Our restaurants are failing. Why should food delivery apps thrive? • Hacker News Board

Re: Our restaurants are failing. Why should food delivery apps thrive?

#121

Post by scarface74 » Sat, May 16, 2020, 4:33 PM UTC

gkop wrote: post #111

newacct583 wrote: post #27

Earlier quoted context omitted.

I think that's about the size of it. This seems like a "bad deal" to restaurants because they aren't really thinking of the problem correctly. Restaurants view having to sell a meal via GrubHub as selling a discounted meal, because the customer pays menu price but the delivery service charges a fee. So the restaurant makes less cash than they would to serve the same food to a table. And the reason they think this is…

Take out customers don’t order high-margin beverages in proportion to dine-in customers. In most of the US, restaurants cannot even sell the highest-margin beverages, alcoholic ones, to go. With the lost beverage margin, increased take out volume is at best a wash for most restaurants.

Then you change your pricing to reflect reality...

Re: Our restaurants are failing. Why should food delivery apps thrive?

#122

Post by 6gvONxR4sf7o » Sat, May 16, 2020, 4:33 PM UTC

I don't understand why it's a commission price structure. Take uber eats. You buy some price of food, then there's an uber eats service fee on top of that, and then a delivery fee (and you're supposed to tip the driver in addition to the service fee and delivery fee?). It seems like that price structure already clearly splits the restaurant's and uber's (and the driver's) portions, but I guess uber takes a commission in addition to that? Like, why fees and commissions instead of just fees? Consumers would understand that delivery is an added cost, so you just add the cost.

Re: Our restaurants are failing. Why should food delivery apps thrive?

#123

Post by cordite » Sat, May 16, 2020, 4:34 PM UTC

perlpimp wrote: post #2

I thought delivery apps aren't making a profit either.

They aren't making a profit because they're spending more than they're making. They make enough to pay the driver, the operations around that, and the tech running the site.

But their shareholders see this as an opportunity to expand the markets. They aren't taking this for granted, they're aggressively spending on marketing, on signing up restaurants for their platform (except DoorDash, they list most restaurants without partnership), on ads for Google, Facebook, and other major platforms. This is why they aren't making a profit.

But it's eating so much into their costs that they're doing some sneaky practices: they're doing the same that Etsy does, taking more out of the net sales on advertising that the restaurant did not consent to knowing they will be charged for it as much as they were.

Re: Our restaurants are failing. Why should food delivery apps thrive?

#124

Post by JMTQp8lwXL » Sat, May 16, 2020, 4:35 PM UTC

coffeefirst wrote: post #114

JMTQp8lwXL wrote: post #18

Earlier quoted context omitted.

The home-grown app in Tulsa will never have the capital for marketing and sales reps that allow it to capture a healthy market share of restaurants. And if they do somehow make it, once they become the market leader, they're going to start asking for a larger portion of the pie. That's how business works, be it in Tulsa or SV.

> That's how business works, be it in Tulsa or SV Um, no. Most businesses seek growth by trying to offer new/upsold products and services rather than trying to squeeze their customers for the same service.

That idea is too much of a reduction of how businesses actually operate.

Most businesses that aren't market leaders have to offer new or upsold products and services to grow because they can't throw around their monopoly power.

If you control 0.01% of the the entire delivery food sales market, and you raise middleman fees 3x, your (restaurant) customers will take a hike and switch to a different, cheaper delivery app.

If you control 75% of the market, your customers might be more willing to accept the increased fees.

Re: Our restaurants are failing. Why should food delivery apps thrive?

#125

Post by BubRoss » Sat, May 16, 2020, 4:35 PM UTC

haltingproblem wrote: post #77

mhh__ wrote: post #54

> why should I'm not a huge fan of moralistic takes on business. If you're selling something dangerous then that's wrong, but it's very easy to be blinkered from a high position. If people want to buy food in a certain way I can't really blame them - arguably the same with Uber and taxis, Uber has disrupted an industry which was fairly uncompetitive and politically charged (Their prevalence indicates the customers ap…

Your take itself is a judgement. Does a company indulging in non-coerced commerce (i.e. voluntary) make it virtuous? Why is questioning the efficacy, for society, of the economic models of any company considered immoral? Capitalist enterprises are neither immoral (left) nor moral (right). They just happen to be the most efficient - read easy to cobble together. It does not mean they are the best outcome for society.

