More big investors shun Deliveroo over workers' rights
bbc.co.uk
bbc.co.uk
Tried to manipulate pricing & food choices with various algorithms (hiding restaurants, making them pay for screen estate)
Trying to run ghost kitchens and further capture market share / margin with poor quality ingredients and misleading advertising (nice photos make it look like a restaurant but it’s some sweat shop instead, likely with unhygienic conditions and slave labor)
With the pandemic receeding, I LOVE walking in fresh air and eating fresh food at a restaurant
On a general note, the world is so beautiful and needs to be enjoyed in person. All these apps are a cheap and manipulative substitution that really reduce quality of life for many. I’m looking at you Facebook, Instagram, LinkedIn, Deliveroo etc
I remember seeing a journalist a few years ago demonstrating, tongue in cheek, how there is zero vetting of restaurents. He set up an account as a restaurent, put up a barbecue in front of his house on the same day and got an acquaintance to order from him. Driver showed up shortly afterwards to pick up the food (which had been dropped on the floor to make a point for the camera), no questions asked.
They're happy to run marketing campaigns about "Food Freedom" [1], but it seems like it's old "we're just a platform" selectively applied when it suits them.
From the video description:
> The Shed at Dulwich was the number one rated restaurant in London, with foodies, celebrities and bloggers trying to get a table. The main obstacle for them, however, was that it didn't exist. Over the course of 8 months VICE's Oobah Butler used an assault of fake reviews to get his 'restaurant' to the hallowed top spot on TripAdvisor.
I'm assuming they have a per-user metric of overall profit and mine ended up being in the negative so it makes sense from a business point of view. However, I would be worried about their business if they can't properly deliver enough orders to make a profit when someone is holding them accountable.
The business model appears to be based on fobbing the customer off and letting them hold the bag should things go wrong, which is sadly a common thing in large-scale VC-funded startups.
Is a ghost kitchen that different from the kitchen in a regular restaurant? Either one doesn't strike me as the best working environment, not necessarily anyway.
I don't advocate for bad working conditions, but it must be hard for anyone who has ever worked in a kitchen to keep a straight face when reading that. Even many Michelin starred kitchens are horrible environments.
[1] https://www.theguardian.com/commentisfree/2018/oct/09/dark-k...
Edit: This isn't meant to be whataboutism, just pointing out that a "ghost kitchen" is only really different from a normal kitchen in its business structure. By and large, catering is not, and has never been, a glamorous industry. If you want to stop kitchens being difficult places to work, that's a worthwhile cause, but much, much bigger than Deliveroo.
Focusing on a poor correlation is not solving the core problem.
Often times these kitchens are anonymous looking from the outside, often located outside of the town centre
In the UK they should be beholden to the same hygiene standards as any other food preparation business
Some of these kitchens have their own branding and are not associated with a restaurant, but if you know your local area and see some restaurants which you don’t recognise on deliveroo or the other food delivery services, it’s possible that they are a ghost kitchen.
This makes it very hard for an established restaurant to compete on-line - from outside, the five real restaurants in your neighbourhood look no different than 20 "virtual" restaurants. There's no way to tell. In this reality, as a customer, I have to resign to expect completely random results when I try to order food. These are also perfect conditions for a race to the bottom.
> Ordinarily, you expect each restaurant to be independent, have their own style and recipes and quality standards.
Pretty sure no one who works in the restaurant industry thinks this. There's always a supply chain. Further, traditional restaurants are also running multiple virtual restaurants (e.g. one menu for katsu curry, and another for sushi).
Perhaps not. And yes, I know there's a supply chain. But every restaurant I've been to - or ordered from - where I live[0], each one has its own distinct and consistent style. For instance, being a pizza aficionado, I could tell you just by looking and tasting, which restaurant you ordered a pizza from in the town I now live, and which major pizza parlor[1] you ordered from in Kraków (the city I spent most of my life in).
This is what I'm concerned about. While not perfect, the restaurant's name was something you could use to "hash" a particular style of a particular dish by. They may have all supplied themselves at few well-known wholesalers[2], but they each processed the ingredients differently. Ghost kitchens + "virtual restaurants" kill that mechanism.
To be clear: I don't mind the concept of ghost kitchens per se. Done well (i.e. regulated well), they'll be able to deliver consistent quality at good price. My problem is with the other half of the equation - the virtual restaurants.
