, those who will keep jobs will be better off. Yes, it sucks for those who lost jobs, but we can cater to them elsewhere in the system (e.g. different industry).

Competition will happily push the salary floor to as low as legally possible, so it's up to the legal system to ensure that floor doesn't go too low; in fact, I'd argue laws should be always set up in a way so that doing unsustainable business off unlivable wages should not be possible. The market is good at figuring out solutions to multifaceted problems, so let it deal with that constraint.

> It just makes the jobs below that floor go away.

No, it doesn't _just_ do that. It also makes the jobs that are viable above that floor pay at least that floor.

>> Are you seriously arguing that the drivers would rather be underpaid than get paid a fair wage?

Economist Thomas Sowell has argued that point and more about how the minimum wage enables racism, so, potentially?

https://www.aei.org/economics/thomas-sowell-on-the-cruelty-o...

>It's hard for a local pizza shop to compete with this kind of thing and the sheer scale of Uber Eats.

I mean, Uber Eats is losing cash at a phenomenal rate. So, more accurately:

>It's hard for a local pizza shop to compete with obscene amounts of venture capital subsidised delivery

> they're often just students or backpackers etc making a couple of bucks in the afternoon while getting fit

I did this in lieu of going to the gym daily a while back ago. Adds a bit of gamification and social interaction, although takes a bit longer for the same intensity. I can't imagine having to live off that wage though.

It's also 30% - 40% of the order not just a delivery fee

Restaurants have two advantages:

1) Drivers can do other work during down time (wash dishes, clean, etc.). I think some places don't even hire drivers, they just have whoever is free deliver the order.

2) They can eat the loss because it will be less than the 20-30% that delivery platforms take from the restaurant.

I know you probably realise this but I think you missed a few important factors that can justify losing some money on deliveries.

- Takeaway/delivery food costs less to produce than dining in - no cleaning, no turning away customers who want to eat in because the place is full, no hiring wait staff, less fixed rental space cost, etc.

- Delivery reaches people who are too lazy to come to the restaurant. Ask most businesses if they will take a dollar or two profit less and make the sale, compared to losing it. Most will say yes.

- Delivery/convenience puts the brand top of mind for people feeling lazy (plus others see the car driving around). This is marketing.

- People are usually willing to wait for deliveries. At least here in Australia, if I order pickup it's ready in 15 minutes or up to an hour for delivery. This allows some flexibility with scheduling in the kitchen around the driver's schedule.

I think it is a lot more expensive than a lot of us give credit for (I visited Canberra and was aghast at the $9 delivery fees), but there are some benefits and savings to offset this.

$15/hr plus tips plus mileage is overkill. Let's say you cut out the awful feature that is tipping and make it $15/hr plus mileage, which is a perfectly good wage.

If I was previously paying $6-7 in fee+tip for a limited selection of restaurants, I'd be okay paying $10 for places that don't normally have delivery.

If that means two trips per hour, and you're not in one of the ten worst cities for traffic in the entire country, then that actually sounds pretty viable.

You forgot wear and tear on the car, and gas. 15/hr is decent without additional expenses. Take out gas and tires and brakes and maintenance and it's poverty level.

No I didn't, that's part of mileage.

And the standard formula for mileage compensation that everyone follows is super generous. If you're driving a car with even half-decent mileage and reliability you come out ahead.

At least around here, nobody delivers by car, it's all on cheap motorcycles. In other cities I've lived in, bicycles were also common.

> Of course, Domino's and lots of other places do it

They kind of go into this in the article -- that since Domino's has made delivery work for decades now, it must be possible to do it sustainably; and that although most of the author's restaurant friends considered it "not worth the effort", individuals had managed to make the economics work for their very specific circumstances.

BUT -- that the fact that it can be made to work in specific circumstances sort of undermines the whole idea of DoorDash, which is a generic "food delivery wrapper" around any restaurant. DoorDash by definition can't do the kind of integration that Domino's does.

The business model is to charge both a delivery fee and a commission on the sales price. That way, you can make it profitable, even when paying a fair price to couriers, as long as you can keep your business lean and your delivery routing efficient.

This is absurd. Can someone explain to me why DoorDash exists? They're #1 in share, but I get the impression that they basically bought their spot.

Grubhub has been operating in the space forever, is public, and generally had been profitable until VCs came to town. How is DoorDash doing anything than Grubhub? Wouldn't this capital do better in other investments?

From the outside it seems like they've duped investors into burning hundreds of millions of dollars to hopefully build a monopoly in a structurally iffy market.

DoorDash is winning in terms of market share for one thing.

https://www.cnbc.com/2020/01/17/doordash-took-the-lead-in-th...

I bet a big thing for DoorDash is DashPass. That would lead to people ordering food for anything as the price is basically the same as in restaurant then.

Definitely agree that they're winning (the Second Measure blog is fascinating), it just seems like they bought their way to the top at a very high cost.

DashPass is definitely keeping me a DoorDash user, it's benefits are significantly better than Uber Eats pass, but idk if that's sustainable for DoorDash.

The thing that really allowed DoorDash (and UberEats) to pull ahead was investing in partnerships with chain restaurants vs focusing on independent restaurants. Which hasn't necessarily resulted int he best product

I have Dashpass free from my credit card. Its not the same as ordering from directly from restaurant as Doordash marks up the prices 10% to 25%. I always thought Doordash was a terrible deal without it, you're paying marked up prices, delivery fee and a tip. Doordash is winning because they have the widest selection of restaurants since they are using their own drivers compared to Grubhub. Not sure why Postmates and UberEats failed to capture more market share since they offer the same service.

Grubhub for years were just a marketplace for customers to find food to order online / restaurants to find customers online. They'd charge a commission on order amount for fulfilling the match but the restaurant would have to deliver the food, manage their own delivery drivers etc. This is why they were profitable for years - they were a two-sided marketplace with a high commission percentage and low cost based since they didn't have any delivery costs.

DoorDash came along (after Postmates btw) and offered the same marketplace, but with delivery drivers too (a three-sided marketplace) - so that a restaurant didn't need to employ delivery drivers. This meant a higher cost base for DoorDash, lower for the restaurant, but similar commission fees. The simplicity of offering online marketplace ordering and delivery was very enticing for restaurants not wishing to manage this themselves, hence DoorDash's huge rise in market share, at the cost of Grubhub's over the last 2 years.

Grubhub has now for the past 3 years been busy spinning up delivery in its markets but is way behind DoorDash and Uber Eats. They have also admitted to falling behind in their Q3 2019 announcement[1] to the new competition (their late admission caused their stock to drop 43% in 1 day on the earnings announcement), and started also spinning up the non-partner side of the marketplace (adding restaurants without an agreement in place) to give customers more to order from (this is what Postmates then DoorDash pioneered). This is why they've started hemorrhaging cash and became loss making.

[1] https://s2.q4cdn.com/772508021/files/doc_financials/2019/q3/...

Got it, this makes a ton of sense, and explains why Grubhub was able to do the impossible, make money.

Yeah, Grubhub were touting themselves to restaurants as more of a marketing channel partner - find customers, advertise etc. Still, I'm not sure why that business service warranted a 20% commission fee in the first place to be profitable from.

