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

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

#201

Post by lotsofpulp » Sat, May 16, 2020, 5:47 PM UTC

Retric wrote: post #185

lotsofpulp wrote: post #157

Earlier quoted context omitted.

> But, I think you achieve most of that with simply doubling prices, after that it’s generally more harm than good. How can one make such a vast claim without knowing things such as cost of input materials, machinery, labor, etc?

The profit in a competitive market is usually ~5%. Double prices while selling out and profit increases by 21x if not vastly more which is a huge incentive. To the point where doubling the profit again is unlikely result in meaningfully increased production. PS: And yea it’s more complex than that, you can generally skip out in advertising but may be paying significant overtime etc. But that’s rarely particularly imp…

How is that not particularly important? In a shortage scenario, you don’t just crank up a dial to make the factory output more. You might need additional facilities, new factories, new workers, etc at the same time others are trying to secure resources too.

People in short supply also don’t just work additional hours for double pay. An hour of my leisure time is worth far more than double.

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

#202

Post by hrpnk » Sat, May 16, 2020, 5:50 PM UTC

haltingproblem wrote: post #169

john_minsk wrote: post #163

Earlier quoted context omitted.

I kind of agree, but on the other side - if 20-30% is too much there will be competitors which offer 2-3% and theoretically all restaurants will move there as well as customers to pay 20-30% less. And tbh this should happen. UBER had to spend billions on marketing and getting their model "right". But now it is clear that such platform is essential for modern city. At some point UBER will have to get this money back w…

Good point. But Yes and no ;) Grub-less et.al are as much about ordering and checkout as they are about discovery . I can rank and view all restaurants offering Sushi in my delivery radius. This is what makes them powerful. Uber et.al are a marketplace. You are absolutely right in that they have zero switching costs but they have a two sided pool of supply (drivers) and riders (demand). This is hard to replicate.

In Europe takeaway.com took over lots of delivery apps and businesses. In Germany they took over foodora and deliveroo exited the market. takeaway's platform is from a feature and UX point of view not justifying any premiums. You can't tip drivers, which is the most important feature enabling contactless deliveries. There are no new features since years. You can literally filter by cuisine and price; nothing else, not even a map with restaurants nearby, search by dish, etc. People order there because it's the only choice, but everyone agrees the page is just awful.

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

#203

Post by scarface74 » Sat, May 16, 2020, 5:52 PM UTC

matthewdgreen wrote: post #186

scarface74 wrote: post #178

Earlier quoted context omitted.

How is “the market’s” fault that an individual restaurant won’t price its services correctly? Unlike VC funded startups, they can’t keep losing money and pawn off their business to the public.

It’s a ruthlessly competitive business with single-digit margins. A restaurant that prices its services higher often becomes an ex-restaurant.

And if the restaurant doesn’t make enough money to pay its bills, it also becomes an ex-restaurant.

The answer in a capitalist market is that restaurants will raise their prices to stay in business. As prices go up, people who don’t want to spend money in restaurants will find alternatives, you will have fewer restaurants and they will have a sustainable business model.

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

#204

Post by xenocyon » Sat, May 16, 2020, 5:54 PM UTC

kgantchev wrote: post #184

xenocyon wrote: post #153

Earlier quoted context omitted.

> prevalence indicates the customers appreciate their presence Focusing solely on consumers ignores negative externalities. There are many situations in which cost benefits from such externalities (slavery, pollution, human rights abuses, animal mistreatment) can lead to a favorable marketplace position vs competitors who do not exploit such externalities. What is more, many of these exploits (slavery, pollution, hum…

I don't think the poster used legality as the moral compass, rather, consumer choice was the moral compass. If consumers lack the moral conciousness on their day to day transactions, then how can we expect them to make the right moral choices when they vote?

I addressed consumer choice in my first paragraph. Let me expand on that:

There have in fact been successful consumer-led movements, but the most successful of these concern cases where the consumers also happened to be the same people being exploited (colonial India's rejection of dumped British textiles, the Montgomery bus boycott, the Boston tea party, etc).

Cases where consumers have acted en masse on behalf of another exploited class are a lot fewer and weaker. To some extent, one may point to the current growth of organic animal products as an example of this, but even in this case, this has been boosted by consumers seeing these choices (in some cases rightly, in some wrongly) as also healthier for human end consumers besides the question of animal cruelty.

History's guide suggests that while morally-minded consumers can and should vote with their wallets, such personal virtuous choices are largely useless without a larger movement to effect change.

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

#205

Post by asciident » Sat, May 16, 2020, 5:58 PM UTC

thatcat wrote: post #171

MattGaiser wrote: post #97

Earlier quoted context omitted.

But that constricts the supply because if you want to make a short term investment (the length of the pandemic) to increase the supply of home toilet paper, you can't as that investment can't generate a return. Most production is based on demand being there for 5+ years the current prices. If home toilet paper demand will only be high for 2 years you can't make money. You also want prices to increase to discourage ho…

I know an EE in the toilet paper manufacturing. The production rate wouldn't change in the time frame you want it to because it is impossible. You'd have to bring in new machines, set them up on the line (the rest of the line has to stop), and trouble shoot any issues - this reduces production in the short term. For any temporary price increase it just isn't going to happen. So, raising the price on TP does nothing t…

Do you think there would be any effect on the mindset of toilet paper manufacturers if they knew they could raise the price in a shortage? Would they not want to prioritize higher flexibility in production, since they would be able to profit from the higher prices during a shortage?

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

#206

Post by mkolodny » Sat, May 16, 2020, 6:02 PM UTC

xenocyon wrote: post #153

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…

> prevalence indicates the customers appreciate their presence Focusing solely on consumers ignores negative externalities. There are many situations in which cost benefits from such externalities (slavery, pollution, human rights abuses, animal mistreatment) can lead to a favorable marketplace position vs competitors who do not exploit such externalities. What is more, many of these exploits (slavery, pollution, hum…

I think it's helpful to separate out pricing from product when talking about morality in business.

What a product should cost depends on how much people are willing to pay for it. Whether a product should be allowed to exist depends on whether it's morally acceptable.

The issue with slaves, and products that pollute the environment or mistreat living things isn't how much they cost - it's that they exist at all.

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

#207

Post by petra » Sat, May 16, 2020, 6:06 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…

>> If restaurants put any effort at all into fixing those things, there would not be such a strong demand for apps.

In such a world, Some model of Ghost kitchens will thrive anyway, not small restaurants.

Why ?

The area a kitchen serves will become much larger - distance matters less when you don't need to go pick the food. And even when food freshness matters, there are some solutions like parcooking and finishing the cooking in ovens inside delivery vans.

The type of food a kitchen serves becomes much more varied - today your Chinese restaurant has one kitchen, and the Mexican place has a different one. But with delivery-only, a single kitchen can open many virtual restaurants.

This also helps with delivery - a single family who likes different food, can order from the same kitchen, and get the order delivered in one go.

And this is now an internet business - since customers prefer all the restaurants in a single app, single search - and those add new complexities.

And usually, small business(in aggregate) often had the benefit of agility over large businesses. But a virtual restaurant is very agile, conducting business experiments is rather cheap.

And personal service and deep relationships don't exist in food delivery - and that was a weakness for big businesses over small ones.

So long term i don't think delivery a good place for restaurants to be.

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

#208

Post by JamesBarney » Sat, May 16, 2020, 6:14 PM UTC

xenocyon wrote: post #153

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…

> prevalence indicates the customers appreciate their presence Focusing solely on consumers ignores negative externalities. There are many situations in which cost benefits from such externalities (slavery, pollution, human rights abuses, animal mistreatment) can lead to a favorable marketplace position vs competitors who do not exploit such externalities. What is more, many of these exploits (slavery, pollution, hum…

You're right externalities exist but I doubt there are any significant ones in food delivery.

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

#209

Post by theterriblestid » Sat, May 16, 2020, 6:16 PM UTC

aloukissas wrote: post #144

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…

But is there really competition? All platforms seem to charge the same outrageous fees to the businesses, we're not seeing competition driving fees down. It's more like a coordinated oligopoly with price-fixing.

Online ordering companies like ChowNow & qMenu that take <5% commission have existed for ages.

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

#210

Post by JamesBarney » Sat, May 16, 2020, 6:18 PM UTC

pjc50 wrote: post #131

MattGaiser wrote: post #97

Earlier quoted context omitted.

But that constricts the supply because if you want to make a short term investment (the length of the pandemic) to increase the supply of home toilet paper, you can't as that investment can't generate a return. Most production is based on demand being there for 5+ years the current prices. If home toilet paper demand will only be high for 2 years you can't make money. You also want prices to increase to discourage ho…

The short term is too short: the investment won't pay back. Almost all profiteering reduces supply by causing hoarding and waste rather than use. Plus the dead weight loss of people killed by lack of PPE.

How does profiteering reduce supply? Or it's use?

If anything it's the opposite.