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DoorDash and Societal Arbitrage

themargins.substack.com

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Re: DoorDash and Societal Arbitrage

#31

Post by CaptArmchair »

lmm wrote: post #19
goatinaboat wrote: post #16

Earlier quoted context omitted.

Maybe the drivers are underpaid, maybe the restaurants are underpaid, maybe the food costs too much, but even if they end up charging more money, are they really going to go away like Groupon did? There is this corrosive process of these gig-economy companies, they end up making life just a little bit more shit for everyone. You'll turn a blind eye to the desperate delivery drivers, to the stress of the restaurant ow…

I'm happy to pay a fair price. But I don't want to have to deal with the terrible websites most local restaurants manage to put together, and I definitely don't want to have to phone in my order. Using an app is absolutely a better way to live. If you can make better food than your competitors, you'll thrive - the delivery services make that more true, not less. Stick to your USP and outsource everything else.

> I'm happy to pay a fair price.

But, that's the thing. Would you? OP's article is a follow up to an original that focusses on and explains price forks and how that affects these delivery services. [1]

[1] https://themargins.substack.com/p/doordash-and-pizza-arbitra...

Why would you - the customer - pay a restaurant 24$ for a pizza while you could get that same pizza for 16$ via DoorDash in a far more convenient fashion? How much do you care about the restaurant's business if the exact same thing is offered to you at 2/3rd's the original price just 2 taps on your smartphone removed from your door?

Companies like DoorDash are currently losing money and they are happy about it. Why is that?

It's a cost/benefit trade off. DoorDash perceives covering the remaining 8$ of that pizza as an expense. What they bank on is being able to buy an established position of dominance as a middle man on the delivery market.

Two things are happening right now. The first is a race to the bottom and drive other delivery services out of the market. That happens by accruing as many restaurants and their customers on their platform. The second is that restaurants get pressured over time to lower their own prices since they compete less with the menu's displayed in their windows on main street, but with the cheap offerings on DoorDash or GrubHub.

If and when the price gap closes over time, incumbent delivery services who remain get to flip their losses into a profit.

The societal cost? Keeping a regular restaurant open becomes prohibitively expensive (which is why ghost kitchens are becoming a thing), low wages for gig and restaurant workers, impact on the quality and diversity of the food on order.

Re: DoorDash and Societal Arbitrage

#32

Post by goatinaboat »

mytailorisrich wrote: post #28
goatinaboat wrote: post #16

Earlier quoted context omitted.

Maybe the drivers are underpaid, maybe the restaurants are underpaid, maybe the food costs too much, but even if they end up charging more money, are they really going to go away like Groupon did? There is this corrosive process of these gig-economy companies, they end up making life just a little bit more shit for everyone. You'll turn a blind eye to the desperate delivery drivers, to the stress of the restaurant ow…

If these apps effectively become mandatory for restaurants owners and start to squeeze them then it's a problem. But regarding drivers I feel that we're confusing causes and consequences: If being a delivery drivers for these guys is so bad then why do they seem to still find so many people willing to do it? So it seems to me that these apps are not destroying anything there. The destruction happened before and these…

If being a delivery drivers for these guys is so bad then why do they seem to still find so many people willing to do it?

What jobs do you think those people would otherwise have? Very few are choosing between "secure job with a future" and "zero-hours contract gig economy" and preferring the latter.

I make an exception here for students and similar - when I was a student I happily worked part-time behind a bar for example, others did other dead-end jobs like stacking shelves. But that's not what's happening here that I can see.

Re: DoorDash and Societal Arbitrage

#33

Post by HNthrow22 »

techsupporter wrote: post #12

> I’m going to end this by noting as I read through the S-1, you can’t help but develop a grudging respect for Tony Xu and his team. It’s the ultimate encapsulation of don’t hate the player, hate the game . To use a meme, "por que no los dos?" I hate both the player and the game. No one ordered Mr Xu to get into this business; there's no requirement that he abuse the living shit out of his workers and sell them up th…

'California voters absolutely own voting for proposition 22'

To be fair they set a new record for money spent on supporting a ballot measure in state history ($225m) and it still only passed with 58%.

If you divide the $225m spent lobbying this by the 9,339,069 votes for it comes out to $23.98 per vote.

https://ballotpedia.org/California_Proposition_22,_App-Based... https://www.latimes.com/projects/props-california-2020-elect...

Re: DoorDash and Societal Arbitrage

#34

Post by lmm »

TeMPOraL wrote: post #27
lmm wrote: post #19

Earlier quoted context omitted.