Because who is going to balk at more sales for slightly less of a cut unless you have priced yourself to the bone already anyway?

Tech is all about inserting yourself in previously untransactable business opportunities via the leveraging of near universal connectivity to the Net, and the ease of electronic transaction settling.

Sometimes, this means taking a momentary haircut to get the right signatures in place, but fee taking and leveraging economies of scale does the rest.

The big head scratcher for me personally is how long it'll take until most people catch on to the pattern, and say "no more".

20% fee isn't the whole story - about 5% is the cost-of-fulfillment - website, phone support, CC processing, fraud protection, etc. The rest of the "fee" is variable marketing and promotions costs - higher search placement, "buy one get one" offerings to customers, etc. The calculus for the restaurants is whether they spend any marketing budget, and if they do, is it going to be junk-mail flyers or targeted advertising that they have some hope of tracking success with.

This is the sad state of VC funding in this day and age.

I can’t help but wonder if movie theaters could have exploited a similar loophole with MoviePass before they went bankrupt. Something like this:

1. Movie theaters buy up MoviePass subscriptions

2. They use those subscriptions to pick different movies to see every day at their location

If they picked 30 movies a month that would be approximately $450 a month in revenue (at $15/ticket), $440 of which would have been pure profit.

Theaters still have to report tickets sold and kick back roughly 50% of the ticket price, so you would need to cut that revenue number in half. Also I don't remember the exact timeline for Moviepass's various restrictions, but there was a limit on the upside at various times due to policies like preventing users from watching movies multiple times (which would generally cap the max tickets below 30 since most theaters don't get 30 new movies a month), limits on how many tickets can be purchased for a single theater that would lock users out from using that theater for the rest of the day, and users being suspended for "fraud" that was often reported to be just heavy use.

> The owner insisted the driver take the pizza in a heated bag so the customer didn’t get cold pizza, but leave an ID so the driver would be compelled to return the bag.

>Doordash was causing him real problems. The most common was, Doordash delivery drivers didn't have the proper bags for pizza so it inevitably would arrive cold

What this means is that the restaurants really care about their customers. The delivery really really don't care.

I spoke with a few restaurant owners in NYC and they all universally hate the delivery companies. The restaurants are charged anywhere between 30% - 40% which is a ridiculous amount.

There's another company in India called Swiggy. I used to travel to India and would frequent a few bars in Bangalore and Hyderabad. All of them absolutely hated them for the same reason.

This reminds me of the SliceLine episode of Silicon Valley Season 5. https://www.youtube.com/watch?v=Txl90NEl92U

Its even better, DoorDash is doing this without even switching boxes.

So true. So many of these apps need to do some basic math and not "try and make it up with volume" if their gross margin is negative...

I don't understand why doordash, uber eats, deliveroo, and similar business are starting to exist. Restaurants have been running successful delivery operations independently for ages. And there are many software offerings to help businesses get set up with delivering food.

Why do we need a centralized on? Is it just the benefit of being able to browse in one app/website everything available for be delivered to you?

> Is it just the benefit of being able to browse in one app/website everything available for be delivered to you?

Yes I think that’s a big part of it.

That’s a big part of Uber as well - I can fly into a city not knowing anything about how they do taxi and get an Uber.

   I can fly into a city not knowing anything about how they do taxi

What airports are you flying into where you could avoid signage/references to local taxis/buses/transit if you wanted to? Heck, most have taxi stands right outside baggage claim, if not all exits.

Not the where, the how.

How much do they cost? Do they know where my hotel is or do I need to provide a specific address for their GPS? Are specific taxis limited to specific jurisdictions? Can I get a van if I have 6 people or do I need two vehicles? Do they go out as far as the somewhat rural university? How about to the manufacturing plant 20 km outside the city?

The cost for a taxi is way less reliable, and harder to dispute. It's a common but unpleasant way to arrive to a new city to realise you've been shafted on the taxi fare.

100% my least favorite part of traveling in the pre-rideshare world. Has happened to me plenty of times.

If taxis just had upfront pricing and followed Google Maps it wouldn’t be a problem. I’d my happy to give them my business. I don’t really care too much about the app or whatever.

Like it could be super informal like $1/minute for whatever it says on Google Maps at the start and it would be fine.

It's the how that matters. Some countries have "interesting" taxi ecosystems.

I had a friend whose taxi would drop her off to a certain part of the city she was in in Malaysia. She liked him and wanted him to bring her back home later because she felt safe. He couldn't. Apparently there were taxi gangs controlling territory and he could only drop off and GTFO.

Or there's what I saw in Peru where a guy was selling TAXI signs at a traffic light. That's all it takes in some countries, whack that on top and you're good to go. Nice to get a tourist halfway down the freeway then "renegotiate".

> Or there's what I saw in Peru where a guy was selling TAXI signs at a traffic light.

This is literally what Uber/Lyft are doing. You don’t even need to leave the house.

I think that's an exaggeration. Uber/Lyft have some standards and questions before they let you join as a driver, not just a plastic sign you throw on the car. And if something goes wrong they have an audit trail. They at least know who picked you up before you went missing and where you were. You get none of that with a plastic sign.

It’s not where they pickup, it’s things like how much do they cost, do they take cards, are they even safe to use?

If you are a tourist you will get charged more if you hail a taxi from most Indian airports.

Majority of times I order from these centralized sites becauae of convenience. Id like to support my local restaurant by ordering via phoning the restaurant directly, but it is pain in the arse compared to the convenient web ordering process.

Given that, I wonder if there is an opportunity to provide the ordering service and leave the delivery up to the restaurant... It would be dramatically easier to start up, require far less capital, require almost no human resource challenges, etc, etc.

Edit: Just noticed lower in the comments that this is exactly what GrubHub was doing before Doordash showed up.

> leave the delivery up to the restaurant

Then you get an inconsistent experience.

I've spent many thousands of dollars on app-delivered food over the last few years (Foodpanda, Uber Eats, Grab Food, Lineman, and Deliveroo). I use the apps because:

- GPS tracking of the driver, and helpful notifications

- Discovery of new restaurants

- Detailed menu (and occasionally useful suggestions of menu items)

- I don't have to create a new account or fuck around with giving some restaurant my credit card

- I don't have to speak to a human

I'm hungry right now. I can pick up my phone, and in 30s, without needing to do anything other than click on the food I want to eat, in 25m I will have a human with food at my building's lobby.

> - I don't have to create a new account or fuck around with giving some restaurant my credit card

In case you need to in the future, i'd recommend privacy.com for merchant-locked cards.

How has your experience been with privacy.com?

Usually gets your Uber account terminated or not able to sign up in the first place with a prepaid.

Hopefully not a problem with small businesses?

It does become a problem depending on their POS vendor deciding to flag prepaids, I've seen several dislike this because of the ability to modify transactions afterward / tip or something of the sort, for the restaurant industry.

Mine has been excellent apart from the daily limit and merchants that don't accept their cards like cloud providers. Takes a bit of regular activity before support will raise the limit but the fact that Privacy.com cards show up as prepaid (try it out with the Stripe api, for example) is a show stopper for some narrow use cases - which overlap almost perfectly with spammers so who can blame the merchants.

