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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

#221

Post by KoftaBob »

bko wrote: post #133
daedrdev wrote: post #23

I think the truth is restaurant food delivery is a luxgury good, literally “private taxi for your burrito” yet many people spend like it isnt.

It didn't used to be. I delivered pizza in the early 2000s, and the fee was $1 and tip, which was usually $2-3. It was pretty normal people ordering the stuff. And the funny thing is I made about $20 an hour (unadjusted for inflation, ~4 deliveries per hour + $5 an hour). Today the drivers still around that amount, the restaurants pay more and the companies operating are often operating at a loss. Something very stra…

What happened is the gig economy inserted a middleman (DoorDash, Uber Eats, etc.) between the restaurant and customer. These platforms take a 20–30% cut, charge customer fees, and still often lose money.

Meanwhile, drivers—now independent contractors—get no hourly wage, no benefits, and absorb all costs (gas, car, downtime). Tech didn’t increase efficiency for workers—it added a VC-funded layer that extracts value.

So despite more demand and better tools, drivers earn the same (or less) in nominal terms, and much less after inflation.

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

#222

Post by entuno »

Workaccount2 wrote: post #62
esco27 wrote: post #28

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.

Worked years ago at a restaurant that had its own website and app ordering... Ubereats and the like still dominated the orders even with the 15% upcharge and even after notifying repeat customers that they can save money ordering direct The convenience of having one centralized app with one account that can summon any food from any restaurant in a 10 mile area is just way too strong.

Plus the fact that you only have to give your credit card details to one large company that (hopefully) has some security professionals working for it, rather than dozens of smaller ones and hoping that none of them lose it/get compromised.

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

#223

Post by TFYS »

jpalawaga wrote: post #185
billy99k wrote: post #163

Earlier quoted context omitted.

All mature markets eventually end up with 3-5 competitors dominating the market. I don't really see this as an issue. I also disagree that it's a net negative. Technology adds convenience to these markets and as long as the government isn't price-fixing through strict regulations, we also end up with better prices. We've seen some of the prices increase after the government decided to regulate the hotel markets. They…

mature markets end up 3-5 competitors because further mergers end up blocked. capitalism would otherwise allow them to contract to a single player. So I'm sure that's one government control that you'd agree is worthwhile.

And even that blocking doesn't matter much anymore, because the owners of all those 3-5 companies are starting to be the same entities. Because the same people/organizations own all of the companies, they no longer care which one is currently winning and so won't push them to compete against each other as much as they would if the ownership didn't have any overlap. They'll push for policies that allow those players to exist together without stepping on each others toes.

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

#224

Post by mike_hearn »

jpalawaga wrote: post #185
billy99k wrote: post #163

Earlier quoted context omitted.

All mature markets eventually end up with 3-5 competitors dominating the market. I don't really see this as an issue. I also disagree that it's a net negative. Technology adds convenience to these markets and as long as the government isn't price-fixing through strict regulations, we also end up with better prices. We've seen some of the prices increase after the government decided to regulate the hotel markets. They…

mature markets end up 3-5 competitors because further mergers end up blocked. capitalism would otherwise allow them to contract to a single player. So I'm sure that's one government control that you'd agree is worthwhile.

Not at all, you see this pattern in markets that regulators ignore too. It's a human limit. You end up with 3-5 competitors because the incremental value of yet another competitor becomes nearly zero very fast. People have very strict limits on how much information about a specific market they care to remember. To even have 2-3 competitors they have to put a ton of work into differentiation and marketing, otherwise people forget they exist.

Sometimes you do see more, and it's indeed because regulators are stopping mergers. The airline market is like that. But it's a mistake and the regulators should back off. It's not helping people to have a gazillion undifferentiated brands, at some point it's just wasteful duplication.

The idea that every market would contract to a single player if not for the benign wisdom of the regulators is a trope. Regulators are tiny compared to the number of markets that exist, but competitive markets aren't the exception, they're the norm. You see it even in very sticky locked-in markets where regulators deliberately decided not to intervene, like operating systems and browsers (Justice Dept effort to break up MS was cancelled).

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

#225

Post by graemep »

lynx97 wrote: post #201
hn_throwaway_99 wrote: post #175

Earlier quoted context omitted.

