[calvinbhai]

I refuse to use any of these delivery apps, which are kind of useless already.

Here in Toronto area, most of the big food outlets are closed, because they are not able to get workers.

The ones that are open, are these mom&pop restaurants, that run on a skeletal workforce.

So with fewer restaurants operating, and delivery apps having a limited radius for delivery, I'd rather go and get the order myself, and let the neighborhood restaurer keep more of the money I give instead of losing 30%-40% of the amount as commission (I tip on top of it even though it's a pickup).

I'll use delivery apps only if: - They charge the restaurant less than 5% total fees - They charge me 5% - 10% for delivery and processing fees whatever (lets say a minimum of $5 or $10, whichever is higher).

Problem is at this rate, Uber Eats or Door Dash or GrubHub wont survive.

I understand using these apps is more of a necessity if you have kids and larger number of people at home. But this is not for me.

Uber drivers who got cars on subprime loans cannot survive with deliveries only. I'm curious to how they'll get through this storm. At least in this case, Uber has fewer liabilities (all head ache borne by the driver).

[colmvp]

How does anyone expect food delivery services to survive with only 5% fees? That's insanity. Uber has to also pay for engineers, sales/marketing to get customers/restaurants onto the platform, online infrastructure, customer service for both sides of the market, etc.

Delivery is expensive. It's time-consuming, and customers are rarely willing to pay the true cost of it.

Most of the restaurant delivery services were bleeding hundreds of millions of dollars last year. They've had a resurgence because of the Covid-19 but that's a blip compared to a normal situation.

If people think it doesn't cost that much money to operate, then all restaurants shouldn't have a problem having their own delivery service.

[malcolmgreaves]

Maybe food delivery services isn't solvable using the Silicon Valley method -- use insane amounts of rich people's money to subsidize product hyper-growth to only later monopolize said market to re-coop earlier losses.

If these businesses would grow more sustainably (i.e. slower), they wouldn't need such large sums of money to operate. They wouldn't over hire at sales / marketing / engineering / design / operations/ literally every role. In turn, they would be forced to set rates that can cover their actual costs while being a good business deal for restaurants, as they'd have to be around long enough for the delivery company to have any real growth.

There should be economies of scale wrt. a centralized delivery platform that services all kinds of restaurants. The fact that, say, Dominos has been offering delivery for _decades_ means that it's absolutely possible to have a sustainable national food delivery business on $8 medium pizza deals and $4 delivery charges. The tech delivery companies are just plain greedy: I surmise it's their quest for "f u" money that kills their business model right off the bat.

[gamblor956]

Pizza parlors and Chinese restaurants have successfully been delivering food for decades with their own delivery staff.

It's only the Silicon Valley delivery services that are unable to profit from delivery, because they insist on paying executives and engineers 6+ figures when all of the value is in the delivery drivers, not the wasteful overhead.

[JeremyNT]

My local restaurant has a couple of employees who own old beater cars. I call the restaurant, then they send out one of these employees with the food. The restaurant charges nothing extra beyond the tip, which I select on arrival.

This is how delivery used to work. The lie and promise of the startups trying to "disrupt" this is that it's somehow going to be better to proxy these interactions through a faceless megacorp rather than a small local business.

Well, is that really happening? If I use Uber Eats I get more expensive, worse service than calling my local place directly.

So maybe these delivery businesses shouldn't survive, at least not as currently envisioned, because they offer something that doesn't actually have that much value to most people.

[puranjay]

> Uber has to also pay for engineers, sales/marketing to get customers/restaurants onto the platform

I really wonder how much of this is a self-created problem. Would Uber really need that many engineers if it wasn't processing data at a massive scale to find the ideal surge price for every trip and maximize revenue? Maybe Uber would make less money without surge pricing (and the large scale data crunching it involves), but then maybe Uber also wouldn't need to pay for so many engineers.

Similarly, would Uber really need to pay for marketing if it attracted growth organically instead of trying to dominate the world within half a decade?

We live in rather strange time for business. It used to be that if you wanted to build a $100B company, you spent decades in the trenches, reinvesting profits and attracting growth organically.