That last bit only applies in dense downtowns. In the Bay Area, if I'm hungry right now and that happens to be roughly dinner time, I'm waiting 50-70 minutes for a food delivery.

My guess is that your app of choice can show you estimated delivery times for different restaurants based on distance and avg preparation, adding yet another reason for using

Yes. I'm just saying that the majority of restaurants in the greater bay area will have lengthy delivery times during weekday dinner hours... the exception being if you order from a place physically close to your delivery point.

Is it just the benefit of being able to browse in one app/website everything available for be delivered to you?

It's not just that, it's also a centralized payment system. You set up your account and you can order from any restaurant on the app without having to give them your address+payment info. Couple that with very simple, centralized dispute resolution and refunds as well as notifications of special offers. It's very, very convenient.

The economy of scale for the drivers is also much better with a centralized model. Instead of every mom and pop restaurant having to hire their own delivery staff there is one centralized pool of drivers available to everyone. A lot of restaurants just don't get consistent enough demand to hire a full-time driver.

> Restaurants have been running successful delivery operations independently for ages.

Crappy phone call driven ones with few checks for information accuracy.

> Is it just the benefit of being able to browse in one app/website everything available for be delivered to you?

Yes, that is a large part of it. I can be hungry and just pick up the DoorDash app and browse for food. I also have a single point of complaint for any issues with the food, can be confident that DoorDash got my address correct do not need to deal with a credit card at the door, and when I am in a new city, can instantly know what is available.

And still your order is wrong half the time.

Yeah, but now I click a button and in 30 seconds get a refund no questions asked.

One selling point is ordering from places that don't offer deliveries, like McDonald's or Burger King. Essentially pay someone else to order and collect for you.

That can backfire, as with the article here...

McDonald's is now partnering with Uber Eats, but in the wild west days there were a few apps which let you order from pretty much anywhere.

One app in my area (Glovo) still lets you do a free-form request: just write whatever you want delivered from any shop within a certain radius of your house. I never tried it, though.

One reason I haven't seen mentioned, maybe because it's not the case in America, but in Australia before Uber Eats your options for takeaway were somewhat limited. You could have all the Italian/Chinese/Indian you wanted delivered, but if you wanted a burger, or Mexican, or French food it was probably 50/50 there'd be anyone around who delivered.

Uber Eats vastly expanded the range of cuisines available, if they simultaneously lowered the quality (since these restaurants had no experience preparing food for delivery, and the delivery was usually slower since they didn't have in-house drivers).

It’s why I do order on DoorDash too. My local Indian place doesn’t do delivery, neither does my local deli, and my favorite pizza place won’t deliver to my address.

I’m more than happy to cut out the middleman and order direct but they turned me down when I offered to pay more to deliver to my address. I’m literally 50 ft outside their posted delivery area.

> Restaurants have been running successful delivery operations independently for ages

Have they? Because in my experience delivery from anything but major chains like dominos, mcdonalds etc. has always been awful everywhere in the world.

With delivery services I can get my favorite dish from my favorite small shop hassle and cash free.

In the UK before Deliveroo you could only order food from traditional take-away restaurants (Chinese, Indian, Pizza, etc). Delivery time could easily take north of 1.5 hours. Deliveroo takes 20-30 minutes. And you can order from really good restaurants.

A company focusing on delivery can do the job more efficiently and competently. Just the fact that they can route deliveries more effectively instead of going restaurant-customer-restaurant is a big win.

Lose a few 100 million today for a monopoly next year. I make the assumption here that these delivery services are intent on dominating the search results so that independent restaurants are not able to compete. They are forced into using the services, or rather having a large majority of other orders coming from these services.

>rather having a large majority of other orders coming from these services.

DoorDash has managed to change my behavior to the point that it is where I do when I am hungry, so I can see that being viable for a portion of the population.

Until the prices inevitably rise back up to the level they require to make up for the massive losses. Then that’ll just drive your behavior right back, probably much much faster than it took for DoorDash to establish this, meaning the “monopoly mode” profit time will be so short-lived as to recover next to nothing of the losses.

True, but then on to the next delivery startup :).

I suppose the fact that I left UberEats for DoorDash as soon as there were coupons suits your point though.

If prices rice on doordash the restaurant can just offer takeout cheaper.

I am guessing that DoorDash will succeed in the very long term. Eventually they will not need independent restaurants, they can just start their own (and cut ingredient costs to whatever they need to make a profit). And eventually deliveries will be done by robots, so no workers to pay. I'm not saying this will happen tomorrow, but think 20 years out -- there is a lot of money to be made.

I am not sure that making something a commodity is necessarily bad. You can go to the grocery store and get store brand macaroni & cheese, kraft dinner, or some organic brand. Kraft and Amy's stay in business, so people must be buying those despite the higher cost. But the lower quality / lower cost version is available for people that want money more than better cheese powder. I don't think that's a bad thing, and is the direction that food delivery is going. (Starbucks didn't kill independent coffee shops, McDonalds didn't kill fine dining. DoorDash seems like that kind of thing to me.)

You’re describing a restaurant chain. Why isn’t Swiss Chalet valued at billions of dollars? They fit your description exactly.

McDonalds is valued at billions of dollars. And this one doesn't rely on being located somewhere convenient; they bring the food to you.

I think DoorDash will ultimately be profitable for its investors. I don't think it's good for society (gig economy, growth by getting people to eat more calories, etc.), but that doesn't mean they can't make a lot of money.

If anything, the market has shown that there's always a VC with too much money to spin up a new one of these every now and then.

I'm not sure if it'll last forever, but I'd be willing to bet I will be dead before that cycle ends.

The problem is all these businesses (ride share, food delivery), have extremely low margins and the tech to spin up a competitor is extremely cheap and commodity.

Thus the “monopoly” you allegedly get later is deeply unsustainable at the profit level and scale required to recoup losses on any timescale that would work for investors, assuming you can even hold onto it in the face of constant reemergence of competitors.

This is what Naked Capitalism has been point out about Uber for years and years. Uber just keeps changing the story. First rideshare itself would be profitable. Then logistics and trucking would be a sexy new profitable area. Then self-driving cars, then food delivery.

It’s frankly just a Ponzi scheme at this point that was foisted onto unwitting retirement plan investors.

GrubHub / DoorDash / etc., are just more of the same.

You can’t take businesses like taxis or food delivery, with well understood economics, round trip costs, density requirements, low margins, etc., and just slap an app on top and make them somehow different than they really are.

Artificially increasing the supply of something that’s fundamentally not sustainable at that price just will not work.

It works great. All those management middle men of thousands of delivery and taxi companies have been replaced with software. Razor thin margins are enough to keep the servers running and a small team of developers managing it - for the entire planet.

It's difficult for any company to abuse their position as they're easily repalcable. So the margins will get lower, and more of the money paid by the customer will go directly to the supplier. Efficiency incarnate.

Uber is laying off 800 engineers tomorrow, they have thousands. All of them making salaries probably in the range of 250K-500k. Not really a small team of developers.

