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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

#91

Post by andy_ppp »

wilde wrote: post #28
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?

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

So people are willing to pay over inflated prices for takeaway? That’s capitalism for you...

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

#92

Post by onlyrealcuzzo »

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?

Wait. So delivery apps pay restaurants 25% less for their food. Don't they also charge customers more for the food, even before they add on service fees, delivery fees, and a tip?

At least this is what I've seen recently. I look at a restaurants menu, and it will have a dish for $9. When I try to order it, Postmates & Uber Eats say the same thing is $14 (though they both agree on the price). This isn't just one restaurant. This is most restaurants I've checked in Pittsburgh.

In this example, I would probably never go to the restaurant for the $14 meal. I'd go once a week for the $9 meal. This seems bad for consumers because it's tricking you on how much the food costs and how much delivery costs.

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

#93

Post by cocoa19 »

I disagree with this move. Why should we force a cap rather than let market competition improve prices?

I believe it's better to fix shady practices. If I pay 25% to Uber, I want to know I paid 25% to them and not the restaurant. Then I can decide if the time savings is worth that 25% or not.

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

#94

Post by chrisseaton »

treis wrote: post #69
chrisseaton wrote: post #42

Earlier quoted context omitted.

So the restaurants are getting the option of delivery and the increased customer base and advertising... for absolutely no change to themselves? And the customers who use delivery are the ones paying for it? And if they don't want to pay it they can still go straight to the restaurant who will again make the same money? Sounds like a win to absolutely everyone involved. What is everyone's problem? Why do we want to i…

It's falsifying the restaurants prices. Grubhub shouldn't be able to say a dish costs $15 when it actually costs $10. It's a false statement that harms the restaurant. Sure, they will get some deliveries but what about the people that would buy at $10 but not $15? And what about the people that won't dine in because they think prices are 50% higher than they are. GrubHub is skimming valuable customers while discardin…

> It's falsifying the restaurants prices.

It's marking them up... yeah. Is that a problem? Do you realise when you go to a store all the products are 'falsified' by marking them up on top of what the producer sells them to the retailer for?

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

#95

Post by _sbrk »

cocoa19 wrote: post #93

I disagree with this move. Why should we force a cap rather than let market competition improve prices? I believe it's better to fix shady practices. If I pay 25% to Uber, I want to know I paid 25% to them and not the restaurant. Then I can decide if the time savings is worth that 25% or not.

Indeed. Let the market discover the proper price for this service.

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

#96

Post by talideon »

airstrike wrote: post #86

Why does it have to be a percentage? Taking the food from point A to point B costs the same whether it's sardines or caviar. I never understood this... Seems like charging for the distance traveled and even the time of day would make a lot more sense

It's a cap. It's not a statement of how _much_ you can charge, just what the maximum charge can be. How much you actually charge can be based on the things you mention, but you can't charge any more than that 10%.

Also, a maximum %age is easier to regulate, while the factors you mention are significantly harder to regulate. Moreover, %ages don't need readjusting to account for inflation.

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

#97

Post by giarc »

Slix wrote: post #66

I feel super guilty ordering from food delivery apps. But I seem to have no choice if I want delivery.

I'm in the same boat. I was even given a large gift card recently for SkiptheDishes (Canadian food delivery app) by co-workers so I'm forced to use it. I want to support local restaurants, but I'm starting to question whether my order is actually a lose for them.

I read this article and actually looked up my city councillor and emailed him. I asked if council had considered this and told him I would support this type of move.

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

#98

Post by ceejayoz »

cocoa19 wrote: post #93

I disagree with this move. Why should we force a cap rather than let market competition improve prices? I believe it's better to fix shady practices. If I pay 25% to Uber, I want to know I paid 25% to them and not the restaurant. Then I can decide if the time savings is worth that 25% or not.

> I believe it's better to fix shady practices. If I pay 25% to Uber, I want to know I paid 25% to them and not the restaurant.

Isn't this what this does? It's a cap on the hidden cut these apps take from what the bill shows as the restaurant's revenue.

Instead of taking 30% of my $10 pizza, Uber/Grubhub/etc. now have to decide to put that $3 in the fee they show to the user if they want that revenue.

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

#99

Post by inkaudio »

This is a regulatory response to Silicon Valley’s implementation of predatory pricing.

Let me explain:

Predatory pricing is defined as “the pricing of goods or services at such a low level that other suppliers cannot compete and are forced to leave the market.”

For silicon valley startups like Doordash and Grubhub this is accomplished by acquiring customers at a significant loss in ways that may often seem idiotic.

example: Doordash and Pizza Arbitrage https://news.ycombinator.com/item?id=23216852

The End game is to be the dominant food ordering platform in any given town where you get to dictate rates like 25%.

Since predatory pricing is illegal, this response is justified. However, it would be better if regulators enforce predatory pricing rules to begin with, which they rarely ever do.

for more info on predatory pricing rules in America see: https://www.ftc.gov/tips-advice/competition-guidance/guide-a...

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

#100

Post by chrisseaton »

yellow_postit wrote: post #63
chrisseaton wrote: post #42

Earlier quoted context omitted.

So the restaurants are getting the option of delivery and the increased customer base and advertising... for absolutely no change to themselves? And the customers who use delivery are the ones paying for it? And if they don't want to pay it they can still go straight to the restaurant who will again make the same money? Sounds like a win to absolutely everyone involved. What is everyone's problem? Why do we want to i…

Option implies that restaurants can opt in/out which for cases like GrubHub isn’t possible. These apps can lead to poor experience and perception of the restaurant due to the delivery short comings and customers tend to transfer any unhappiness with the delivery as being the restaurants fault (eg late delivery and cold food).

> Option implies that restaurants can opt in/out which for cases like GrubHub isn’t possible.

Should a manufacturer have the right to say that you can't re-sell something that you bought from them fairly? That doesn't sound great to me. If Doordash fairly buy the food then they can sell it to me (as long as they follow food regulations). That sounds fine, doesn't it?

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