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AntiImperialist

When I pay for food in a restaurant, what I'm paying goes into:

- the cost of food itself

- chef and kitchen staff salaries

- waiter salary/tip

- profit margin

- rent

I'm assuming that the waiter salary/tip will cover delivery costs... so, the cost for the consumer will mostly remain the same.

The cost saving will come from the fact that if the restaurant operates just the kitchen, they don't need excellent location. A part of this saving can be claimed by the company that makes the app.

The rent difference between where you can have a restaurant vs where you can have just a kitchen in the same general area is huge in most places... so I think the business opportunity is real.

Now, the companies are competing to grab market share, and most restaurants still have the same restaurant kitchen, so we haven't seen those changes, but I think it's just a matter of time.

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> Now, the companies are competing to grab market share, and most restaurants still have the same restaurant kitchen, so we haven't seen those changes, but I think it's just a matter of time.

I wouldn't be so sure of that. delivery is inherently less profitable for the restaurant. a single employee can serve many more dine-in and especially take-out customers in an hour than they can as a delivery driver. at the same time, you are throwing maintenance and insurance for a vehicle into the equation. you can push a lot of this cost onto the driver, but not all of it. I also doubt that the location savings are that substantial. you don't need to lease the prime real estate that everyone walks by, but you still need to be within a 15-20 minute drive of your customer base. any property within 20 minutes of a dense area tends to be expensive to rent.

there are already a few take-out/delivery only places in my area. the only ones that seem to be doing well have pretty bad food for the price.

> at the same time, you are throwing maintenance and insurance for a vehicle into the equation.

We're comparing to the customer driving to the restaurant, right? So this was always a cost the customer was paying and it's just moved into the transaction

If by “cost” you mean car mileage, sure. But in a store pickup situation, there is no additional driver to pay, special packaging for transportation of the food, liability for safe transport of the food, transportation logistics operating costs, etc.

right, but the fundamental problem is that customers aren't willing to pay the full cost of delivery. delivery places don't just compete with other delivery places on price; they also have to compete with takeout prices. people don't mentally add the cost of gas, vehicle depreciation, and their own time onto takeout prices. plus a pretty common "workflow" is for people to pickup food on their way home from work, which has a negligible cost for them even if they rigorously price it out.

> delivery places don't just compete with other delivery places on price; they also have to compete with takeout prices.

Sure, but right now all of those takeout prices are from restaurants with retail locations. A ghost kitchen that offers delivery could be undercut by a ghost kitchen offering pickup, but in general they'll have a price advantage versus a retail restaurant with a more expensive location and more square footage.

The calculus is especially favorable toward ghost kitchens during pandemic-induced lockdowns, when people aren't otherwise out and about. If I'm driving home from work and can easily stop by a restaurant for takeout, that doesn't cost me much time. But if I'm at home 24/7, then I factor in the time spent going to get food. That makes ghost kitchens with delivery somewhat more attractive.

It's the exact opposite for me.

On one side being home 24/7 gives me a lot more time to cook myself, on the other side going out to buy food finally makes sense, it's one of the few occasions I have now to go out and have a walk in the open.

>> customers aren't willing to pay the full cost of delivery

There is a different market for customers that are willing to pay the cost of delivery, they usually have more mouths to feed, and those mouths are pickier.

If anyone is ever brave enough to actually test this I think they would be surprised, especially during COVID.

Restaurant doesn't deliver? Provide an option to deliver for $20 and I am certain that you will get orders.

> any property within 20 minutes of a dense area tends to be expensive to rent.

As a rule, if one just rents the place on the street behind the one where all the people go, one can cut the rent by 1/3 or 1/2. A kitchen only place can function underground or on a high floor, what takes most of the price out again.

Personally I don't enjoy the dine-in experience that much. It takes an additional hour of time for long meals, mostly just sitting browsing through my phone, or 15-20 minutes for short meals, again browsing through my phone. I don't like the tipping system, feeling pressured to order drinks, or the whole credit card payment ritual. I hope you're right and that we see delivery-focused restaurants in low cost areas with sustainable packaging, so we can enjoy higher-end food at home besides pizza and chinese.

> or the whole credit card payment ritual

Huh?

Probably:

Wait for the check.

Get the check, attach a credit card to it.

Wait for the wait staff to return and get it.

