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Comment by maltelandwehr | Hacker News Reader

Next week there will be complaints that food delivery services are no longer catering to certain areas. Instead of accepting that it is just not profitable for them, journalists will label it as backslash or an act of punishment. Same thing happened in others states/cities that implemented similar rules.

The winners are people living in central areas of the city with lots of restaurants. The losers are the poorer outskirts.

I fully support the idea behind this rule. But this implementation has been proven to not work.

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How about you have to charge the fee to the customer. The issue isn't taking 25%. It's taking 25% from the restaurant, which means they don't have a profit margin left.

If for example the pizza is $10 at the restaurant, make that $12.50 with delivery and $10 without. That way the consumer can decide themselves if they want to pay the added amount for delivery, or if they'd rather walk/drive. Right now they charge you $10 and give the restaurant only $7.50 meaning they can't make a profit on that pizza.

It's already 12.5$ with delivery. And even worse, a ton of other fees get added on top of it, making your order total close to 18$. Consumers are already paying enough, so they don't want to pay more. This is the reason why the Apps turn to restaurants instead. Even with that, they aren't still profitable.

Then they should cease being in business.

Couldn't the same argument be made for restaurants? If they can't afford delivery fees, or can't afford to make money without delivery they shouldn't be in business either.

Yes, of course, and they often do go out of business.

This is true so long as you recognize that this is a change in the market that will make certain restaurants unprofitable. A restaurant that was financially well-off before the advent of 3rd party delivery apps may not be anymore because they have fiercer competition.

Restaurants that can absorb the 25-30% hit, for whatever reason, now have an advantage over those that couldn't. The question becomes is this a market failure that needs corrected, or the natural evolution of the food service industry? The case for the former is that you have a vibrant market of pretty high quality restaurants run by their owners as passion projects and have margins that keep the lights on. Squeezing this market because it's now "deliver or die" means that they'll either have to go out of business or reduce their costs which hurts the customer with second order effects -- they will have to reduce their rents by going to a cheaper location that's out of the way, the quality of the food will drop, and/or the staff will be squeezed.

I don't necessarily agree with capping the fee but I don't think supply-chain transparency ever hurt the customer.

If you want to look at the poster child for holding back innovation in order to protect an outdated business model, then look no further than the film and TV industry. You could replace the restaurants in this story with the MPAA and the delivery apps with Netflix, and you’d have a story with exactly the same parameters, just with the heroes and villains of the narrative reversed.

If the apps charge too much the restaurants should leave. If that means they end up not delivering what consumers want then they should change their business model or go out of business. If the delivery apps can’t survive under those conditions then they should change their business model, or go out of business.

The hospitality industry has always been ultra-competitive and low margin. Bad restaurants go under all the time. The only thing that is different now is that they have somebody else to point the finger at. The other thing I think they all miss is that without these apps, most of the businesses would have had to immediately go under when Covid hit. Those services were the only thing that gave them a shot of keeping the lights on, and for the ones that can’t find a way to make things work, consumers can do without them.

Could easily be said, however you're overlooking the huge elephant in the room of restaurants being essentially forced into turning into delivery-only or delivery-first businesses due to Covid restrictions. Where I live we've only recently (like within the past few weeks) allowed restaurants to serve food to guests, and only outdoors.

Yes, but the restaurants have been put out of business by government order. This is effectively a Fifth Amendment “taking” and should be compensated.

Sadly they don't.. Not as of yet. They got tons of VC money to burn before they have to answer to anyone.

Doordash seems to have higher menu prices than the restaurants' own websites, so unless I'm missing something, it seems the restaurant has the ability to choose to recoup those fees from the customer if they want to.

What gets me is that Doordash is triple dipping here. There's the fee to the restaurant, which may or may not translate to higher menu item prices. There's the fixed $2-5 delivery fee which is pretty obvious. And then there's the percentage-based fee in addition to that, 10 or 11% I believe, that's kind of hidden along with the taxes.

