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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

#81

Post by idrios »

chrisseaton wrote: post #42
brianlweiner wrote: post #38

Earlier quoted context omitted.

In at least some cases ... the prices you see on grubhub may be higher than the actual prices the restaurant is charging. E.g $17.99 vs $14.99

So the restaurants are getting the option of delivery and the increased customer base and advertising... for absolutely no change to themselves? And the customers who use delivery are the ones paying for it? And if they don't want to pay it they can still go straight to the restaurant who will again make the same money? Sounds like a win to absolutely everyone involved. What is everyone's problem? Why do we want to i…

Are you sure these companies are getting an increased customer base? These services are giving them advertising but also giving advertising to all their competitors so I would assume it cancels out to a degree. Also the negative reviews for high prices or food being served cold probably hurt more than they help

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

#82

Post by chvid »

fipar wrote: post #34
chvid wrote: post #17

In a country where tipping of 20% is the norm ... there is all of sudden a cap of 10% on what the delivery guy can make?

Do you believe that the full delivery app fee goes to the delivery worker?

Who is the delivery worker? Is it the guy on the scooter? The app developer in the office? The marketing guy brought your attention to the take-away place and caused you to make the order?

Since all these services are operating at the loss, the "delivery worker" might actually get more than the full fee.

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

#83

Post by [deleted] »

treis wrote: post #69
chrisseaton wrote: post #42

Earlier quoted context omitted.

So the restaurants are getting the option of delivery and the increased customer base and advertising... for absolutely no change to themselves? And the customers who use delivery are the ones paying for it? And if they don't want to pay it they can still go straight to the restaurant who will again make the same money? Sounds like a win to absolutely everyone involved. What is everyone's problem? Why do we want to i…

It's falsifying the restaurants prices. Grubhub shouldn't be able to say a dish costs $15 when it actually costs $10. It's a false statement that harms the restaurant. Sure, they will get some deliveries but what about the people that would buy at $10 but not $15? And what about the people that won't dine in because they think prices are 50% higher than they are. GrubHub is skimming valuable customers while discardin…

[deleted]

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

#84

Post by andrewla »

darrenoc wrote: post #12
falcolas wrote: post #11

Are any of these food delivery app services actually making profit right now, or are they just burning VC capital? A news podcast I listened to yesterday made the statement that every food delivery company is doing deliveries at a loss. This seems problematic for making delivery a viable business without forming a monopoly to get the scale required to make things profitable.

Nope, they don't make any profit even when charging 30% fees. So this 10% cap will probably cause them to withdraw from the market.

They're not profitable with 30% fees; they won't be profitable with 10% fees, but they won't withdraw, they'll just adjust their burn rate in the hopes that eventually they'll dominate the market through undercutting prices that they can start to jack them up again through other channels, or bully municipalities into changing these rules.

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

#85

Post by ceejayoz »

yangminded wrote: post #25
chvid wrote: post #17

In a country where tipping of 20% is the norm ... there is all of sudden a cap of 10% on what the delivery guy can make?

It caps the fee that the delivery service can take. You can still tip the delivery person as much as you like.

It's not even that. They can still put a $500 delivery fee on the bill, if they want. They just can't hide it in the food costs anymore, and take it out of the restaurant's cut.

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

#86

Post by airstrike »

Why does it have to be a percentage? Taking the food from point A to point B costs the same whether it's sardines or caviar. I never understood this...

Seems like charging for the distance traveled and even the time of day would make a lot more sense

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

#87

Post by gpderetta »

paulgb wrote: post #32
Nextgrid wrote: post #13

Earlier quoted context omitted.

Food delivery worked for decades when it was done by the restaurant itself so worst-case scenario we wouldn't lose much as these companies go bankrupt and we go back to restaurant-provided delivery. In fact, with all their tech and economies of scale, I'm surprised food delivery services are doing worse in terms of per-unit profitability than the low-tech restaurant-provided ones despite already charging excessive fe…

You're right, and that's why I'm genuinely confused by what's going on. Restaurant delivery used to be a healthy market that didn't need to eat up external capital. Now we have a situation where: - Restaurants say they are paying too much. - Delivery companies are losing money. - Customers are paying fees to the sites in addition to the delivery cost we used to pay. What gives? It seems these can't all be true.

A single or unified marketplace and a convenient paying process can easily capture the whole market, especially if the fees are shown to be artificially small or even zero.

Requiring market places to advertise the actual fee (i.e. anything that doesn't go to the restaurant directly) would probably help here: I might be willing to pay a 5% extra for the convenience, but at 30% I might think twice. It would both improve competitions between marketplaces and marketplace vs direct order.

Of course I'm sure that companies will do anything to game it (for example shifting costs to restaurants to fees not directly connected to the orders themselves).

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

#88

Post by andy_ppp »

jfengel wrote: post #53
andy_ppp wrote: post #27

So as I understand it Deliveroo and Uber eats charge 25% of the food costs, plus delivery fees on top. Uber eats I know is losing money and Deliveroo are losing a few hundred million per year on revenues of about $500m. Basically cutting the food percentage like this to 10% would imply delivery services are permanently unprofitable? Why have all these restaurants signed up if 25% is so unfair?

It's doubtful that these services are actually spending 25% of each food order on providing the service. The money goes to expansion, marketing, loss leaders, and other supposedly temporary overhead. They're hoping that when they reach scale and have eliminated competitors, they'll turn a tidy profit, the way Amazon did. It's not at all clear that they really need to spend that much money on their expansion or that t…

I think these things are a bit difficult to regulate though as how can the next Grubhub or whoever raise the cash to scale a competitor if you start down this road. I say on things like this let the market decide but force them to be clear about costs per order being +30% including delivery costs.

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

#89

Post by jowiar »

chrisseaton wrote: post #42
brianlweiner wrote: post #38

Earlier quoted context omitted.

In at least some cases ... the prices you see on grubhub may be higher than the actual prices the restaurant is charging. E.g $17.99 vs $14.99

So the restaurants are getting the option of delivery and the increased customer base and advertising... for absolutely no change to themselves? And the customers who use delivery are the ones paying for it? And if they don't want to pay it they can still go straight to the restaurant who will again make the same money? Sounds like a win to absolutely everyone involved. What is everyone's problem? Why do we want to i…

Part of the problem is that there ends up being an effect where, when customers go first to the big delivery apps rather than to restaurants themselves to look for delivery, the delivery apps become the only way to get delivery business. The option to run their own delivery system is no longer available.

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

#90

Post by giarc »

empath75 wrote: post #50
gmadsen wrote: post #36

Earlier quoted context omitted.

drivers bringing restaurant food to individual houses doesn't really seem like something that scale helps. More people using the service requires more drivers.

It could scale if there's enough people ordering food from the same geographic location to the same geographic location at around the same time. Imagine a bunch of ghost kitchens next to each other in an industrial park, offering discounts to certain neighborhoods if they agree to order in a certain time frame.

That's likely the only path to profitability; making deliveries more efficient by saying we'll deliver your food, but it'll be sometime between 5-8pm.
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