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

#391

Post by mikeg8 » Thu, Jul 09, 2020, 7:32 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…

A restaurant is a brand and a brand gets to determine the pricing of their products. Pricing is one of the ways customers relate to the brand's identity. Having a 3rd party, which may still add value to both the brand and end-user, interject and abstract from the brand's determined prices is unethical, period. These delivery services should really be increasing their delivery fees to cover their costs, but they know customers will not go for a higher line item fee, so they choose to obscure it through price inflation that is not obvious to the customer. Now the customer may think the price of an item is always higher, so they may avoid the location in a future dine-in experience. This is harmful.

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

#392

Post by [deleted] » Thu, Jul 09, 2020, 7:33 PM UTC

root_axis wrote: post #365

chrisseaton wrote: post #304

Earlier quoted context omitted.

> If a delivery company charges me 70 dollars to deliver a flat screen tv that's fine, but if they charge me 70 dollars but also markup the price of the TV 25% I'd consider that pretty dishonest and would at least want to know that I have the option to save 25% by managing delivery on my own. ...but this is exactly how other industries already work and everyone's fine with it! When you buy a TV from Amazon they both…

Amazon is a marketplace not a delivery service. It is expected that you might pay different prices in different marketplaces, it's not expected that a delivery service would charge you a delivery fee and a markup on the cost of the product that you're buying - that is not normal.

[deleted]

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

#393

Post by wutbrodo » Thu, Jul 09, 2020, 7:34 PM UTC

devalgo wrote: post #250

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…

>The winners are people living in central areas of the city with lots of restaurants. The losers are the poorer outskirts. Not sure this holds in most US cities. Outskirts are usually wealthier suburbs and lots of Urban Cores are quite poor.

This has been changing dramatically over the last decade+, but I guess I don't know which tendency currently dominates

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

#394

Post by [deleted] » Thu, Jul 09, 2020, 7:39 PM UTC

dingle_thunk wrote: post #367

dehrmann wrote: post #319

Earlier quoted context omitted.

> we guarantee that only over-capitalized predatory businesses can compete in the space. Assuming you can't make money at 10%, why would even a well-capitalized company that's OK with having a loss leader enter that market? The Uber strategy has been to enter a market fast, drive competitors out (possibly taking a loss), then (and looking at their earnings, this never happened, probably because there's a competitor i…

Because you’re funded by investors who have been lied to about eventual automation. Netflix delivered DVDs at a loss to build a brand and content licensing for their streaming service.

[deleted]

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

#395

Post by sokoloff » Thu, Jul 09, 2020, 7:40 PM UTC

TylerE wrote: post #351

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?

Because my time is worth more to me than that. It's not so much the travel ... it's the waiting once you get there for the food to actually be ready (or conversely, waiting at home first and risking it not being hot when you get there).

I prefer to pick up the food myself, so that I can be reasonably assured that it's hot when I sit down to eat it. I've gone so far as to buy an insulated pizza delivery bag so we can eat hot pizza at home.

For me, the prospect of lukewarm food kills the delivery experience for me, even if delivery were "free" (not itemized to me).

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

#396

Post by wutbrodo » Thu, Jul 09, 2020, 7:40 PM UTC

jbay808 wrote: post #302

andrewla wrote: post #204

Earlier quoted context omitted.

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…

There's some information asymmetry. A $24 pizza with free delivery might look to a consumer like a better deal than a $15 pizza with $9 delivery because the consumer can't tell that it's the same pizza. The $24 pizza might be more expensive because they use better ingredients, and the delivery might be free because of a loss leader. Or at least it might look that way to the consumer.

Another, probably cleaner way around this information asymmetry is the reviews that already exist on these apps. If you order a $24 pizza and something the quality of Domino's arrives at your door, you're not going to enjoy that place and you're not going to rate it very highly. There are plenty of problems with review systems, but there are problems with price caps too.

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

#397

Post by boring_twenties » Thu, Jul 09, 2020, 7:41 PM UTC

carlmr wrote: post #218

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…

Doordash seems to have higher menu prices than the restaurants' own websites, so unless I'm missing something, it seems the restaurant has the ability to choose to recoup those fees from the customer if they want to.

What gets me is that Doordash is triple dipping here. There's the fee to the restaurant, which may or may not translate to higher menu item prices. There's the fixed $2-5 delivery fee which is pretty obvious. And then there's the percentage-based fee in addition to that, 10 or 11% I believe, that's kind of hidden along with the taxes.

I mean come on. Sometimes I am willing to pay a rather high price to have my food delivered. I'm not willing to have to fire up Wolfram Alpha just to determine exactly how much higher, though.

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

#398

Post by jiofih » Thu, Jul 09, 2020, 7:43 PM UTC

School-Cotton wrote: post #348

jiofih wrote: post #65

Earlier quoted context omitted.

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?

A variety of pedestrian reasons:

- they don’t have the appropriate packaging, ie don’t actually do delivery

- it’s inconvenient for their order pipeline / system

- they can’t vouch for the carrier handling, is the food going to arrive still hot? A shaken mess?

- is the carrier going to add or remove something before it reaches the customer?

Any of those can be damaging for the restaurant, losing a customer, or even downright dangerous in the case of incorrect handling.

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

#399

Post by karlakush » Thu, Jul 09, 2020, 7:43 PM UTC

citizenkeen wrote: post #226

cwhiz wrote: post #142

Earlier quoted context omitted.

This is a cap on the invisible fee that Uber and other companies charge to restaurants. It is not transparent or visible on the consumer end that a restaurant is only getting 75% of the listed food prices. This is, in effect, forcing these delivery companies to be more transparent about their pricing. Instead of charging a restaurant an invisible 25% it will be capped at 10% and the delivery companies will have to mo…

Exactly. This is not a cap on prices, it's a cap on hidden prices. When the restaurants have to raise their prices to compensate for Uber's fee, Uber doesn't take the hit, the restaurant does. This forces Uber to more clearly tell the customer how much their convenience costs, but it can be anything Uber wants.

No, it doesn't. Previously, when delivery services got an order for a $10 burger, they charged a $2 fee to the restaurant and a $4 delivery fee to the customer for a total charge to the customer of $14 and $6 of revenue for the delivery service. Now, they're capped at charging the restaurant a $1 fee so they will need to charge a $5 fee to the customer ($15 total) to get the same $6 of revenue.

This is really just an attempt to shift wealth from consumers to restaurants. Now consumers will have to pay one dollar more which goes mostly to the restaurant.

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

#400

Post by sokoloff » Thu, Jul 09, 2020, 7:44 PM UTC

saluki wrote: post #323

andrewla wrote: post #282

Earlier quoted context omitted.

Only if they don't change it in the future in response to "market forces", or if they start charging consumers fees directly or some other workaround and then the city council has to retract this guidance because people are complaining about the higher prices.

The restaurant should get paid regular price for their food and maybe even a little extra to cover boxing it nicely for delivery, keeping it warm. The delivery company should charge the customer the price they need pay to have it delivered to them. I expect the 10% max fee if around the margin the restaurant is making so I'm not sure this fixes anything. Food delivery is an awesome service but it costs money, consume…

OTOH, maybe the restaurant should get paid less for the food because the patron isn't tying up a table, isn't using the restroom, isn't consuming any water/ice, isn't creating any linen/silver/plates/glasses that need washing.