Even a true "unicorn" (not that I care much for that term) like Microsoft was worth "only" $35B in 1995, 20 years after it was founded.

We've all somehow assumed that this order of things is natural when it is far from how the rest of the business world functions

[Retric]

Delivery apps have a vastly higher overhead because the drivers are not based out of a single high volume restaurant.

With traditional deliveries operating over a tiny radius back to base. Drivers can do multiple deliveries at the same time. Pick up a new stack of orders and quickly be out the door again, this means they need fewer people during rush and thus much lower overhead.

Some people are willing to pay 10+$ an order to have a much wider selection of restaurants from a huge area. But, that doesn’t scale to the kind of volume these companies expect.

[dragontamer]

Foodsby has a cool model.

1. Set a time. Say 11:00 or 12:00. The food will be delivered at this time, no other time.

2. Set a location, a little table in the lobby of various buildings where the Foodsby driver drops off the food.

3. One driver goes to the various restaurants, and goes to the various dropoff points. One trip at one time can serve hundreds of customers.

-------

Every foodsby trip is synchronized to the time. As such, all orders and deliveries are batched together, saving time and effort on all parties involved.

[nathanvanfleet]

Weird somehow many restaurants did and do have their own delivery service. I have heard many pizza places do this

[ragebol]

> Delivery is expensive. It's time-consuming, and customers are rarely willing to pay the true cost of it.

I think that's the main problem. Delivery isn't free and so far has been subsidized by Uber's investors or draining the restaurants. Which didn't have a choice because they where being undercut.

We'll end up with either paying a reasonable price for delivery or picking it up yourself. Or maybe robots, but those aren't free either.

[fock]

I guess, you can operate a very good and featureful food delivery SaaS for a lot less if you skip GoogleAds, ridiculous mid 6 figure salaries (for a similar job in every place except SV) and building an exploratory machine learning arm to compete with the adtech companies you're anyway spending money on in this scenario. If you then host your servers in some coloc (because you'll have what: a 4 times surge capacity on holidays compared to a regular friday?) you can even reduce your computing bill (given that without needless data collection for your analytics and ML efforts your computing power needs will shrink fast...).

Around here most restaurants still use this kind of service (often hosted by some lowly webdev).

[kkotak]

No one expects them to survive. The business model is unsustainable on unit economy basis. Uber has always lived on borrowed time.

[megaframe]

Sometime back Uber added this $0 delivery for a set of rotating restaurants. In my mind what I figured they were doing was clumping orders together to drive down costs... in practice I don't know what they're doing, but I like that idea.

Maybe when this price war ends normal delivery will be something much higher and they offer some kind of flash or pre-order pricing deals on clumped orders. Like $5 delivery for pre-ordering a pizza for that evening from this one restaurant so only one driver needs to go out there. Uber-Pool for your food if you will. Or you place your order at a higher price and if some more people hop onto the order from the same restaurant they cut your delivery price a bit.

[Mikeb85]

> If people think it doesn't cost that much money to operate, then all restaurants shouldn't have a problem having their own delivery service.

Many already do and more are pivoting to delivering themselves. The delivery services are terrible and not worth their fees.

[mulmen]

Sounds like Uber has a bad business model then. Restaurants already offered delivery, it’s not like Uber invented that or even exclusively enables it. Somehow they invented a model where nobody is making any money and convinced investors to enable it.

[calvinbhai]

The cost for Uber is to process the cc transaction, cost of transportation (the close to minimum wage "net pay" to the driver).

I agree Uber has other costs, and I'm not saying it should act like a charity and not recover those costs.

So whatever is uber's costs + profit needed, add it as a fee for using the app.

Eg: If I order a 2 large pizzas at my neighborhood pizza shop, and on their printed menu it is $40 (assume including taxes), I'd like to see the same price displayed to me. Uber can charge me processing fee and delivery fee of say $20 or $30 on top of this (to recover Uber's costs + profit).

Sadly, this is not what actually happens. Ordering the same item through delivery app, I see that each menu item is costing $1 to $5 more already (happens with Instacart too). On top of this I pay a processing fee and a delivery fee. In addition to this, the pizza shop guy pays 40%.

