What frustrates me with restaurants (especially the small business mom and pop ones) is that they are not adapting to this situation. When I go to their websites (sometimes they don't even have one), I want to see two things:
* A way to order and pay online.
* Details on their contactless pickup procedure if I drive there. I want them to bring it to my car, then I can unlock my trunk, and they can place it inside and close it.
If they did this, my use of these food delivery apps would drop to almost zero. I don't mind driving to pickup my food, it's even good for my car which has been sitting idle for weeks. But I want it to be contactless pickup. If bringing it to my car is too hard, I might even be ok with waiting outside their restaurant, text them, and they bring it out and place it on a table.
But these restaurants have no plan, put no effort into adapting, then complain about high fees for food delivery apps. I don't like these expensive apps either, please provide an alternative!
You may overestimate the tech skills of "mom and pop" restaurants. They're one of the shrinking segments where people without much education and language skills can make a decent living with some hard work.
If they knew how to maintain the web site you want, they'd probably be in a better paying, more academic career.
Disclaimer: This is just my impressions from the outside. I know nothing. But I doubt mom or pop will show up on HN to tell their story.
No, you're right. Many people on HN would scoff at UberEats taking a 30% cut or whatever from orders, but how much would it cost for every mom and pop to try and implement something like that themselves? And have someone to maintain it? Whatever people want to say about it, these are orders (or at least a signficant number of them) that the restaurants would've never received, if not for the app existing. 70% is better than 0%.
And that 30% isn't in stone. Last place I worked at, they were able to negotiate for 15% because of how desperate Uber was.
Hey if this is exposed there can certainly be non profits who setup delivery systems like this with a goal of providing a service, getting paid, but not trying to keep growing and growing.
It would allow users to understand this isn't free and actually pay for a subscription that essentially does this.
This regulation creates an opportunity for new business models.
As much as consumers would love the idea of non-profits sweeping in and doing the same service as businesses sans the profit margin, this is simply not what we observe in real world very often. Running an organization is hard, and people doing that usually want to be compensated for their efforts.
If anything non profits have a somewhat of a reputation for being a way to pay the top people big salaries without the pressure of having investors pushing for more profits & getting the image of being "good" mostly for free since it's a non profit.
Most of the food deliveries services are running using VC funds. I don't think there's much scope of profit here for a ~$5-$7/delivery charge having someone someone pickup and deliver a package along with other costs like building/maintaining the system, credit card charges etc,
Frankly, I feel something like peach which bundles multiple orders from a few restaurants is the way to go if you want to make money as a food delivery service.
Remember before uber, yellow cabs had their own app. The experience was shitty. Nonprofits are not known for great software products and operational skills.
Yellow Cab Company is the furthest thing in the world from a nonprofit. They recently went bankrupt, but a century of monopoly tactics and mafia ties preceded.
It will probably be hard for a non-profit to do all of that (especially ethically like paying fair wages) considering Uber, Grubhub and Doordash are all losing money while charging 30%+ for the current services.
70% isn't always better than 0%. But if a small restaurant did this, they would tack on delivery charges. The customer should be paying for the service, not the restaurant. I realize that a delivery charge is also added on. But it feels like the restaurant does most of the work, and the delivery company makes all the money
You don't need to "maintain a website". You can do all of this trivially from within Facebook if you don't want to "maintain a website". In the country I live in, only the hugest businesses have a website. 99% of businesses run off of Facebook (you generally order by just sending them a FB message saying "send me 12 of X" and then you pay Cash On Delivery).
I don't usually have cash on me other than a tiny amount for emergencies, and looking at my Facebook page I see a smaller and smaller portion of my connections are online regularly.
To me a business that is only on Facebook doesn't exist as far as I am concerned.
I expect a restaurant to have a working bathroom, the owner doesn't need to know anything about indoor plumbing, that's why even a mom and pop shop hires a contractor to take care of that. Don't see why web is any different.
Shopify rather than those two since they also need to sell a product. Or a new platform (opportunity) that also takes care of food delivery or connects couriers to restaurants.
Out here in the hinterlands of "fly-over country", I just want a phone number, address, menu, and hours of operation. I don't care what form they take be it website, Facebook, a Yelp page, whatever. Something that a search engine can index. Just those 4 things can be something of a large ask from the mom and pop places around here.
What you're asking for sounds like science fiction.
Nothing at all wrong with Facebook or Yelp. The issue is a lot of them are auto-generated pages by those websites. So they're usually nothing more than placeholders created with the hope that the restaurant will claim them, and then populate them with info.
The science fiction is bit_logic's requests from up at the top of the thread:
* A way to order and pay online.
* Details on their contactless pickup procedure if I drive there. I want them to bring it to my car, then I can unlock my trunk, and they can place it inside and close it.
> Just those 4 things can be something of a large ask from the mom and pop places around here.
i bet that there's a way to turn this sort of need into a utility that can be provided with a very simple method. It used to be very difficult to operate a telephone when it was new. Now it's ubiquitous. Calling somebody meant looking up their number in a phonebook. And it is because of standardization.