Numbers are relative? Compared to the management overhead of all the taxi companies in the world it is orders of magnitude smaller. And after today it is 800 people smaller on top of that. So yes, very small, very efficient.

You should probably read the articles the parent cited on nakedcapitalism.com.

How about public transport? It makes a substantial difference that I can pull up the route suggestion and station timetable from my pocket always-on always-connected supercomputer to know to the minute when I need to start tieing my shoes to get where I'm going. You're basically arguing that adding telepathic conscioussness to a service provides less than zero value.

It's not that these services don't provide value, it's that they don't make money. These are two quite different things.

> the tech to spin up a competitor is extremely cheap and commodity.

This is the part that makes me the most mad. The delivery companies have almost no value as business entities, all of their value is in the technology, and the technology is not complicated at all.

The job that's being done by doordash and grubhub and all of them would be accomplished much more affordably, sustainably, and ethically with a marketing co-op, which is already pretty common in the food industry in America (Blue Diamond, Land o Lakes, Ocean Spray, Sunkist, Sun-maid, Tillamook, Welch's, etc). There's no need for a separate VC-backed for-profit here, a simple confederation of restauranteurs would work fine and be just as effective and way better for the whole marketplace.

What's amazing to me is that they can all so brazenly pursue a strategy of "monopoly or bust" without any fear of regulatory action once they reach that endgame. I'm not sure whether it speaks more to the foolishness of VCs, or to the corruption of regulatory institutions.

I'm afraid that soon any regulation action will be seen as a death knell for the stock market, and all the monopolies will be judged "too big to fail". Then we'll have regulations not controlling, but cementing these monopolies

This quote summarizes it all for me: "Amazon just bailed on restaurant delivery in the U.S."

If amazon, a "real" business with a reputation built on ruthlessly cutting margin can't get it to work why would anyone else?

There are many businesses Amazon doesn’t enter. I personally don’t see how Amazon’s strengths can help them compete against other food delivery services. After all, same day delivery is the norm there.

I do suspect their focus on logistics and having an existing network would make it easier for them than others. They are doing food delivery through Amazon Fresh and also have been hiring contractors to do package delivery. Food, of course, has it's own constraints but compared to many they would be in a decent spot.

I mean, they canceled their phone program too, you don't see Apple packing it up.

True. But that industry already has a duopoly with very strong network effects. Food delivery is extremely fragmented and it looks as if there's no one actually doing it profitably.

I mean, think about it – Amazon can't run it like their current delivery service. They can't mark it as delivered, but then not deliver it until the next day. They can't drive up to the curb, throw it over your fence and then drive off. They can't claim to have delivered it but just not bothered. They can't say they're giving you a pizza from Pizza Hut and then actually give you a pizza some guy made in his basement. In other words, they can't run it like their current business.

Yea for sure. At the same time they did acquire Whole Foods and are doing food delivery through prime. They do own the warehouses here rather than acting as couriers but I would not be surprised if they just found out the economics (especially given their strengths) to just not work out for them.

Amazon just invested £500m into Deliveroo based in Europe...

The restaurants need to work through their own trade organization where they band together and push out the delivery businesses that are costing them money, and then allow delivery companies to bid for their business.

I suspect the larger restaurants have negotiated deals already, so they would not be amenable to this.

In the end the customer needs some single easy interface where to order food from. It is kind of difficult to see how this could work in a way where restaurants would dictate how customers prefer to order.

Why doesn't Google build this as an extension of Google Maps?

Charge restaurants no fee for the platform, if they provide their own drivers. Charge restaurants money through Google Ads to promote their restaurants for higher results.

In a few years, get Waymo's driverless cars on the game.

Google is already facing antitrust lawsuits from the EU, DOJ and US states, and you want them to add more fuel to the fire?

Why? All I want is for each restaurant to have their own website (which most already do), and to have a menu, a way to place an order, and a way to enter a credit card online, or for the person who comes to my door to be able to take a credit card. I don't care about an app or centralization, or having it be the same for every business. I just want to give them my money for their food in my house. So long as it works, doesn't get in my way, and doesn't cost me 30% extra, I don't have too many preferences on how it's done.

Same as it works today, but replace the VC funded app with a different app that a critical mass of restaurant owners get behind. That app could be owned, funded, managed by a group of restaurants in order to better serve their needs. Perhaps there could be some kind of federated standard.

Yelp actually provides a platform that integrates ordering from multiple providers into listings.

The restaurants (that aren’t mega chains like McDonalds) are usually utterly incompetent in spheres of logistics and IT. I don’t see how this can end up well.

That's what federations and marketing co-ops are for. They're really common in the agriculture sector. Nut, dairy, berry, and fruit farmers buy into groups like Land O Lakes, Blue Diamond, Sun-Maid, Tillamook, and Welch's, and then those entities handle the logistics and distribution and pass back the profits.

Platforms like grubhub and doordash could and should still exist, but they shouldn't be separate VC-backed for-profits, they should be restaurant-owned.

In another form of arbitrage with “substitute goods”, we’ve noticed restaurants with completely different menus on delivery sites than directly. We ordered anyway and the packaging was totally different. Someone is fulfilling orders for a fancier restaurant with generic food. I ended up throwing it out because I wasn’t comfortable with it.

The real arbitrage opportunity is for a competitor to DoorDash to place orders through DoorDash, and pay the delivery person a small fee plus let the delivery person collect the DoorDash fee. You could scale this up to huge numbers.

Curious if doing so would survive a lawsuit. On the one hand, DoorDash could argue that it's unfair competition, but only by admitting that their deliveries are priced too low, which itself is unfair competition. I don't know how unfair competition is regulated.

What if you set up a fake Pizza website "Super Pizzas", that advertises the Pizza for $16. That site then places the order with DoorDash automatically.

Then Doordash will scrape "Super Pizzas" and sell those for say $12.

Then set up another site "Supper Pizzas 2" selling the $12 Pizzas, buying from Doordash, and then Doordash will scrape that and sell them for $9.

Repeat until you have a site selling $1 Pizzas, then get that posted on Lifehacker!

Or serve a different version of the pizza place's website to the Doordash scraper with lower prices?

Wouldn't be too hard to do, use a PNG for your human menu and embed a "door dash" priced menu below.

How would the competitor get customers to pay higher than what DoorDash charges?

I've noticed the opposite phenomenon at a popular restaurant in Austin. The menu through DoorDash is priced higher than the normal price. Curiously, the restaurant's own, in-house delivery system is the same price as dining in. This is when I stopped using DoorDash...when I discovered that using the restaurant's own delivery system is just as easy and maybe cheaper.

Which restaurant? (I live in Austin)

Tarka

it will be interesting to see the impact of SoftBank withdrawing on consumption patterns of city-dwelling professionals. So much of their daily life is subsidized courtesy of Son

> How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners?

“(…) What sphinx of cement and aluminum bashed open their skulls and ate up their brains and imagination?