Something like this has already happened with consumer goods - so many of them are white-label goods these days, each sold by many fly-by-night brands. Consumer's ability to use branding as a proxy for quality (or quality of support) has been destroyed, DDoSed by the proliferation of such transient brands. I consider this a loss to customers and to the market at large (it increases information asymmetry). I worry the same is about to happen with food delivery.
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[0] - I love my country for being just enough developed to get all the fun stuff conceived in the US, but just enough not developed that they come with a delay of a few years - giving us time to see the expected social impact things will have :).
[1] - At least until recently. Now there's too many small operators offering delivery services to track - but I can still distinguish between the ~6-8 places I used to order from. When these small operators started showing up, many of them were delivery-only, so I suspect they may have graduated to ghost kitchen frontends by now.
[2] - Or discount supermarkets :). My wife and I have a bunch of stories about it. Notably, I remember once being in the queue behind a couple who were buying the entire stock of chicken breast and invoicing it to a company - presumably the Asian restaurant nearby :).
I don't know the Polish market, but I'm not sure what you mean by all these fly-by-night brands. For white goods, you have Samsung, Bosch, Whirlpool, Zanussi, LG, Sharp, Siemans, Miele, etc. Did these go away or are not available in Poland? Do you guys not use Pro Test when researching white goods?
https://en.wikipedia.org/wiki/International_Consumer_Researc...
>My problem is with the other half of the equation - the virtual restaurants.
Virtual restaurants are used by actual restaurants - not just ghost kitchens. Maybe you don't see it in your area, but actual restaurants do it for a few reasons:
1. Delivery companies limit the delivery distance based on the items on the menu. e.g. sushi must be fresh so you must order it from places close by. Curry keeps so you can deliver it further. Therefore to make sure most stuff is available at a distance, a restaurant can offer a subset for long range delivery.
2. Branding isn't [only] for you. Delivery companies will offer a discount from the eye watering 30% for exclusive listings. So if you setup a virtual restaurant - a few menu changes, and, hey presto, this is an exclusive listing with a discount.
I meant white-label goods. It's when a producer churns out a product with no branding on it, to be bought by resellers, who put their own branding on it and pass it on as theirs. See: https://en.wikipedia.org/wiki/White-label_product. What I mean by "fly-by-night brands" is that there's a lot of these small resellers, and some resellers may sell the same product under several brand names. These brand names are often temporary - they get used for a year or two, and then a new name may be created (particularly after previous name starts showing up with bad reviews in search results).
As for white goods, i.e. domestic appliances, we have every one of these brands you mention. I didn't know what Pro Test is, thanks for mentioning it!
If you know that Deliveroo are using slave labour then you should call the Police right now.
They also held all my band's passports as a musician, but we knew that if we were to rock up to the British embassy / consulate and requested assistance we'd have been helped to leave the country without our passports on emergency travel document, and I suspect that the Indian workers who were, in my opinion, poorly treated - they had a lot less options.
so why isn't there an indian embassy to look after their citizens overseas there? Even you admit that you cannot be poorly treated because there's a british embassy offering some level of protection.
So the root cause is that the country does not care about its citizen.
But wait, there are still buildings needing constructed in Muscat and there are not enough local people willing to be worked long hours for poor pay. So these Omani companies begin to step up recruiting in Bangladesh and now those workers start getting treated exactly as poorly as they were before.
So did we identify and solve the root cause? No, we just shuffled around the nationality who was being abused. In an ideal world everyone who needs consular assistance can get it wherever they are based, but the root cause here is abusive employment practices, do not try to pretend otherwise.
The UK for example has loads of jobs like fruit picking done by the cheapest labour allowable, in the worst conditions allowable. Those conditions are just legally mandated to be a bit better, they're still not great but the UK can afford and is willing to offer that basic level.
Significantly being repatriated without a job and no money back to the UK and India are not like for like. Even if the assistance is technically there it doesn't mean that it is equivalent.
Many people here are anti food delivery brands, it’s really exploitation here - bad food, risk to drivers, restaurants losing out
The cream on top of it all was their lack of phone or chat support. Instead, one emails an address that auto replies with a “we will get back to you within three business days” message. Not helpful when I’m trying to eat tonight!
