This hearsay but I've heard restaurants hate all of the delivery services. They take a cut and decrease walk in traffic which usually buys high profit stuff like alcohol and fountain beverages.
In India, especially bigger cities like Bangalore, this has had a different effect - the rise of the delivery-only restaurant. These places are typically listed only on the delivery apps (Swiggy, Food Panda, Uber Eats), and don't have any other way to sell direct. Some of them are quite good, and we've ended up becoming regular customers.
That said, smaller restaurants in India don't depend as much on beverage revenue to start with - and most places don't serve alcohol.
Also - my father who owns a small resto hates pretty much every delivery service. They refuse to do anything beyond "We can't help you, it's policy", anytime an issue happens. For instance, you can order food with cash on delivery here. The delivery guy is supposed to pay the restaurant before he picks the food up. On one occasion, the delivery guy said that he did not have cash and would pay up once the end customer paid up. At some point, the end customer refused the delivery, so this guy came back, quietly left the parcel on a table and disappeared. The platform of course was of no help.
Well, considering I can order food and pay practically the same delivery fee/tip that I have to pay for waiter tip + I don't have to pay the ridiculous "alcohol and fountain beverage" since I can drink that at my home that I already purchased: BooHoo. Maybee it is time they reduced their ridiculous "alcohol and fountain beverage" margins.
We've had a few coffee shops in our area drop the delivery/mobile purchase (Ritual) apps, perhaps due to this. Or, just the logistics may have been unbearable for them.
Sometimes, I do enjoy walking into a coffee shop and ordering like a human.
Based on my personal experience with this service, I guess two things have happened that would make them profitable:
1. DoorDash has started gouging customers with exorbitant fees - restaurant tip, service charge, delivery fee, driver tip etc. I stopped using service after that. Remaining customers could the true "target demographics" for DoorDash, who might be price insensitive or really busy in their lives, thus improving DoorDash's financials.
2. Softbank betting big and investing lavishly on gig economy companies (see: Uber, Didi, Grub, now DoorDash etc)
> DoorDash has started gouging customers with exorbitant fees - restaurant tip, service charge, delivery fee, driver tip etc. I stopped using service after that.
This seems to be the case for PostMates, too. I recall being sceptical when they originally were acquiring customers with free (or $1-$3 flat fee) delivery promotions, but I figured it could be worth it even for double that amount.
However, when I next looked, they had quietly [1] implemented fees that are a (high) percentage of total bill in addition to a higher flat delivery fee, that was a dealbreaker.
Distance-based pricing would have been OK, but not percentage of the order on top of a flat fee.
[1] A generous interpretation. Personally, I found it sneaky.
This is why the best time to join a startup is increasingly at the post $1B mark. Significantly derisked with product and economics proven, solid comp, crazy upside.
The unicorn is a silly designation, but it also isn’t. There are exceptions of course as it is not zero risk.
I disagree about joining a startup worth over $1B. First, compare it something that actually is de-risked, a big company. Amazon has grown 6.5x in the past 5 years. Google has grown nearly 3x in that period. So in addition to have basically no risk of failure, you get high compensation, fully liquid stock and pretty decent growth if you are lucky.
Let's compare that to unicorns. I own some shares in a unicorn that has been worth over $1B for nearly 3 years. In that time myself and all the other shareholders have had exactly 0 opportunities to sell the stock. I'm not saying the valuation is made up, but I certainly wouldn't say anything is de-risked. Taking a lot of money in investment just means the outcome is expected to be bigger and bigger. It doesn't mean less risk and it doesn't mean more liquidity.
If you want upside, there is just going to be so much more potential if you join a really early company. If you want to de-risk, join a big company.
Good for them. And by "them" I mean the founders and investors. Employees may make some money if the company exits, but not much relative to time/sweat investment, certainly several orders of magnitude lower than the guys up top, and probably comparable to or worse than FANG compensation (even disregarding RSUs).
This isn't unique to DoorDash, but it's what comes to mind when a pre-exit company's valuation is being marketed in public. It's meant in part to entice eager recruits, but they don't realize that money is never meant for them.