I'm happy to pay a fair price. But I don't want to have to deal with the terrible websites most local restaurants manage to put together, and I definitely don't want to have to phone in my order. Using an app is absolutely a better way to live. If you can make better food than your competitors, you'll thrive - the delivery services make that more true, not less. Stick to your USP and outsource everything else.

Then oppose businesses like DoorDash and Uber Eats! It's because they can get away with their abusive business practices that a fairer competitor can't exist. > If you can make better food than your competitors, you'll thrive - the delivery services make that more true, not less. Stick to your USP and outsource everything else. I'm not convinced this is true. IME, delivery-wise, most restaurants are pretty interchang…

> Then oppose businesses like DoorDash and Uber Eats! It's because they can get away with their abusive business practices that a fairer competitor can't exist.

I don't think buying stuff from someone who sells to the public is abusive. I don't think scraping is abusive. I do think workers' rights are important, but the restaurant industry (especially the mon-and-pop end of it) hardly has a great reputation on that front, so I don't think ordering directly rather than DoorDash sends a message there.

> IME, delivery-wise, most restaurants are pretty interchangeable, and people make the decision on price.

Well, if that's true then why care which of those interchangeable restaurants succeed and which fail?

> So "stick to your USP and outsource everything else" means that you should outsource cooking to a ghost kitchen and just focus on maintaining a brand. Which is something we start to see happening.

> I fear the end game is still going to be DoorDash & friends just contracting or operating their own ghost kitchens, and creating hundreds of fake "brands" that are all sourced from the same kitchens.

Am I supposed to think there's something bad about "ghost kitchens"? If it means better, cheaper food, then surely it's a good thing.

If everything's being sourced from the same kitchens then that's a monoculture that's easy to compete with by offering something better. If those centrally sourced kitchens end up being so high quality that no-one can compete, well, mission accomplished.

Re: DoorDash and Societal Arbitrage

#35

Post by mytailorisrich »

goatinaboat wrote: post #32
mytailorisrich wrote: post #28

Earlier quoted context omitted.

If these apps effectively become mandatory for restaurants owners and start to squeeze them then it's a problem. But regarding drivers I feel that we're confusing causes and consequences: If being a delivery drivers for these guys is so bad then why do they seem to still find so many people willing to do it? So it seems to me that these apps are not destroying anything there. The destruction happened before and these…

If being a delivery drivers for these guys is so bad then why do they seem to still find so many people willing to do it? What jobs do you think those people would otherwise have? Very few are choosing between "secure job with a future" and "zero-hours contract gig economy" and preferring the latter. I make an exception here for students and similar - when I was a student I happily worked part-time behind a bar for e…

> What jobs do you think those people would otherwise have? Very few are choosing between "secure job with a future" and "zero-hours contract gig economy" and preferring the latter.

Exactly my point. So accusing these companies is hitting the wrong target.

One should also realise that these jobs are very low productivity so cannot pay much. If for the drivers the choice is this or no job then people should complain about the economic situation not these companies.

Re: DoorDash and Societal Arbitrage

#36

Post by lmm »

goatinaboat wrote: post #22
lmm wrote: post #19

Earlier quoted context omitted.

I'm happy to pay a fair price. But I don't want to have to deal with the terrible websites most local restaurants manage to put together, and I definitely don't want to have to phone in my order. Using an app is absolutely a better way to live. If you can make better food than your competitors, you'll thrive - the delivery services make that more true, not less. Stick to your USP and outsource everything else.

If you can make better food than your competitors, you'll thrive I have a couple of friends who have opened and run their own restaurants - there is an awful lot more to it than that and most restaurants fail for reasons that are nothing to do with the capabilities of the chef.

Sure. You currently need to be good at the many different things that make up running a business. But as the non-chef aspects (like your website and advertising, and hiring delivery drivers) become commoditised, that becomes less true.

Re: DoorDash and Societal Arbitrage

#37

Post by arrosenberg »

novok wrote: post #30
TeMPOraL wrote: post #27

Earlier quoted context omitted.

Then oppose businesses like DoorDash and Uber Eats! It's because they can get away with their abusive business practices that a fairer competitor can't exist. > If you can make better food than your competitors, you'll thrive - the delivery services make that more true, not less. Stick to your USP and outsource everything else. I'm not convinced this is true. IME, delivery-wise, most restaurants are pretty interchang…

There has been, and they never really get anywhere (Ex: OrderAhead). They all seem to end up at the doordash / uber eats / yelp style locus point and there might a reason we are seeing the same pattern shake out globally.

