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

#211

Post by pwinnski » Thu, Jul 09, 2020, 2:54 PM UTC

occamrazor wrote: post #137

treis wrote: post #69

Earlier quoted context omitted.

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 is unethical only if Grubhub says “I will deliver joe’s 12$ burger to you for a 4$ delivery fee” when the burger costs actually 9$. There’s nothing wrong if they say “I will bring you Joe’s burger for 16$ including delivery.” In general we don’t expect resellers to reveal their cost of goods sold.

GrubHub describes themselves as a delivery service company, not a reseller. With resellers, I can comparison shop. GrubHub tries to make that difficult at best.

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

#212

Post by catalogia » Thu, Jul 09, 2020, 2:54 PM UTC

i_am_proteus wrote: post #195

lotsofpulp wrote: post #175

Earlier quoted context omitted.

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.

I've experienced the opposite. I used to order pizza on a phone from a local shop a few times a month but then one day a machine answered the phone telling me to order using Grubhub. I've never bought anything from that business again.

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

#213

Post by waheoo » Thu, Jul 09, 2020, 2:55 PM UTC

andrewla wrote: post #204

raverbashing wrote: post #181

Earlier quoted context omitted.

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

The restaurants have this option, and I frankly have no idea why they don't pass the entire cost of delivery onto the customer. I'm happy to pay a delivery fee, though not everyone will, but the restaurant can strike a balance -- they can choose to raise their prices in general, to fund some of the delivery cost from their direct-ordering and in-person traffic. That's what they're doing anyway, just not being explici…

Same reason if you dont do "free shipping" on ebay you get shafted.

The market is conditioned to look for the free shipping label.

You may be able to see through the sham, I can assure you, many others do not.

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

#214

Post by bluehatbrit » Thu, Jul 09, 2020, 2:55 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?

We're moving from an age of consumers going to the good/service and to the good/service going to the consumer. In particular younger generations see delivery as a norm. It's less about being lazy or having high expectations and more a case of it being baked into the culture of younger generations now.

I work for a takewaway / food delivery company and it's facinating listening to what our customers are saying. I heard one parent say that their kids have sometimes ordered ice cream on a delivery platform rather than look to see if there's any in the freezer first. It's quickly becoming the norm to the point where peoples literal first thought is "can I order it?" rather than "can I go and get it?".

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

#215

Post by cpwright » Thu, Jul 09, 2020, 2:56 PM UTC

waheoo wrote: post #203

andrewla wrote: post #194

Earlier quoted context omitted.

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…

You realise free shipping on ebay and amazon is.. anything but free right?

Yes, but neither is the rent for an in-store experience. Having the item of the price subsidize the shipping vs. pay the merchant's rent is not all that different.

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

#216

Post by pwinnski » Thu, Jul 09, 2020, 2:56 PM UTC

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…

That is fundamentally not what Doordash says.

Doordash or whatever says 'for $x we will put a $y WhateverBurger burger into your hand,' but $y is already higher than a WhateverBurger costs. People are left thinking that $x isn't that high a cost for delivering a $y burger, but the actual delivery cost is $x plus some percentage of $y, so both the numerator and denominator are falsified.

They're lying about their value proposition.

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

#217

Post by _sbrk » Thu, Jul 09, 2020, 2:58 PM UTC

DanBC wrote: post #198

_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.

> 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.

https://www.statista.com/statistics/794278/disabled-populati...

Let's take the first-order approximation that 15% of the population is disabled and cannot get their own food. A quick, but by no means, thorough search shows both government and private programs to help these people obtain nutritious food. We could delve into this and go down the rabbit hole of what % of that 15% cannot prepare food or even feed themselves, but I don't have data on that. Yes, delivery might be a need in some of those cases where family, friends, programs, etc. don't exist. These can be a special case, perhaps My comments are directed at the other 90% of keyboard pushers who whine that they're getting charged too much / businesses are being harmed when they click a button for Beef Lo Mein.

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

#218

Post by carlmr » Thu, Jul 09, 2020, 2:59 PM UTC

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…

How about you have to charge the fee to the customer. The issue isn't taking 25%. It's taking 25% from the restaurant, which means they don't have a profit margin left.

If for example the pizza is $10 at the restaurant, make that $12.50 with delivery and $10 without. That way the consumer can decide themselves if they want to pay the added amount for delivery, or if they'd rather walk/drive. Right now they charge you $10 and give the restaurant only $7.50 meaning they can't make a profit on that pizza.

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

#219

Post by manuelabeledo » Thu, Jul 09, 2020, 3:00 PM UTC

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.

> Why should we force a cap rather than let market competition improve prices?

This is an extremely simplistic perspective on the matter.

Competitors have proved that they are willing to lose money on the short term, because the goal is to dominate the market in the long term. This has a name, and it's "dumping".

On top of that, these services are saturating and cannibalizing the food delivery market share, not by driving restaurants out of business, but their delivery services. At some point in time, the perception of such services would be that they are the only available options, giving restaurants no chance to compete, even when they are the actual providers or manufacturers of the goods.

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

#220

Post by EForEndeavour » Thu, Jul 09, 2020, 3:01 PM UTC

ceejayoz wrote: post #206

EForEndeavour wrote: post #190

Earlier quoted context omitted.

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.

Read the order closely. > “Purchase Price” means the menu price of an online or phone order. Such term excludes taxes, gratuities, and any other fees that may make up the total cost to the customer of an online order . > It shall be unlawful for a Third-Party, App-Based Food Delivery Platform to charge a Restaurant a fee (including, without limitation, any delivery fee) for the use of its services that totals more th…

> It shall be unlawful for a Third-Party, App-Based Food Delivery Platform to charge a Restaurant a fee (including, without limitation, any DELIVERY FEE) for the use of its services that totals more than 10% of the Purchase Price of the order made through the Third-Party, App-Based Food Delivery Platform.

Do delivery apps charge "delivery fees" to restaurants as well as to the customer? Yes, the ordinance applies to restaurant charges, but this provision reads ambiguously to me, as I don't know if third-party platforms charge the restaurant a delivery fee while also charging the customer a (possibly different) delivery fee.