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Five companies now control over 90% of the restaurant food delivery market

marketsaintefficient.substack.com

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Re: Five companies now control over 90% of the restaurant food delivery market

#21

Post by tpmoney »

morsch wrote: post #19
tptacek wrote: post #2

I would care a lot more if this market had even existed as recently as 15 years ago, but most of what this article is making a case for is that the next 5 years in this space are almost completely unpredictable.

I don't understand, are you saying the market was so small that it might as well not have existed? I don't have the impression that it's gotten magnitudes bigger here in Germany, maybe in China it did (what hasn't), in the US...? People just use the web instead of using a phone. AT&T didn't charge a commission.

Realistically in the US before the various online delivery companies figured out how to make it work, most places just didn't do delivery at all. Traditionally pizza places and Chinese food were something you could order delivered. Almost everything else was either drive through or take-out.

Re: Five companies now control over 90% of the restaurant food delivery market

#22

Post by AndrewKemendo »

hn_throwaway_99 wrote: post #11

This is essentially the story of tech companies across nearly every industry where they have come to dominate. This is one reason that I see most tech companies as essentially a net negative for society at large, as the goal is nearly always to control a large monopoly (and this is fully admitted by many tech leaders, e.g. Thiel) which the Internet makes possible. Pre-Internet you would see the same dynamics, but usu…

>This is essentially the story of tech companies across nearly every industry where they have come to dominate.

It is the only possible result of consumptive transactional organizations.

Conquest in all forms is accretion and consumption based, until the organization gets to large to sustain a consistent direction, then it collapses and the people get pulled into many smaller companies.

Those companies get accreted into a new superset monopolist/duoploist etc... and the bubble grows again and then explodes.

Wash rinse repeat forever at different abstraction levels.

Re: Five companies now control over 90% of the restaurant food delivery market

#24

Post by 6510 »

andybak wrote: post #13

I still tend to discover a takeaway or restaurant and then figure out how to get them to deliver. I've never not ordered from somewhere I was keen on based on their choice of delivery service. If the consolidation results in price hikes and poor service, what's the lock-in? Why can't the takeaways just go rogue and offer independent deliveries?

I only order from places that deliver themselves.

Re: Five companies now control over 90% of the restaurant food delivery market

#25

Post by TeaBrain »

morsch wrote: post #19
tptacek wrote: post #2

I would care a lot more if this market had even existed as recently as 15 years ago, but most of what this article is making a case for is that the next 5 years in this space are almost completely unpredictable.

I don't understand, are you saying the market was so small that it might as well not have existed? I don't have the impression that it's gotten magnitudes bigger here in Germany, maybe in China it did (what hasn't), in the US...? People just use the web instead of using a phone. AT&T didn't charge a commission.

>are you saying the market was so small that it might as well not have existed?

They're saying that the space these companies are competing in literally did not exist. It didn't in the US, maybe not 15 years ago, but 20 years ago it was nonexistent.

Re: Five companies now control over 90% of the restaurant food delivery market

#26

Post by to11mtm »

andybak wrote: post #13

I still tend to discover a takeaway or restaurant and then figure out how to get them to deliver. I've never not ordered from somewhere I was keen on based on their choice of delivery service. If the consolidation results in price hikes and poor service, what's the lock-in? Why can't the takeaways just go rogue and offer independent deliveries?

> Why can't the takeaways just go rogue and offer independent deliveries?

Because many of these delivery 'ad-hoc contractors'[0], sometimes even eating cost [1].

Pre-covid, you were often best off as a business either doing something that was 'known' to be delivery offered (i.e. pizza) or your next best option was to aggressively advertise it and have an extra staffer on hand willing to do the deed.

Then, you've also got the other form of arbitrage (or perhaps a cost thereof), of smaller independent restaurants/chains being unwilling or unable to handle the costs of properly covering drivers [2] and their pay when not driving [3].

Some restaurants started doing delivery during covid and kept it going. However most around here dropped because the volume wasn't worth it to them, on top of the 'streamlined flow' (don't need to give a route, the app the person picking up the 'pick-up' order is handling, does that for them.)

I'm not saying I like it but I get how it got here.

[0] - Remember that in the early days some of these companies would do all sorts of weird things like just have someone order on behalf.

[1] - There's an article about this involving 'pizza arbitrage' here https://www.readmargins.com/p/doordash-and-pizza-arbitrage

[2] - To be clear, both the startups as well as locals have a checkered history when it comes to proper coverage...

[3] - One can argue that such a person can be made 'useful' during the waiting time, however it becomes a complicated equation between 'what can this person be paid to do' vs 'are they willing to do it for that base'.

Re: Five companies now control over 90% of the restaurant food delivery market

#27

Post by b112 »

spacephysics wrote: post #16
andybak wrote: post #13

I still tend to discover a takeaway or restaurant and then figure out how to get them to deliver. I've never not ordered from somewhere I was keen on based on their choice of delivery service. If the consolidation results in price hikes and poor service, what's the lock-in? Why can't the takeaways just go rogue and offer independent deliveries?

Lots of their infrastructure for handling orders (iPads, software integration into their payment system) was done around Covid, and some have started to integrate in-person orders through the same “single unified system” creating a higher and higher cost to switch delivery systems. AFAIK there’s no well-supported open source order/delivery management software. The companies that were ready during covid took all the e…

And yet, why do you need software?

In the 80s, I delivered pizza with no software. The place had a normal cash register, for pickups.

People would call, order, and we'd write it down. They it'd go on a wire with a clothes pin, until made. Then it went with the driver.

Each delivery was written down before leaving with it.

This worked for decades for everyone in the industry, flawlessly, perfectly, without issue.

Why is software required? Any given reasons are an unneccessary complication.

And here's the thing. Even in Palo Alto I order from companies still doing it this way.

The above system, paperwork wise .. again, is perfect. It's been done forever. It is faster and far less expensive than any unified payment and order system.

Seems to me, they're the smart ones.

Re: Five companies now control over 90% of the restaurant food delivery market

#28

Post by esco27 »

The food industry is due for a good old opensource disruption, where each restaurant can setup their private menu hub (like you would an instagram account), add their payment processing details, and start delivering their own orders. It's a win-win for the restaurant and their recurring customers.

Re: Five companies now control over 90% of the restaurant food delivery market

#29

Post by asdff »

tpmoney wrote: post #21
morsch wrote: post #19

Earlier quoted context omitted.

I don't understand, are you saying the market was so small that it might as well not have existed? I don't have the impression that it's gotten magnitudes bigger here in Germany, maybe in China it did (what hasn't), in the US...? People just use the web instead of using a phone. AT&T didn't charge a commission.

Realistically in the US before the various online delivery companies figured out how to make it work, most places just didn't do delivery at all. Traditionally pizza places and Chinese food were something you could order delivered. Almost everything else was either drive through or take-out.

What is sort of crazy is that these delivery services didn't even supplant pizza delivery. All the major chain pizza delivery places and most of the local spots all still run their own delivery service long into this app era.

It kind of makes sense. App delivery is notorious for being pretty terrible service quality and having the food end up worse with more time spent between kitchen and you eating it. Pizza delivery on the other hand has been seen as quick with drivers interested in earning their tip, pizza places being conservative with delivery radius to not overextend their drivers, etc. Customers don't like getting an inferior product or service one day.

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