Wait for the wait staff to run the card.

Wait for the wait staff to return with your card.

Do some math for a tip, sign the receipt.

It’s also mildly concerning to leave your bare credit card (with pretty much everything they need to commit fraud with it) with a complete stranger.

Do you not have contactless, or chip-and-pin?

The waiter or waitress turns up with the bill, I glance at it, I tap my card, or if it's a larger sum insert it and type in my PIN.

Worst case scenario it's 30s.

I'm pretty sure that your agreement with your card company includes that you must not let anyone else touch the card, let alone take it away.

It's still very new here, and most places just don't do it the way that you all do elsewhere in the world. I think I got my first one last year? And I bank with one of the biggest banks.

Even then, we have just the chip, no PIN.

(There is a PIN for like, ATM transactions, but if I go to Europe, I still have to sign, even if they do the contactless thing. Folks (reasonably) almost never expect it, and have to go find a pen...)

A very, very few places offer it at the table. Most places I’ve been to in the last few years do not offer it.

Even at the counter, as a sibling mentions, a few places offer a chip, but no pin. Quite a few will still only have swipe readers.

Chips only came to America recently, and mobile card readers are kind of a novelty.

The last few times I went to a sit-down restaurant (Before March, when the hammer fell), it was still done that way.

I only got a completely contactless card... last month. October.

> I'm pretty sure that your agreement with your card company includes that you must not let anyone else touch the card, let alone take it away.

In the US this is the standard way restaurants work, and it is very strange when they do not work this way. At the low end there will sometimes be a cashier who accepts payment.

> It’s also mildly concerning to leave your bare credit card (with pretty much everything they need to commit fraud with it) with a complete stranger.

This actually happened to me at the Santa Clara Convention Center bar of all places.

If I had to guess, I'd say they were talking about (in most US restaurants)

- Ask for check -> waiter brings check -> put card in fold, wait ?? minutes for waiter to return to grab card -> wait ?? minutes for waiter to run card and return it -> sign receipt and leave.

On a busy night, this ritual could last 15-20 minutes.

To be fair, in some countries in Europe (and a small number of restaurants I've been to in the US), it's more like:

- ask for check -> waiter brings hand terminal to table -> swipe card, then leave

America is a weird place. They bring the bill. You put your credit card in the bill. A waiter comes and takes it then brings it back and after all that you have to enter the tip amount.

In Australia they bring the Eftpos machine to your table and I'm pretty sure it's illegal for them to touch your card.

it's really not such a big deal. if I'm in a hurry, I just give them the card and they come back with a receipt to sign. if there's any issue, I'm confident amex will be happy to process my chargeback.

I think this is more of a cultural thing than anything. if americans are in a rush, we get takeout or go somewhere that doesn't have full table service. I think the "credit card ritual" is usually just a way to show they are not rushing you out the door.

something to understand about america: in general the protections for ordinary folks are pretty bad, but the act of paying for a good/service is sacred. if you (or one of your employees) fuck over a customer, they have ample remedies against you.

> I just give them the card

Pretty sure you're explicitly not supposed to do this...

Doesn't it have everything needed to make online purchases printed on it? What stops the waiter or waitress using all the info on Amazon?

> What stops the waiter or waitress using all the info on Amazon?

Most people don’t want to go to jail after their fraudulent purchase is quickly flagged

It's hard to track down. They could just write down your credit card number, name, expiration, and security code. Then use it a month later, at which point you have already been to several restaurants and handed people your card many times. And you don't know if the card was taken in some other way like a online retail hack.

It’s not too difficult for the credit card companies to pin this down. Basic graph algorithms on their datasets of transactions detect this pretty quickly. And these are running constantly trying to detect fraud ASAP. Problematic businesses can lose their credit card privileges too.

Those algorithms can be very good at detecting fraudulent transactions. However, I'm unfamiliar with systems designed to isolate the origin of the fraud. It's not hard trace a stolen card number to a dump of cards sold on the dark web, or the identity of a person using it after the theft, but it is quite hard to figure out how that person came into possession of the card. My subjective impression is that first-party theft + usage of stolen payment credentials is rare--they're usually passed along (sold) to someone else.