No billing issues on my side though. I've always found the platform itself to be solid.
I see Deliveroo, Uber Eats etc in a very similar situation to Amazon Prime.
In the UK nobody really offered same day delivery for goods other than Amazon. Not many restaurants had websites or a unified payment processor (this is key for me).
Now a lot of stores and especially Argos do same day deliver and have great product and quality control. I see Prime loosing out.
I now see that all the stores I buy food from off Deliveroo giving me a voucher code for 20% off id I go direct.
I feel that Deliveroo and Prime had an edge whilst the supplier caught up.
The difference is, content exclusives are normalized now, so Amazon Prime Video, Disney, or whoever can try to entice me away with the content I like. Argos is not going to get exclusive rights to supply a certain product, so everything will always be on Amazon and I'm unlikely to leave. Did you even have problems with prime? I'm highly skeptical that Argos offers a better service.
I'm inclined to think of Argos as generally stodgy, just from a superficial point of view. Maybe they've changed, but it means I'm unlikely to give them a shot. I'm just reminded of their terrible in-store experience: painfully leafing through the catalogue, typing the SKU into their spongy/sticky keypad, waiting around to pay, waiting around again to collect.
On the other hand, I have good experiences with Amazon. I know what will happen if something goes wrong--they will do right by me, generally. Same with Deliveroo. I know how it works for every order, regardless of where I order from. Switching that to a separate consideration for every restaurant is mental overhead I don't want to deal with.
I agree with the "20 different streaming services" I think somebody (ROKU have started) need to address this pain point.
I do agree with all of your other points as well.
Just based on your reply I could guess your age haha I also remember the endless flicking of pages in store. I kinda liked the hunt!
Now that I've got other things to do as an adult though (and I moved to London, where the stores are more packed and the queues longer), I find all the waiting around a bit tiresome.
But maybe they really are doing a pivot to a better online service.
Oh and that 'generous' £50m stock allocation they are offering the public [0] before the majority investors all sell, combined with a heavily loss making company AND the historic employee classification that the supreme court ruled against Uber [1] recently in the UK?
Cocktail for a blindingly obvious scam in broad daylight, and they know it. Just look at how $DASH turned out.
This is an easy no buy even when the scam has been admitted to the public and retail investors.
Take heed this advice.
[0] https://www.altfi.com/article/7672_deliveroo-ipo-kicks-off-w...
that "historic" event isn't what many people think it is.
1. there is a difference between worker and employee in the UK. they're not the same thing!
2. the UK Gov is fixing this whole situation by establishing a no-rights employment under IR35. as such, deliveroo and uber workers will not be entitled to employment rights, pensions, etc.
> blindingly obvious scam
what's the scam?
When IR35 changes come to life in April, this will not be relevant, as Uber and others can just issue in-scope contracts to workers and bypass employment laws altogether, legally.
edit: there is also a how-to guide for employers: https://norightsemployee.uk/step-by-step
All the while, deliveroo and others have started deciding who stays open after curfew, ostensibly based on sales — but who is so naive to think this isn’t crude extortion? Neighborhood restaurants suffer while fast-food chains and more leveraged restaurants thrive. This will have long-term effects for everyone.
The city knows what’s happening and does nothing, in part because what can they do? They already lost control on the pandemic situation long ago. So who bears the weight? It is primarily a migrant population working illegally and for crumbs. It’s astounding. And what am I to do? I want to help the small restaurants in my neighborhood, but even they are squeezed by these greedy companies. I refuse to be complicit, but I know that hurts independent restaurateurs.
A friend of mine runs a café and gets charged 30% per order by deliveroo. Recently deliveroo started a subscription service that provides free delivery. My friend sells a cookie for 3.5€ and has it delivered to someone nearby. The benefit of the doubt says that this person has an excellent reason. The pessimist in me indicts the state of tech and startups.
The sooner investors, such as the two mentioned in this article, stop pumping up these short term profiteers with absurd capital, the sooner we can start investing in long term projects that improve lives. Instead, companies like deliveroo profit by exploiting illegal workers (with the complicity of the state) and encourage only the worst of human aspirations: deliver me my matcha cookie, and don’t be late, or I’ll give you a 1-star review! My worst fear is that more logistics services like this are on the horizon. The social fabric and environment in my city can’t handle it. We need long-term and sustainable investment and not another app for lazy people.