So i propose that all businesses standardize in describing what they sell - make this a requirement by law, and there will be companies that can provide cheap services to do this task for them. Using this standardization process, online ordering and other (like inventory tracking) can also be "standardized" in such a way that makes it outsource-able.
I'm surprised by the number that are around here. The town of 7,000 people I live in (Marshall, MI) doesn't have a lot in the way of delivery app participation. However, 15 minutes away is a town of 52,000 people (Battle Creek, MI), and I would say at least half of the local mom and pop places there are in bed with at least one delivery app.
There is another big advantage that aggregators have; I only have to enter my address and payment info once, and can order from a ton of restaurants. It can save all my orders from lots of places so I can reorder. It can find all the places that deliver to my address.
> I want them to bring it to my car, then I can unlock my trunk, and they can place it inside and close it.
That's a little excessive given there are lots of customers and only a handful of restaurant workers.
What I have seen restaurants do is that they put your food on the tables (which are idle anyway) with a number. If you tell them who you are when you walk in, they tell you the number and you can pick it up without interacting with people.
I've seen this as well, at the ~60% of restaurants who will still serve me without my having a car. Walk in, give name from safe distance, get food from spot.
What sucks about the other 40% is half of them are "our door is locked, pay a delivery service" and the other half are "use our drive-thru and if you come in anything other than a vehicle with a license plate we will yell at you." I don't want to do the former because delivery people seem incapable of working out where I live and I can't do the latter.
I've been buying groceries in this manner. (I submit a MS Word document with my order, they call me to arrange payment and double check that whatever substitutions they need to make are okay, and I show up in the afternoon and pop my trunk.)
Probably not practical in big cities, where parking can be haphazard, but many restaurants have parking lots right in front.
Have you talked over the phone to an average Chinese restaurant lady or Taco place?
If I had to ask for the menu from my local, one of the best that I had, taco truck - I'd hang myself by the time I got to actually deciding what my order would be.
I can re-order my previous orders from Grubhub or DoorDash with one hand on my phone while I chase after the kids or am busy doing something else. Don't have to enter payment info, find my wallet, look at a menu, or worry about the noise level.
Language barrier and awful call quality also come into play. It's sometimes next to impossible to understand them and that's even assuming a strong language grasp. Much of the best food comes from the old dude/woman who's been cooking all their life, but not necessarily the easiest to communicate with.
Waiting on hold, handling payment details over the phone, miscommunicating an order, language barriers (not everyone who runs a restaurant speaks the local language fluently, and not everyone living in a place speaks the local language fluently), not having to explain my address.
Then there's the benefits of online - menu is accessible, often they're using stripe/Shopify so my payment info isn't everywhere, it's one click, I get email confirmations and receipts, I can leave free form notes easily, and last but not least, I don't have to talk to a person who may or may not want to talk to me.
They’ll have touched the trunks of the 100 previous people, and breathed concentrated common air from the 80 of them with an SUV, minivan or truck. Is this really better than having the customer walk into a big open room (with a mask in some jurisdictions), and pick up a bag?
I’m perfectly happy phoning in an order, walking in and sticking my credit card in a slot. I’m orders of magnitude more likely to catch it at the grocery store, or during a trip to our partially-closed and therefore over-crowded parks.
However, no one in our house is in a high risk group. We’d rather get one of the two strains that are common now (preferably the first one!) than roll the dice with whatever’s common during the second surge later this year.
Retail shopping has gone through a similar evolution, so it might be a source of inspiration for how to make online food delivery more successful. Today, retail customers have the same, or an analogous, list of wants. When e-commerce first emerged, a similar 99.9 of retailers were similarly incapable of meeting those demands.
Simply handling disputes is enough to bury any retailer who doesn't learn how to handle it. If it doesn't consume their money, it will consume their time.
I have a very small side business, and have handled the above needs by working exclusively through PayPal. Also, I have enough of a mark-up to cover disputes. It's kind of ironic, but to survive in business, you have to be comfortable with somehow letting your customers pay for your mistakes.
When people are not in front of you, people are much faster to complain and dislike.
Thus when this guy sold a sub-optimal pizza in his shop to a person in a hurry, they would rather have the food and not start a verbal fight. But when they are physically removed - they are free to look at the quality and make a complaint.
PS: Customers aren't paying for your mistakes, your profits suffer. I just recently sold off a bunch of excess sports masks(it's faster to order a bulk package from a Chinese manufacturer, than buy one). I sold them off on eBay at cost and people bitched to me about the fact that the postman didn't come on time... while not paying for expedited delivery. In the end I lost $10.
Indeed, I get what you're saying, and maybe it's just a way of looking at things, but if you don't at least roughly figure the average cost of your mistakes into the price that you charge, eventually you'll go out of business. A mistake on any single order might still be a loss, but you make it up with a hopefully larger number of successful sales.
