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Doordash and Pizza Arbitrage

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Re: Doordash and Pizza Arbitrage

#201

Post by hnick »

Barrin92 wrote: post #168
cletus wrote: post #166

Wow, that was great. And honestly good on them for profit-taking on this arbitrage. The author likes to pin this on zero-interest rates ("ZIRP") and that certainly explains why the system is awash with cash but I'd say he's missing a key point here. When I moved to NYC (~10 years ago) I didn't order delivery at all. Honestly it's a huge pain. To call someone up and try and communicate an order to someone who probably…

I honestly don't know if I'm living in a different world than everyone else but I've been ordering food and taking cabs all my life and I've never had to deal with any friction. Like, you call the pizzeria, tell them what you want and then some college student delivers your stuff, and if you order for more than 20 bucks it doesn't cost you anything. Not even being facetious, but what problem do these apps solve? I al…

I dunno, even at physical restaurants or cafes I often have issues where they didn't hear my order correctly. Just today I had a guy repeat my order (thank you to people who do this, it's the only way) and he'd forgotten the cheese. Phone calls to ethnic restaurants (as with GP, no offense intended) are another layer of trouble. With my local noisy Indonesian restaurant we had a 50% miss rate on our orders so usually just go in person now.

Written text is just so much nicer. And I can send the link to family still in the office or whatever and co-ordinate.

Re: Doordash and Pizza Arbitrage

#202

Post by WrkInProgress »

bvandewalle wrote: post #52

I said this in another post about Grubhub but similarly to this article I really don't get it. Those apps are all 25%+ expensive than ordering take out directly with the restaurant, they screw the restaurants and all those delivery companies lose millions. Did everyone really become THAT lazy that driving 10 minutes to get your meal is that much trouble?

I'm in Toronto, so we have Skip (Skipthedishes) instead of GrubHub along with UberEats and Doordash

1.) Skip doesn't allow the restaurant to jack up the price, so to the customer the total cost is the same 2.) These companies toss out tons of coupon codes and referral codes that bring the overall cost down (sometimes even cheaper than ordering directly from the restaurant) 3.) In dense urban centers, a ten minute "drive" is way more challenging/time consuming/effort than it would be somewhere else. In fact, these services use bicycle couriers in these areas.

Re: Doordash and Pizza Arbitrage

#203

Post by brd529 »

astura wrote: post #116
dylz wrote: post #107

Earlier quoted context omitted.

The driver pays with a Doordash prepaid-reloadable card. When the driver GPS-checkins at the restaurant they're picking an item up at, the card is loaded with the exact balance the restaurant is "supposed to charge"

At that point door dash still thinks the pizza will cost much less, so if it's only the total the customer paid that's authorized, then how does the full cost of the order get paid?

In the article it makes clear that doordash calls the restaurant from their call center to make the order and gets the correct total verbally. Ostensibly this is what gets loaded to the delivery worker’s card.

Since this was part of a “demand test” door dash is more interested in capturing a large number of orders than per order profitability. Once their digital marketing muscle has doordash originating 10%+ of orders to the restaurant they have the leverage to negotiate a per order fee from the restaurant along with an agreement to force the restaurant to manage their prices on door dash, shifting liability to the restaurant for incorrect pricing online.

Re: Doordash and Pizza Arbitrage

#204

Post by j7ake »

joshvm wrote: post #165
ChuckMcM wrote: post #147

I love this story, especially about ordering dough pizzas. It reminded me of this twitter thread: https://twitter.com/meslin/status/1225834920611848192?lang=e... In which the author tries to order the Uline "box of boxes", a box of twenty-five (25) 6" x 9" x 6" boxes, only to have Amazon deliver a 6" x 9" x 6" box containing some random product. The collection product from Uline has the same bar code as the box itsel…

The automated system should say "weight, that can't be right". Works fairly reliably in supermarkets, especially if you allow a bigger margin of uncertainty on sku weight. Or verify the volume/shape - or both, like volumetric weight that shipping companies use. I'm guessing amazon has some system to automatically assign boxes based on the dimensions of stuff that's being picked.

Weight can easily be gamed by adding a bag of water.

Verifying shape would be difficult without knowing what to expect beforehand, but can also be gamed.