I mean come on. Sometimes I am willing to pay a rather high price to have my food delivered. I'm not willing to have to fire up Wolfram Alpha just to determine exactly how much higher, though.

There's also the 15-20% tip, of which the restaurant staff aren't getting a cent.

Don't you normally tip the driver for deliveries? I've never tipped a restaurant for take out or delivery normally...

I stopped tipping with DD.

I used to tip, when delivery was "free" (included in the menu price).

But DD jacks up the menu price (which, at least around here, is already increased to account for their own direct delivery service - they use DD to source more customers) and then adds a delivery fee - if I'm paying that much more of a premium to use a specific delivery person, I don't really feel I owe them a gratuity on top of it.

Why would you tip the restaurant staff?

Because tipping restaurant staff is what normal people do when they go out to restaurants in the U.S. Those same people still prepare and package the food, even when someone else delivers it.

I do not tip at fast food or counter-service places or when I pick up takeout. Presumably GP was comparing the delivery experience to the picking up takeout experience where someone else just happens to be picking up the takeout.

People tip the waiters when dining in. Depends on the location if those waiters share with the rest of the staff.

Picking up food usually has no tips. Delivery involves tipping the driver, which delivery apps already support and they don't take any fees from it.

> Depends on the location if those waiters share with the rest of the staff.

Legally, any tips go solely to the individual waiter to whom the tip was given. Restaurants may not legally require a tip sharing program, either between servers, or from the servers to the cooks.

In practice, you are right.

> Picking up food usually has no tips.

I typically tipped even when picking up food. And restaurant staff remember that, precisely because so few people do it.

Who the does the tip go to? The person handing you the order?

The places I give such tips at typically give them to the kitchen and staff.

When you go to a restaurant, you sit down, occupy valuable table space, and have staff service you by bringing the food to you, filling your drinks, and providing you with napkins and cutlery. That's why you tip.

Many places charge extra for pick up.

You got a lotta Reservoir Dogs fans replying to you lol. Didn’t realize how cheap so many of the tech bros on here were.

We've asked you several times to stop posting unsubstantive and/or flamebait comments. Please actually stop.

Is it possible for me to delete my account? I emailed about this awhile back and never got a response.

When did you email? I can't find any email from you in the archives, and that's not the kind of thing we'd fail to respond to.

Sometimes legit emails go to spam, though I look over the spam folder pretty carefully too.

I don't tip for takeout. If they deliver, I tip the delivery person, but if the restaurant isn't the one delivering that's not relevant.

(I hate tips, restaurants should just charge what they need to charge. But that's not how things are done in the US, and it's hard to change the culture...)

The ChowNow app doesn't handle delivery, only online ordering. If the restaurant delivers, they do it themselves. The nice thing about ChowNow is that they just charge a monthly fee to the restaurant, plus any credit card fees. More affordable for the restaurant than a 30% cut of each order.

How much more extra do you think customers will pay? There is already a $15 minimum on most apps. There is the 15% flat service fee they charge customers. Then there is the delivery fee that can range from $0.99 to $7.99. Then there's the tips. And to top it off, the apps charge the restaurant as well. Sometimes as high as 25%. If you shift these costs to the customers, its almost a 50-60% premium. I don't think their business will survive.

> The issue isn't taking 25%. It's taking 25% from the restaurant, which means they don't have a profit margin left.

I mean, that's not really an issue.

Money is fungible, which means there's no real difference between "charging the customer" and "charging the restaurant" aside from who the customer blames for the higher price.

Exactly what happened in SF. Uber Eats stopped delivering to Treasure Island as a result:

"The Order limits our ability to cover operation costs, so we have had to revise the areas Uber Eats can deliver to in the city. Unfortunately, this means we cannot continue to serve customers in Treasure Island. The Mayor’s Emergency Order limits the commissions we charge restaurants for access to our platform and delivery services."

To some extent this seems like grandstanding. They charge a delivery fee. If the delivery fee doesn't cover delivery, then charge a higher delivery fee. That comes from the customer, not the restaurant.