The relationship is between me and the restaurant, whether it’s the local curryhouse (Indian Ocean) or dominos.
They may not deliver at all, or they may have a deal with a local taxi firm, or employ their own drivers, that’s upto them. I dont care where they buy knives from, or foil boxes, or prawn crackers, or delivery service.
If I dont like the food or the delivery time or another aspect of the service I go elsewhere.
Why would I want to replace that with a middleman who can squeeze both sides and offers very little. I know my favourite restaurants, I have a relationship with them. The bulk of the value is mainly at the restaurant, not the delivery or the ordering process.
Compare with uber which is identical to any other minicab firm in the U.K., but due to a good app also improves on the value of a hailable taxi, and that’s the difference.
I want to do business with the company providing value, not one connecting me via a proxy. It would be like ordering a takeaway in the 80s through the GPO operator, who would take my order and pass it on. Why would I want that?
1) restaurants' own tech is usually terrible. Beyond major chains with their own website & order management system, the next best thing is the phone. There's no standard way to obtain a menu, opening times, etc. When you're hungry, simply opening an app and seeing all the options presented to you in a standard way with one-click ordering is valuable.
Maybe Google with its phone call AI (don't remember how it's called) and large-scale scraping could be a solution to this. You "order" off the (scraped) menu and Google actually places the phone call on your behalf. The problem is that there's no reason Google will be any better or less evil than the current delivery platforms, so sadly it's not a good solution either.
2) delivery services. Restaurants no longer have to employ delivery staff, and because of the platforms' scale and tech advantage they should be more efficient, ending up paying the delivery person more and the restaurant pays less.
This problem seems solvable with a non-profit or a company owned by delivery drivers themselves that would run similar tech and expose the entire fleet via an API for third-parties (including these same delivery platforms) to connect to.
Or, Restaurants that previously didnt have delivery staff are now able to offer delivery.
Though I'm not sure how the cost/hassle of dealing with "gig economy" services compares in such matters.
Still, if you want to support your local restaurant you should always order directly with them to cut out the middle man.
The direct-from-restaurant alternative to that is to be sure you have cash in small enough denominations, or negotiate over the phone for them to take a card terminal - which may not be available, or may extend delivery time significantly (there's usually one or two terminals shared by all drivers, so they have to coordinate orders), or the driver may forget and cause an awkward situation (happened to me). Or you can hope that the restaurant has an online ordering/payment form (most don't) and that it works (many don't) and accepts your form of payment (it's a wash).
In my effort to not use the gig economy services, I now ensure I always have small-denominated cash at home set aside for delivery orders - which is a noticeable hassle over just paying with two taps/clicks during ordering.
Gross margins on restaurants run typically higher than 70% to 80%. Your employee cost is usually fixed, so by even giving off some chunk of the gross margin to these middle men, they're growing revenue and profit.
It's not a good idea to assume restaurant owners who sign ip to these apps are idiots. If their revenue and profit was not expanding, they wouldn't be still on the platforms
The missing piece here that makes the delivery work, is the VC funding. The apps are presently a net win for consumer and restaurant is because some SV VC fund is subsidizing the delivery.
Maybe they'll be able to organize a mass delivery network with enough efficiency that it actually develops economies of scale and becomes self-sufficient. Or maybe they'll burn out like Groupon.
For a customer, it's inconvenient and sometimes daunting to call a restaurant and ask for the menu, then choose the items, then recheck the order with the call desk, then order the food and pay it in cash. With an app, you just need to do a few taps and then order directly from the restaurant, and even pay for it with your card.
For restaurants, you get the marketing reach through being on a platform while also getting delivery costs that are on par with what would have been if you hired your own drivers (if you're a low end restaurant). It's obviously much less beneficial for a high end restaurant that relies on dine-ins for higher priced menu items.
I've been trying to coax him into moving to Whatsapp based ordering systems (since Whatsapp is big in the old world), but it's hard to do that without Whatsapp chatbots and access to the Whatsapp businesses API.
Hosting costs, moderation, payment processing and centralisation are major difficulties though. Legality and safety of providers are also significant.
