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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

#161

Post by ceejayoz »

chrisseaton wrote: post #149
treis wrote: post #131

Earlier quoted context omitted.

No, because since the beginning of retail stores that is how it has worked and everyone understands that. For food delivery it has always been that you buy from the restaurant and pay menu price + delivery charge. Grubhub et.al. have come along and used that understanding along with an implied relationship to the restaurant to deceive the customer.

I don't really get it. Doordash or whatever says 'for $x we will put a WhateverBurger burger into your hand'. As long as that's what they achieve, this seems fundamentally honest to me. As a consumer I don't really care where that $x goes to - Doordash, WhateverBurger, delivery person... doesn't seem my business to interfere in people's private financial agreements. The diner gets offered a deal and can take it or no…

> Doordash or whatever says 'for $x we will put a WhateverBurger burger into your hand'. As long as that's what they achieve, this seems fundamentally honest to me.

That's not what they do, though. The receipt shows line items with a cost for the food, a fee for the service, and a delivery fee.

The problem is there's an additional fee for the service hidden in the supposed cost of the food; customers don't actually know what Doordash's cut really is.

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

#162

Post by paulgb »

NovemberWhiskey wrote: post #61
paulgb wrote: post #32

Earlier quoted context omitted.

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.

You missed out on: - VCs continue to pour money into the delivery companies ... that is all that is required for this to continue. If that stops, presumably a whole bunch of these firms will fail and that will be the end of that.

I didn't miss that, but usually the VC money ends up in someone's pocket. I'm thinking of all the meal kits and rides I got for next to nothing thanks to VCs and win-the-market-at-all-costs strategies.

With food delivery, it feels like everyone is getting screwed.

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

#163

Post by a_c_s »

MisterTea wrote: post #143
inkaudio wrote: post #99

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. e…

> The End game is to be the dominant food ordering platform in any given town where you get to dictate rates like 25%. You fight back by calling your order in and having them deliver it or pick it up yourself. I do this 99%* of the time as I refuse to pay a web server $8+ order+delivery fee for a meal that costs the same. It's absurd to think that people are so lazy that they cant pick up a phone or walk a few blocks…

Many of these platforms charge a fee for phone calls to the restaurant too.

Platforms like Seamless go so far as to set up websites for restaurants (that often have better SEO than the restaurant's original website), so the phone number listed routes through Seamless, helping to ensure they get their cut of any order.

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

#164

Post by treis »

chrisseaton wrote: post #149
treis wrote: post #131

Earlier quoted context omitted.

No, because since the beginning of retail stores that is how it has worked and everyone understands that. For food delivery it has always been that you buy from the restaurant and pay menu price + delivery charge. Grubhub et.al. have come along and used that understanding along with an implied relationship to the restaurant to deceive the customer.

I don't really get it. Doordash or whatever says 'for $x we will put a WhateverBurger burger into your hand'. As long as that's what they achieve, this seems fundamentally honest to me. As a consumer I don't really care where that $x goes to - Doordash, WhateverBurger, delivery person... doesn't seem my business to interfere in people's private financial agreements. The diner gets offered a deal and can take it or no…

>Doordash or whatever says 'for $x we will put a WhateverBurger burger into your hand'. As long as that's what they achieve, this seems fundamentally honest to me.

What percentage of customers do you think understand that Grubhub is marking up their food?

>If they aren't, they can turn it down and go elsewhere.

That's precisely the problem. Some of the restaurants customers are turning it down and going elsewhere because Grubhub has misrepresented their prices.

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

#165

Post by ceejayoz »

admax88q wrote: post #155
ceejayoz wrote: post #139

Earlier quoted context omitted.

That's what this does . They can still charge whatever they want for their fee. They just can't hide their fee in the list price of your sushi.

What? Are we reading the same article? As far as I can tell this new rule caps fees at 10%, it doesn't say anything about charging whatever they want, while being more transparent or disclosing the fees more clearly.

The headline says "Portland approves 10% cap on fees that food delivery apps can charge RESTAURANTS". There's no cap on what they can charge customers.

Legal: "Your pizza is $10. Our fee is $3, delivery is $5. Total bill $18." Restaurant gets $10.

Not legal: "Your pizza is $10 (but we quietly take $3 of that). Our fee is $3 (but we hid an extra $3 in the pizza!). Delivery is $5. Total bill $18." Restaurant gets $7.