* If the delivery fee doesn't cover delivery, then charge a higher delivery fee.*

Why doesn't that reasoning apply to restaurants? If the fees cut into their profits too much, then they need to raise prices.

There is no free lunch here (ha!). The customer is always going to be paying for both the food and the delivery. There's no benefit in micromanaging the internal transactions.

I’d wager they have clauses that prevent them from charging a lower price for direct customers. In which case the restaurant has to charge everyone a higher price. In what world does that benefit anyone but the intermediaries?

It’s the exact same as credit card processing fees. Except that’s 3% and this is 30%

> Why doesn't that reasoning apply to restaurants?

More opaque. The honest approach would be for the menu prices to be the menu prices, and the cost of the delivery should be obvious.

Because the restaurants aren't allowed to charge higher prices to their higher cost delivery customers. Which doesn't stop the food delivery places from charging higher prices, of course. And taking a cut, and collecting a delivery fee, etc etc.

> Because the restaurants aren't allowed to charge higher prices to their higher cost delivery customers.

Why can't they? Is this a local or state law?

Because it's a platform rule from most Delivery Apps in most markets.

Restaurants in Australia do charge higher price on Ubereats and Menulog, I am surprised its not the same in the US.

And base that delivery fee on distance between the restaurant and the customer as well. They can solve it they want to. People in treasure might be willing to pay a higher fee than to not get any delivery at all. It’s political posturing and pressure tactics.

In that other fold of the multiverse, the headline could be that uber is charging people extra in Treasure Island, which contains a lot of subsidized low-income housing.

They already do that for taxi rides, right? A longer taxi ride doesn't get magically cheaper because it's going to/from low income housing. It's all transportation, and transportation gets more expensive for a longer distance.

Well who would click on that article?

That makes no sense to me. Why can't they charge people ordering from Treasure island higher?

Because the city made it illegal, obviously. Just like Portland. They're not going to operate at a loss. All you're doing is criminalizing deliveries that cost more than 10%.

> Because the city made it illegal

That just seems as PR from food delivery apps. AFAIK the city put a limit on how much the restaurants can be charged, there is no limit on how much a person ordering the food can be charged.

The city made it illegal to charge the restaurants - not to add a higher delivery fee.

Some semi-related reasons I can think of

1. If people knew what it actually cost to get food delivered (as opposed to hiding the delivery fee by increasing per item costs or charging the restaurant a cut), they wouldn't order

2. Part of their business model is to waive delivery fees, like if you buy the subscription for unlimited delivery. However even if you have unlimited delivery they still make money from service fees and restaurant commissions. If all of that cost gets charged as a "delivery fee", the $20 subscription for unlimited free delivery becomes unsustainable.

3. As others have mentioned, they're probably doing it in part just to make a point

They can, but they don't want that increased charge to be shown to the customer, they want the restaurants themselves eating that cost so the prices stay artificially low from the end users perspective.

I don't understand why people in central areas of the city order delivery. There are 10 amazing restaurants within easy walking distance of me, why order delivery when I can walk for 5 minutes instead?

Depression, chronic fatigue, disabilities, anxiety...?

Sick in your apt with covid for one.

- There is a pandemic going on

- Not everyone is physically able

Cause people are lazy/committed to something else/working too much/sick/what ever else? They wouldn't be ordering delivery at all if they weren't. They would make their own food.

If you have enough discretionary income, why not circulate it and help expand the econony? I'd never have a problem with any of my neighbors spending money, and especially not locally.

My barber (well masked up and a face shield) was seeing fewer customers. I was getting my haircut less since I was at home and spending less in gas. I was giving him double the amount that I usually pay for a haircut when he reopened.

I’m also tipping delivery drivers a lot better these days.

Maybe because some people are completely quarantined and unable to leave their homes.