So while one side of my brain says - these services could offer and respond to requests in a federated system (akin to activity pub) where you can post menu feeds for example, and respond to requests for your food / taxi / accommodation in a requested location if it is available.
The other half of me says - too expensive to host and build, time consuming to build, difficult to get providers to use your protocols, and then difficult to stay non-commercial - and difficult to work out how payments should be done, dispute resolution, reviews issues and the fact that probably the service would end up used to sell sex and scam people somehow because it almost always does...
And I shrug and think: this is why we probably can't have nice things.
If you were to make this, you could also both open source it or run it as a SaaS and give some options to those restaurants that don't want to pay a 30%
Edit:- btw, SMS isn't effective anymore. Nobody uses SMS now anywhere I've traveled. It's either Whatsapp or Telegram (in the UK mostly).
It's either too expensive, not reliable ("we ran out of delivery people, please wait 2 hrs") or just not available at all.
Sharing the delivery network across restaurants theoretically allows it to spread the load and solve those issues.
The problems come when one company is in control of that network and has a profit motive. The solution here is for restaurants to band together and take control of their logistics.
Or are they foreseeing legal issues that make it a bad investment...
> the way the company employs its riders is not socially acceptable, and poses a risk to its future.
Ah, it's the latter.
They probably forecast legal issues that make it a bad investment, and then will say it's not socially acceptable for the PR.
I mean, I doubt that Deliveroo labour standards are actually worse, for example, than a cambodian clothing manufacturer which was scored as one of the worst in the world for a lack of "forced labour safeguards". Aberdeen Standard (one of the companies criticising deliverro) proudly states on their website that their investments in this manufacturer gave great returns for their innvestors, while poo-pooing Deliveroo for labour standards. Hmm, I detect a possible contradiction...
In their eyes, slave labor is unethical in western countries and business as usual in rest of the world.
It's bad for business to do so, but it's happening more and more frequently that things like not giving your workers sufficient breaks/pension contributions/healthcare/etc can after-the-fact be corrected leaving a big liability for that kind of behaviour.
Obviously any country that gets a reputation for changing laws after-the-fact will soon lose all outside investment... So it isn't a clear win.
In the long term, the driver compensation will also go up - either as a result of either regulation or – more likely – driver collective action. Meanwhile, these investment funds are missing out on the birth of new basic service industry, and by extension guilty of mismanaging their customers' funds.
Now that they are well-established and some European countries have legal frameworks for "the sharing/gig economy", they are squeezing both sides. The delivery workers are pushed by lowering rates, lowering delivery time, unfair algorithmic task asssignments, etc. Restaurants are being squeezed by increased rates.
Personally, I try to order straight from the restaurant and I seek out restaurants that employ their own drivers. There are still plenty of those around here, but that number is decreasing.
Not the worst thing to do to spend some time outdoor these days.
From a human point of view I hope that does happen.
They even admit it's a huge problem with their profitability plan: https://london.eater.com/2021/3/24/22347981/deliveroo-delive...
Even treating its “independent contractors” like d09(c)h!7 isn’t enough to make the business profitable. As best I can tell, investors are literally investing in the idea... no, hope, that companies can somehow exist without real employees. That they can Pray Away the Proletariat.
[1] : https://morningology.com/four-top-reasons-why-uber-isnt-prof...
[2] : https://www.forbes.com/sites/bethkindig/2020/03/25/can-uber-...
I don't know how deliveroo future profits look in comparison.
If they won't own the technology, then Uber has no moat when it comes to service - people generally use cheapest ride hailing app.
By now, they should have enough data to know who's going to order from where and using these predictions they can route the drivers/riders accordingly and price the delivery.
By now, they should have algorithmic innovations related to vehicle routing problem, pickup & delivery and traveling salesman so that they can reward the drivers/riders more.
Image that a single rider has a no-wait route where he's just picking up food and delivering but doing that in an efficient (not zig-zag across the city) way.
Google Maps ETA’s are a simple problem compared to this because of the park and embark times & handoff variability.
- Parking is different at every restaurant, some days you may get lucky and find a spot, others you have to park far away and walk.
- A restaurant may be down staff on an given day and are late cooking the order.
- Customer may live in a high-rise or gated community that requires security identification before entering.
- Customer may not have a house number clearly visible making the house hard to find
The actual driving route/ traveling time is the easy part. It’s the other variables that make this incredibly complex.