Obfuscating price at every step and then proclaiming to be a saviour of my neighborhood restaurants, is exactly what ticks me off.

Again, I'm not saying delivery apps should be charitable. I just want some transparency. The reason I go to a local pizza shop, (in addition to satiate hunger and enjoy tasty food) is to support the local economy.

Uber can charge the same total amount to me while providing the same service, provided they clearly show how much goes to Uber and how much goes to restaurant and delivery person.

[Nextgrid]

5% fees on top of the true cost of delivery is enough for what is essentially an automated process.

Maybe it's not enough for "growth" and "engagement" and maintaining an engineering blog about their overengineered stack (I call those "engineering playgrounds") but guess what? None of those things benefit users.

[RoyTyrell]

f you can't provide a product or service to customers at a price they want to pay, too bad but that's capitalism. Not every business is viable even if the 'goals' are.

[ApolloFortyNine]

Dining out is already a luxury. Paying 20% more just for someone to deliver the food to my door is even more of a luxury, and without the 'dining out' experience.

Honestly I don't expect delivery services to survive, and I don't think it would be a tragedy if they ceased to exist.

[mpol]

If Uber cannot afford this, maybe it is not a viable business. If either the restaurant has more cost than income, or Uber has more cost than income, it seems not to be working really.

[gen220]

In my neighborhood in NYC, restaurants are getting much more vocal about the commission rate.

We used to be pretty exclusive seamless users in my house until we got a letter in one of our bags that roughly read:

"thank you for your order. Especially with the decrease in volume during these times of crisis, the grubhub commission makes it hard for us to stay in business. please consider ordering direct to support your neighborhood."

Since then (near the beginning of the COVID shelter in place order), we've ordered with the telephone or custom solutions every time. And we've noticed a difference: delivery times are literally half of what they were before.

It's interesting to see the `shopify`-ing of restaurants in our area: instead of going through the big platform of Seamless etc., they're using platforms that appear to be more like shopify/stripe (decentralized, meager commissions, no high-traffic "discovery" platform). Some of our favorite restaurants have even left Seamless/etc, because they're literally losing money on orders fulfilled there.

For example, a famous pizzeria nearby used to never offer delivery, but recently started offering delivery, with online ordering powered by https://pos.toasttab.com/products/online-ordering.

I don't know if all of this commotion will be enough to unseat the seamless/grubhub/postmates of the world, but I honestly hope it does. Restaurants are a tough enough business as it is, and the steep commission rates have been converting mom & pop places into sweatshops. :/

[cwhiz]

My wife and I were exclusively using Seamless until we read an article in Eater talking about how Grubhub/Seamless charge restaurants $6-7+ per phone call.[0]

..but then when we started trying to call or order directly through restaurants, we kept getting turned away and told to order through one of the apps. It seems many (most?) restaurants aren't in a position to take orders over the phone or directly through their website, even for pickup.

[0]: https://ny.eater.com/2020/4/23/21231943/grubhub-nyc-phone-or...

[adjkant]

Similar experience here in NYC/Brooklyn. Got a leaflet in an order to use their direct website. They use this, which seems to work pretty well and the tech looks solid:

https://get.chownow.com/

[toomuchtodo]

We use Uber Eats for discovery. We'll use it to find new establishments, and on the first order, I'll tip cash to make up for what Uber Eats takes from the restaurant. If we decide to patron the same restaurant again, we order directly from them to avoid the Uber tax for them (edit: as many are aware, margins are slim [3-5% typically] for restaurants and the delivery service tax is onerous on them). Has worked pretty well. Be the change y'all.

[gambiting]

Yes, be the change and stop tiping. That's the change that everyone needs to be doing, then the prices would increase to match what the market should actually be, rather than rely on charity of customers.

>>I'll tip cash to make up for what Uber Eats takes from the restaurant

So you've just allowed Uber Eats to operate another day, because the restaurant can now justify using them and their shitty rates.

[safog]

The restaurants don't lose a full 30% on the order - the items on Uber eats are marked up over what you pay when you do regular takeout. I wouldn't go so far as to say they don't lose any money at all but we won't know exact numbers until Uber / restaurant owners publish them somewhere.

