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Doordash and Pizza Arbitrage

themargins.substack.com

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Re: Doordash and Pizza Arbitrage

#61

Post by pottertheotter »

imgabe wrote: post #49

Just some back-of-the-napkin math if you wanted to do this "right". Let's say you hire drivers as employees and pay them $15/hr plus tips and reimburse them for mileage. You charge a $4.99 delivery fee. Drivers work set shifts and are paid hourly whether they are making deliveries or not. That means each driver needs to be making at least 4 deliveries an hour or you're losing money. That's not even really counting fo…

If it's an existing restaurant that has excess kitchen capacity they probably don't need that many deliveries per hour as he customer isn't paying for a table and that margin can go towards paying the driver.

Re: Doordash and Pizza Arbitrage

#62

Post by toomuchtodo »

miked85 wrote: post #28
ed312 wrote: post #2

Do businesses have any recourse here? E.g. for the pizza situation - can a business ban DoorDash and its ilk?

In-N-Out has done this: https://www.foodandwine.com/news/n-out-doesnt-want-anyone-de...

I enjoy that In-N-Out is still proceeding with the suit even though DoorDash has taken down the advertising in question. Have to send a message.

Re: Doordash and Pizza Arbitrage

#63

Post by spurdoman77 »

mlthoughts2018 wrote: post #38
MattGaiser wrote: post #31

Earlier quoted context omitted.

>rather having a large majority of other orders coming from these services. DoorDash has managed to change my behavior to the point that it is where I do when I am hungry, so I can see that being viable for a portion of the population.

Until the prices inevitably rise back up to the level they require to make up for the massive losses. Then that’ll just drive your behavior right back, probably much much faster than it took for DoorDash to establish this, meaning the “monopoly mode” profit time will be so short-lived as to recover next to nothing of the losses.

If prices rice on doordash the restaurant can just offer takeout cheaper.

Re: Doordash and Pizza Arbitrage

#64

Post by ngngngng »

I don't understand why doordash, uber eats, deliveroo, and similar business are starting to exist. Restaurants have been running successful delivery operations independently for ages. And there are many software offerings to help businesses get set up with delivering food.

Why do we need a centralized on? Is it just the benefit of being able to browse in one app/website everything available for be delivered to you?

Re: Doordash and Pizza Arbitrage

#65

Post by dannyw »

MattGaiser wrote: post #13
exacube wrote: post #5

I'm curious to hear how restaurant delivery services are meant to make profit; is it really through service fees (or a monthly subscription model), and tips? Cost per meal seems way too high for people to use it often. Maybe it make economical sense for larger party orders, but how often do those kinds of orders happen during considering the COVID situation?

I assume it is the 30% they take from the restaurant.

30-40% from restaurant + up to 35% in promotional fees from restaurant + delivery fees + service fees from the customer.

Re: Doordash and Pizza Arbitrage

#66

Post by toomuchtodo »

judge2020 wrote: post #12
ed312 wrote: post #2

Do businesses have any recourse here? E.g. for the pizza situation - can a business ban DoorDash and its ilk?

If delivery people are paying with the Doordash debit card (most likely for non-partnered restaurants) you might be able to ban that BIN number (YMMV but it is possible with Stripe Radar + Stripe Terminal), or you could instruct your cashiers to refuse service to doordash drivers based on what card they use. After DoorDash receives enough reports from their drivers/customers it'd probably be delisted.

This would be key for restaurants to do, in DoorDash’s largest markets.

Re: Doordash and Pizza Arbitrage

#67

Post by secabeen »

exacube wrote: post #5

I'm curious to hear how restaurant delivery services are meant to make profit; is it really through service fees (or a monthly subscription model), and tips? Cost per meal seems way too high for people to use it often. Maybe it make economical sense for larger party orders, but how often do those kinds of orders happen during considering the COVID situation?

I'm not an expert in this, but I think that the evil VC game plan is to try to make their portal the default first stop when ordering food. If they can get to that point, then they can start transferring the profit from the restaurateurs to themselves. This is more likely if people are indifferent to the specific place they order from after they've selected a dish or cuisine; less likely if people want specific restaurants.

Essentially, they've looked at the food delivery market as thousands of individual orders all going through individual phone calls or web orders and said, if I could take a percentage of all that, I'd have a great business.

Re: Doordash and Pizza Arbitrage

#68

Post by perseusmandate »

sdan wrote: post #23
sherlock_h wrote: post #18

What if you strip out the entire 'aggregation' and customer facing side of DoorDash/GrubHub/UberEats and rebuild them as complete back-end logistics services to the restaurants? You charge lower percentage of orders or just a monthly fee to help procure and pay the labor and route deliveries. Seems like that's the actual challenge for restaurants

CloudKitchens fixes this. I also find this really weird: its like load balancing between https://server1.example.com and https://server2.example.com instead of using a proper load balancer under the hood to get https://example.com

CloudKitchens is more the kitchen infrastructure for restaurants who only have a presence on delivery apps. They are trying to facilitate a restaurant model that is optimized for the delivery apps'supply chains rather than starting their own

Re: Doordash and Pizza Arbitrage

#69

Post by 6nf »

imgabe wrote: post #49

Just some back-of-the-napkin math if you wanted to do this "right". Let's say you hire drivers as employees and pay them $15/hr plus tips and reimburse them for mileage. You charge a $4.99 delivery fee. Drivers work set shifts and are paid hourly whether they are making deliveries or not. That means each driver needs to be making at least 4 deliveries an hour or you're losing money. That's not even really counting fo…

A bunch of delivery 'drivers' here in sunny Sydney just use a bicycle - and they're often just students or backpackers etc making a couple of bucks in the afternoon while getting fit. They're happy to make $10 an hour which would normally be illegal under Australian employment laws.

It's hard for a local pizza shop to compete with this kind of thing and the sheer scale of Uber Eats.

Re: Doordash and Pizza Arbitrage

#70

Post by MattGaiser »

dannyw wrote: post #65
MattGaiser wrote: post #13

Earlier quoted context omitted.

I assume it is the 30% they take from the restaurant.

30-40% from restaurant + up to 35% in promotional fees from restaurant + delivery fees + service fees from the customer.

The promotional fees are on top of the 30-40% for the order?
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