Moloch! Solitude! Filth! Ugliness! Ashcans and unobtainable dollars! Children screaming under the stairways! Boys sobbing in armies! Old men weeping in the parks! (…)”

https://www.poetryfoundation.org/poems/49303/howl

This whole sphere of economic activity is a gigantic farce. It would be hilarious if it weren't so pestilent. The only upshot I can see is that it feels like people are finally catching on to it.

"Which brings us to the question - what is the point of all this? These platforms are all losing money. Just think of all the meetings and lines of code and phone calls to make all of these nefarious things happen which just continue to bleed money. Why go through all this trouble?

How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners? My co-host Can and my restaurant friend both defaulted to the notion "delivery is a shitty margin business" when discussing this post.

You have insanely large pools of capital creating an incredibly inefficient money-losing business model.

It's used to subsidize an untenable customer expectation.

Third-party delivery platforms, as they've been built, just seem like the wrong model, but instead of testing, failing, and evolving, they've been subsidized into market dominance.

The more I learn about food delivery platforms, as they exist today, I wonder if we've managed to watch an entire industry evolve artificially and incorrectly."

A contrary view, from 4 days ago, arguing third party food delivery market is not created by VC, the startups are not over-funded and that they are delivering splendid returns to investors.

https://news.ycombinator.com/item?id=23171915

> Now suddenly each trade would net $75 in riskless profit ⇒ $240 from Doordash minus ($160 in costs + $5 in boxes).

If you do this over and over, obviously you can use the same dough and boxes, so costs are just what you pay Doordash.

What if you strip out the entire 'aggregation' and customer facing side of DoorDash/GrubHub/UberEats and rebuild them as complete back-end logistics services to the restaurants? You charge lower percentage of orders or just a monthly fee to help procure and pay the labor and route deliveries. Seems like that's the actual challenge for restaurants

ChowNow https://get.chownow.com/demo/ and Toast https://pos.toasttab.com/ do that

CloudKitchens fixes this.

I also find this really weird: its like load balancing between https://server1.example.com and https://server2.example.com instead of using a proper load balancer under the hood to get https://example.com

CloudKitchens is more the kitchen infrastructure for restaurants who only have a presence on delivery apps. They are trying to facilitate a restaurant model that is optimized for the delivery apps'supply chains rather than starting their own

Chipotle has white labeled DoorDash for delivery in my area. If I open the Chipotle app and make a delivery order, the "track your order" screen says it's "Powered by DoorDash."

> Chipotle has white labeled DoorDash ... it's "Powered by DoorDash."

Disclosing who’s powering it is the opposite of white labelling.

DoorDash already serves as the back end for a number of other services.

But being a courier company is not near as good of a business model. The aggregation element means that they own the end customer and payment flow, which among other things increases spend since you discover new restaurants via the platform and can transact seamlessly with any restaurant on DoorDash vs giving your card info to each new place

More importantly, as a two-sided marketplace DoorDash enjoys network effects which are the source of its defensibility. If they were just a courier company, restaurants could just switch over when they found the next company that could deliver marginally faster or undercut them with VC funding. As a two-sided marketplace, the restaurants can't turn them off without losing all the demand coming through the platform, demand which is captured by DoorDash is because they have tons of restaurants on the platform, creating a feedback loop.

Do businesses have any recourse here? E.g. for the pizza situation - can a business ban DoorDash and its ilk?

It probably can't since people don't have to be honest about being DoorDash.

But how can DoorDash advertise and impersonate someone else's restaurant without their consent?

https://www.google.com/search?q=in+n+out+doordash+lawsuit

The pizza business is the one making the profit here, at doordash's expense.

It'd presumably be trivial for doordash to fix this, by checking the order amount against the cost. The article explains why they might not be doing that ("growth")

The problem is some customers received the pizza cold, and instead of blaming DoorDash, they blamed the restaurant. It's very misleading when DoorDash resell a product and pretend like the restaurant is actively participating in that process. I personally would not hesitate to ramp up the "self ordering", just to f* with DoorDash.

Gotcha. You're talking about doordash pretending to be the restaurant, not the arbitrage problem.

It's an interesting question. I suspect there's some trademark arguments to be made regarding confusion as to who is providing the product and service and whose failures any mistakes reflect. That kind of attribution, and the product quality it promotes, is one of the central purposes of trademark law. But there's also the first sale doctrine--that after you sell your physical product, people can do with it as they please, including resell. I suspect it comes down to how clear Doordash makes it that the restaurant is not involved in the service, but I'm not an expert in these areas, and this is obviously not legal advice.

But doctrine of first sale does not extend to you fraudulently masquerading as the first-party seller.

> But there's also the first sale doctrine--that after you sell your physical product, people can do with it as they please, including resell.

Yep! First sale doctrine applies to all transactions. This is why my gammy can resell her Oxy’s and it’s all nice and legal.

To speak more precisely, the first sale doctrines prevent the original seller from asserting intellectual property rights (copyright, patent, trademark) as a basis to prohibit resell. I was writing an internet comment, not a legal brief!

So then first sale has nothing to do with Doordash’s food delivery service right?

It's an obstacle to suing Doordash for trademark infringement, which is what you would typically do when someone is doing business in your name without your permission.

All the regulation around food and beverage sales stands to the contrary - Normal people can't resell liquor, nor resell takeout food from a licensed restaurant.

Relatedly, it's surprising that delivery times aren't monitored because of (totally appropriate!) food safety laws on holding food at proper temperature

Those prohibitions have nothing to do with the original seller asserting his copyright or trademarks or patents, which is what the first sale doctrine prevents. They're just requirements for anyone who is selling food to the public.

The safety angle is interesting.

> Normal people can't resell liquor, nor resell takeout food from a licensed restaurant

That's actually good and a bit surprising. I find it quite disingenuous that DoorDash lists restaurants that haven't agreed to do take-out or delivery. Not only that by having a call center call into a restaurant it's just making the experience more expensive.

There is one restaurant in SF that was going to push for legal action. https://www.eater.com/2020/1/29/21113416/grubhub-seamless-ki...

If delivery people are paying with the Doordash debit card (most likely for non-partnered restaurants) you might be able to ban that BIN number (YMMV but it is possible with Stripe Radar + Stripe Terminal), or you could instruct your cashiers to refuse service to doordash drivers based on what card they use. After DoorDash receives enough reports from their drivers/customers it'd probably be delisted.

This would be key for restaurants to do, in DoorDash’s largest markets.

In-N-Out has done this: https://www.foodandwine.com/news/n-out-doesnt-want-anyone-de...

I enjoy that In-N-Out is still proceeding with the suit even though DoorDash has taken down the advertising in question. Have to send a message.

> the only viable endgame is a promise of monopoly concentration and increased prices

This is it! I've been involved with Foodpanda and Delivery Hero. The name of the game is, indeed, becoming the #1 player in the market. The tool of the game was M&A. That's what you see everywhere with Delivery Hero, Takeaway Group, Just Eat trading positions across the world. They are effectively cutting and slicing the world into countries and regions where each of them is #1 and the others don't compete. Such "collusion" creates incredibly profitable markets, as the #1 doesn't need to share 30% of top-line with Facebook and Google, can charge a 15% take rate to restaurants AND additionally, a delivery fee to consumers.

