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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

#461

Post by jbay808 »

wutbrodo wrote: post #396
jbay808 wrote: post #302

Earlier quoted context omitted.

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.

Are you attempting to explain why we don't see restaurants offering free shipping while rolling the cost into the food price?

Because we do see this happen, which suggests to me that reviews are not effective enough in practice to overcome the perception advantage of the information asymmetry.

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

#462

Post by colinmhayes »

nickff wrote: post #423
colinmhayes wrote: post #408

Earlier quoted context omitted.

Walking around is usually one of the highlights of my day. Walking down the block isn't a chore, it's a pleasure. Delivery is cold by the time I get it half the time, I want stuff done well I've got to do it myself.

You're explaining why you don't use delivery, but not why "it doesn't make sense".

Would people really rather have cold food that costs more than walk for 10 minutes?

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

#463

Post by ponker »

mardifoufs wrote: post #324
carlmr wrote: post #277

Earlier quoted context omitted.

Then they should cease being in business.

Couldn't the same argument be made for restaurants? If they can't afford delivery fees, or can't afford to make money without delivery they shouldn't be in business either.

Yes, but the restaurants have been put out of business by government order. This is effectively a Fifth Amendment “taking” and should be compensated.

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

#464

Post by ponker »

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?

Because they’re lazy and can afford it.

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

#465

Post by scarface74 »

On its face, this is really a bad idea. Price caps never lead to good market outcomes in a competitive market. You end up with an imbalance where the people who are willing to pay more aren’t getting served and demand isn’t getting met and you are reducing the supply where the suppliers could have made more money. This isn’t good for either side.

However, if this means that the supplier can’t charge the restaurants but can charge a higher delivery fee and it’s explicit. That seems like a win. A free market operates more efficiently when all parties have enough information.

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

#466

Post by scarface74 »

bofadeez wrote: post #412
raz32dust wrote: post #405

Earlier quoted context omitted.

That makes no sense to me. Why can't they charge people ordering from Treasure island higher?

Because the city made it illegal, obviously. Just like Portland. They're not going to operate at a loss. All you're doing is criminalizing deliveries that cost more than 10%.

The city made it illegal to charge the restaurants - not to add a higher delivery fee.

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

#467

Post by scarface74 »

labster wrote: post #425
manigandham wrote: post #421

Earlier quoted context omitted.

Why would you tip the restaurant staff?

Because tipping restaurant staff is what normal people do when they go out to restaurants in the U.S. Those same people still prepare and package the food, even when someone else delivers it.

Many places charge extra for pick up.

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

#468

Post by obibring »

fpgaminer wrote: post #450
obibring wrote: post #39

This is the right move - local restaurants are hurting and, sadly, the internet is a place where big corps with large budgets have leverage over passionate little guys working their butts off. For those who want to help, I built a chrome extension similar to Honey that shows a local restaurant's direct ordering website as you're about to order from that restaurant thru a third party service. If direct ordering isn't…

(Preface: I'm sure your app filters for stuff like this) I got kinda burned when I tried to order direct from a restaurant. The last time we ate there they included a little "order online" card with a link to their website. So the next time, in the spirit of supporting businesses directly, I went to their site and ordered. They did use a third-party handler (ChowNow I think?), but I figured it was a kind of order man…

Wow, that's really wild. Would you mind sharing the name of the restaurant? I'd love to reach out to them to understand what happened there. And thanks for posting this, that's definitely something I'll take into consideration.

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

#469

Post by scarface74 »

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.

I hate this line of reasoning and so do many economists.

It’s not the “opportunity cost” you should be measuring. It’s the “opportunity cost of the next best alternative.”

If I am an hourly worker making $50 and going to get food would be an hour that I wouldn’t be working, then yes it is worth $50 to not spend it going to get food.

But if I am choosing between watching Netflix and going to get food. The next best alternative pays $0. From a purely financial view it makes sense to get food.

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

#470

Post by scarface74 »

fortran77 wrote: post #172
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?

If you have enough discretionary income, why not circulate it and help expand the econony? I'd never have a problem with any of my neighbors spending money, and especially not locally.

My barber (well masked up and a face shield) was seeing fewer customers. I was getting my haircut less since I was at home and spending less in gas. I was giving him double the amount that I usually pay for a haircut when he reopened.

I’m also tipping delivery drivers a lot better these days.

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