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Portland approves 10% cap on fees that food delivery apps can charge restaurants

oregonlive.com

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Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#51

Post by belltaco »

paulgb wrote: post #32
Nextgrid wrote: post #13

Earlier quoted context omitted.

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 fe…

You're right, and that's why I'm genuinely confused by what's going on. Restaurant delivery used to be a healthy market that didn't need to eat up external capital. Now we have a situation where: - Restaurants say they are paying too much. - Delivery companies are losing money. - Customers are paying fees to the sites in addition to the delivery cost we used to pay. What gives? It seems these can't all be true.

Add to that drivers complaining that they're getting exploited.

But yes, all of those can be true. Paying someone for 30 to 45 minutes of their time is expensive.

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#52

Post by ghaff »

atonse wrote: post #10
itsoktocry wrote: post #6

Earlier quoted context omitted.

> 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?

I'm just reading more that this business model was never going to work the way it is right now given the thin margins in restaurants and the cost of delivery drivers. With automation, it might change the economics. I think that's what everyone's betting on. I think the Ubers and all are just trying their damndest to not completely drown until driver automation reaches a certain stage. They obviously can't openly say…

>They obviously can't openly say that because there would be revolts from their drivers.

Uber at least has been quite explicit about that. It's somewhere between delusional and what's known in the vernacular as "lying" but investors who are either naive or are cynically bought into the greater fool theory lap it up.

Delivery specifically can work in dense areas but it mostly relies on local kids or family members working for peanuts and can't really pay for overpriced SV engineers or VC yachts.

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#53

Post by jfengel »

andy_ppp wrote: post #27

So as I understand it Deliveroo and Uber eats charge 25% of the food costs, plus delivery fees on top. Uber eats I know is losing money and Deliveroo are losing a few hundred million per year on revenues of about $500m. Basically cutting the food percentage like this to 10% would imply delivery services are permanently unprofitable? Why have all these restaurants signed up if 25% is so unfair?

It's doubtful that these services are actually spending 25% of each food order on providing the service. The money goes to expansion, marketing, loss leaders, and other supposedly temporary overhead. They're hoping that when they reach scale and have eliminated competitors, they'll turn a tidy profit, the way Amazon did.

It's not at all clear that they really need to spend that much money on their expansion or that they're doing so ethically, but either way, don't weep at their losses. That's not the reason they're charging so much.

As for the restaurants, they're in a bind. The services that deliverers provide should be much cheaper at scale. They need somebody to do delivery and to take online orders, both of which are a hassle to set up yourself. Not impossible, but you'd expect economies of scale if you're effectively sharing a driver pool and software development cost with all of your competitors.

If your competitor has a delivery service and you don't, you'll lose a lot of business. If you develop it yourself, you pay the overhead. If you buy in to the services, they have a lot of power to set prices where they want.

I don't know why the delivery services aren't forced to undercut each other's prices to get the businesses. Customers don't seem to care which service they use; they have all of the apps anyway.

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#54

Post by jiofih »

discopicante wrote: post #49

This reminds me of Ticketmaster vs. Pearl Jam in the 90s where the band exposed that Ticketmaster takes a much bigger cut that ticket holders didn't see in addition to a small 'ticket fee' that the ticket holder did see. I remember during that time that the general consensus from music fans was that Ticketmaster was an evil and greedy company. Restaurant customers really need to change their perceptions and understan…

The sad thing is I don’t believe that situation has changed - if anything they take an even larger chunk, and even figured out a way to profit multiple times from the same ticket by owning the reseller platforms.

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#55

Post by tonyarkles »

albntomat0 wrote: post #31
andy_ppp wrote: post #27

So as I understand it Deliveroo and Uber eats charge 25% of the food costs, plus delivery fees on top. Uber eats I know is losing money and Deliveroo are losing a few hundred million per year on revenues of about $500m. Basically cutting the food percentage like this to 10% would imply delivery services are permanently unprofitable? Why have all these restaurants signed up if 25% is so unfair?

A number of anti-competitive business practices, such as offering delivery for restaurants without telling them. Previous discussion: https://news.ycombinator.com/item?id=23216852

There’s a really interesting liability question that comes along with that. If I order food from a restaurant via a delivery service that has no contractual relationship with them, and happen to get sick, who’s on the hook for that? I, legally, have no business relationship with the restaurant in that circumstance.

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#56

Post by 0x202020 »

SeanLuke wrote: post #35
wilde wrote: post #28

Earlier quoted context omitted.

They haven't. Grubhub just scrapes business listings and pretends restaurants sign up. https://www.theverge.com/2020/1/29/21113876/grubhub-seamless...

If restaurants haven't signed up, then how are they getting fees from delivery services?

Like what the other person said, they increase the prices and then most people blame the restaurant. A local restaurant I get pickup from is $8.95 pre tax, curious I looked to see what delivery was and it is $11.65 pre tax and then a $4.00 delivery fee

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#57

Post by leetcrew »

darrenoc wrote: post #12
falcolas wrote: post #11

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.

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 mean, they're free to recoup the losses by charging a more realistic delivery fee directly to the customer.

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#58

Post by tanilama »

albntomat0 wrote: post #31
andy_ppp wrote: post #27

So as I understand it Deliveroo and Uber eats charge 25% of the food costs, plus delivery fees on top. Uber eats I know is losing money and Deliveroo are losing a few hundred million per year on revenues of about $500m. Basically cutting the food percentage like this to 10% would imply delivery services are permanently unprofitable? Why have all these restaurants signed up if 25% is so unfair?

A number of anti-competitive business practices, such as offering delivery for restaurants without telling them. Previous discussion: https://news.ycombinator.com/item?id=23216852

Can't the company just deliver the food?

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#59

Post by jiofih »

adrianmsmith wrote: post #47
brianlweiner wrote: post #38

Earlier quoted context omitted.

In at least some cases ... the prices you see on grubhub may be higher than the actual prices the restaurant is charging. E.g $17.99 vs $14.99

What's wrong with that? If the restaurants are getting the price they want to charge, and if the customers are prepared to pay the higher price, seems everything's OK? I agree that it's scammy that grubhub etc. is pretending to be the restaurant. But if they made it clear, we are a delivery service giving you access to this restaurant, if you want to order this food you can do so for $17.99, I think everything would…

If, but that’s not what they are doing. So there’s everything wrong with that.

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#60

Post by muizelaar »

andy_ppp wrote: post #27

So as I understand it Deliveroo and Uber eats charge 25% of the food costs, plus delivery fees on top. Uber eats I know is losing money and Deliveroo are losing a few hundred million per year on revenues of about $500m. Basically cutting the food percentage like this to 10% would imply delivery services are permanently unprofitable? Why have all these restaurants signed up if 25% is so unfair?

Why can't the delivery services just raise the delivery fee?
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