In a single isolated incident then yes, it is difficult. However many thrives get greedy and don’t realize it’s fairly easy to identify the point of sale where fraudulent activity originated.

maybe there's something like this buried in the fine print, but I don't think anyone in the US worries about this. I certainly don't. the usual way a transaction goes is you hand the employee your card and they swipe it for you. in any case, it makes no difference whether you wait to get the receipt first for a meal. either way, you are handing them the card and they are swiping it outside your field of view.

credit card issuers heavily favor the customer in disputes. lots of people unknowingly make chargebacks in situations where it's actually not legal to do so. it still gets processed, the customer gets their money back, and the merchant eats a punitive fee.

What stops the waiter from putting sedatives in your food and then taking all the cash from your wallet when you pass out?

At a certain point you just have to trust that most people aren't trying to scam or rob you. The waiter is too busy putting in other orders and bussing tables to write down all your card details (and I guess social engineer your billing zip code?) I imagine most people who make their living from credit card fraud would rather not spend their days working in a restaurant.

> At a certain point you just have to trust that most people aren't trying to scam or rob you.

But... you don't have to just trust as you say... we already have technology that means you don't have to let them have your card at all.

Plus isn't taking the card away from you a lot slower even if it wasn't also less safe? What's the advantages?!

Fraud detection has gotten really good, the specific restaurant and even the waiter can be identified if they do this regularly.

> if there's any issue, I'm confident amex will be happy to process my chargeback.

It's not a huge deal if they run your card for the wrong amount, as you say it can be fixed by AMEX. But if they skim your card and start using it days/weeks later, it's hard to pin down where the fraud started. And you probably have to replace your card, and update the card for vendors that you use auto billpay with.

80% of all credit credit card fraud in the US happens at bars and restaurants, and it's because of that ritual. It's why I always pay with cash at restaurants and bars.

This sounds impossible given the industrial scale at which PoS malware and the likes operate.

Its not illegal, Its in the banks fine print that states that you will not allow another to control your card.

If you do that and it gets abused the bank wont cover you, you'll be liable to pay up whatever the abuse was.

That's not true and credit cards are one of the few cases where the fine print does not matter.

That's because by regulation you (the consumer) will not be liable for credit card fraud if they steal the number and other info and use it elsewhere. If they physically steal the card and use it elsewhere your max liability per regulation is $50.

Regardless of fine print these are the max limits of your loss. That's why nobody worries about it.

https://www.nolo.com/legal-encyclopedia/unauthorized-credit-...

I assume you are dining out alone? Or are you just ignoring your dining companion(s)? I agree dining out alone takes some getting used to, I would normally pony up to the bar and chat with the bartender or other patrons when dining alone.

Yes dining alone, especially on business travel. I just want to eat my entree and go to the hotel. Dining with a group is totally fine as an experience. Dining with a partner is still a bit of a wait if it's someone you're very familiar with. I'd rather have a 1:1 conversation in a quiet private place with a coffee or drink.

Can I ask why you dine in if you can take out the food?

Delivery means you are not even going out from your house, which can only make those browsing sessions while eating longer and more depressive.

To some degree yes, but the market that you are talking about is going to be dominated by repeat diners. It isn't people going out to show off for example - it is people who want want food.

The competition mentality in hospitality businesses is cut-throat and deeply ingrained. If they saw a profit margin, they would attempt to push the delivery service out of the market. If I'm a regular at Toby's Popular Take Away, it seems unlikely that Toby would sit quietly while Uber made money. He would try to muscle in on the distribution too.

It is unlikely that the market share they are fighting for is defensible. A lot of people aren't fighting for it at the moment because there is no profit to be found. The app part might get commoditised or done in a community manner or by some random dude as a side project, it wouldn't be too hard to get local businesses on side with an idea like that. It doesn't need to be a big company.

I don't know if it's everywhere, but here in Germany the profit margins on the food tend to pretty low, and the restaurants try to make up for that by selling drinks pretty expensively.

So for takeout, I just order food, and often just drink tap water. I also assume I'm not the only one doing that, so for the restaurants, a significant part of their profit dries up.

They'll have to adjust to that somehow, most likely by increasing food prices, or by cutting into the extra profit from rent differences that you have laid out. If they do exist, I'm not yet convinced.

In the US ordering (free) water is common for casual restaurants. There is a lot of profit to be made from selling alcoholic drinks, but that’s not in everyone’s business plan.

