The restriction may have made sense during a pandemic, but long term this really seems like something for markets, rather than governments, to solve
So competitors agree behind the scene and nothing change.
San Francisco permanently caps delivery app fees for restaurants at 15%
21–30 of 84 posts
Re: San Francisco permanently caps delivery app fees for restaurants at 15%
#22When you compare the pre internet method of advertising, where the restaurants paid gobs of money to radio stations and periodicals to run an ad with no guarantee of any result, no one thought that had to be capped. Wonder what the typical ad spend was as a proportion of sales, not even considering the risk and difficulty of tracking results.
Re: San Francisco permanently caps delivery app fees for restaurants at 15%
#23The restriction may have made sense during a pandemic, but long term this really seems like something for markets, rather than governments, to solve
The fact that there are many apps competing for this businesses, but the costs to the restaurants are still so high, seems suspicious to me.
There was a good thread on this topic a year ago: https://news.ycombinator.com/item?id=23216852
That and Matt Levine's take on it ( https://www.bloomberg.com/opinion/articles/2020-05-18/the-un... ) posit the thesis of an entire industry that evolved incorrectly and artifically due to near-zero interest rates and arbitrage.
Re: San Francisco permanently caps delivery app fees for restaurants at 15%
#24The restriction may have made sense during a pandemic, but long term this really seems like something for markets, rather than governments, to solve
Not to mention that this just shifts costs to other fees like marketing.
I’d rather that and keep the restaurant afloat. If it’s too expensive, maybe the issue is DoorDash itself and they should lower their profit expectations. It’s easier now for people to actually dine out compared to during the height of the pandemic…
Re: San Francisco permanently caps delivery app fees for restaurants at 15%
#25Suppose two meals at a restaurant cost $30 for takeout. Depending on how much you value your time, spending even $20 to have those meals delivered to you might be worth 20 minutes of commuting back and forth. A 67% delivery fee could still be a bargain to you. The government should not interfere.
I don't think that is what is being described here.
Meal = $30, Delivery = $20
Customer Pays = $50 Restaurant gets $30 - fees% (e.g. $25.50 at 15%) Delivery company keeps $24.50
I believe this is about capping that fees% at 15%.
Re: San Francisco permanently caps delivery app fees for restaurants at 15%
#26Earlier quoted context omitted.
Delivery is expensive and network effects are valuable. Price-fixing is already illegal
Delivery platforms can stay solvent due to capital markets longer than restaurants and drivers they exploit. Regulation is required.
And they will become irrelevant if there are no good restaurants on their platform
Re: San Francisco permanently caps delivery app fees for restaurants at 15%
#27Whack one mole and another pops up. This is a nice start but the fees will just be called something else. I don't know what can fix this issue effectively.
Re: San Francisco permanently caps delivery app fees for restaurants at 15%
#28Do these fees also cover the cost of the deliver driver for the restaurant? Because 15% still seems high, but that might not be a bad deal for the restaurants if it's covering the cost of delivery.
The issue is that the user is charged: (restaurant cost) + (delivery cost) and the restaurant is paid (restaurant cost - 15%) (actually around 25%-30% I think without the cap) So that fee is more like a commission than an actual fee
The delivery app’s double dip. That they’re charging the restaurant at all is hidden to the user.
Re: San Francisco permanently caps delivery app fees for restaurants at 15%
#29How nonsensical to have this as a percentage. The underlying operational cost doesn't really depend on how much money you spent on the food.
I don't see how delivery can be profitable on < $10 orders with a 15% cap.
Re: San Francisco permanently caps delivery app fees for restaurants at 15%
#30Earlier quoted context omitted.
The fact that there are many apps competing for this businesses, but the costs to the restaurants are still so high, seems suspicious to me.
Delivery is expensive and network effects are valuable. Price-fixing is already illegal
Food delivery has been around and profitable for generations. And there are several well-known apps in most markets. And just because a thing is illegal doesn't mean it doesn't happen.