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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

#291

Post by grafmax »

delichon wrote: post #277
AbstractH24 wrote: post #275

These delivery companies have become a far bigger "Evil" than Amazon or any other megatech company people often like to criticize. Because they provide nearly no benefit to anyone on any side of the marketplace and increasingly offer horrible customer service. But as I write this on the deck of a lake cabin I rented in New Hampshire, I'm reminded how different the world is outside of big cities like my home in NYC. T…

Please explain why people are collectively spending billions of dollars on these services if they provide nearly no benefit to anyone.

VC funding subsidizing the entry of these firms into the market. Few competitors contributing to pricing power among these firms. Network effects arising from coordinating the multi-sided market of drivers, restaurants, and consumers.

Early subsidization has led to the position of these firms as middlemen that can extract something akin to rent from their dominant market position. The vig that middlemen collect isn’t a benefit to consumers but something they pay for with every transaction (price mark ups, service fees, narrowed choices).

No, profit isn’t a sign of consumer benefit. Often it’s quite the opposite actually.

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

#292

Post by MisterTea »

Aurornis wrote: post #63
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.

Seeing how many Gen Z people use food delivery services on a weekly or even daily basis was mind blowing to me. I’ve had numerous conversations where I’ve had to bite my tongue when younger colleagues complained about finances after also explaining that they DoorDash dinner nearly every night. It’s bizarre. Not all Gen Z, of course. Most of the younger people I’ve worked with have been generally smart about finances.…

My coworkers stepson is the same, door dash every day then complains he has no money. Even after having finance explained to him he still doesn't get it.

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

#293

Post by carlosjobim »

redleader55 wrote: post #32
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.

What about users? Will they install one app for each restaurant they order from on their phone or will they prefer to do everything in the same app?

There's no need for apps to make online orders.

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

#294

Post by carlosjobim »

Workaccount2 wrote: post #68
faizshah wrote: post #38

Meanwhile I have seen a lot of local restaurants advertising how ordering through their own delivery/pickup service can be 30% less than Uber Eats or DoorDash on their takeout boxes (and consequently in your uber/doordash order). It’s interesting that some of the POS companies are getting into the market: https://www.toasttab.com/local There’s huge room for disruption in this model when a $12 chipotle order costs the…

When I worked at a restaurant that did Ubereats/door dash/GrubHub, we had a 15% upcharge on order through those platforms. We would tell repeat customers they could use our website/app/phone to order directly and save the 15%. Almost no one converted. Convenience really is king.

Win-win then, since you made the upcharge.

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

#295

Post by nradov »

harimau777 wrote: post #283
nradov wrote: post #232

Earlier quoted context omitted.

There is infinite competition for food delivery. People can just go pick up their own damn food.

I don't think that simply the ability to perform a task is sufficient for competition. It could still be impossible for a newcomer to compete with established corps' marketing budget and economies of scale.

The point is who cares. Getting a burrito delivered is a pointless luxury service that no one actually needs. Instead of complaining about competition, just stop wasting money on it.

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

#296

Post by 0xbadcafebee »

MisterTea wrote: post #292
Aurornis wrote: post #63

Earlier quoted context omitted.

Seeing how many Gen Z people use food delivery services on a weekly or even daily basis was mind blowing to me. I’ve had numerous conversations where I’ve had to bite my tongue when younger colleagues complained about finances after also explaining that they DoorDash dinner nearly every night. It’s bizarre. Not all Gen Z, of course. Most of the younger people I’ve worked with have been generally smart about finances.…

My coworkers stepson is the same, door dash every day then complains he has no money. Even after having finance explained to him he still doesn't get it.

I think this partly explains gen z's constant complaint of not being able to afford a house. Most people didn't used to pay for TV (there's this invisible signal going over the air!) and now everyone pays for Netflix. People did pay for premade food (TV dinners, canned food, etc) but now they're paying for a restaurant-level expense one or multiple times a day. They're purchasing equipment in online games, subscribing to a million online services, constantly buying junk from peddlers like Temu, Amazon, etc. $100 home internet, $70 mobile phone service, $1000 phones? They're throwing their money away. And while they technically could stop, I'd argue that we have all been programmed to do this, to the point most people probably are unable to stop. Consumerism is addictive. I'll bet in the future your paycheck comes pre-deducted with all your subscriptions "to help you afford food and housing", and it'll be provided by Stripe.

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

#297

Post by autobodie »

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…

it's just the story of companies across industries.

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

#299

Post by derwiki »

entuno wrote: post #222
Workaccount2 wrote: post #62

Earlier quoted context omitted.

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.

I know I sound like a broken record at this point, but Privacy.com cards for everything to minimize the blast radius

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

#300

Post by nickff »

lysace wrote: post #266
kgdiem wrote: post #251

Earlier quoted context omitted.

Here’s something WiLd and crazy — “in town” or “in range” delivery used to be free in major urban areas, and you’d tip the delivery driver $2-5.

We had a variant of that for pizza in Sweden around 2000-2010: Free delivery from an online order and no tips expected. Literally the same price for the pizza for in store take away or home delivery. Always wondered if that was tax or immigration fraud (pay-to-work schemes). Or both.

Most pizza restaurants are built around the delivery cost-structure. They locate off main streets, they have a small front-of-house relative to kitchen size, and they have relatively low ingredients costs. They save money on both real estate and taxes, and use those savings to pay for drivers who deliver multiple orders per trip.

Other restaurants just aren’t optimized for the delivery business, so it’s more expensive per serving for the customer (no matter who is doing the delivery).

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