We're moving from an age of consumers going to the good/service and to the good/service going to the consumer. In particular younger generations see delivery as a norm. It's less about being lazy or having high expectations and more a case of it being baked into the culture of younger generations now.

I work for a takewaway / food delivery company and it's facinating listening to what our customers are saying. I heard one parent say that their kids have sometimes ordered ice cream on a delivery platform rather than look to see if there's any in the freezer first. It's quickly becoming the norm to the point where peoples literal first thought is "can I order it?" rather than "can I go and get it?".

Sounds incredibly wasteful, no matter the economics involved.

Because those parents are bearing the costs of their childrens eating habits, rather than the kids feeling the cost.

I'm not defending it, it's just the trend I'm seeing.

Once the long promised delivery drones are finally here, it’s actually less wasteful. So the younger generations are just adapting to the yet to come future :)

I think Amazon Prime is a big cause of this mindset. It's become so much easier to order things on Amazon and wait two days than it is to think about going to the store and looking for the item you want.

5 minute walk then 20 minute wait then 5 minute walk back.

When you're earning $50+ an hour, which many in cities are easily clearing, it starts to make a lot of sense to pay someone else to do your waiting for you.

Call ahead?

Takeout is 15-20 minutes, delivery is 40-60. Call ahead, and the food will be ready by the time you get yourself together, walk out the door, and arrive at the restaurant.

Right, but you can be doing other things during those 40-60 minutes

I usually spend that time distracted with thoughts of where is my delivery, why is my delivery late, I'm so hungry, why did I even order delivery? The walk is a lot more pleasant.

This is maybe a reasonable argument for lunch on a workday, but doesn’t really apply for dinner or on weekends. There’s a counter argument to be made that for many people their productivity and creativity increases when interspersed with a bit of walking, change of environment, sunlight, etc. Anyway it’s largely a matter of preference. There’s are certainly occasions where it’s nice to relax and order door-to-door delivery regardless, although I’m never personally willing to pay the insane fees that apps like Uber Eats charge.

Don't you see? My time is too valuable to do anything vaguely unpleasant. The entire economy would suffer if I had to pick up my own food.

I'm probably going to get downvoted for this, but yes - that's spot on. It's exactly that kind of attitude I've seen far too often in the culture of well-paid tech workers.

Their lives are all about optimization of time resources / time management, and everyone should bow to their needs - if it results in them shaving off some minutes here and there.

After all, they're making $300k/year working on important products, so it's only natural that every corner that could be cut, should be cut - even if it means driving people out of business.

When confronted with the logic, they regurgitate the same "But you see, my time is worth $xx, 24/7/365 - so 30 mins saved on task x is a net profit for me" (even though, in fact, they would not be working during those 30 minutes)

We all pay people to do things that we could do ourselves that we would rather not do.

Every time we eat out, pay a lawn service to cut our grass, have someone else wash our car.

Yes. It is dumb though to justify it based on how much you get paid hourly. They don’t understand the real concept of opportunity cost.

> It is dumb though to justify it based on how much you get paid hourly.

imo my time is actually worth many multiples of what my employer pays me for it.

That’s fine. You can value your time however you want. But don’t pretend it’s done grand economic principle.

But your time is only “worth” monetarily what the market will pay for it.

> "But you see, my time is worth $xx, 24/7/365 - so 30 mins saved on task x is a net profit for me" (even though, in fact, they would not be working during those 30 minutes)

You're right. If their leisure time were merely worth as much as their regular wages then they ought to be working those 30 minutes instead. Since in fact they made the opposite choice, they clearly value their leisure time more than what they would have earned by spending that time working.

You sew your own shirts and milk your own cow I presume?

> Their lives are all about optimization of time resources / time management, and everyone should bow to their needs

You make it seem like they have a gun to the heads of the landscaper they hired to do a job, in which the landscaper now has money to do whatever want to do it with it.

To your other claim about not “working” during those 30 minutes. You are working every single minute of the day. It might not be for a paycheck, it is probably for your mental sanity by chilling out with a drink waiting for some food to arrive.