We see the convergence because the rules of the market encourage consolidation and a race to monopoly.

Re: DoorDash and Societal Arbitrage

#38

Post by lmm »

CaptArmchair wrote: post #31
lmm wrote: post #19

Earlier quoted context omitted.

I'm happy to pay a fair price. But I don't want to have to deal with the terrible websites most local restaurants manage to put together, and I definitely don't want to have to phone in my order. Using an app is absolutely a better way to live. If you can make better food than your competitors, you'll thrive - the delivery services make that more true, not less. Stick to your USP and outsource everything else.

> I'm happy to pay a fair price. But, that's the thing. Would you? OP's article is a follow up to an original that focusses on and explains price forks and how that affects these delivery services. [1] [1] https://themargins.substack.com/p/doordash-and-pizza-arbitra... Why would you - the customer - pay a restaurant 24$ for a pizza while you could get that same pizza for 16$ via DoorDash in a far more convenient fash…

> Why would you - the customer - pay a restaurant 24$ for a pizza while you could get that same pizza for 16$ via DoorDash in a far more convenient fashion?

Maybe some of it's unsustainable, sure. But why should the restaurant care? They're still getting their $24; they should make hay while the sun shines.

> If and when the price gap closes over time, incumbent delivery services who remain get to flip their losses into a profit.

Maybe. This has supposedly been the business model, but has anyone actually managed to execute on it? As soon as they started jacking up the prices it would be very easy for a competitor to enter.

> Keeping a regular restaurant open becomes prohibitively expensive (which is why ghost kitchens are becoming a thing)

As they should - it sounds like they're a more efficient way to do things all round. I'm not worried about regular restaurants disappearing though, because I still like them and am still willing to pay a premium for them.

> low wages for gig and restaurant workers

It's always had a reputation as a minimum-wage (or even below-minimum-wage) job, no?

> impact on the quality and diversity of the food on order.

Sounds like a self-correcting problem - as and when quality and diversity drop, an opportunity rises for anyone who can offer them.

Re: DoorDash and Societal Arbitrage

#39

Post by dash2 »

wwweston wrote: post #29
lacker wrote: post #9

To me, this is the key claim of the article: This is not a genuine partnership, it’s extractive. Is DoorDash extracting money from its users, the restaurants and the delivery drivers? Or is it actually providing something of value? To me, the delivery apps like DoorDash and Uber Eats just work a lot better than calling up restaurants for delivery did in the pre-app era. Maybe the drivers are underpaid, maybe the rest…

> the delivery apps like DoorDash and Uber Eats just work a lot better than calling up restaurants for delivery did in the pre-app era. Not my experience for takeout. Before: I called in an order, they told me how long it would take, I would arrive, it would be done. After: I submit an order via the app. I receive confirmation and an estimated time. Arriving at the time is optimistic, so I arrive 5 minutes later. I f…

If this were the general experience, then DoorDash would not have got started. Where I live you can still order plenty of food by phone. I prefer Deliveroo. It's simpler and I can see what I'm ordering.

Re: DoorDash and Societal Arbitrage

#40

Post by goatinaboat »

lmm wrote: post #34
TeMPOraL wrote: post #27

Earlier quoted context omitted.

Then oppose businesses like DoorDash and Uber Eats! It's because they can get away with their abusive business practices that a fairer competitor can't exist. > If you can make better food than your competitors, you'll thrive - the delivery services make that more true, not less. Stick to your USP and outsource everything else. I'm not convinced this is true. IME, delivery-wise, most restaurants are pretty interchang…

> Then oppose businesses like DoorDash and Uber Eats! It's because they can get away with their abusive business practices that a fairer competitor can't exist. I don't think buying stuff from someone who sells to the public is abusive. I don't think scraping is abusive. I do think workers' rights are important, but the restaurant industry ( especially the mon-and-pop end of it) hardly has a great reputation on that…

I don't think buying stuff from someone who sells to the public is abusive. I don't think scraping is abusive. I do think workers' rights are important, but the restaurant industry (especially the mon-and-pop end of it) hardly has a great reputation on that front, so I don't think ordering directly rather than DoorDash sends a message there.

I guess if that story works for you, you better stick with it as long as you can.

Some software developers it seems go to work each day thinking how can I put other, poorer, people out of work, and erode the pay and conditions of those that I can't?

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