Legal: "Your pizza is $7. Our fee is $6, delivery is $5. Total bill $18." Restaurant gets $7.

Legal: "Your pizza is $10. Our fee is $6, delivery is $5. Total bill $21." Restaurant gets $10.

Legal (but not great for business): "Your pizza is $10. Our fee is $600 because 'fuck you, we have VCs to pay', delivery is $5. Total bill $615." Restaurant gets $10.

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

#166

Post by shagie »

tanilama wrote: post #58
albntomat0 wrote: post #31

Earlier quoted context omitted.

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?

If delivery isn't a core part of the business and there isn't something for the delivery driver to do when there are no deliveries, having staff to do those deliveries isn't viable.

At my local pizza place, the delivery drivers are also wait staff and cooks (not primarily, but are able to serve in those capacities). When there are no deliveries, they're working (and getting paid) - the majority of the time, they're a pizza place and doing deliveries. Dominoes excels at doing this at scale.

But if you're the local sit down brew pub delivery isn't part of your standard thing. You can't hire a person to be a driver with the expectation that they'll do one delivery a night... and then what do you do on the nights they don't work?

A restaurant that isn't set up with deliveries being a primary source of getting to food to the customer - which includes having the staffing levels/tasks for delivery high and low - the economics of it doesn't favor adding staff to do it.

Note that deliveries also take a certain commitment of capital to make sure that the packaging for the food is appropriate for take away and that the delivery vehicle has the proper things to make that work (keeping food hot or cold as appropriate).

Having staff that can meet the demand as appropriate is key there for customer expectations. If you call for delivery and the wait time is 2h because they only have one driver that does an out and back each time - that's not going to be good.

So they could... but it an investment in staff that needs to be flexible in time and task, in packing for takeout, and in vehicle equipment. Unless this is to add a reasonable bit to revenue, the additional planning and logistical difficulty isn't worth it.

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

#167

Post by C1sc0cat »

giarc wrote: post #90
empath75 wrote: post #50

Earlier quoted context omitted.

It could scale if there's enough people ordering food from the same geographic location to the same geographic location at around the same time. Imagine a bunch of ghost kitchens next to each other in an industrial park, offering discounts to certain neighborhoods if they agree to order in a certain time frame.

That's likely the only path to profitability; making deliveries more efficient by saying we'll deliver your food, but it'll be sometime between 5-8pm.

So several hours old food that's sounds like its going to be really delicious NOT

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

#168

Post by chrisseaton »

ceejayoz wrote: post #161
chrisseaton wrote: post #149

Earlier quoted context omitted.

I don't really get it. Doordash or whatever says 'for $x we will put a WhateverBurger burger into your hand'. As long as that's what they achieve, this seems fundamentally honest to me. As a consumer I don't really care where that $x goes to - Doordash, WhateverBurger, delivery person... doesn't seem my business to interfere in people's private financial agreements. The diner gets offered a deal and can take it or no…

> Doordash or whatever says 'for $x we will put a WhateverBurger burger into your hand'. As long as that's what they achieve, this seems fundamentally honest to me. That's not what they do, though. The receipt shows line items with a cost for the food, a fee for the service, and a delivery fee. The problem is there's an additional fee for the service hidden in the supposed cost of the food; customers don't actually k…

> customers don't actually know what Doordash's cut really is

But why would you care? I don't need to know the bill of materials for all my transactions. When I buy a coffee I don't expect to know how much they paid for the beans.

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

#169

Post by ikeboy »

tonyarkles wrote: post #146
zwily wrote: post #79

Earlier quoted context omitted.

Legally, do you have a business relationship with a company you buy a product from on Amazon?

That’s an interesting comparison! I admit it I took business law a long time ago, but I think the answer is: it depends. You’d also need to dig deep into the TOS for both the consumer side and the seller side. But ignoring the specific details, here’s my general thought process: - products sold directly by Amazon: you have products sourced through (nominally) a legitimate supply chain, where there are legal agreement…

In the Amazon case, different courts have said different things.

You're right that if Amazon sold it directly they're definitely liable. But even if a third party sold it, there's an argument (which some courts have accepted) that Amazon is the "real" retailer. Substance over form.

Note that Amazon doesn't even give FBA sellers the customer address anymore. They're effectively a retailer who just pays suppliers on consignment.

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