> Does a company indulging in non-coerced commerce (i.e. voluntary) make it virtuous?

No, the reward is money/resources and the person wasn't implying the polar opposite of the article. You are creating a false dichotomy here by trying to split things into good or bad. There is a neutral position that you don't have to be invested in.

> Why is questioning the efficacy, for society, of the economic models of any company considered immoral?

I don't think the parent said this at all.

Re: Our restaurants are failing. Why should food delivery apps thrive?

#126

Post by ramraj07 » Sat, May 16, 2020, 4:35 PM UTC

coffeefirst wrote: post #114

JMTQp8lwXL wrote: post #18

Earlier quoted context omitted.

The home-grown app in Tulsa will never have the capital for marketing and sales reps that allow it to capture a healthy market share of restaurants. And if they do somehow make it, once they become the market leader, they're going to start asking for a larger portion of the pie. That's how business works, be it in Tulsa or SV.

> That's how business works, be it in Tulsa or SV Um, no. Most businesses seek growth by trying to offer new/upsold products and services rather than trying to squeeze their customers for the same service.

Only if there's genuine risk of competition. If there's even the slifhtest whiff of lock-in the executives in any sufficiently large organization start milking their customers to enhance their personal portfolio even at the immediate (not to mention the long-term) detriment of the organization itself. See Oracle.

Re: Our restaurants are failing. Why should food delivery apps thrive?

#127

Post by dvduval » Sat, May 16, 2020, 4:35 PM UTC

Google ranks apps higher than restaurants. It would not be all that difficult to roll out a more open source technology that all restaurants could use. Then Google can rank the restaurants more and the apps less. or perhaps a search engine like being might move into this space. This would be a savings for the restaurants and the consumers.

Re: Our restaurants are failing. Why should food delivery apps thrive?

#128

Post by dathinab » Sat, May 16, 2020, 4:35 PM UTC

chvid wrote: post #108

The truth is that in the current situation most restaurants should not be in business. And the fees charged by delivery services are artificially low due to the high level of competition and all the investor money.

> And the fees charged by delivery services are artificially low due to the high level of competition and all the investor money.

And them forcing part of their costs onto the restaurants. ;=)

Still stopping operating a restaurant doesn't stop all costs, so operating it on a small flame and doing a bit of not very profitable delivery jobs can still be better then not operating at all.

Re: Our restaurants are failing. Why should food delivery apps thrive?

#129

Post by dehrmann » Sat, May 16, 2020, 4:36 PM UTC

orev wrote: post #37

Apps are doing well because they are solving a real problem — translating restaurants’ abysmal web sites, PDF menus, and awful online ordering experiences to apps that “just work”. If restaurants put any effort at all into fixing those things, there would not be such a strong demand for apps. Obviously this is different for different restaurants, and the skill set needed to run a restaurant is vastly different from r…

Not just that, but it's expensive to build and maintain a website, and no one's going to install and app for a restaurant with a handful of locations. These apps built a marketplace, and people say "they're just middlemen," there's absolutely a value-add to what they do.

Re: Our restaurants are failing. Why should food delivery apps thrive?

#130

Post by yalogin » Sat, May 16, 2020, 4:36 PM UTC

The delivery business is in a bubble right now, deservedly so. But it's going to come back to earth once we have a vaccine. I don't think the price model is sustainable at all. They are trying to get into the middle of an already tight equation between the service industry and the customers.

To me the main issue is for restaurants the margins are thin and the price/profit equation is very different for every restaurant. So applying the same business/pricing model for all restaurants won't work. The only sustainable way is to let customers pay for the delivery. Right now the apps are forcing the restaurants to pay up in some ways by service shaming them to sign up and offer delivery. Of course profitable restaurants will become do more business and the rest will lost more money. Not a good thing for the over all ecosystem.

I guess this is when the concept of kitchens set up just for delivery will take off.