171–180 of 324 posts
Food delivery is a terrible business. M&A won’t make it better. I worked at LivingSocial in 2012/2013. We used to joke that “we lose money on every transaction but make it up in scale.” Takeout and Delivery was one of the last bets the company made. Basically food delivery. The customer service load is huge, the services aren’t really differentiated, and you have to both pay the driver enough for it to be worth it an…
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I've worked as pizza delivery. The tipping and per-delivery payments to drivers is why it works. Roughly speaking, a delivery driver in my area nearly a decade ago earned roughly $20/hr after gas and car expenses, half in hourly wages @ state minimum and the other half in tips + $1/delivery payment. They also took about 3 deliveries an hour when fully utilized, which wasn't for 100% of their shift. The wait time got…
What about in countries where tipping is not normal? I live in the UK and lots of small family-run fish and chip shops and takeaways offer delivery, along with the bigger chains like Dominos.
Personally, I’ve ordered a ton of food delivery lately from places I’ve wanted to try but never found time to go. But, I don’t order from them more than once, so those businesses aren’t making a customer out of me.
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> because price is all that customers actually care about Customers actually care about service, too, but the two-sided-market-drivers-aa-contractors models doesn’t really leave the parts of service that would matter in the hands of the delivery matchmaker, so it's true that all they have is price, not because it's all customers care about but because it's all the firm has any kind of control over, by design.
They could let customers pay a N% (say 10%) premium for a ...better-rated delivery courier? I'd be curious to see how that'd A/B test. Probably would fail, but nonetheless prove a point if there's any 'service' component that is possible to compete on.
What's Postmates moat? Having never used it, I don't necessarily see the 2.6b$ value in a smaller delivery app that is only really used in some areas of the US. Though I'm sure there is something I'm missing and 2.6b$ is probably less expensive than the cost of pricing Postmates out of the market especially considering it's an all stocks deal. It's just that delivery seems to be easily scalable and easy to just dump…
Network effects are the moat here, much like for ride hailing apps. More drivers signed up on the app means that the service times for customers are improved, and more customers using the app means less waiting time and dead mileage for drivers.
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What about in countries where tipping is not normal? I live in the UK and lots of small family-run fish and chip shops and takeaways offer delivery, along with the bigger chains like Dominos.
Like the person you responded to said, employees working for those stores can do useful work when they aren’t delivering. Here the Domino’s are delivered by bicyclists and those people are doing work for the store when they’re waiting for deliveries. That work justifies them being paid a wage. For Postmates et al., those drivers aren’t doing anything useful during their downtime. They have nothing to sweep or dishes…
I assume tips are generally more than $1 (I may be wrong).
Maybe it’s just not productive to compare different countries’ eating habits in the end, but it seems to me GP is saying that tips make up a meaningful proportion of delivery drivers’ income.
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The issue is mostly limited by requirements to get food there quickly. If we knew what we wanted ahead of time, scheduling delivery ahead of time would make it easy... since you could use a delivery route (to deliver 2-3 items nearby). A single winner may be able to make it work since you can do 1-2 pickups and deliver to two nearby homes.
Uber Eats has done this to me and it made me stopped using them. Driver needs to wait for the second meal to be prepared, pack it together, take a detour to the other place and spend time delivering it. So your meal arrives late, cold, and crushed after you paid full-price for the delivery.
That's the rub right there.
If you're the winner in the market, can send info to a restaurant to keep your food hot (or even hotter than normal) and can schedule it perfectly it will work.
Once you spend a couple of billions into the infrastructure to make it happen, you can totally make a couple of hundred thousands worth of profit - 2020 Startups.
Food delivery is a terrible business. M&A won’t make it better. I worked at LivingSocial in 2012/2013. We used to joke that “we lose money on every transaction but make it up in scale.” Takeout and Delivery was one of the last bets the company made. Basically food delivery. The customer service load is huge, the services aren’t really differentiated, and you have to both pay the driver enough for it to be worth it an…
Food delivery is a terrible business. M&A won’t make it better. I worked at LivingSocial in 2012/2013. We used to joke that “we lose money on every transaction but make it up in scale.” Takeout and Delivery was one of the last bets the company made. Basically food delivery. The customer service load is huge, the services aren’t really differentiated, and you have to both pay the driver enough for it to be worth it an…
I think a questions that’s going to pop up is, why does delivery work for a company like Dominos’s (vertical integration) but not Postmates (horizontal)?
A pizza is made for £1-2 and sold for £10-20. The margin is incredible and more than enough to pay staff and deliverers.
I personally never order pizza delivery because it's a total ripoff. Don't want to pay £20 for a pizza (or two on promotion). This is a party delivery service as far as I am concerned, only used when there are friends over (big dollars for the company for a single delivery).
The business model of Uber and Just Eat by comparison is to attempt to deliver Noodles for £10 (one meal for a lazy millennial or a couple who doesn't want to cook). It doesn't work.
Food delivery is a terrible business. M&A won’t make it better. I worked at LivingSocial in 2012/2013. We used to joke that “we lose money on every transaction but make it up in scale.” Takeout and Delivery was one of the last bets the company made. Basically food delivery. The customer service load is huge, the services aren’t really differentiated, and you have to both pay the driver enough for it to be worth it an…
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Not sure I understand - Netflix has the same problem as Disney and HBO, they must spend a ton on content to differentiate.
Yes, most content producers have the same problem but few have to maintain the pace Netflix needs to keep users subscribed to a unlimited platform. Disney has a very strong and very culturally defining position. They are also more diversified and generate cashflow from multiple sources. Disney+ is also mostly content that has already been "paid for" by either box office sales or licensed merchandise.For example, sell…