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DoorDash Buying Caviar from Square for $410M

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Re: DoorDash Buying Caviar from Square for $410M

#161

Post by notyourday »

bardworx wrote: post #156
notyourday wrote: post #146

Earlier quoted context omitted.

> Ghost kitchens may be scams but I know at least of one QSR in Manhattan that does them successfully. In some instances they are quite profitable if you generate the volume. It is a temporary fluke. If Chinese take out operators that are able to do razor thin margins and nearly completely unpaid labor force cannot make them work then no one can make them work > While true that base comm is 20-30, those numbers are a…

> It is a temporary fluke. If Chinese take out operators that are able to do razor thin margins and nearly completely unpaid labor force cannot make them work then no one can make them work They can, and they do. One way some chains achieve this is by raising prices vs. in-store. By offsetting the cost, the economics makes more sense. > It is a creative lie by omission. Same kind of lie that Grubhub had when it forgo…

> They can, and they do. One way some chains achieve this is by raising prices vs. in-store. By offsetting the cost, the economics makes more sense.

That's not allowed by the contracts. In either event 50 location chain is HUGE. Olive Garden has less than 1000 stores nationally. If you have 50 stores your chain is in the real estate business and it happened to have food as an additional line item.

> I also know of a NYC deli with one location that runs at ~15-17 comm. Its about volume. You can negotiate anything with high enough vol.

Unless you happen to own that deli I'm going to tell you that you are being lied to. No one does enough volume to do it.

> Not sure what you meant by "creative lie by omission" or if you were referring to what I said

Something else is padded. Delivery services won't make any money off the 10% commission.

> Also, Shake Shack has only recently started going into delivery (check their latest 10-K) they are fledglings going from their own platform (OLO) to working w/Caviar/Dash/etc.

The argument was that USG type companies only do full service restaurants. That's simply not the case.

> Again, successful, but not a barometer.

It is because it has been around longer than most of the startups in the delivery space, not to mention vendors to the startups in the delivery space that do not have actual restaurants.

Re: DoorDash Buying Caviar from Square for $410M

#162

Post by chipotle_coyote »

dtparr wrote: post #119
chipotle_coyote wrote: post #114

Earlier quoted context omitted.

That's true, although to be fair, there's only so much a delivery driver can do service-wise compared to a waiter. Your only interaction with the driver is picking up the order. The driver isn't responsible for the time the restaurant takes to get the food to them, and isn't even entirely responsible for the time it takes to get the food from the restaurant to you -- there's traffic, weather, and the possibility that…

It seems like what you're arguing is that delivery drivers should not be a tipped class, but instead just guaranteed a higher rate.

Well, my actual thought was more that adjusting tips based on perceived delivery driver performance is somewhat unfair based on all the things beyond the driver's control. (I'm not sure if the downvotes I got are from people who think I was arguing "never tip drivers" and are mad because they think I'm a jerk, or people who realized I was more arguing "don't undertip drivers" and are mad because they think I'm saying undertippers are jerks, and fair, I am.)

Anyway, yes, actually: I think there's a good argument to be made for a higher wage for delivery drivers -- and all waitstaff -- that makes their earnings less dependent on tips. If people want to tip for exceptional service, that's fine, but there are a surprising number of people who treat tips today as if they're only for exceptional service, will cut tips in half or even to zero for things beyond the server's control (e.g., the restaurant will not accept your clearly expired coupon), etc.

Re: DoorDash Buying Caviar from Square for $410M

#163

Post by loceng »

loceng wrote: post #22
dewitt wrote: post #10

The price seems high for something Square presumably needed to unload. Who else would have been bidding it up? And why are food delivery businesses still in a bubble? That's not a slam on businesses in a bubble phase, either. Many industries go through one before settling into a steady, sustainable state. Just surprised that delivery is still in one, while related industries, like ride-share are cooling off.

They make a lot of profit, recycling it buy up and coming startups to maintain market share and the business model.

Too late to edit my original comment to clarify: the incumbents are profitable, have enough revenue to recycle into buying up new competition in existing and different markets, keeping the their position and business model alive.

Re: DoorDash Buying Caviar from Square for $410M

#164

Post by bduerst »

cgriswald wrote: post #157
bduerst wrote: post #53

Earlier quoted context omitted.

I hear you. It was so difficult for couriers to deliver where I live that I literally developed a single page website with pics and instructions. Now I just text them the url and access code.

I had to provide detailed instructions as well, and as soon as I did I never had another problem. But I don’t know why. My house isn’t hard to find at all. I even asked around and all my friends thought it was bizarre. (I moved here about five years ago so at the time ‘the first time’ was fresh in minds). I suspect they were relying on the map instead of address numbers because their map used to be off by two houses.…

The problem with where we live is more a circumstance of bad environment that messes with drivers, which upon realizing this, spurred me to make the website to include pictures.

