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Portland approves 10% cap on fees that food delivery apps can charge restaurants

oregonlive.com

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Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#301

Post by andrewla »

mchanson wrote: post #147
MisterTea wrote: post #143

Earlier quoted context omitted.

> The End game is to be the dominant food ordering platform in any given town where you get to dictate rates like 25%. You fight back by calling your order in and having them deliver it or pick it up yourself. I do this 99%* of the time as I refuse to pay a web server $8+ order+delivery fee for a meal that costs the same. It's absurd to think that people are so lazy that they cant pick up a phone or walk a few blocks…

Or just regulate the dumb behavior of these dumb start ups to not distort the market in dumb damaging ways,

No! Absolutely do not do this! Do not listen to this idea! Regulation is the wrong solution here! Warning! Jaguars will eat you if you do this!

Prosecute the dumb startups for breaking the law. Don't force everyone to comply with some stupid pricing regulations and fill out a trillion forms when they're not doing anything wrong. Legislators should legislate, law enforcement should enforce laws. Regulators will just be captured by private equity and forced to set rules to that make the regulatory burden higher and higher for new companies, unless they have "friends" who can "cut" the "red tape", which means being financed by these predators.

Regulation is the lazy answer for politicians who want to have no understanding of the issues of business responsibility, and just pay some unaccountable "experts" to decide what is acceptable.

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#302

Post by jbay808 »

andrewla wrote: post #204
raverbashing wrote: post #181

Earlier quoted context omitted.

The 25% delivery fee is fine as long as it's explicitly charged to the consumer and not charged as commission from the "restaurant cost" I have no qualms if I order on the system and it shows, let's say: - Pizza: $15 - Delivery fee: $9 And the entirety of the $15 goes to the restaurant But that doesn't seem to be happening

The restaurants have this option, and I frankly have no idea why they don't pass the entire cost of delivery onto the customer. I'm happy to pay a delivery fee, though not everyone will, but the restaurant can strike a balance -- they can choose to raise their prices in general, to fund some of the delivery cost from their direct-ordering and in-person traffic. That's what they're doing anyway, just not being explici…

There's some information asymmetry. A $24 pizza with free delivery might look to a consumer like a better deal than a $15 pizza with $9 delivery because the consumer can't tell that it's the same pizza. The $24 pizza might be more expensive because they use better ingredients, and the delivery might be free because of a loss leader. Or at least it might look that way to the consumer.

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#303

Post by ertemplin »

Some restaurants just raise their prices to compensate for delivery fees.

One extreme example is a burger restaurant in SW Seattle that charges $6.80 for a burger if you buy it in the restaurant and $12.00 if you order it on a delivery app.

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#304

Post by chrisseaton »

root_axis wrote: post #269
chrisseaton wrote: post #168

Earlier quoted context omitted.

> customers don't actually know what Doordash's cut really is But why would you care? I don't need to know the bill of materials for all my transactions. When I buy a coffee I don't expect to know how much they paid for the beans.

That doesn't seem like a good comparison, the burger is not a "bill of materials" it's a final product available directly to customers by the restaurant, consumers would definently care that they are being sold a marked up burger that is available to them for 25% cheaper. If a delivery company charges me 70 dollars to deliver a flat screen tv that's fine, but if they charge me 70 dollars but also markup the price of…

> If a delivery company charges me 70 dollars to deliver a flat screen tv that's fine, but if they charge me 70 dollars but also markup the price of the TV 25% I'd consider that pretty dishonest and would at least want to know that I have the option to save 25% by managing delivery on my own.

...but this is exactly how other industries already work and everyone's fine with it!

When you buy a TV from Amazon they both mark it up and also charge you delivery!

And they didn't give you the option to save by managing delivery on your own!

Why don't you get mad at Amazon for marking up products as well as charging delivery?