Also, having a delivery option I'm pretty sure provides additional business (on top of just having dine-in / pick up). So, for a restaurant to hire employees and building out a delivery service themselves will be much more hassle and probably will be more expensive than using a service like doordash / uber eats.

Lastly, this is driving a trend towards the so-called "cloud kitchens" letting restaurants operate with a subset of staff in cheaper to rent places and charging effectively what a regular restaurant would for a meal.

The restaurants are going through a paradigm shift now, and it will only be accelerated due to COVID - Cloud kitchens can be more sanitary / safer to order from than regular dine-in restaurants for instance but I don't really feel sorry for them. If anything, the drivers doing the delivery are the ones getting shafted here and barely making any money. If folks start tipping, it will simply mean that Uber can afford to pay drivers less - the amount a driver makes won't change very significantly.

Overall I'm convinced eats is the future and Uber focusing on ride share + eats + self driving (existential threat if someone else does it cheaper / better) is the right way to go for the company.

[umeshunni]

> The restaurants don't lose a full 30% on the order - the items on Uber eats are marked up over what you pay when you do regular takeout.

Not to mention that they are saving on labor and rent costs on delivery orders by not having to pay additional wait staff, get a bigger space more more tables etc.

[bsder]

> Lastly, this is driving a trend towards the so-called "cloud kitchens" letting restaurants operate with a subset of staff in cheaper to rent places

These exhibited the same failure modes as UberEats, et al., namely that your food is cold by the time it gets there.

Delivery works when it's local and immediate--period.

[jpadkins]

cloud kitchen = a new name for drive through food service? :-)

[amelius]

> The restaurants don't lose a full 30% on the order

Doesn't Apple already grab 30% of the in-app payment?

[mcculley]

I don't understand the appeal of these food delivery services at all. For those occasions where I feel lazy enough to have a pizza or Chinese food delivered instead of walking or driving to pick it up, I don't want a middleman company contracting the job out to some random person. Who thinks that's a good idea? How many layers of profit-taking do people think is acceptable to have random people touching their food along the way?

That's setting aside the ridiculousness of all of the one-off trips I see in my building and my neighborhood, burning gasoline to hand-deliver a sandwich.

[newfriend]

> I don't understand the appeal of these food delivery services at all

I'm sure there's no end to the things you don't understand.

> For those occasions where I feel lazy enough to have a pizza or Chinese food delivered instead of walking or driving to pick it up, I don't want a middleman company contracting the job out to some random person.

You may be surprised to know there are people in different situations than yourself.

* What if I want something besides pizza or Chinese food?

* What if I don't have a car?

* What if restaurants are too far to walk?

* What if I'm unable to walk?

* What if I have small children that I can't bring with me and can't leave behind?

* What if I have something important going on and can't take time to go get food?

* What if I don't want to call them on the phone? What if I have anxiety or can't speak?

* What if I don't know what kind of food I want, and would like to browse options?

* What if I'm new/don't know the area?

> How many layers of profit-taking do people think is acceptable to have random people touching their food along the way?

So you're ok with the food preparer and other employees, and the restaurant's delivery person "touching" your food, but not a 3rd party delivery person. Anyway, the delivery bag is typically sealed when ordered through these services.

Maybe if you thought about it for 5 seconds, you could understand why these services are so popular.

[bsder]

> I don't understand the appeal of these food delivery services at all.

The appeal was that these services would work with almost any restaurant that had takeout but not delivery.

Personally, if I were a restaurant, I would use these services to gauge how much interest my clients have in delivery. Once I pass a certain threshold or during peak times, I would hire my own drivers and do my own delivery while cutting out the SillyVally VC backed services.

11:37 PM on Tuesday--sure, Uber gets that one, LOL. Peak Friday from 5:00PM to 10:00PM--I'll have my own drivers for that timeslice, thanks.

[supernova87a]

When a person starts to have discretionary spending power, or starts to feel to not have to be cheap any more, the previously unimagined items or services that one didn't feel one needed, inflate greatly.