You won’t get the precision of supermarket weighting if you are dealing with diverse restaurants with a dynamic menu.

Re: Doordash and Pizza Arbitrage

#205

Post by hnick »

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…

I know you probably realise this but I think you missed a few important factors that can justify losing some money on deliveries.

- Takeaway/delivery food costs less to produce than dining in - no cleaning, no turning away customers who want to eat in because the place is full, no hiring wait staff, less fixed rental space cost, etc.

- Delivery reaches people who are too lazy to come to the restaurant. Ask most businesses if they will take a dollar or two profit less and make the sale, compared to losing it. Most will say yes.

- Delivery/convenience puts the brand top of mind for people feeling lazy (plus others see the car driving around). This is marketing.

- People are usually willing to wait for deliveries. At least here in Australia, if I order pickup it's ready in 15 minutes or up to an hour for delivery. This allows some flexibility with scheduling in the kitchen around the driver's schedule.

I think it is a lot more expensive than a lot of us give credit for (I visited Canberra and was aghast at the $9 delivery fees), but there are some benefits and savings to offset this.

Re: Doordash and Pizza Arbitrage

#206

Post by kabacha »

ngngngng wrote: post #64

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?

> Restaurants have been running successful delivery operations independently for ages

Have they? Because in my experience delivery from anything but major chains like dominos, mcdonalds etc. has always been awful everywhere in the world.

With delivery services I can get my favorite dish from my favorite small shop hassle and cash free.

Re: Doordash and Pizza Arbitrage

#207

Post by SergeAx »

> If capitalism is driven by a search for profit, the food delivery business confuses the hell out of me.

The modern Silicon valley venture capitalism is not about operational profit, it's about company valuation.

Re: Doordash and Pizza Arbitrage

#208

Post by MattGaiser »

Barrin92 wrote: post #168
cletus wrote: post #166

Wow, that was great. And honestly good on them for profit-taking on this arbitrage. The author likes to pin this on zero-interest rates ("ZIRP") and that certainly explains why the system is awash with cash but I'd say he's missing a key point here. When I moved to NYC (~10 years ago) I didn't order delivery at all. Honestly it's a huge pain. To call someone up and try and communicate an order to someone who probably…

I honestly don't know if I'm living in a different world than everyone else but I've been ordering food and taking cabs all my life and I've never had to deal with any friction. Like, you call the pizzeria, tell them what you want and then some college student delivers your stuff, and if you order for more than 20 bucks it doesn't cost you anything. Not even being facetious, but what problem do these apps solve? I al…

> I also don't know how "not having to talk to someone" is a perk.

For us introverts it is.

Re: Doordash and Pizza Arbitrage

#209

Post by martey »

kbaker wrote: post #126
inquiryaccount wrote: post #51

This reminds me of a post I submitted a few weeks ago on HN. A friend of mine works for a restaurant group in NYC and they like many they have had to respond by offering delivery to folks in order to keep some revenue flowing. He and I were chatting and he mentioned that lately, a large majority of high value ($500+) orders were fraudulent with the fraudster ordering things that can be resold such as high-value wine,…

Well, since DoorDash is listed as the copyright holder on the bottom of www trycaviar com it looks like DoorDash is just bleeding their $400mm series F out under a different name. Maybe have them try the arbitrage themselves per the article and put the profit _and_ the booze directly in their pockets... (/s?)

DoorDash purchased Caviar from Square last August: https://techcrunch.com/2019/08/01/doordash-is-buying-caviar-...

I assume DoorDash doesn't want to alienate loyal Caviar customers and so is continuing to operate it independently, similar to how Grubhub and Seamless merged seven years ago but still run two different websites (albeit with identical design).

Re: Doordash and Pizza Arbitrage

#210

Post by Dylan16807 »

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…

$15/hr plus tips plus mileage is overkill. Let's say you cut out the awful feature that is tipping and make it $15/hr plus mileage, which is a perfectly good wage.

If I was previously paying $6-7 in fee+tip for a limited selection of restaurants, I'd be okay paying $10 for places that don't normally have delivery.

If that means two trips per hour, and you're not in one of the ten worst cities for traffic in the entire country, then that actually sounds pretty viable.

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