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#305

Post by Reedx »

maltelandwehr wrote: post #71

Next week there will be complaints that food delivery services are no longer catering to certain areas. Instead of accepting that it is just not profitable for them, journalists will label it as backslash or an act of punishment. Same thing happened in others states/cities that implemented similar rules. The winners are people living in central areas of the city with lots of restaurants. The losers are the poorer out…

Exactly what happened in SF. Uber Eats stopped delivering to Treasure Island as a result:

"The Order limits our ability to cover operation costs, so we have had to revise the areas Uber Eats can deliver to in the city. Unfortunately, this means we cannot continue to serve customers in Treasure Island. The Mayor’s Emergency Order limits the commissions we charge restaurants for access to our platform and delivery services."

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#306

Post by mindslight »

crazygringo wrote: post #263
mindslight wrote: post #227

Earlier quoted context omitted.

It's amazing how many commenters have not read the article. This is not a cap on the total price of delivered food, but rather a restriction on the delivery service misrepresenting the price of the food itself. The obvious outcome is that the delivery services move their total fee into the appropriate line item labeled "Delivery Fee". Also, there is an apparent lack of competition in this space, given that restaurant…

Huh? I don't understand what you're saying at all. This is a cap on the commission charged. The article doesn't say anything about total price or about misrepresenting prices. Where are you getting that? Why are you saying people aren't reading the article? And the fraudulent number thing is a separate issue, totally unrelated to level of competition. It's scummy but irrelevant to this particular issue. Competition e…

(the critical detail is contained in the full headline - "can charge restaurants")

The commission is the cut of the "food price" that the delivery service gets from the restaurant, in addition to charging the customer-facing "delivery fee". So if the customer sees "Pizza $20, Delivery $5", and the restaurant is paying 30% to the delivery service, the actual breakdown is "Pizza $14, Delivery $11". It's misleading to say that the pizza costs $20 when $6 of that is actually a hidden delivery fee.

How this falls out depends on whether the listed food price was the same as the restaurant's list price, had been inflated by the delivery service. But continuing the example, with the cap we'd expect to see the explicit delivery fee go up to ~$10 (if customers will bear it), and the food price to end up between $14 and $20 depending on the market for the food itself.

> And the fraudulent number thing is a separate issue, totally unrelated to level of competition

My point there is that the services are only allowed to do this in such a misleading way by the restaurant signing a contract allowing them to do so (otherwise it would be straightforward fraud). Despite the presence of many delivery services, it would seem they're all pushing similar scummy terms. This is an indicator of a lack of competition.

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#307

Post by pwinnski »

chrisseaton wrote: post #234
pwinnski wrote: post #216

Earlier quoted context omitted.

That is fundamentally not what Doordash says. Doordash or whatever says 'for $x we will put a $y WhateverBurger burger into your hand,' but $y is already higher than a WhateverBurger costs. People are left thinking that $x isn't that high a cost for delivering a $y burger, but the actual delivery cost is $x plus some percentage of $y, so both the numerator and denominator are falsified. They're lying about their valu…

> Doordash or whatever says 'for $x we will put a $y WhateverBurger burger into your hand,' but $y is already higher than a WhateverBurger costs. So add $x and $y together. If that price works for you go for it, if not, don't. A markup plus a fee is already a common thing. It's done so that there is a minimum to cover expenses plus something that can vary with higher value items because you can get more profit from p…

What I think you're missing is that price is (or has been) an incredibly valuable input signal when determining the value of a previously-unknown restaurant. if I'm in the mood for a $20 meal, I know to avoid places that offer $40 meals, and vice-versa. My expectations for a $15 lunch are different than my expectations for a $25 lunch. Most people use price as an important signal, communicating something about the restaurant or meal.

These vendors are distorting that signal by misrepresenting the price. If it were clean-cut, and the original price were still visible, and the delivery as a separate 15-20% fee, then fine, I could do exactly what you suggest. Is it or is it not worth it to have this delivered right now?

But it's not. Let's say I see an arbitrary restaurant serving the kind of food I'm in the mood for, say Vietnamese food. I can then look and see the price to know roughly what quality of food to expect: Is it closer to $10 or $30 for an entree, since those are two very different things.

The total price might not even matter to me. But if I order a $20 entree with an extra delivery fee, and what shows up is a $10 entree, then that's a problem and most people will believe that the restaurant offers terrible value, because they were lied to by the intermediary.

That's the issue. It's not "am I will to have my In-N-Out burger delivered for $6 extra," it's "with Doordash lying to me about these restaurants I've never been to, I have no idea whether this is worth doing or not until I've already paid and accepted delivery."

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#308

Post by ceejayoz »

chrisseaton wrote: post #300
ceejayoz wrote: post #266

Earlier quoted context omitted.

The Grubhub UX makes a specific claim, though: "Restaurant X charges $10 for a burger, and we will deliver it for $5". When they're marking the item price up, that claim is false. Given these apps' SEO juice and ubiquity, users are left with the false impression that Restaurant X sells a pretty expensive burger.

Do they really specifically say 'Restaurant X charges $10 for a burger'? Or do they just say 'the burger costs $10'? Like when you shop on Amazon - they say 'the TV is $x and our delivery fee is $y' - really the manufacturer charged them Nobody looses their mind at this.

Grubhub positions themselves as a delivery service, not a reseller. Receipts list the price for the item, Grubhub's fee, and Grubhub's delivery fee. I'm sure they're quite careful with exactly how they word it to avoid legal issues, but the implicit claim is pretty clear: "here's the restaurant cost, and here's our cost".

I would be upset if Amazon had brick-and-mortar stores and they sold me a $100 TV with a $10 delivery fee online, but that same product was available for pick-up at $90. I'd be fine with it sold in-store for $100.

We do flip out when these sorts of pricing tricks are used. One I can recall: Best Buy ran a bestbuy.com intranet in-store to wiggle out of online deals. https://www.engadget.com/2007-03-03-best-buys-secret-intrane...

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#309

Post by abc-xyz »

chrisseaton wrote: post #240
abc-xyz wrote: post #179

Earlier quoted context omitted.

I’m pretty sure that in most countries, a store can’t just sell another company’s products without entering an agreement with them. This agreement allows the company to set a minimum and maximum price for the product. Imagine you’re selling chocolate that you want people to associate with luxury/wealth. To achieve this you might want to limit resellers to be 5 star hotels and luxury stores rather than the 1 dollar st…

> I’m pretty sure that in most countries, a store can’t just sell another company’s products without entering an agreement with them. Of course you can. What makes you think you can't?

The fact that your company’s product end up being represented by the store and its actions. Mistreating employees and customers, discrimination, bad customer service/return policy, terrible product placement, etc. There are so many ways a store can hurt your company’s reputation by association.

Re: Portland approves 10% cap on fees that food delivery apps can charge restaurants

#310

Post by ethbro »

cortesoft wrote: post #289
MisterTea wrote: post #143

Earlier quoted context omitted.

> The End game is to be the dominant food ordering platform in any given town where you get to dictate rates like 25%. You fight back by calling your order in and having them deliver it or pick it up yourself. I do this 99%* of the time as I refuse to pay a web server $8+ order+delivery fee for a meal that costs the same. It's absurd to think that people are so lazy that they cant pick up a phone or walk a few blocks…

I really hate this sort of argument... that people who use the newer, more convenient, technology are just lazy and should keep using the old way of doing things. Why stop at delivery apps? Why are lazy people driving cars instead of just riding horses? Why are you ordering things online instead of just going to the store? Why are you farming using that tractor instead of a horse drawn plow? Small conveniences add up…

Because sometimes the net result of individual optimization (predatory food delivery apps) is social deoptimization (local restaurants close).

And for the same reason that we don't allow health insurance to charge people different rates on the basis of their genetic profiles, the exercise of government prerogative to optimize for the greater good, on behalf of all, is apt here.

Whether or not this particular approach is the best way to produce that good is a valid debate.

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