Portland approves 10% cap on fees that food delivery apps can charge restaurants • Hacker News Board

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

#181

Post by raverbashing » Thu, Jul 09, 2020, 2:41 PM UTC

_sbrk wrote: post #160

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…

"Although the FTC examines claims of predatory pricing carefully, courts, including the Supreme Court, have been skeptical of such claims." Which means that predatory pricing rarely, if ever, exists. If you don't like the 25% delivery fee, GET OFF YOUR ASS AND GO GET YOUR OWN FOOD.

The 25% delivery fee is fine as long as it's explicitly charged to the consumer and not charged as commission from the "restaurant cost"

I have no qualms if I order on the system and it shows, let's say:

- Pizza: $15

- Delivery fee: $9

And the entirety of the $15 goes to the restaurant

But that doesn't seem to be happening

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

#182

Post by _sbrk » Thu, Jul 09, 2020, 2:41 PM UTC

_wldu wrote: post #126

_sbrk wrote: post #95

Earlier quoted context omitted.

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

The market can't discover this when consumers are misled by the delivery services. 10% is reasonable. Let the delivery service add a fee to recover their cost rather than take the food provider's profit. Otherwise, these food providers are going to go out of business (and be bought by the delivery services).

The market determines what is reasonable, not you (or any one person). "Recover their cost"? What is this, communist Russia?

So what if the food providers sell off to the delivery services? Perhaps it will result in a better match for the market demands. Preserving jobs isn't the goal of capitalism, profit is. Those businesses who try to go too far toward extreme profit usually fail when smaller, more nimble upstarts dig the foundations out from under the bigger ones.

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

#183

Post by cpascal » Thu, Jul 09, 2020, 2:42 PM UTC

I live in Jersey City and in March the mayor instituted an executive order capping delivery commissions to 10%. The effect of this was every Uber Eats order had a $3 "Executive Order Surcharge" for deliveries in Jersey City. They just removed the surcharge after the NJ legislation/governor passed a law making the cap state-wide.

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

#184

Post by lotsofpulp » Thu, Jul 09, 2020, 2:42 PM UTC

a_c_s wrote: post #163

MisterTea wrote: post #143

Earlier quoted context omitted.

> 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.

No one is forcing the restaurant to accept the fee, and if they do, then the restaurant should charge higher prices to offset it.

Otherwise google maps and Apple Maps is sitting right there not charging any fees for the phone number.

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

#185

Post by Nextgrid » Thu, Jul 09, 2020, 2:43 PM UTC

paulgb wrote: post #162

NovemberWhiskey wrote: post #61

Earlier quoted context omitted.

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.

To be fair, in the case of Uber, at least in London there's always someone paid to stand near the metro stations distributing Uber Eats vouchers.

Of course, Uber's objective is to acquire you as a customer and not give you free food, so it's limited to new accounts only and presumably they check credit card and phone numbers to prevent multiple accounts being created.

However, if you try hard enough, you can indeed take advantage of it and automate the process assuming you have a good source of phone numbers and non-fraudulent credit card numbers.

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

#186

Post by ceejayoz » Thu, Jul 09, 2020, 2:43 PM UTC

chrisseaton wrote: post #168

ceejayoz wrote: post #161

Earlier quoted context omitted.

> 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.

I care because they're explicitly listing a fee for the app that doesn't accurately reflect what that fee is.

If you wanna say "delivering a pizza will cost you $20" and leave at that, fine. If you tell me the Grubhub fee is $5 and it's actually $10, I'm upset.

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

#187

Post by amyjess » Thu, Jul 09, 2020, 2:43 PM UTC

colinmhayes wrote: post #123

maltelandwehr wrote: post #71

Next week there will be complaints that food delivery services are no longer catering to certain areas. Instead of accepting that it is just not profitable for them, journalists will label it as backslash or an act of punishment. Same thing happened in others states/cities that implemented similar rules. The winners are people living in central areas of the city with lots of restaurants. The losers are the poorer out…

I don't understand why people in central areas of the city order delivery. There are 10 amazing restaurants within easy walking distance of me, why order delivery when I can walk for 5 minutes instead?

Maybe because some people are completely quarantined and unable to leave their homes.

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

#188

Post by yardie » Thu, Jul 09, 2020, 2:45 PM UTC

Nextgrid wrote: post #13

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?

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…

If I recall food delivery wasn't the only duty a delivery driver had. Between deliveries drivers were working in front of house, in the kitchen, food prep, and cleaning. They were employees with a scheduled shift and not contractors trying to gig on it.

The restaurant I regular order it's family run and either the father or son will deliver to us.

What we have now is a lot of abstracter layers of services, payment processors, workers, cloud computing, and VC. All these layers add a cost in an industry that can't afford the overhead. Unlike software and services, restaurants are high capital, high labor intensive businesses with low margins.

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

#189

Post by MisterTea » Thu, Jul 09, 2020, 2:45 PM UTC

mchanson wrote: post #147

MisterTea wrote: post #143

Earlier quoted context omitted.

> 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…

Or just regulate the dumb behavior of these dumb start ups to not distort the market in dumb damaging ways,

Do you need these services that badly that you're willing to get the government involved? If you don't like the product or the company ethics then don't give them money. The only lesson greed will ever learn from is No Sale.

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

#190

Post by EForEndeavour » Thu, Jul 09, 2020, 2:45 PM UTC

ceejayoz wrote: post #122

EForEndeavour wrote: post #109

Earlier quoted context omitted.

I think the parent commenter would prefer a law that requires ordering platforms to list their cut separately, but doesn't actually cap how big that cut can be. That would give customers more information to choose for themselves whether to use a given ordering platform.

This largely does that, by my reading. The delivery apps aren't forbidden from charging the customer a sky-high fee. They're just not permitted to hide it in the supposed cost of food. Before: Pizza ($10), Grubhub fee ($2), delivery fee ($3), but the Grubhub fee is actually $5 because they're taking 30% of the restaurant's revenue behind the scenes. Now Grubhub has to accurately show their fee as $5 if they want that…

Sorry, which article are you reading? I'm not seeing anything about forcing third-party delivery platforms to list out their fees separately in the linked article, or in the Portland ordinance itself: https://www.portlandoregon.gov/auditor/article/763323

The law sets a cap on fees (including delivery fees!) of 10% of the menu price, and prohibits delivery companies from withholding wages or tips from delivery staff.