>I knew Doordash scraped restaurant websites. After we discussed it more, it was clear that the way his menu was set up on his website, Doordash had mistakenly taken the price for a plain cheese pizza and applied it to a 'specialty' pizza with a bunch of toppings.

If that's really what happened (sounds plausible) that means that you should be able to trick DD even more by designing a website specifically in order to confuse the scraper. Have some cheap dish listed at $50 but in a way that would be scrapped as $5 or something. As long as a human would have no issue parsing the menu and understanding the actual price I don't really see how you could get into trouble, it's DD's fault for having crappy parsers.

I'm not sure I would call a scraper crappy if it was fooled by a site deliberately designed to fool it. It would be like calling somebody's vision crappy if they were fooled by an optical illusion.

Scraping can be an adversarial exercise, but not typically in that manner.

Keep reading the level of skullduggery these companies go through and keep saying to yourself "Tech is a meritocracy."

Yeesh.

Merit for businesses is defined by consumer acceptance and consumers love these apps.

Perhaps because ignorance is bliss.

I recall blowback when it was uncovered that DoorDash was not providing 1:1 amount of tips to their dashers.

It's because the consumer experience is so subsidized. Consumers would also love an app that sends them $1.10 for every $1.00 they spend in it.

That's equating merit with user acquisition, which is the very thing that's fueling the (hyper-)growth of unsustainable unicorns!

We have extended a tech company to mean any company that uses computers.

>> Uber Eats is Uber's "most profitable division” . Uber Eats lost $461 million in Q4 2019 off of revenue of $734 million. Sometimes I need to write this out to remind myself. Uber Eats spent $1.2 billion to make $734 million. In one quarter.

These might be stupid questions, but... can this go on forever? No, right? Is there precedent for this? How long of a horizon do companies like this expect to be a money toilet? What happens to everyone else if companies like this collapse? Why hasn't it happened yet?

The foundation is immense "VC" funds that are throwing money at (often "unicorn") businesses that are using the money to grow their currently unprofitable businesses. The premise is that, once they are big enough to drive all the competing businesses out of business, they will be able to transition to being profitable.

The poster child of these "VC" funds is Softbank.

The foundation is crumbling. https://www.cnn.com/2020/05/18/tech/softbank-earnings-intl-h...

When these companies collapse, the investment funding them will have to write down the losses the "unicorns" have built up, and there will be a lot of investors that will be sharing in that hurt.

> Amazon just bailed on restaurant delivery in the U.S.

Yeah and Amazon just plugged £500m into Deliveroo in the UK. They are going for UK food delivery market and potentially Europe with that investment. Deliveroo is pretty amazing.

1. I can track my driver in real-time 2. Communicate with drivers via Whatsapp 3. Great range of resturants 4. Super convenient. Order comes usually within 30 minutes

Are they? They were in Munich but then pulled out. Looks like only Lieferando still exists here, as far as I can tell.

https://uk.deliveroo.news/news/amazon-leads-series-g.html

But it seems there has been some issues getting the funding past the CMA – https://www.gov.uk/cma-cases/amazon-deliveroo-merger-inquiry

I believe you're correct. Deliveroo did pull out of Germany.

I'm curious to hear how restaurant delivery services are meant to make profit; is it really through service fees (or a monthly subscription model), and tips?

Cost per meal seems way too high for people to use it often. Maybe it make economical sense for larger party orders, but how often do those kinds of orders happen during considering the COVID situation?

I assume it is the 30% they take from the restaurant.

30-40% from restaurant + up to 35% in promotional fees from restaurant + delivery fees + service fees from the customer.

The promotional fees are on top of the 30-40% for the order?

Yep - this is optional though, it's essentially an ad service.

I'm not an expert in this, but I think that the evil VC game plan is to try to make their portal the default first stop when ordering food. If they can get to that point, then they can start transferring the profit from the restaurateurs to themselves. This is more likely if people are indifferent to the specific place they order from after they've selected a dish or cuisine; less likely if people want specific restaurants.

Essentially, they've looked at the food delivery market as thousands of individual orders all going through individual phone calls or web orders and said, if I could take a percentage of all that, I'd have a great business.

The part of the article that shocked me was the Google hijacking. It seems Google is allowing it as a policy. Why screw these poor restaurants?

https://support.google.com/business/answer/6218037

Interesting. I always suspected this to be true but not the extent, especially the overall profits generated by food delivery cos. For e.g. one of India’s largest delivery co reported a loss that was double the revenue! [1]

The other way to look at this is to think of it as a global capital transfer mechanism, from the super rich to the “real” economy. Sure, it is not sustainable in the long run but while it lasts there is significant transfer of capital which appears difficult to otherwise do, thanks to resistance to capital taxes. I really do not know what to make of the incentives for fraud though.

1 - https://yourstory.com/2019/12/foodtech-startup-swiggy-loss-r...

Initially I thought this may have gone the other way, setup a business with no physical location, get on Doordash, and when you get orders you place orders at other restaurants not on the platform, then pick up and deliver their food, while charging some kind of markup on their prices.

Oh, one other interesting thing I've heard happens regularly. Couriers have multiple cellular devices. The second account usually get batched orders from the same restaurant they are already at which leads to a host of problems for the customer and restaurant. This leads to the order that was ready first to just sit and die in the courier bag while they work to maximize their earnings. Couriers sometimes leave before the second-order is ready and return well AFTER it's been ready to retrieve it because they are out and about delivering other orders.

With location services, should be simple to detect this occurring. The apps could do something about it, if they wanted.

I don't see why it's hard.

Probably because Grubhub and Doordash are approaching this with the "holistic mindset" of a "visionary" mind like the WeWorks founders. Hence we get behaviour like this which is probably illegal in multiple ways.

Provide your work at a fixed price per order. Or you might take a (transparent, explicit, of those who actually signed up for the service) commission, fair enough.

Providing a good service is hard on itself, but it won't distract you from all the other crap and won't alienate the people that actually make your service work.

Isn’t this fraud? What’s unclear to me is if it’s illegal, or just unethical.

My initial response to this headline was anger as I assumed that the arb would inevitably screw over the small business owner. That anger quickly turned to glee upon reading the first couple of paragraphs!

Honestly at times it seems like all these Uber for this or that, DoorDash and whatever other logistical services were created with the premise of just keeping people busy and making them feel like they have a job (one that often costs them money to work at).

Once upon a time you started something and hoped to figure out how to scale and find product/market fit. These days with the cloud it’s become trivial to scale almost anything that’s not building cars or spaceships.

All these other BS startups have no hope for profit and no end game in sight. It’s kind of pathetic.

> Honestly at times it seems like all these Uber for this or that, DoorDash and whatever other logistical services were created with the premise of just keeping people busy and making them feel like they have a job (one that often costs them money to work at).

Are you referring to customers or restaurants or drivers?

I’m referring mostly to drivers, but programmers and basically everyone else in the chain as well.

Let’s throw a stupid amount of (not our own) money and manpower at programming a solution to a well defined problem and then grab a bunch of low wage workers and milk them. We will keep everyone, engineers, drivers, restaurants busy all the time to make it seem like we are making progress but in reality we are just burning time, money, oil and the last mile workers to the ground.