'Ghost kitchen': How a plain storefront hides more than a dozen delivery restaurants

Business model is gaining popularity as food delivery apps gain a foothold in Canada

https://www.cbc.ca/news/canada/calgary/ghost-kitchen-calgary...

> I'm assuming that the waiter salary/tip will cover delivery costs...

Unlikely. At least, not a non-exploitative delivery cost. Beyond the employee cost and mileage, there’s the fact that (in the US) delivery drivers are also tipped. They’re also probably more expensive for a company to insure.

If consumers don't drive to get their food, over time their insurance should come down. It should come down more since a restaurant delivery driver can make multiple stops on one optimized route vs a customer just going to the restaurant and back, but once you factor in how much more dangerous scooter delivery is vs car maybe this doesn't hold up.

Why order out to some (probably unsafe) dark kitchen when I have a kitchen in my house?

In this covid times when I don't want to cook I simply go downstairs and order a take out from one of the tens of restaurants around, where I can get the same quality of a dine in at half the price while also supporting local businesses that are suffering.

Food delivery is overrated in my opinion and also unfair to workers.

The only reason I found to order from a delivery company is to skip the waiting line at McDonald's those rare times I feel like having junk food on a Sunday night while watching a movie and don't move from the couch.

But if I want a good pasta I simply order to the guy at the restaurant below my home from the window, don't even need to phone them, and they give me the food in a regular dish, not some lousy plastic wrap that I just return when I have time.

You also need to spend time and money getting to and from the restaurant. If you use Uber both ways it’s already more than double the cost of getting the food to you.

Having been in the business you way overestimate how much rent actually is. Payment for the kitchen equipment inside is more in many cases. Saving even 1000 a month is not that much. You will spend more than that on your delivery vehicles! (though you can outsource that to the drivers in some cases)

Without having to worry about a store front, you could consolidate kitchen equipment between businesses. Say you use your ovens in the morning to bake bread, and at night to cook meat. Sure, there are limits to this, but there have to be some benefits from centralization.

Another option for cost savings is on the fly demand pricing of meals. Through some process of ingredient availability, customer analytics, registered interest(voting or something), etc, the centralized kitchen could decide to make a particular dish at a greater volume/lower cost which could then be passed on to consumers. i.e. Tuesday is 'spaghetti night' and you can feed your family for 50% less than other options.

I believe this may be how many cafeterias operate. Cafeterias are a good analogy because you have an environment already saving on wait staff and gratuities.

This might seem odd to a typical HN reader who spends $300+ on sushi dinners in SF, but this sort of thing could appeal to many people with less income and without the time to prepare meals themselves. It probably won't work until we can automate the delivery process, but I think at some point the economics will work out in certain markets.

> Say you use your ovens in the morning to bake bread, and at night to cook meat.

There's nothing inherent to the delivery app business that makes this possible. This has always been possible, but it doesn't really happen on any significant scale.

Ghost kitchens are a real thing, but it’s still an open question how much value there is in building a brand relationship woth a customer from a dine-in experience. Cutting out the front-of-house, the ambiance, and the wait staff kinda also cuts out a lot of the personality and connection. Scrolling through a bunch of generic “chicken fettucini alfredo” options on an infinite grid is kinda soulless, and doesn’t give me a sense of what I’m getting for the extra money between the $14 and the $26 versions.

> Without having to worry about a store front, you could consolidate kitchen equipment between businesses.

This is happening right now: see 'ghost kitchens' on delivery apps, with three or four different 'restaurants' that are actually operating out of the same location.

The deck ovens used to bake bread would be challenging to use for other types of food. You could perhaps bake some bread in a combi oven, but it’s going to be much slower.

I'm assuming that the waiter salary/tip will cover delivery costs...

"Will" is doing double duty in that sentence. Maybe with some futuristic delivery tech (Rainbows End-style pneumatic cannons?) that would be possible. Today, delivery costs are covered by VCs and by paying drivers less than minimum wage. (58% of California voters approve!)

> some futuristic delivery tech (Rainbows End-style pneumatic cannons?)

You are closer to the truth than you may realize.

It's a little-known fact that there once was an underground tunnel that delivered piping hot burritos from the SF Bay Area to hungry customers in New Jersey.

Behold the Alameda-Weehawken Burrito Tunnel:

https://idlewords.com/2007/04/the_alameda_weehawken_burrito_...

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