The building itself looks like a garage from the road, so many pass by the unmarked door they need to enter the code on. Also, there's three consecutive lanes you can turn right onto, so when Waze tells them to turn right, only 33% of drivers get it correct else they get lost in a maze of parking lots and dead ends. This is also after the driver successfully navigates a roundabout (hard for some US drivers) and does not accidentally getting back onto the interstate because the lanes are not clearly marked.

Re: DoorDash Buying Caviar from Square for $410M

#165

Post by dheera »

ec109685 wrote: post #135
dheera wrote: post #35

Earlier quoted context omitted.

It's probably a mostly equity deal, i.e. most of the $410M is not real money. They recently raised $600M and I doubt they'd spend $410M of that on an acquisition. It would be more interesting if we knew how much they actually paid in hard cash; the rest is effectively just promises of money in the form of a valuation that hasn't materialized in liquid form yet.

The same promises of money that their investors paid money to acquire, so it doesn’t seem right to just dismiss the equity value.

Sure, not dismissing it, but it's not the same value. It's not hard cash that the founders/employees can spend, so it's mostly useless in terms of value for research, charity, self-funding new ventures without VCs, investing in other companies, side projects, or whatever else you would do with hard cash.

If you're an early employee of Caviar and got $1M in AMZN stock or options? You could sell it for cash. DoorDash stock? It could be $0 in a few years for all you know, and you quite possibly have no avenues to liquidate it for anything now.

Re: DoorDash Buying Caviar from Square for $410M

#166

Post by jamiequint »

sanj wrote: post #97
jamiequint wrote: post #90

Earlier quoted context omitted.

They weren't "defrauding the drivers of tip money" they were normalizing the variance in payments across deliveries by not directly paying the drivers tips and instead guaranteeing a minimum payment amount which was above the delivery fee. Once they modify their system and move to a system where drivers get 100% of the tips the drivers will probably see approximately the same payouts on average, just with higher vari…

Tip pooling makes sense because a restaurant experience is composed of the work of multiple players in the front/back of the house. DoorDash drivers don’t rely on other drivers. So why should a good driver compensate for the poor tips of a bad one?

This isn't like restaurant tipping where bad service gets 10% and good service gets 25%+ It's mostly bi-modal, drivers frequently don't get tipped at all. In this scenario reducing variance makes sense because (as many other commenters here note) unless the experience is overwhelmingly bad the tip generally has more to do with the receiver of the order rather than the driver.

Re: DoorDash Buying Caviar from Square for $410M

#167

Post by arbitrary_name »

notyourday wrote: post #71
pradn wrote: post #54

Earlier quoted context omitted.

New types of restaurants are popping up: 1) Ghost kitchens that only serve via delivery apps. You can save on rent by setting it up in an area with no foot-traffic. You can also get economies of scale. 2) Restaurants with dedicated entrances for delivery drivers. Baar Baar in NYC has a separate place where delivery workers can wait. In other restaurants, they have to wait in the limited dining area. One hopes that th…

> 1) Ghost kitchens that only serve via delivery apps. You can save on rent by setting it up in an area with no foot-traffic. You can also get economies of scale. You can't. This is the kind of a mistake that all first time entrepreneurs make. Delivery costs too much money. Logistics of getting your labor force to your kitchen is a nightmare. > 2) Restaurants with dedicated entrances for delivery drivers. Baar Baar i…

Can you elaborate on the delivery costs and employee travel aspect?

Surely by selecting a location that balances low rent versus proximity to residential areas you could lower operational costs while still ensuring staff could get to work and keep delivery costs low? I get that running a restaurant is a complex and risky business, but i dont think youve really addressed why a delivery only kitchen would fail consistently.

Re: DoorDash Buying Caviar from Square for $410M

#168

Post by notyourday »

arbitrary_name wrote: post #167
notyourday wrote: post #71

Earlier quoted context omitted.

> 1) Ghost kitchens that only serve via delivery apps. You can save on rent by setting it up in an area with no foot-traffic. You can also get economies of scale. You can't. This is the kind of a mistake that all first time entrepreneurs make. Delivery costs too much money. Logistics of getting your labor force to your kitchen is a nightmare. > 2) Restaurants with dedicated entrances for delivery drivers. Baar Baar i…

Can you elaborate on the delivery costs and employee travel aspect? Surely by selecting a location that balances low rent versus proximity to residential areas you could lower operational costs while still ensuring staff could get to work and keep delivery costs low? I get that running a restaurant is a complex and risky business, but i dont think youve really addressed why a delivery only kitchen would fail consiste…

> i dont think youve really addressed why a delivery only kitchen would fail consistently.