[lhorie]

> I understand using these apps is more of a necessity if you have kids and larger number of people at home

I have 2 small kids. From my perspective, it actually makes less sense to use an app for delivery because having kids often implies also having a car (in north america, anyways). So driving down to the restaurant for pickup costs considerably less than using the delivery option.

I'll still use the app though for the same reason Uber originally became popular: there's no need to call or talk to anyone, and there's no need to fumble with physical currency for payment; you just tap a few buttons, drive to the store, pick up your food and go.

[calvinmorrison]

Just wait a few more years and you will have free delivery children. Oft of my childhood was the call to 'go get the pizza!'

[calvinbhai]

I agree with you about convenience of ordering. This was often the case when I was in the US. But in canada it's nice that all stores I frequent accept credit cards, and all of them work with apple pay, so no fumbling with cash.

Probably I'm not like most app users are. If I know a few different types of restaurants in the area, and I know specific items I like there, I'll just order the same thing again and again until I move elsewhere.

If I wanted a new place, new dish every time, probably Delivery apps would be a good way to discover

[asdff]

No delivery service is good. Why would I pay more for soggy food that left the kitchen almost an hour ago? Restaurant's own delivery services don't even suffer from this as they go right from store to door. Ubereats et al orders sit for 15 minutes by the register waiting for the driver to appear.

[pbalau]

Not sure how food delivery works in US, but here in London I can get my food no late than say 45mins after I placed my order (via Deliveroo and afaik JustEat too). And the only time I ordered food in US, I had the pizza about 30mins after I ordered it (via UberEats).

[maximente]

what about slice? flat fee ($1.95 as of today) and solid mission:

https://www.forbes.com/sites/garystern/2019/08/14/slice-help...

[benatkin]

I think it's ethical! That would take a hundred dollar order for it to meet GP's standard though.

I hope Slice wins. Their business model is still vulnerable to credit card chargebacks, but they let the restaurant handle delivery and pickup, which is why they might be able to afford taking less of a cut. I can't say Slice's business model will work, but I can pretty much guarantee that taking a 5% cut won't work. Slice also probably needs to pass on credit card processing fees (at least 3%) for any transaction they handle in addition to their flat fee in order for it to work. They provide an option of paying in cash though.

Thanx also seems like it might be good. I interviewed as part of interviewing at five companies in five days at TripleByte. That was a surreal experience. I had lived in SF for three and a half years, and had only been gone from SF for two months when they flew me back to SF and I stayed at Hotel Whitcomb. Never had I stayed so close to City Hall when I lived in SF. At the time Thanx was mostly about rewards. I saw them come up when I ordered from a burger place called PINCHO in Coral Gables, which is adjacent to Miami where I live now. It seems like an ideal pivot. Like Slice, it had very good UX.

[calvinbhai]

Love their mission. But I think Slice is more for helping non-chain pizza shops compete with Dominos/Pizza-Hut/Papa-johns.

also $1.95 doesn't include the costs of delivery (delivery is handled by pizza shops' existing delivery drivers)

[rootsudo]

Wow, that is literally right out of Silicon Valley.

https://www.youtube.com/watch?v=LYu-d6y5HRo

[JMTQp8lwXL]

Conversely, if restaurants can't survive with apps taking a 30% cut, there may be no market for delivery aggregators. 5% is too little for the aggregator; 30% too much for the restaurant. Perhaps there's a middle ground around 15%.

[leetcrew]

one might ask why the commission is necessary at all. unless you're placing an enormous order, a large order isn't really more expensive to deliver than a small order. the bottleneck is much more likely to be the number of stops you can fit into a single loop before the food gets cold than the volume of food you can fit into a single vehicle.

the only answer I can think of is that they don't want the customer to realize the true cost of delivery.

[Mikeb85]

15% is around how much restaurants budget for front of house staff, so it would be acceptable at typical prices.

[amelius]

I feel that delivery apps should have certification like "Fair Trade" [1], so you know that the restaurant owner receives a fair share of the money.

[1] https://www.fairtrade.org.uk/

[forgotmylogin2]

Restauranteurs opt-in to their relationship with Uber Eats. If they feel they aren't getting compensated fairly, they can opt-out.