> There's an air of let's go back to the good old days when we were hunter gatherers to the whole thing. I strongly disagree. On the contrary, I see the arch of many technological advancements in that, in the beginning, they solve a crucial need, but then once they solve that problem they attempt to hijack the positive feedback systems of humans (e.g. addiction systems) to stay in power. Consider the food industry. M…

Just because Americans have an obesity problem doesn't make every food vendor a drug dealer. Come on, get real. Basically everything that is being sold can be abused by the user. Does that mean every vendor of anything is potentially a bad actor? I believe you are exaggregating. BTW, I virtually never thought about Thiel when I ordered a Pizza. Is there a reason why you drag the owners into this? It basically sounds…

> Does that mean every vendor of anything is potentially a bad actor

Yes, of course they are. Left unregulated they will form cartels. As Adam Smith said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

They will try to raise barriers to entry as well, to limit competition. They will try to increase sales by many means.

They may be ethical enough not to do all that, but the potential is definitely there.

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

#226

Post by graemep »

grues-dinner wrote: post #218
budududuroiu wrote: post #103

Earlier quoted context omitted.

We don’t have to go back to hunter gatherer societies, just do some antitrust. I dislike the commentary that any pushback against tech companies means you’re a Luddite

Put a cap on company size. No organisation can be worth more than (say) a few hundred million. You can still make big and complex things but it'll have to be several small(er) companies working in concert, which is already kind of how massive companies work internally anyway. Less efficient, maybe, but I am not entirely convinced that huge companies hoovering up any attempt at competition leads to efficiencies in the…

I have long had ideas on those lines: https://pietersz.co.uk/2009/11/fix-capitalism

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

#227

Post by graemep »

motorest wrote: post #203
fasterik wrote: post #106

Earlier quoted context omitted.

Anti-trust for an industry where there are at least five companies doing well in any given space? That's not called a monopoly, it's called competition. Edit: I wasn't accusing everyone who is critical of tech of being a Luddite. The attitude that nearly every tech company is a net negative for society goes quite a bit beyond criticism.

> Anti-trust for an industry where there are at least five companies doing well in any given space? That's not called a monopoly, it's called competition You need to be completely out of touch with reality to read an article on 5 companies dominating a global market and your take from that info is that there are no anticompetitive practices because 5 is more than 1.

Its called oligopoly and oligopsony: https://moneyterms.co.uk/oligopoly/

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

#228

Post by BiteCode_dev »

bko wrote: post #133
daedrdev wrote: post #23

I think the truth is restaurant food delivery is a luxgury good, literally “private taxi for your burrito” yet many people spend like it isnt.

It didn't used to be. I delivered pizza in the early 2000s, and the fee was $1 and tip, which was usually $2-3. It was pretty normal people ordering the stuff. And the funny thing is I made about $20 an hour (unadjusted for inflation, ~4 deliveries per hour + $5 an hour). Today the drivers still around that amount, the restaurants pay more and the companies operating are often operating at a loss. Something very stra…

They removed friction by centralizing all restaurants so you can choose from one place, standardizing the experience no matter the food source, making selection simple and payment/refund easy.

The human brain is wired to go the way of the least resistance short term, no matter the cost long term, so customers pay a lot for that.

I have many pizza places that tell me they still deliver themselves for cheaper: almost nobody takes the option, they use the giant company app.

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

#229

Post by BiteCode_dev »

Getting in the market now is super tough.

We have a French company, called Delicity, that has been doing just that for the last few years. They have a smart strategy and determined people.

It works, but they have to fight tooth and nail for each city they get a foothold in.

I had a call with the founder, the guy has more dark circles than visible eyes.

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

#230

Post by andrepd »

itake wrote: post #160
alisonatwork wrote: post #132

Earlier quoted context omitted.

Now imagine you live in one of the other 190 countries of the world who do not or no longer have significant players in the industry because they were crushed by those five foreign companies. It's not competition when the wealth and power is so disproportionately held by the same people in the same places.

Can you name them which countries this impacts? China (basically) only has didi. Not much the USA can say here. Southeast has Grab, and within each country there are at least 2 local competitors (Be, GoJek, Bolt, Line Man, Bluebird, etc). I believe Doordash just bought Deliveroo, making it the only American competitor in SEA. In Europe, the main players are local food panda / Delivery hero and Just Eat. India's winni…

> What countries have both the talent to build a food delivery app

It's not about "talent" these are utterly pedestrian apps that anyone mediocre team can fart out in a quick amount of time. It's about capital for massive scale, massive advertising, literal VC-subsidised dumping, takeovers of the competition, etc.

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