What's the End Game on Food Delivery Platforms?

#1

— I cut this out of a different thread, where @sfdragonboy posted this —

I’ve been pondering this for a little bit…

Do many folks here use caviar / door dash / postmates / seamless ?

Its seems many of these food delivery services are squeezing the beleaguered restaurant industry for more margin (bc usually the restaurants bear most of the fees), and giving them the promise that they will “make up for it in volume (of food transacted)” … but I’m not sure restaurants are terribly happy with the increased wear and tear / stress on staff / etc.

Then there are guys like restauranteur Brandon Jew in SF, creating separate popups purely as a Financial-District-kitchen…making food that is optimized for food delivery … and not even bothering to have a retail POS terminal or even a place to sit and eat.

Not sure how this all ends / exits…

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#2

Like the article said it’s a proxy war between Tencent and Alibaba. Meituan and Didi are two of the big three unicorns TMD (pun must be very intended) - Toutiao, Meituan and Didi.

In the US I don’t see any big companies willing to bankroll delivery startups, and our low density makes it hard. I think the biggest here is Uber Eats? It’s also very big in Hong Kong. There they pay people to walk on foot to deliver, because density is just that high.

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#3

I suspect the model will be the “restaurant” with no seating similar to a food truck. That way the overhead costs are much lower. Also, they need drone delivery to make it a good business model. The cost of paying people to deliver is just too expensive.

Pizza delivery works, since a driver can take multiple orders on one route. The way restaurant delivery works that’s very unlikely, since there’s different pickup and delivery points. If you try to bundle orders, the food will get cold.

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#4

I worked as a restaurant delivery driver a long ago in Michigan. There was no GPS, no cell phone, only paper maps with street names indices. The restaurant had a relatively fancy ordering system where they printed out the orders along with addresses so I didn’t need to write them down. One night it was super busy and after I came back from a delivery there were 10 orders waiting for me to deliver. So I spent 5 mins studying the map and marked out their locations, then set out with my car full of food boxes. After the first few deliveries that were close and clustered together, I drove toward the next one which was the last one on that section of the city. Upon arriving in the area I started looking for the address, then I realized the address was not where I thought it was because the street had multiple segments and the actual address is much farther out which is outside our delivery zone. Had the guy taking orders got it right, we would’ve requested customer pickup. But it was too late to fix that problem so I had to just keep on driving. After making delivery I told the guy that it’s too far out and we won’t be able to deliver next time. He got upset and didn’t tip me. Whatever.

Coming back from that far corner of the city, by the time I made the rest of the deliveries in my car, food was getting cold. Customers got upset about waiting for a long time for food to come and that food was cold. Needless to say they weren’t enthusiastic about tipping me that night. By the time I got back to the restaurant it was more than 2 hours since I left, and another 10+ orders were sitting there waiting for me, and they already started to get cold. I knew the tips from that night weren’t going to make it worthwhile, but I had no choice.

Good ol’ days though.

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#5

Are restaurants really making more money with the food delivery?

As a consumer, I hear the same complaints - inconsistency in food experience after lengthy delivery times, delivery drivers who don’t know the area and get lost looking at GPS, high fees, etc.

From the restaurant perspective — are these restaurants really making money from these middlemen like Postmates, Doordash, Caviar, etc.? I had a chat with one of the BBQ places on Stockton St. who are looking to expand their business to the lunchtime crowd in the FiDi ---- but the BBQ place is complaining about these middlemen’s fees and the fact that these middlemen create super lumpy demand ---- in essence it forces the BBQ place to overstaff for much of the day to anticipate the spike in demand during lunch …

Here’s an article on a delivery only popup being tested.

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#6
#7

Just published ---- Uber Eats vs. Foodora vs. Skip the Dish — not a good look.

#8

End game is the founder would sell the business for a handsome profit. Retail investors would be holding the bag once millennials tire of using the service. Older generation won’t use delivery because they are very particular about taste of the food.

#9

Exactly. The apps take 30% plus get a delivery fee from the customer. Delivery is crazy expensive if you don’t do it at scale like pizza places. You can’t make money delivering 1 order at a time with an average of 30 mins per delivery.

#10

The other option is to only have delivery service in very dense urban environments with a small delivery area. This will naturally support scale. When wifey was in Shanghai, she was getting delivery at the cost of about 1 RMB per delivery (not great delivery service, but it was cheap and fast).

Right now the issue is that delivery services are basically acting as gatekeepers and eating all the profit out of the food industry which is going to kill off either the producer (they will go bust) or the consumer (they will stop ordering as quality drops) because they want to keep prices somewhat sane. to be healthy, the true costs need to be paid which will cause most consumers to balk (it’s not cheap anymore) or they need to narrow their focus where both the producer and the delivery parts cab make money.

However, since all the apps are trying to starve each other out, I think the uncontrolled expansion till there are massive failures is going to happen.

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#11

Really dense cities can have delivery people on scooters at a fraction of the cost of cars. The US has a lack of dense urban environments though. Most of our land is dedicated to SFH zoning. If you rule out SFH from delivery service, then you don’t have nearly as many customers. The valuation of these companies is WAY too high if that’s the true addressable market.

I stopped using food delivery apps, because there was far too much variability in the quality of food.

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#12
#13

“This is what you get when you give an 89 cents tip for an almost 30-minute drive”

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#14

He didn’t have to accept the order. Millions of deliveries are made everyday. I’m sure plenty of shenanigans happen.

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#15

The World’s Greatest Delivery Empire

In China, Meituan has reshaped city life—and heightened a rivalry with a certain competitor.

https://www.bloomberg.com/features/2019-meituan-china-delivery-empire/?srnd=businessweek-v2

#16

Food Delivery Boom Means Sandwiches Don’t Come From Restaurants Now

These shared-space restaurants are fast and low cost, but failures have piled up in the new business model that’s still like the Wild West

https://www.bloomberg.com/news/articles/2019-05-15/your-food-delivery-may-come-faster-through-a-ghost-kitchen?srnd=premium

#17

Pizza has been proven to be deliverable by Pizza Hut. What else? Do :spaghetti: still taste good? Long ago, people go around to take orders for food :face_with_monocle: Delivery is under 15 mins :crazy_face: A bowl of hot steaming fish ball noodles delivered within 15 mins of ordering :yum: