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

latimes.com

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

#221

Post by Jommi »

crazygringo wrote: post #190
matthewdgreen wrote: post #166

Earlier quoted context omitted.

Most growth-oriented tech companies are “unprofitable” in the sense they invest their revenues into growth rather than dividends. This does not mean their core products necessarily make less money than it costs to operate them, without those massive growth investments. The real question people are asking here is: what necessary costs do the food delivery apps actually incur in operating their business that causes the…

> This does not mean their core products necessarily make less money than it costs to operate them Generally, yes it does. The up-front costs for building and marketing a platform so that it ultimately becomes profitable are enormous. In today's climate, the idea that a company could just "choose" to be profitable now and in the long-term rather than grow is disingenuous: over the following few years, other companies…

I think you're slightly misrepresenting what the parent comment is saying. You both are right.

Food delivery can be profitable, and they could switch to being profitable if they wanted to. That's what the parent company is saying - they chose not to as they want to operate on the hypothesis that investing in growth as early as possible will put them on an expontential trend in a network effect -based business. Which is true.

However, what you say is right as well. If they switched to a completely profit skimming model, their competitor would keep them in check very fast.

However. what data that I've seen in ridehailing shows, is that if you invest in growth and achieve the 1 or 2 position in volume, you can grow and reap profits simultaneously - at least for some time. It's a massive juggling effort.

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

#222

Post by Jommi »

haltingproblem wrote: post #36
MattGaiser wrote: post #15

Earlier quoted context omitted.

> payment processing (3%) + 2-3% overhead. Is that anywhere near enough to actually pay for a delivery? I have both the Dasher app and the DoorDash app. That delivery I pay $2.99 for leads to the Dasher often being offered $13 on a $30 order with a $4 tip.

Grubless et.al can charge as high as 30% for just order and payment processing, delivery through their network is extra.

However that delivery is in part subsidies by this.

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

#223

Post by Natsu »

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…

That's only true if all the plants run all their lines 24x7.

If you have some plants that are not at capacity, you can hire additional shifts to produce more, run on weekends, etc. Then you have additional labor costs, overtime, materials costs, etc. to recoup.

The manufacturing plant I once worked for had spare capacity for the better part of a decade, so it's not some completely unusual thing and was in fact part of our corporate strategy at the time to gain market share.

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

#224

Post by haltingproblem »

BubRoss wrote: post #183
haltingproblem wrote: post #141

Earlier quoted context omitted.

The parent opens with saying - I am not a fan of moralistic takes on business. I did not create the dichotomy, the parent did!

They are saying the exact opposite. They don't like assigning a moral judgement either way to a business that isn't hurting anyone. You were replying as if they had said that instead of something being bad, it was good. That is not the same thing. Treating something as neutral is not the same as saying something is an opposite.

Keyword "don't like". Moral judgement also.

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

#225

Post by Natsu »

genericone wrote: post #167
true_religion wrote: post #152

Earlier quoted context omitted.

I agree if the disaster is truly short term, but is an 8 month rolling quarantine short enough to count?

If their supply chains are decimated, they won't receive new equipment for additional manufacturing.

But they may be able to hire additional shifts or work overtime on existing production lines.

Not every plant is run at a constant 24x7 three shift schedule. There are plenty of businesses that keep some slack in their manufacturing to respond to changes in demand as part of their corporate strategy, especially if they think there's an opportunity to gain market share.

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

#226

Post by Jommi »

ramraj07 wrote: post #139
dathinab wrote: post #116

Earlier quoted context omitted.

It's not that simple. First we need to know why they don't turn in a profit. Potential reasons include: - Because they pay to the people delivering (I don't think so). - Because keeping the app running is to expensive, i.e. server costs (I don't think so to). - Because they payed a lot upfront to create the app and are still paying it of (Maybe, still unlikely, this would have been their own mistake and go away after…

They seem to be charging enough to pay delivery drivers on top of their outrageous commission so I don't think that's the real expense. Not like they pay for their insurance or even social security!

Why would they pay for social security of a contractor?

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

#227

Post by fncypants »

dvtrn wrote: post #96
tcbawo wrote: post #31

Earlier quoted context omitted.

I'm amazed that Chipotle hasn't packaged it's online ordering app and licensed it to other restaurants. I've never used such a streamlined, polished, and convenient way to make an order for pickup or delivery.

I’ve found Panera Bread’s online ordering system to also be a well crafted order flow. To your question, I wonder if the exact reason they don’t is because they view their order software as something that gives them a competitive edge in their specific cuisines markets. Panera and Chipotle are about as far apart as you can get, sandwiches and soups versus burritos and burrito bowls yet where I see some alignment is h…

Chick-Fil-A’s app is extremely well done. Just this morning I ordered breakfast from a store, but drove to the wrong one and parked. The app noticed this automatically, asked if I wanted to move my pending order to this store, and after pressing “Yes” my food was walked out to my car < 5 mins later.

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

#228

Post by indecisive_user »

throwaway2048 wrote: post #172
thatcat wrote: post #158

Earlier quoted context omitted.

Continuing with that logic; the prevalence of beggars on street corners indicates that their patrons appreciate their presence in the space.

Also everyone loves customer service on airlines, the fact that it keeps getting worse is gold plated proof

Now you're talking about price discrimination, which customers DO prefer.

If I wanted premium service and a premium seat, I can pay the premium price for business or first class, or fly on a better airline. Even though people complain about the terribly small seats and lack of service on budget airlines and economy tickets, they still choose the lowest seat price above anything else. And the cost of plane tickets has fallen drastically over the past few decades so it's not like the same product is more expensive, people just want cheap flights.

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

#230

Post by kwk1 »

mkolodny wrote: post #206
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 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.

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

I don't think the two are so easily separable. If you take for example, "a dozen eggs", most people would consider that an acceptable product. But if you said "a dozen eggs for ten cents", for those to be legitimate eggs, they must be stolen. If you could somehow inspect them and guarantee they were legitimate, I am sure plenty of people would accept those stolen eggs at that price, but their willingness to pay for it doesn't mean the existence of a market for "a dozen eggs for ten cents" is moral.

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