The unit economics in the US just don't quite add up. Assuming in a rational market a driver has to make about the equivalent of minimum wage (or else they'd take a less taxing minimum wage job) they need to make say $15 an hour in SF. So if I order a Cheesecake Factory from Union Square to the Marina, they arguably will take 30-40 mins roundtrip, so even at full utilization, the delivery is costing nearly $8. Unless the delivery fee is > $8 then the margin on food subsidizes the delivery which seems like a pretty rotten strategy to lower margins even further. Theoretically I guess they could do point to point delivery where they then pickup in Marina but that seems far more difficult and anecdotally never the case when I ask a driver. In that case you could assume a one way takes say 20-25 mins (waiting on delivery probably adds 5 to each order), then that's still a $7 delivery cost at the margin.
One can make the case this can be made to work in dense cities say 1m or more with a density over X people/p. sq. ft. like in Europe/Asia. But I don't think there are many US cities with this kind of density to support.
As mentioned in a different subthread [1], their actual delivery fee can easily be above $8 when including their 11% "service fee". (If the "delivery" portion is only $3, the total CCF check would need to be $45.50, which doesn't seem outlandish for that establishment).
Even denser cities are likely to have even more (cheaper) competition.
Nope. We raised on clean terms, 1x liquidation preference, no ratchets. Has been true for every single round —- we have and will never take dirty terms, even if it means a lower valuation
Given that Stanley just said precisely the opposite, I'm wondering why you made this comment. I'm not being a jerk, but I wonder why you spoke so authoritatively. Do you think that he's lying, or were you just speaking in generalities?
It’s not really directly relevant to their valuation but if I can prevent someone else from that experience: DoorDash will happily let you pass your phone around a group browsing and adding things but it’s only during the actual payment attempt that they’ll deny it and inform you that you can’t order more than $50 worth of food. It was (at least at the time) documented nowhere. The app didn’t prevent you from adding more than that amount and their FAQ said nothing. Uber Eats (for better or worse) didn’t have any of those issues.
I don't deny your experience, but it doesn't match mine. I am able to confirm 15 orders over the last two years higher than $50, the highest landing at $73.
Unless we're to believe the app is detecting multiple users surreptitiously and has an opinion on them, group orders / a phone being passed around seems irrelevant, but also not within my personal experience.
(Zip: 94086, and I love Indian leftovers from Ulavacharu, usually individual orders)
This could be a bug that you encountered. I've ordered tens of thousands dollar worth of food through their app or website in the last 3 years, often each order is $50-$200 (everyday lunch for our startup). Although, now I only use the 'group order' feature ever since they introduced it, before that it was more like 'passing the phone around' as you mentioned.
I imagine they must do this to minimize risk for certain accounts based on factors unknown to me. I don't know what your error message said exactly, but perhaps the restaurant themselves placed an upper limit on delivery orders because they don't like that they are missing out on the tip for large orders. This is purely speculation by me of course.
Some of the fancier places will easily be over $25 of food so if you order for two, $50 is not difficult to reach.
Out of curiosity had you ordered from DoorDash multiple times before you attempted that group order?
Their app has a ton of bugs in it. A simple bug i came across was by setting an address to a location they don't serve and doing a search. My display left me with
"The operation couldn't be completed. (JSONMapper.MappingError error 2.)"
Displaying an error like that to the end user does not inspire confidence.
[+] [-] th0ma5|7 years ago|reply
[+] [-] tushar-r|7 years ago|reply
That said, smaller restaurants in India don't depend as much on beverage revenue to start with - and most places don't serve alcohol.
Also - my father who owns a small resto hates pretty much every delivery service. They refuse to do anything beyond "We can't help you, it's policy", anytime an issue happens. For instance, you can order food with cash on delivery here. The delivery guy is supposed to pay the restaurant before he picks the food up. On one occasion, the delivery guy said that he did not have cash and would pay up once the end customer paid up. At some point, the end customer refused the delivery, so this guy came back, quietly left the parcel on a table and disappeared. The platform of course was of no help.
[+] [-] mrep|7 years ago|reply
[+] [-] truebosko|7 years ago|reply
Sometimes, I do enjoy walking into a coffee shop and ordering like a human.
[+] [-] RestlessMind|7 years ago|reply
1. DoorDash has started gouging customers with exorbitant fees - restaurant tip, service charge, delivery fee, driver tip etc. I stopped using service after that. Remaining customers could the true "target demographics" for DoorDash, who might be price insensitive or really busy in their lives, thus improving DoorDash's financials.
2. Softbank betting big and investing lavishly on gig economy companies (see: Uber, Didi, Grub, now DoorDash etc)
[+] [-] mmt|7 years ago|reply
This seems to be the case for PostMates, too. I recall being sceptical when they originally were acquiring customers with free (or $1-$3 flat fee) delivery promotions, but I figured it could be worth it even for double that amount.
