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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

#481

Post by andy_ppp »

raz32dust wrote: post #417
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?

> Why have all these restaurants signed up if 25% is so unfair? Here is my impression of the problem: Say the restaurant was taking $10 for each order, making $3 in profit per order. i.e, cost is $7. Before delivery apps: 100 orders/day. Total profit $300. After delivery apps: 200 orders/day, cost $7, sale $7.5 (-25% fee), $0.5 profit per order. Total profit $150. After delivery apps, if you don't sign up for the app…

Doesn’t the app make the market larger?

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

#482

Post by adfuioqenasdf »

RussianCow wrote: post #477
fpgaminer wrote: post #450

Earlier quoted context omitted.

(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…

I have actually seen quite a few restaurants do this, where they use a third-party ordering system but then delegate to DoorDash/GrubHub for delivery. Is it maybe because the delivery service gets a smaller cut in this case? I wonder if the total fees add up to a smaller number with the two middlemen than with only DoorDash/GrubHub. Presumably, the latter can charge more if they also handle the transaction as well as…

> Is it maybe because the delivery service gets a smaller cut in this case? Yes, this is correct. If you order from DoorDash directly, the restaurant will pay anywhere from 15-40% of the total transaction.

Restaurants that have partnered with DoorDash for delivery logistics only will pay usually around $7 per order (this varies depending on geography and overall partner terms).

However, the key difference is that this delivery fee is almost always passed on to the customer. So from a restaurant's perspective, they are getting a great deal: Delivery logistics for customers who want delivery, but if they're using a low/no commission direct ordering service, they keep (most of) the full order margin.

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

#483

Post by MereInterest »

manigandham wrote: post #434
labster wrote: post #425

Earlier quoted context omitted.

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.

People tip the waiters when dining in . Depends on the location if those waiters share with the rest of the staff. Picking up food usually has no tips. Delivery involves tipping the driver, which delivery apps already support and they don't take any fees from it.

> Depends on the location if those waiters share with the rest of the staff.

Legally, any tips go solely to the individual waiter to whom the tip was given. Restaurants may not legally require a tip sharing program, either between servers, or from the servers to the cooks.

In practice, you are right.

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

#484

Post by nickff »

colinmhayes wrote: post #462
nickff wrote: post #423

Earlier quoted context omitted.

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?

Other people may have a combination of:

- better delivery options

- an aversion to walking, or no walk-able options

- higher risk tolerance for lukewarm food

People differ in more than physical appearance.

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

#485

Post by boring_twenties »

treis wrote: post #69
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…

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…

Is Grubhub the one marking up the prices, or are the restaurants doing it (to recoup their Grubhub fees)?

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

#487

Post by raz32dust »

andy_ppp wrote: post #481
raz32dust wrote: post #417

Earlier quoted context omitted.

> Why have all these restaurants signed up if 25% is so unfair? Here is my impression of the problem: Say the restaurant was taking $10 for each order, making $3 in profit per order. i.e, cost is $7. Before delivery apps: 100 orders/day. Total profit $300. After delivery apps: 200 orders/day, cost $7, sale $7.5 (-25% fee), $0.5 profit per order. Total profit $150. After delivery apps, if you don't sign up for the app…

Doesn’t the app make the market larger?

It does. That's why I bumped the orders to 200. Despite selling more, the restaurants are making less. Of course these are random numbers that came to mind, but this is my understanding of the issue.

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

#488

Post by mkolodny »

cocoa19 wrote: post #479
mkolodny wrote: post #381

Earlier quoted context omitted.

When I take a flight, I don't demand to know how much the airline is paying the pilots and flight attendants. When I buy food from a restaurant, I don't demand to know how much the restaurant is paying the waiters and cashiers. I also don't know how much the restaurant paid for the food they cooked. That's true of any company/workers/suppliers. People only know and care about how much they end up paying. As long as t…

I don't think that's a good analogy because having a pilot or not is not optional. A better analogy would be extra baggage. I appreciate being able to save $25-$50 in domestic flights by not bringing an extra bag.

Unlike asking people to pay for baggage, this law doesn't change how much the customer ends up paying.

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

#489

Post by wyre »

bluehatbrit wrote: post #214
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?

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 hear…

I think Amazon Prime is a big cause of this mindset. It's become so much easier to order things on Amazon and wait two days than it is to think about going to the store and looking for the item you want.

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

#490

Post by usehackernews »

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…

This is absolutely not the right move.

This is you self promoting your app.

Restaurants will pay more to market themselves, hire delivery drivers, and manage the logistics.

Local restaurants are hurting because of COVID. They are blaming the delivery services, whose proprietary tech, marketing spend, logistics services are the only reason 90% could maintain any revenue stream.

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