With all this money being thrown around you would think they would be able to engineer a solution wherein instead of committing identity theft (which is essentially what the author describes) and exploiting workers, they are actually solving the problem in an honest way which also provides an equitable wage.

Enough with the unethical bullshit. If you have to pose as the business to “help” a business all while exploiting cheap labor you aren’t solving a problem and you don’t have a right to exist, no matter how much money you got from SoftBank.

One thing I'll point out is that we don't actually know if delivery services (for restaurants such as pizza places that the article mentions) are profitable period. It's entirely possible that businesses offer delivery at a loss (i.e. cost of delivery is more than the delivery fee, so it hurts their overall profit margin) because they expect the increase in revenue due to added convenience for customers to offset the lower profit margin.

Companies like Dominos are mostly delivery, so I would imagine they must profit.

How does the author know it isn't the driver that will get the short end of the stick here? To put it differently, what would happen if the restaurant mistakenly charged the driver who is picking up the food more than listed and then the driver pays that mistaken amount with Doordash's credit card? Will they be penalized/fired once Doordash discovers the accounting error?

It would be illegal to penalize the drivers, at least financially. I doubt the driver is given the choice of not buying the food based on price. If Doordash did have some way to penalize them, they could just bounce over to Grubhub or others. Doordash is advertising food at a given price - they must sell it at that price, regardless of price of purchase.

I remember the time when I self referred the shit out of doordash, caviar few years back only to stop because I started feeling bad about it.

I'm surprised a guy in finance can't see the potential efficiency gains and economies of scale a delivery company could have over all restaurants having to operate their own delivery service. I don't know about DoorDash specifically (not in the US) but it seems obvious to me that those services are here to stay and they can be run profitably.

Reminds me of the discussion in ‘The Bitcoin Standard’ about zombie industries directly or indirectly build on top of unsound monetary policies. One could argue this capital burning colossi exist by virtue of access to a populations purchasing power / wealth. Instead of multiplying productivity and increasing living standards they stall progress.

Source please?

Perverse incentive drives odd behaviors. People would have shipped bricks to themselves if the arbitrage warrants it.

This is so asburd it feels like a story in bad movie. We have pushed finance & capital so far into the realm of fiction that it doesn't really make sense anymore.

Artificial growth for the sake of artificial growth, just so you can get to your exit and leave someone else holding the bag. Ponzi schemes at massive scale.

How did the startup/VC world become so entangled in all this bullshit capitalism?

I have a vague sense that this exact scenario with pizza was covered in the Silicon Valley sitcom...

It was, they use it to bankrupt another startup so they can acquire them (and their employees). I'm wondering now which one happened first...

Same way they did in the 90s, lots and lots of dumb money.

My son and i have a tradition when my wife attends a nonprofit board meeting every other month. She leaves and we order some five guys on doordash while we play a PlayStation game. I use a new email every time and usually get free delivery and a coupon. Doordash loses, Five Guys loses, and we get some dude to deliver a burger.

Though according to the article only doordash loses here, not fove guys. Doordash pays the difference netween menu and paid price.

For a period of time when Uber was in China, a huge amount of revenue was from fraudulent rides that weren't actually happening.

There were smart investors who saw through the facade and didn't invest and there were smarter ones who saw through it and invested despite that.

Where I live in India, nearly 90% of the restaurants and hotels get their food from one place at rock bottom price.

And the restaurant/hotel the customer is dealing is responsible for arranging delivery and serving.

Something just doesn’t make sense with this story. Ok, it’s possible doordash has accidentally mispriced a pizza. But why would they misprice a pizza but then pay the correct price to the restaurant?

Because the person calling the restaurant to place the order gets the correct price. Why isn't it detected and fixed then? Probably a mix of bureaucracy and undermotivated employees; the call center people don't really know or care if DD is making a loss on purpose or not, even if they know how much the final customer actually paid.

Nice - this made BBC news! https://www.bbc.co.uk/news/technology-52724062

> That’s what is so odd to me about third-party delivery platforms. The business of food delivery clearly is not intrinsically a loser. Domino’s figured it out. Every Chinese restaurant in New York City seemed to have it figured out long before any platform came along. My friend is figuring it out.

Domino's and Chinese are very specific high-margin businesses. Basically the highest-margin restaurant businesses.

That doesn't, in any way, prove that food delivery in general is not a loser. In fact, if you have to specifically pick the two highest-margin examples as your examples... maybe the industry in general isn't all that sustainable.

It's kind of hard to imagine how DoorDash execs are going to explain to those investors who find this on HN / elsewhere and ask them what the eff is going on ?

Since at a high level this seems like mis-assigning VC funds, could someone who does this arbitrage eventually be sued by Softbank to recover VC funds?

I don't get the opening story. If his restaurants weren't delivering, who was Doordash picking up from? Did they just get doggy-bags to go?

yes

There's an episode of Silicon Valley where Pied Piper bankrupt an unrelated start-up using this method so that they can hire their developers.

Yep, this is the real world Sliceline.

Sounds like the driver is the loose end. I wonder if the author considered becoming a Doordash driver just for the arbitrage transactions.

so they have two possible endgames:

1) find a sucker (aka retail investors) that buy a loss-making stock

2) become a monopoly and squeeze everyone to get higher margins (kind of how booking.com pushes hotels to increase their standard prices so that booking can offer a discount; which you also get if you call the hotel itself).

I said this in another post about Grubhub but similarly to this article I really don't get it. Those apps are all 25%+ expensive than ordering take out directly with the restaurant, they screw the restaurants and all those delivery companies lose millions.

Did everyone really become THAT lazy that driving 10 minutes to get your meal is that much trouble?

Not everyone has a car.

> Did everyone really become THAT lazy that driving 10 minutes to get your meal is that much trouble?

Depends on density, and traffic.

Getting to a nearby restaurant to pick up dinner, even a close by one, would easily take 30 minutes+ round trip. If I want food from someplace more than a couple miles away, make that 45 minutes or more round trip for dinner.

Or I can order from an app and have food delivered.

The question then becomes, is saving almost an hour of time worth $20?

For me, it's sometimes laziness, but usually not. The long and short of it is that delivery only happens when it's hard to leave the house for whatever reason. If getting myself to the restaurant is an easy option, then dining in generally is, too. Takeout only happens when I've been tasked with picking up burritos on the way home from work.

I've probably only used each of the major delivery apps once or twice, so I'm not representative of their customer base, but yeah, every now and then I'm having a specific day where I'm feeling that lazy (and of course driving anywhere in the bay area around dinner time is likely to take a lot longer than 10 minutes round trip). Then again I'm living in the bay area and not making anywhere near FAANG money. I can definitely see the delivery fees being negligible compared to the value of my time if I was making 2-3x my current salary.

Meal delivery doesn't just exist because people are lazy. It has been around a long time via the much more inefficient process of calling a restaurant that you already knew about, having someone spend time with you on the phone getting your order and credit card # and then dispatching a delivery person they employed directly to deliver the order to you.

My experience is that calling for pizza is faster and easier than using an app.

