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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

#191

Post by MisterTea »

deelowe wrote: post #148
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…

In my experience, most restaurant staff get super upset about this -- especially if you ask them to bring your order out. Restaurant owners need to be more clear with their staff about needing to support this.

Sounds like a restaurant that doesn't want to stay in business.

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

#192

Post by crazygringo »

There are legitimate abuses of market power. But this is not one of them.

Nobody's forcing restaurants to enter these partnerships, there's competition, and delivery people still need to be paid.

There are two obvious outcomes here: either food delivery apps will restrict delivery to profitable orders only (stop working for some restaurants, require higher order minimums, etc.), or they'll stay to avoid bad press but then this is essentially the city blackmailing investors to subsidize food delivery.

It's one thing for COVID-19 to restrict business services, and deeply unfortunate that businesses wind up closing. It's another thing entirely to force businesses to continue operating but at a loss.

If Portland or other cities believe it's a necessary public service to provide subsidized food delivery, then they ought to pay for it themselves through tax dollars. Either hire city-employed deliverypeople and make them available to restaurants, or pay GrubHub etc. to do it through a normal business contract.

But capping food delivery rates to far below what they were pre-pandemic is not a fair approach.

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

#193

Post by amyjess »

_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.

> GET OFF YOUR ASS AND GO GET YOUR OWN FOOD

That's really something to say to people who are 100% quarantined during a pandemic.

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

#194

Post by andrewla »

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 problem is that this response is in the wrong direction. By forcing prices lower, we guarantee that only over-capitalized predatory businesses can compete in the space.

The problem is that consumer advocacy and anti-monopoly are practically the opposite thing. The end result of government action here should be short-term higher prices to the consumer, that reflect the actual cost of operations, rather than lower prices to the consumer (i.e. "free delivery") that is achieved by pricing at a loss to drive out competitors.

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

#195

Post by i_am_proteus »

lotsofpulp wrote: post #175
_sbrk wrote: post #160

Earlier quoted context omitted.

"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.

Yes, this is a completely unnecessary law. Restaurant phone numbers are seconds away using the same device used to order from these apps, and a phone call is free. Absolutely no reason a restaurant can’t recoup extra costs by charging the app users more or simply refusing to do business with the app.

A family member of mine owns a restaurant that does mostly delivery business. He employs his own drivers; he's on GrubHub because it brings in more business and is a net positive for his bottom line. He includes flyers with every order that says, in large obvious text, "Call us directly at [this number] and save 20% compared to GrubHub."

He still gets a sizeable amount of repeat business from GrubHub.

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

#196

Post by Nextgrid »

yardie wrote: post #188
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…

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 pr…

On the other hand, with a delivery service where the driver delivers for multiple restaurants, the downtime of the driver can be reduced to near-zero, so I don't think that is the problem.

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

#197

Post by pwinnski »

lotsofpulp wrote: post #184
a_c_s wrote: post #163

Earlier quoted context omitted.

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.

I think you misunderstand.

There are a number of restaurants listed on Yelp in my area for whom the phone number listed is answered by GrubHub. I refuse to deal with GrubHub, so I make an effort to search for a direct number, but it is often difficult to find.

I'm not sure how GrubHub is getting themselves set as the primary number for restaurants in Yelp, but it's happening.

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

#198

Post by DanBC »

_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.

> GET OFF YOUR ASS AND GO GET YOUR OWN FOOD.

A gentle reminder that people with disabilities exist and they benefit from food delivery services.

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

#199

Post by paulgb »

belltaco wrote: post #51
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.

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.

> Paying someone for 30 to 45 minutes of their time is expensive.

Definitely, but this was also the case before Uber Eats et al.

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

#200

Post by criddell »

Proven wrote: post #72
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?

The socialist busybodies in Portland want to "do something", so apart from rendering these businesses unprofitable, they are also going to put more of the relatively less skilled workers out of work, while at the same time lower the quality of life for consumers who will now be forced to find less convenient or more expensive ways to eat.

The cap can be adjusted or even removed down the line. Maybe 10% is too low, too high, or maybe it's just right. It's an experiment worth trying.
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