Are any of these food delivery app services actually making profit right now, or are they just burning VC capital? A news podcast I listened to yesterday made the statement that every food delivery company is doing deliveries at a loss. This seems problematic for making delivery a viable business without forming a monopoly to get the scale required to make things profitable.
Portland approves 10% cap on fees that food delivery apps can charge restaurants
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Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants
#12Are any of these food delivery app services actually making profit right now, or are they just burning VC capital? A news podcast I listened to yesterday made the statement that every food delivery company is doing deliveries at a loss. This seems problematic for making delivery a viable business without forming a monopoly to get the scale required to make things profitable.
Nope, they don't make any profit even when charging 30% fees. So this 10% cap will probably cause them to withdraw from the market.
Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants
#13Seems like a solid move, given the capture of the market by the food delivery apps, and their shady business practices (like the thread from a while ago where a delivery service was making fake websites for restaurants, without their knowledge or consent). Why have this expire post COVID though?
> Seems like a solid move Are any of these food delivery companies even making money? What will capping their fees do except make them lose even more?
Food delivery worked for decades when it was done by the restaurant itself so worst-case scenario we wouldn't lose much as these companies go bankrupt and we go back to restaurant-provided delivery.
In fact, with all their tech and economies of scale, I'm surprised food delivery services are doing worse in terms of per-unit profitability than the low-tech restaurant-provided ones despite already charging excessive fees.
I guess the reason is that the various venture capital firms poisoned their own well by subsidizing the services and competing at below-cost pricing.
Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants
#14Seems like a solid move, given the capture of the market by the food delivery apps, and their shady business practices (like the thread from a while ago where a delivery service was making fake websites for restaurants, without their knowledge or consent). Why have this expire post COVID though?
> Seems like a solid move Are any of these food delivery companies even making money? What will capping their fees do except make them lose even more?
Who should be losing money? The delivery apps or the restaurants?
Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants
#15Seems like a solid move, given the capture of the market by the food delivery apps, and their shady business practices (like the thread from a while ago where a delivery service was making fake websites for restaurants, without their knowledge or consent). Why have this expire post COVID though?
On paper it looks good, and given the players in the arena, there’s not much competition, especially since there’s a high bar of entry for new competition. Perhaps the idea behind not imposing such regulations is a free market argument, in which the most efficient price won’t be selected for, thereby not producing the optimal supply/demand. I would argue against this point that we would be assuming perfect competitio…
> In China, if I recall correctly, they have a food economy such that it’s cheaper to order take out, and have the food delivered, than actually cooking.
Is this true?
Here in London, a typical delivered meal would cost ~$20, whereas a weekly shop and cooking probably takes 5 hours/week, but costs only ~$2 per meal.
Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants
#16Seems like a solid move, given the capture of the market by the food delivery apps, and their shady business practices (like the thread from a while ago where a delivery service was making fake websites for restaurants, without their knowledge or consent). Why have this expire post COVID though?
On paper it looks good, and given the players in the arena, there’s not much competition, especially since there’s a high bar of entry for new competition. Perhaps the idea behind not imposing such regulations is a free market argument, in which the most efficient price won’t be selected for, thereby not producing the optimal supply/demand. I would argue against this point that we would be assuming perfect competitio…
> I would argue against this point that we would be assuming perfect competition, and given the anti competitive behavior of gig economy companies in this space (such as buying restaurant domain names, making fake websites with phone numbers they own to trick people into thinking they’re ordering directly) and lack of competition, this seems appropriate for now.
I agree that the ideal solution would be hitting the anti-competitive behaviors directly, rather than an rate cap. The overall issue is the pressure that a large delivery company can exert on individual small business restaurants, with the solution being coordination between restaurants to ensure they all get a good deal, or strong competition between the delivery services.
Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants
#17In a country where tipping of 20% is the norm ... there is all of sudden a cap of 10% on what the delivery guy can make?
Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants
#18Are any of these food delivery app services actually making profit right now, or are they just burning VC capital? A news podcast I listened to yesterday made the statement that every food delivery company is doing deliveries at a loss. This seems problematic for making delivery a viable business without forming a monopoly to get the scale required to make things profitable.
Nope, they don't make any profit even when charging 30% fees. So this 10% cap will probably cause them to withdraw from the market.
If thats true, there is not a market to withdraw from ...
Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants
#19Are any of these food delivery app services actually making profit right now, or are they just burning VC capital? A news podcast I listened to yesterday made the statement that every food delivery company is doing deliveries at a loss. This seems problematic for making delivery a viable business without forming a monopoly to get the scale required to make things profitable.
Nope, they don't make any profit even when charging 30% fees. So this 10% cap will probably cause them to withdraw from the market.
I've had delivery takeaways in British towns and cities for 2 decades, well before the likes of ubereats and deliveroo.
Those companies do their own deliveries and manage to make enough money to not even charge more for delivery (or offer a collection discount) - although usually a minimum cost of say £20.
Why can't VC companies do it that efficently?
Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants
#20Seems like a solid move, given the capture of the market by the food delivery apps, and their shady business practices (like the thread from a while ago where a delivery service was making fake websites for restaurants, without their knowledge or consent). Why have this expire post COVID though?
On paper it looks good, and given the players in the arena, there’s not much competition, especially since there’s a high bar of entry for new competition. Perhaps the idea behind not imposing such regulations is a free market argument, in which the most efficient price won’t be selected for, thereby not producing the optimal supply/demand. I would argue against this point that we would be assuming perfect competitio…
Why not enforce regulations that prevent bad actors from pursing anti-competitive behavior? It's harder, and much less flashier than mandating a cap, but it retains much more of the free market integrity. Pricing is a genuinely hard problem, and mandating it from above is an exercise in pure folly.