I'm not convinced it's tractable to satisfy everybody.
1. Customers (broadly speaking), want to minimize time between order and delivery, and between pickup and delivery (fresh, hot food).
2. Drivers want to maximize number of jobs and minimize down time.
These utilities seem in obvious tension -- if a driver goes to restaurant A, B, C and delivers to customer X, Y before Z, then Z is getting a worse product than A -> Z.
Deliveroo, itself, presumably wants to find a blend between customer satisfaction (1) and reducing marginal costs (2).
I'm sure they are. But why would their share these gains with anyone, when they could pocket them?
Knowing nothing about Deliveroo but suspecting it was a gig delivery service, I expected this to be about big investors shunning Deliveroo because it was going to pay their workers too much and hence not be profitable enough.
This doesn't sound like they're concerned over workers' rights. It sounds like they're concerned that deliveroo won't be able to keep exploiting gaps in employment legislation to generate profit.
Can place an order by just calling them, most restaurants display their phone numbers online. Shockingly, yellow pages still exist in the UK even online.
Does anyone realize that high valuations are not in the long term interest of a company? That only benefits current investors. Never the employees, suppliers, or customers.
I ride only a few hours a week on Friday and Saturday evenings for extra money. For this purpose it's good for me and the flexibility suits me. However, I would prefer to do a few more hours on weekday evenings but don't bother because every time I have tried recently I end up sitting in the cold with no orders coming in.
This is the primary problem with Deliveroo in terms of workers rights - they push the cost of supply/demand asymmetry entirely onto the "worker". What's worse is you will often be told that it is "busy" or at least "moderate" in terms of demand in a particular area but then can't get any work when you arrive (and if you don't get orders, you don't get paid). A few weeks ago I found myself in a supposedly "busy" area not receiving orders; in my field of view I counted 14 other Deliveroo riders on bicycles - when there are so many other people it's no surprise that you can't get order, even if demand is high. Ultimately, Deliveroo can increase supply as much as they want and it doesn't really cost them as the riders who wait around and don't get orders just don't get paid. The claims they make through the app about demand in a given area are often misleading as a result of the asymmetry, but it's unpredictable enough that you can never really tell.
At this point I only work the hours that are almost always profitable and don't bother with the rest. This is okay for me as I only need a small amount of extra money anyway but if I really needed the money it would be a lot more stressful.
This is from the perspective of a rider on a bicycle, my understanding is that things are generally a bit better for those on mopeds. I know a lot of riders use multiple apps like Uber Eats, Just Eat, etc. too which makes things better.
I'm personally a bit sceptical of applying the standard workers rights legislation to these companies - it makes more sense for Uber because most of the drivers do it as their full time job but I think you would end up destroying some of the benefits too (like flexibility) with Deliveroo. I do think something needs to be done though. Not sure how you would design it but I think any legislation should focus on the way they exploit the supply/demand asymmetry and make semi-fraudulent claims about demand to riders. We have the "freedom" to choose hours but there is no freedom around the information needed to make reasonable estimates of how much money you might make if you choose to go out and work.
The actual job itself is fine as long as you make money, it requires almost zero cognitive ability and is good exercise.
It's more likely over Deliveroo fines which are coming. Italy demands €773M in fines for unpaid social security contributions. Italy won't be the only country.
The company and all its investors and directors should have all their assets seized, even those not related to the company. In addition to any relevant criminal charges being applied.
If we had a few instances of this occurring for the worst offenders, you can be sure other companies would swiftly clean up their acts.
This is expropriation. Its track record is poor. It results in government cronies applying the “death penalty” to people it doesn’t like to take their stuff. To the degree it exists in America (for individuals), it’s called civil forfeiture and is roundly criticised.
If you don’t give the assets to the government after seizure, and instead auction them off, the original investors would repurchase them. This redistributes assets from shareholders who do not have access to the auction to those who do. Again, cronyism.
Corporate “death penalties” are either stupid or an invitation for corruption. Punishing individual actors, individual decision makers, is less risky and more effective.
We've tried this, a lot, in Latin America. It doesn't work. Throwing out the rule of law because you don't like a group of people is a short-term strategy.
No company should be allowed to profit from restaurants that are currently struggling to survive.