That was purely an economic decision that they value doing X over doing Y. That’s done with every transaction done throughout life.

Walking around is usually one of the highlights of my day. Walking down the block isn't a chore, it's a pleasure. Delivery is cold by the time I get it half the time, I want stuff done well I've got to do it myself.

You're explaining why you don't use delivery, but not why "it doesn't make sense".

Would people really rather have cold food that costs more than walk for 10 minutes?

Other people may have a combination of:

- better delivery options

- an aversion to walking, or no walk-able options

- higher risk tolerance for lukewarm food

People differ in more than physical appearance.

In a central area of a city? Absolutely.

I hate this line of reasoning and so do many economists.

It’s not the “opportunity cost” you should be measuring. It’s the “opportunity cost of the next best alternative.”

If I am an hourly worker making $50 and going to get food would be an hour that I wouldn’t be working, then yes it is worth $50 to not spend it going to get food.

But if I am choosing between watching Netflix and going to get food. The next best alternative pays $0. From a purely financial view it makes sense to get food.

Most simply, some people value their leisure time as much or more than their hourly wage.

I find this become more true the more someone is compensated and the more they have to work.

I have no problem with that. Just don’t wrap it in some BS about opportunity cost and how much their time is worth.

There are three concepts that HN commenters don’t understand

- “Monopoly” and anti-trust

- the legal concept of censorship.

- opportunity costs.

I just want to make sure I'm following your train of thought correctly regarding this object.

So, say, an hourly contractor who orders delivery so they can get back to work sooner still makes sense to you, right?

If he would get more hours in during that time instead of going home earlier, then you could value the time saved against how much it would cost.

If he makes $50 an hour and he can get an extra hour in working, if it is cheaper for him to order food then yes it makes economic sense.

On the other hand if he were at home watching Netflix and he spent the money set aside for his utility bill to eat out and his lights got cut off , the opportunity cost wasn’t the $50, it was that he could have had lights.

Alright. Just wanted to make sure I was following your train of thought.

Thanks for taking the time to elaborate. You have a good one.

> It’s not the “opportunity cost” you should be measuring. It’s the “opportunity cost of the next best alternative.”

Opportunity cost is exactly that: the next best alternative.

> But if I am choosing between watching Netflix and going to get food. The next best alternative pays $0.

If you could be spending that time earning $50, and you choose to watch Netflix instead—all else being equal—then obviously watching Netflix is worth more to you than the $50. Going to get food thus implies foregoing at least $50 worth of leisure time. The fact that no one is paying you to watch Netflix is irrelevant; monetary compensation is not the sole (or even most signficant) measure of economic value.

I agree that monetary compensation is not the sole economic value. But still “how much you could be making that hour” is also irrelevant in most cases.

That’s the entire point.

No it is highly relevant. I’m “making” happiness by watching a film on Netflix instead of getting dressed, getting in the car, struggling to find parking, waiting for the order, and then driving back.

This is an economic decision just One that not easily seen by dollars. I value a movie more than running errands.

And that still doesn’t have anything to do with the original thesis - “if I make $50/hour when I am working. That means I should value my time at $50/hour”. The opportunity cost is not $50/hour if you wouldn’t have been using that hour to work.

> The opportunity cost is not $50/hour if you wouldn’t have been using that hour to work.

It is at least $50 per hour if you could have been using that time to work. Anything else that you choose to do instead of working is prima facie worth more to you than the $50 you could have been earning. The opportunity cost—the next best alternative—is either working and earning $50 or else something you value even more than $50.

You are attempting to claim the opposite: that if someone can make $50 per hour working, but chooses to do something else, then that time is somehow worth less than $50 per hour. This makes no sense at all. This would presume that the person knowingly and deliberately chooses the option which is less valuable from their own point of view.

If I am a salaried employee, no matter how much time I work, over 40 hours a week, it would not earn me more money.

The only reason that I would work around 40 hours a week instead of slacking off is because ethically, that’s what I agreed to do.