I used to think this, until:

1. We had a child

2. We had multiple children

3. We realized getting children (who may be sleeping) into a car for even a 10minute drive becomes a big production

4. We got rid of our car

Also, other reasons:

A. It is 8:30pm, you're at the office, have another 3hrs of work to do and cant spare even 10min to get away. Very common in my Junior Analyst days. In fact, we had a company sponsored SeamlessWeb account that we could use anytime.

B. You are on a business trip at a random city/hotel w/o a car

C. Your car is in street parking and you dont want to lose the spot (wicked, i know...)

It's the opposite. People are so busy that they can't spend 10 minutes to get food.

Also the fact that they can afford the premiums in the first place implies that they're not lazy ;)

I'm in Toronto, so we have Skip (Skipthedishes) instead of GrubHub along with UberEats and Doordash

1.) Skip doesn't allow the restaurant to jack up the price, so to the customer the total cost is the same 2.) These companies toss out tons of coupon codes and referral codes that bring the overall cost down (sometimes even cheaper than ordering directly from the restaurant) 3.) In dense urban centers, a ten minute "drive" is way more challenging/time consuming/effort than it would be somewhere else. In fact, these services use bicycle couriers in these areas.

Some background -

In my past life I started Crazymenu.com The idea initially started as a central place to host all the restaurant menus with the idea of eventually expanding it to SAAS tech layer for everything restaurant related. The idea ultimately pivoted into google maps for restaurant menus. Meaning companies would just pay me a service fee to incorporate these menus into their services (ordering food, review sites, restaurant apps, etc.)

I self-funded the idea and after my first beta launch (2006, I believe) I was pitching an angle investor (Mr. X) who years later became an early investor in Doordash.

Right away, Mr. X said why not go into online food ordering business and then may be do delivery, etc. I never liked the idea of dealing with all the transaction headaches and told him I wasn't sure about the idea and dealing with so many fragmented restaurant softwares. From what I could gather attending a few National Restaurant Association events in Chicago and speaking with lots of restaurant owners, I noticed two categories. Very small mom and pop operations, or small medium chains. All the small to medium chains already had invested into some technology layer (some were closed off) and unless you could integrate with them, there was no interest to working with you and the smaller mom pop entities were either too busy or they were so bombarded by all types of tech solution offerings that they didn't want to listen to you.

Years later when Mr. X had invested in Doordash I had private chat with him.

I told him in my opinion, restaurant delivery is restaurant business. Meaning that it'll be very hard to compete. On top of one huge exception. You never crave DoorDash, you crave pizza or burger or Chinese food.

When the OP says Dominos figured out the model as did lots of family owned Chinese restaurants. I can understand that.

I believe this is a very vertical business. For one thing it's mostly around the brand, and the brand experience. This is the same reason Starbucks avoided franchising (if you think about it, DoorDash is a bit like franchising a delivery business) as did In-N-Out. These smart people had already figured out the nature of building a food brand experience.

Getting a cold food, soggy pizza destroys the brand.

This is very different than Amazon or UPS delivering books. Because delivery of books or jackets doesn't impact the brand at the same level it does with food. Not to mention when you don't deal with risk of food getting cold you can really scale delivery by mastering routing and all the different things UPS can do with scale.

Ultimately, we either see a very vertical experience. Uber buying several popular food category chains (pizza, burgers, fried chicken, etc.) or the reverse, PEPSI's parent company buying UberEats/Grubhub or if there is a massive consolidations and Uber or Grubhub can charge in an economically sustainable way.

So funny how this mirrors the pizza app thing from HBO Silicon Vally.

I think I finally understand "growth hacking".

Maybe they should rebrand as sliceline.

i know no lawyer wants to provide conclusive opinion here, but this has to be illegal

> If capitalism is driven by a search for profit, the food delivery business confuses the hell out of me.

The modern Silicon valley venture capitalism is not about operational profit, it's about company valuation.

"Isn't business supposed to solve problems?"

This is a common misconception... Capitalism is only designed to solve one problem: maximizing shareholder value.

Is there really a monopoly play here for food delivery?

Granted, DoorDash can possibly be used for other kinds of delivery, like medicine and groceries.

It seems the cost of labor and transportation is too high to make it feasible.

But the actual play, might be robotic. To first take over the manual market, and then, conduct research into automated delivery services, like aerial drone delivery, or robotic dog delivery.

Once that technology is viable, then phase out the human delivery people, and replace them all with robots.

I actually never thought something like this would ever be economically viable. And then one day, a pandemic hit the entire world.

Saying that delivery can work for most food in most places just because dirt cheap pizza and super dense NYC can do it, strikes me quite naive.

> How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners?

Simple. Capitalism is broken.

In order for capitalism to work, there has to be a meaningful profit/loss incentive. People who are doing the work must get rewarded if the work is done well and penalized if the work is done poorly.

We already started moving away from this many years ago with the growth of large corporations. When was the last time that you at your "capitalist" firm were aware of revenue and costs for the things you were working on in a more-than-superficial way? When was the last time you saw someone make a buy-vs.-build decision based on the actual numerical cost of the employees needed to run the project and not just handwaving? (When was the last time you even knew what the cost of the employees on your team was, given the widespread taboos about compensation?) When was the last time that someone who said "I saved the company X million dollars" got some proportion of those X million dollars? When was the last time that someone who needlessly made the company spend X million dollars in the first place paid for it?

The function of a big company is to abstract away the cold, unfeeling invisible hand of the market and protect people/groups who make unprofitable decisions. This is actually totally fine and good in the short term - nobody makes consistently good decisions, and insurance is a thing for a reason. You want people to take bigger risks on behalf of the company than they're willing to subsidize with their own paychecks, which is why individual artisans and professionals team up to form a company in the first place. But it's grown past that. As the article points out, some regional director somewhere is able to convince other people at the company that their work is profitable - with no hard link to whether the work is, in fact, profitable. And that scenario is entirely plausible for all of us; it's not specific to this one company in any way. If you're in the unlucky position where both you want to draw good charts and everyone around you wants to see good charts, there's no real way to figure out if you're wrong unless the company as a whole is dying, and there might be a host of reasons why it's not dying that have nothing to do with your decision-making.

And now venture "capitalists" have decided that this model needs to scale out from protecting teams to protecting entire companies. You can run a business for years without even attempting to make a profit and get acquired based on the potential of the business. No more messy realities of the market determining whether you are in fact profitable or not - what matters is whether you look profitable. And, again, this is genuinely good at small scale, because it allows new ventures to ignore bumps and potholes that would otherwise have ended a small company. But if you scale it up, it also allows new ventures to ignore driving straight off a cliff.

I expect capitalism to work very well if implemented right. But I don't know how we go from where we are today to actual, functioning capitalism.

You say that capitalism is broken, but the capitalists are all doing very well, even as everyone else feels the pain.

If the capitalists are doing very well, then how can you say that capitalism is not doing very well?

To answer this question may require you to undergo a paradigm shift.

Think about it.

We really need a true crisis. Free market economy needs to let such companies to buncrupt. Lesson must be learned.

Unfortuanetelly looking what FED is doing, it won't happen soon :(

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