However, when I next looked, they had quietly [1] implemented fees that are a (high) percentage of total bill in addition to a higher flat delivery fee, that was a dealbreaker.
Distance-based pricing would have been OK, but not percentage of the order on top of a flat fee.
[1] A generous interpretation. Personally, I found it sneaky.
[+] [-] closetohome|7 years ago|reply
A 30% charge appeared on my bill that wasn't explained anywhere in the app or on their website.
They canceled an item off of my order because the menu was inaccurate, and tried to refund me in delivery credit.
[+] [-] WisNorCan|7 years ago|reply
The unicorn is a silly designation, but it also isn’t. There are exceptions of course as it is not zero risk.
[+] [-] birken|7 years ago|reply
Let's compare that to unicorns. I own some shares in a unicorn that has been worth over $1B for nearly 3 years. In that time myself and all the other shareholders have had exactly 0 opportunities to sell the stock. I'm not saying the valuation is made up, but I certainly wouldn't say anything is de-risked. Taking a lot of money in investment just means the outcome is expected to be bigger and bigger. It doesn't mean less risk and it doesn't mean more liquidity.
If you want upside, there is just going to be so much more potential if you join a really early company. If you want to de-risk, join a big company.
[+] [-] dingaling|7 years ago|reply
For example in the UK a company of that size is Balfour Beatty, an enormous construction and services company established in 1909
[+] [-] captain_perl|7 years ago|reply
In other words, if it's a small startup, do it as a founder.
Otherwise, stick to BigCo and Unicorns.
[+] [-] compcoffee|7 years ago|reply
What, exactly, is "proven" about this model? It's food delivery. Smells like late stage bull market to me.
[+] [-] mbesto|7 years ago|reply
Sure, but that doesn't mean it has a viable business.
> and economics proven
Says who? Uber still doesn't have positive unit economics and its valued at $60B+
> solid comp, crazy upside.
Base comp? Sure. Options (upside), no. Liquidation preferences wipe these out if the company doesn't meet it's valuation in a liquidity event.
One thing that is (almost) for sure - it looks good on your resume.
[+] [-] khazhou|7 years ago|reply
This isn't unique to DoorDash, but it's what comes to mind when a pre-exit company's valuation is being marketed in public. It's meant in part to entice eager recruits, but they don't realize that money is never meant for them.
[+] [-] SmellyGeekBoy|7 years ago|reply
[+] [-] huangbong|7 years ago|reply
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] robk|7 years ago|reply
One can make the case this can be made to work in dense cities say 1m or more with a density over X people/p. sq. ft. like in Europe/Asia. But I don't think there are many US cities with this kind of density to support.
[+] [-] mmt|7 years ago|reply
Even denser cities are likely to have even more (cheaper) competition.
[1] https://news.ycombinator.com/item?id=17780377
[+] [-] xtreme|7 years ago|reply
[+] [-] fipple|7 years ago|reply
[+] [-] stanleytang|7 years ago|reply
[+] [-] askafriend|7 years ago|reply
So 1x is standard, and nothing crazy like what you're implying.
[+] [-] davidmr|7 years ago|reply
[+] [-] tptacek|7 years ago|reply
Or is the argument that these companies get very high nominal valuations but the terms on the rounds they raise include punitive preferences?
[+] [-] unknown|7 years ago|reply
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[+] [-] scarejunba|7 years ago|reply
[+] [-] draw_down|7 years ago|reply
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[+] [-] brazzledazzle|7 years ago|reply
[+] [-] theDoug|7 years ago|reply
Unless we're to believe the app is detecting multiple users surreptitiously and has an opinion on them, group orders / a phone being passed around seems irrelevant, but also not within my personal experience.
(Zip: 94086, and I love Indian leftovers from Ulavacharu, usually individual orders)
[+] [-] mashgin|7 years ago|reply
[+] [-] abkumar|7 years ago|reply
Some of the fancier places will easily be over $25 of food so if you order for two, $50 is not difficult to reach.
Out of curiosity had you ordered from DoorDash multiple times before you attempted that group order?
[+] [-] DeepYogurt|7 years ago|reply
"The operation couldn't be completed. (JSONMapper.MappingError error 2.)"
Displaying an error like that to the end user does not inspire confidence.