>Seems like a solid move
Are any of these food delivery companies even making money? What will capping their fees do except make them lose even more?
Are any of these food delivery companies even making money? What will capping their fees do except make them lose even more?
In fact, with all their tech and economies of scale, I'm surprised food delivery services are doing worse in terms of per-unit profitability than the low-tech restaurant-provided ones despite already charging excessive fees.
I guess the reason is that the various venture capital firms poisoned their own well by subsidizing the services and competing at below-cost pricing.
- Restaurants say they are paying too much.
- Delivery companies are losing money.
- Customers are paying fees to the sites in addition to the delivery cost we used to pay.
What gives? It seems these can't all be true.
But yes, all of those can be true. Paying someone for 30 to 45 minutes of their time is expensive.
Definitely, but this was also the case before Uber Eats et al.
Not to mention that crazy high costs of developing, running and maintaining slick apps that work for all restaurants, restaurant and customer acquisition, and tech support. Those costs have to be made up somehow.
Requiring market places to advertise the actual fee (i.e. anything that doesn't go to the restaurant directly) would probably help here: I might be willing to pay a 5% extra for the convenience, but at 30% I might think twice. It would both improve competitions between marketplaces and marketplace vs direct order.
Of course I'm sure that companies will do anything to game it (for example shifting costs to restaurants to fees not directly connected to the orders themselves).
- VCs continue to pour money into the delivery companies
... that is all that is required for this to continue. If that stops, presumably a whole bunch of these firms will fail and that will be the end of that.
With food delivery, it feels like everyone is getting screwed.
Of course, Uber's objective is to acquire you as a customer and not give you free food, so it's limited to new accounts only and presumably they check credit card and phone numbers to prevent multiple accounts being created.
However, if you try hard enough, you can indeed take advantage of it and automate the process assuming you have a good source of phone numbers and non-fraudulent credit card numbers.
But I don't really get it.
To be clear, the people doing well out of this are the delivery customers who are receiving a subsidy from all other participants.
Only like maybe 5% of the restaurants offered delivery on their own, mostly pizza chains and Chinese places.
The restaurant I regular order it's family run and either the father or son will deliver to us.
What we have now is a lot of abstracter layers of services, payment processors, workers, cloud computing, and VC. All these layers add a cost in an industry that can't afford the overhead. Unlike software and services, restaurants are high capital, high labor intensive businesses with low margins.
With automation, it might change the economics. I think that's what everyone's betting on. I think the Ubers and all are just trying their damndest to not completely drown until driver automation reaches a certain stage. They obviously can't openly say that because there would be revolts from their drivers.
Uber at least has been quite explicit about that. It's somewhere between delusional and what's known in the vernacular as "lying" but investors who are either naive or are cynically bought into the greater fool theory lap it up.
Delivery specifically can work in dense areas but it mostly relies on local kids or family members working for peanuts and can't really pay for overpriced SV engineers or VC yachts.