It would fail consistently because it has a worse dwell time compared to a comparable restaurant that also does take out while providing no real advantages. There are just no margins for error in a restaurant business. If your competitors dwell time is 10 minutes and yours is 30, you are done.

Here's is why the proximity to the residential area is important: kitchens are staffed by the group of people on the lowest tier of the economic ladder. These people use public transportation to get to places, not cars. The industrial zones where the rent is cheap aren't accessible easily via public transportation which means the kitchen staff has problems getting there, which in turn means that it selects other places.

If an industrial area is easily accessible by a car from the residential areas which is what is necessary for it to be a good source for deliveries then the rent in that area is only slightly lower than the rent in the residential area so there's really no win at putting the kitchen there. To get a win on rent one needs to put it 20-30 minutes away where the rent could be significantly cheaper. Except that it means that it takes at least 30 minutes to get to the border of the residential area with the food, plus additional 10-15 minutes inside the service area, which means the delivery only saving money by putting the place in the cheaper industrial area restaurant has the following minuses:

1. Difficulty to get kitchen staff 2. 45 minutes of driving to get from its kitchen to an average customer if the driver is immediately available at the location [ the drivers is not at the location: the driver is probably at the transit somewhere in or around the residential area so the turn around becomes at best ~1 h ]

It's competitors located in the residential areas:

1. Don't have the logistical problem at hiring staff 2. Can get food delivered in sub 25 minutes of driving

The only positive for the outskirts kitchen is ~20-30% at best save on the rent.

Re: DoorDash Buying Caviar from Square for $410M

#169

Post by cgriswald »

xenocyon wrote: post #159
milesskorpen wrote: post #136

Earlier quoted context omitted.

By their scummy practices, are you referring to their tipping policy? I'm not sure I fully understand the backlash. Yes, the tipping policy didn't meet people's expectations ... but it seems almost exactly the same s how tipping + wages work for wait staff in restaurants (where restaurants are allowed to pay them less than minimum wage, as long as the difference is offset by tips). Why are we okay with this policy, w…

Firstly, restaurants are not allowed to pay "less than minimum wage" in any US state, though some states have two separate minimum wage rates for tipped and untipped employees. (NB: all west coast states in the US have just one minimum wage that applies for all employees, tipped or not.) But more fundamentally Instacart and Doordash deceived consumers in a way restaurants don't. Say minimum wage for tipped employees…

> Firstly, restaurants are not allowed to pay "less than minimum wage" in any US state, though some states have two separate minimum wage rates for tipped and untipped employees.

This is a difference without distinction. It is the separate minimum wage for tipped employees which allows the restaurant to pay less than the minimum wage. If the tipped employee minimum wage is $A and the untipped employee minimum wage is $B, and the tipped employee earns $C in tips:

The restaurant must pay $A. If $A + $C That's exactly how DoorDash works. They pay $1 (equivalent to $A), guarantee another amount (equivalent to $B), and if $A + $C > But more fundamentally Instacart and Doordash deceived consumers in a way restaurants don't.…

How so? They operate exactly as restaurants do in tipped employee minimum wages states in regard to tips.

Re: DoorDash Buying Caviar from Square for $410M

#170

Post by cgriswald »

chipotle_coyote wrote: post #114
r1nkgrl wrote: post #107

Earlier quoted context omitted.

But in the case of the DoorDash, if you tip using the app, you tip long before you know what the service will be. It's like walking blindfolded into a restaurant and putting your tip in the hostesses hand before you even see any of the staff, or have any indication of service.

That's true, although to be fair, there's only so much a delivery driver can do service-wise compared to a waiter. Your only interaction with the driver is picking up the order. The driver isn't responsible for the time the restaurant takes to get the food to them, and isn't even entirely responsible for the time it takes to get the food from the restaurant to you -- there's traffic, weather, and the possibility that…

I entirely disagree.

Things a dasher is responsible for:

1. The correctness of the order. Yes, it's fair to hold them responsible for this, because they have the order and they are at the restaurant. If the order is wrong, they can easily correct it then. If it's wrong at my house, now what? Probably I'm unhappy, even after Door Dash offers me credits

2. Keeping the food in good shape. That includes heat (some dashers use a heat bag), but it also includes keeping soup, chili cheese fries, and other things upright. (All things some dashers have screwed up for me.)

3. Paying attention to notes. I eat my Taco Bell with diablo sauce. Did he include the sauce I asked for in the notes? (Bonus points for including things like napkins and sporks without being asked.)

4. Polite behavior. Most are polite, but some practically throw the food at you and run away.

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