It feels quite condescending that you think you need to protect restaurants from Uber when restaurants are already capable of dissociating from Uber. You're essentially saying restaurant owners are too dumb to know what's best for them, so you need to make decisions for them.

[chrisseaton]

> Here in Toronto area, most of the big food outlets are closed, because they are not able to get workers.

Huh that surprises me. Here in the UK the big food outlets have gone on a big hiring spree to keep up with the extra demand from people all eating at home.

[calvinbhai]

Need to go off on a tangent to reply.

Canada is showering it's unemployed citizens with something similar to $2000 per month unemployment benefits.

That's $12.5 per hr for not working, while (minimum wage in Ontario) is $14 per hr.

Why would anyone work to get $1.5 per hr extra? When you can stay home and get the free money? (in fact other provinces, $12.5 per hr is above minimum wage).

Having something like this for a month or two was probably fine, but right now Canada is paying it's residents to not work while grocery stores / warehouses are not finding enough workers.

I was tilting positive of UBI until I saw the effects of this $2K per month scheme in Canada.

To immediately solve the problem, Canada can continue giving $2K per month to those who are unemployed, but working in a necessary occupation (say grocery stores, deliveries, warehouses) wouldn't disqualify them from getting the $2K, with a caveat that there's no minimum wage. At that point it's a two sided bidding with grocery stores going lower and workers increasing their bids. At some rate (say $5 per hr or $10 per hr) there's a right balance for supply/demand of labor.

[wdb]

In London McDonalds, Nando's etc were all closed, even most restaurants in China Town are closed. Which food outlets are you referring too?

[myth_drannon]

People if they don't have a car, are afraid to take public transportation to go to work. The same happens with some food factories, 10x more orders but half the people are refusing to go back to work.

[speeder]

Where I live the government literally banned you picking up your orders... so sadly can't live like you are doing :(

Delivery is only option, I suspect delivery people are making a killing now.

[Bang2Bay]

my concern was uber not having competition and that has been set right with at least one other ipo-ed company. uber for me is as important as local business.

[kkotak]

There is no competition because the business is not sustainable. Not everyone gets to raise billions of dollars on a promise of self-driving future - where the per unit economy might be sustainable. When that happens there will be tons of competition.

[clairity]

yes, this wave of delivery services haven't solved last-mile logistics in any meaningful way over previous waves. their main "innovation", popularized by uber, is outsourcing the capital investment to less sophisticated operators (while matching and real-time routing have improved, those are incremental improvements at best).

no one has cracked the core logistics problem involving time or cost, which is the real hump. i can literally order a pizza, walk to the store to pick it up, and return in less time than a delivery service can deliver, and i've saved all that overhead cost and it's warmer/fresher to boot. even moreso with groceries. granted, i'm in a city, but the gambit of delivery is that the city is the real shizzle for delivery.

until the logistics problem is solved, it makes little sense to use a delivery app for more than as an occasional novelty or treat.

[ghaff]

Once you can walk (easily) to pick up a takeout order, the value of delivery goes down pretty quickly. Not that I have great takeout options near where I live, but I'm going to have to hop in a car and it's going to take me probably close to 30 minutes to pickup an order when all is said and done. If I had good takeout delivery options, I would definitely use them now and then.

[texasbigdata]

Toronto (and New York) are not representative of 95% of North American cities assuming you live in the GTA.

[lhorie]

Assuming you live in Toronto proper. Most of the GTA is pretty sparse and car-oriented. Even northern Toronto (think Steeles) is already relatively suburban.

[Consultant32452]

Every restaurant around here just passes Uber's cut onto the customer by raising prices in the Uber menu.

[ccktlmazeltov]

I don't tip when using these delivery apps and I have no idea how they can make money honestly.

[smallgovt]

There's a guy that's working on an app that helps you order directly from local restaurants so they can save on commission fees: https://www.eatnyc.org/

I think the app only covers NYC for now.

[connectsnk]

Nice username :)

Does the calvin in the username refer to calvin and hobbes?

[ashconnor]

Not only is it cheaper to use Ritual. The rewards mean free food.

[lozaning]

I still havent figured out what the value prop is of Ritual. It seems like rent seeking between co-workers. If my co-worker buys me a burger, I just venmo her.