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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

#341

Post by asdff »

austhrow743 wrote: post #221
colinmhayes wrote: post #123

Earlier quoted context omitted.

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?

5 minute walk then 20 minute wait then 5 minute walk back. When you're earning $50+ an hour, which many in cities are easily clearing, it starts to make a lot of sense to pay someone else to do your waiting for you.

Takeout is 15-20 minutes, delivery is 40-60. Call ahead, and the food will be ready by the time you get yourself together, walk out the door, and arrive at the restaurant.

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

#342

Post by ajphdiv »

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?

Maybe that's whats next -- online only restaurants. Food made in a warehouse.

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

#343

Post by mindslight »

crazygringo wrote: post #333
mindslight wrote: post #306

Earlier quoted context omitted.

(the critical detail is contained in the full headline - "can charge restaurants ") The commission is the cut of the "food price" that the delivery service gets from the restaurant, in addition to charging the customer-facing "delivery fee". So if the customer sees "Pizza $20, Delivery $5", and the restaurant is paying 30% to the delivery service, the actual breakdown is "Pizza $14, Delivery $11". It's misleading to…

> It's misleading to say that the pizza costs $20 when $6 of that is actually a hidden delivery fee. No it's not. While some delivery sites do list higher prices than in-restaurant (arguably misleading), that's not the norm. And as long as they don't, then if a pizza is $20, then if you're eating in-house $6 of that is going to dining space, tables and chairs, plates and utensils, dishwashing, etc. If it's delivery,…

Yet take-out is also the same price and doesn't require any of that overhead. Although you are saving on a "tip", which is yet another weird fee attributed to a third party rather than waitstaff just earning straightforward wages - cost-responsibility-dodging is rampant in this industry. What's probably driving this dispute over commissions is that restaurants still need to pay for that dining space during Covid, so they're fighting over that "spare" $6.

> All businesses spread their costs out among customers in different ways. There's nothing inherently "hidden" about it.

The restaurant is front and center as being the provider of the food. The delivery service is explicitly stating that this food costs one specific price, and delivery another specific price. Meanwhile this breakdown is false and arbitrary, with a seeming goal of misleading customers about how much getting your food delivered actually costs.

> And again, "scummy terms" in no way implies lack of competition. Not sure where you got that idea from?

Effective market competition generally results in reasonable terms, due to many meetings of minds. A lack of reasonable terms shows there is not effective competition over the relationship. If a restaurant could instead sign up with a delivery service that didn't front-run their customers, they wouldn't take to writing exasperated blog posts about it.

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

#344

Post by cameldrv »

GordonS wrote: post #293
cameldrv wrote: post #276

IMO this is misguided. The reason that restaurants are struggling is because they're unable to provide the value they once did, but they're still bearing a lot of the costs that used to provide it. All of these restaurants are paying rent on their dining rooms, when they're only using the kitchens. The customer experience, paid for by waiter wages and dining room rent, is now being provided by the delivery companies.…

I disagree - large cuts to delivery services were hurting restaurants long before COVID, and the predatory practices of the likes of Grubhub and DoorDash have been well documented here on HN in the past.

I don't doubt that restaurants are paying big fees to the delivery companies, but the delivery companies are still losing money on every order. The predatory pricing is that they're charging too little, not too much. That's how you get this pizza arbitrage stuff. Now some of the other practices of the delivery companies like setting up fake web pages for restaurants are really objectionable, but I think that what's happening now is a separate problem.

Ultimately though, the problem of the pandemic is that restaurants need customers to pay for both the dining room and the delivery, and that's just too much money. If you're running a cloud kitchen, you don't expect to be able to get the same amount of money for a meal as a sit down restaurant, but the sit down restaurant is now providing the same product as the cloud kitchen.

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

#345

Post by School-Cotton »

abc-xyz wrote: post #179
chrisseaton wrote: post #94

Earlier quoted context omitted.

> 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?

I’m pretty sure that in most countries, a store can’t just sell another company’s products without entering an agreement with them. This agreement allows the company to set a minimum and maximum price for the product. Imagine you’re selling chocolate that you want people to associate with luxury/wealth. To achieve this you might want to limit resellers to be 5 star hotels and luxury stores rather than the 1 dollar st…

I don’t know what countries are like that, but that’s certainly not the case in the United States.

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

#346

Post by creato »

mostlyghostly wrote: post #326
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…

I'm struggling to call this predatory pricing when most of the food delivery app industry is unprofitable. The correct industry action: push through higher pricing for the end users, share gains with drivers and restaurants to get to a sustainable business model, and accept the resulting decline in unit volume. (which also means fewer drivers will have jobs, so there's a human cost here as well) It's easy to tell "co…

"Predatory" refers to competing businesses, not customers. The fact that the industry is unprofitable is the main indication that the pricing is predatory.

It's unclear to me if this industry would exist at all if it were profitable. There's a minimum volume needed to make the industry viable, once you fall below some (quite high) density of people ordering food delivery, it doesn't work.

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

#348

Post by School-Cotton »

jiofih wrote: post #65
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…

There are plenty of “proxy shipping” services that operate under this model. They don’t conceal the fact that they are a third party unaffiliated with the provider. In addition, most restaurants will not just accept takeout orders from a random person that shows up on a bike, it’s an organized partnership. I wonder how they even achieve that.

> most restaurants will not just accept takeout orders from a random person that shows up on a bike

Why not?

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

#350

Post by [deleted] »

ceejayoz wrote: post #266
chrisseaton wrote: post #255

Earlier quoted context omitted.

But Doordash don't charge for an unsolicited service. They aren't charging the restaurant at all in this case. They're paying the restaurant's full price for food. Like anyone could. Then they charge the customer for an additional service actually rendered - the delivery. They charge this as a delivery fee and a markup that they can vary on more expensive items. This is pretty normal for a retail business to do.

The Grubhub UX makes a specific claim, though: "Restaurant X charges $10 for a burger, and we will deliver it for $5". When they're marking the item price up, that claim is false. Given these apps' SEO juice and ubiquity, users are left with the false impression that Restaurant X sells a pretty expensive burger.

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