Most people aren’t in a position where they could put in every waking hour into pursuits that generate money.

What percentage of people that post on HN are working hourly billable jobs?

Overtime pay exists, even for many salaried positions. Short of that, if you routinely put in extra productive hours you should expect a higher salary. And you could always take on a second job, switch jobs, or do some work around the home yourself instead of paying someone else to do it for you. There is no shortage of opportunities to trade some leisure time for extra cash.

For tech workers who dominate HN and are the first to say that their free time is worth whatever their total comp is, how many get overtime pay?

How many people who put in extra time actually get recognized by their company for doing so at their equivalent hourly rate?

It's not a decision you make every single time you order food. It's lifestyle.

Put in just your 9-5 then bail or put extra time and effort in to your career. Many high earners in cities are doing the latter. You take the time you'd be using not only be getting your food but cleaning, mowing, looking after your car; all of the work that isn't your job, and use it to earn more instead. The higher you earn, the more this makes sense to do.

Hours are interchangeable. Sure if you order food at 7:30, get it delivered at 8, and you spend 7:30-8 watching Netflix then yeah the next best alternative for that half an hour was $0. That's not where the trade off happened though. It's when you left work at 6 instead of 5. It's when you answer that phone call or email you otherwise wouldn't have later that night. It's going out for drinks the next day with that weird guy you shared an office with until he left a few weeks ago to work at a company you really want to move to.

I don't understand why economists would hate it. The opportunity cost doesn't have to be dollars - it could be in universal "utility measure" units. If I value the utility measure of what I'm giving up to get food > than I value the utility measure of the cost of delivery, I don't want to give up that utility to go get food.

I am not saying that money is the end all be all.

I am saying that the intellectually honest reason is that “I have the money to spend on doing things I don’t want to do myself”. Not, “Because I make $50/hour, for 8 hours a day, my time is worth $50 and every hour I get back in my life is worth $50/hour”.

If you aren't being paid hourly, this is utterly fallacious.

If you are being paid hourly, you should be billing for thinking while walking down the street or taking a shower. That is some of your most productive time.

Also as another commenter mentioned, cold food. Furthermore, avoiding all of the extra zero-use plastic waste they throw in the bag by default.

Most high earning people have the ability to influence their pay through expending time and effort.

Don't confuse spending time or effort with achieving results.

Amusingly, you have to spend the same amount of time exercising, to work off the health effects of eating restaurant food.

Speaking from when I lived in the middle of a major city:

I am working and/or enjoying highly limited relaxation time. I am willing to pay a premium to have the food arrive, and have the time surrounding "getting food in hand" be minimized, so as to minimize work interruption or maximize current recreational activity.

It's essentially the opportunity cost argument, applied to utility measure rather than literal dollars.

Because my time is worth more to me than that. It's not so much the travel... it's the waiting once you get there for the food to actually be ready (or conversely, waiting at home first and risking it not being hot when you get there).

I prefer to pick up the food myself, so that I can be reasonably assured that it's hot when I sit down to eat it. I've gone so far as to buy an insulated pizza delivery bag so we can eat hot pizza at home.

For me, the prospect of lukewarm food kills the delivery experience for me, even if delivery were "free" (not itemized to me).

Because they’re lazy and can afford it.

>The winners are people living in central areas of the city with lots of restaurants. The losers are the poorer outskirts.

Not sure this holds in most US cities. Outskirts are usually wealthier suburbs and lots of Urban Cores are quite poor.

This has been changing dramatically over the last decade+, but I guess I don't know which tendency currently dominates

If food delivery services suspend service in Portland tomorrow, I would find it pretty hard to believe it isn't political maneuvering to prevent other localities from doing the same.

They won't stop delivering in Portland, they'll just stop delivering to certain areas that are more out of the way.

Or just be more transparent and charge a higher delivery fee.

I mean by this logic the food delivery services are also proven not to work based on the ridiculous fees for a commodity service.

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