For instance, the widget that I make, I screw up a small number of them during production, and I consider that to be part of my cost-of-goods. The rare customer with a complaint gets a full refund. My overall profit more than covers the occasional mistake.
Some other things that the big retailers do is simply not to sell goods that are open to dispute. Home Depot would look at making a pizza by hand from scratch at a retail location and delivering it to your door, as some kind of crazy.
If we are trying to be charitable in our interpretations of someone's argument, I think they were suggesting that each item ordered would have the same price and that the order total minus delivery cost would have the same price, not that the total for the entire order with the delivery-specific costs and delivery service would be the same as the in-store pickup.
Ordering for delivery often requires extra packaging and extra handling. Items that can all be thrown together in a single plate may need to be put into separate containers, which takes extra time in the kitchen. Probably they are also missing upsell opportunities on higher-margin goods (how many people are ordering alcohol, desserts, or just drinks in general for delivery?)
I honestly don't know how much that all adds up to -- and weighed against it are some cost savings, certainly.
But I've never really got the impression that the restaurant business is a high-margin business where they make hand over fist, so my default position isn't "oh, another greedy cash grab for those fat cat restaurateurs" but more "eh, probably they've run the numbers and this extra $1/order is what they need to stay afloat when doing delivery".
> Ordering for delivery often requires extra packaging and extra handling. Items that can all be thrown together in a single plate may need to be put into separate containers, which takes extra time in the kitchen. Probably they are also missing upsell opportunities on higher-margin goods (how many people are ordering alcohol, desserts, or just drinks in general for delivery?)
Good points, on the other hand I would think there's way less work for each order with takeaway:
People cost more than packaging. So it's not exactly an easy calculation.
Often delivery can be optimized much better, than in person services(including takeaway). Making 10 packs of fries takes as much manpower, as 1 pack. If you can batch it well, then you can optimize costs.
But most people in restaurant business are crap at optimization, that's why McD is this big...
This seems like such a weird law. Cool for supply chain transparency and all but it feels super political to target delivery apps when literally everyone does commissions for sales.
Customers should also be confused that…
* Paying $1.99 for an app doesn’t mean the developer receives $1.99.
* Buying a product on Amazon when your browser has a referral cookie means the full cost doesn’t go to the seller.
* Buying a pack of Oreos at Walmart doesn’t mean that Nabisco gets $3.
* Paying $17 to see a movie doesn’t mean the theater gets all of it.
* Buying a game on Steam…
* Buying a flight on a Travelocity…
* Getting a hotel through hotels.com
* Renting an AirBnB…
Like this list could almost literally go on forever.
We're talking about knowing how much a middleman is charging here.
To use your example, when I rent an airbnb, yes I absolutely want to know how much Airbnb is pocketing. Airbnb happily discloses this as an itemised "Service Fee", and they charge hosts a fair 3% fee to cover payments processing.
When I hire a cleaner on Thumbtack, I absolutely want to know how much the cleaner is paid. I want to make sure everyone is earning a liveable wage.
And when I order something through a delivery app, I absolutely want to know how much the restaurant is paid.
The middleman is providing value, is it not? In the case of the food ordering app (let’s say you’re picking up, not getting delivery), they’re increasing discovery for the restaurant, simplifying payment and the ordering experience, organizing and managing the orders for the restaurant, give you a reasonable estimate on when the order should be ready, and provide decent customer service if something goes wrong. I use several apps custom built by restaurants, and they never come anywhere close to the fidelity of a DoorDash/GrubHub.
I don’t know why you think it’s your business to know who is making what. I don’t need to know the salaries of all the engineers at Thumbtack. No one who works for them is a slave. They can quit if they don’t like their compensation. I don’t need to stick my finger in their business and start making demands when I don’t have an inkling of what their financials and contracts even remotely look like. I hope their clearers make a liveable wage, but for someone with no real competitive skills, just having a job may be all you can ask for. If we fix a certain wage floor, some people could end up without a job at all.
Labor markets are hard to regulate well. There are cases under monopoly or monopsony conditions where it’s desirable to do so, but “I just don’t like that” isn’t cause to interfere with efficient markets. You can’t regulate the world to perfection.
If society decides everyone should have a preset minimum standard of living, the burden of meeting that minimum should fall on all of society, not just the handful of firms who deliver a valuable service that requires providing employment to large numbers of unskilled workers.
Yes because then people aren't competing on price but the value of goods and services. Arguably transparency brings us closer to a true free market system as well - with the same other potential pitfalls if not managed for.
Temp staffing agencies show customers their markup. In the tech world, examples like airBnB and fixer (started by Grubhub co-founder) show it’s not unheard of.
Food delivery is being singled out here because of pure politics.
Your AirBnb example by the way is a perfect example. The 3% service fee is the amount charged to the host by AirBnb. They also have a separate charge which they bill to the renter;
> Guest service fee: This fee is typically under 14.2% of the booking subtotal (the nightly rate plus cleaning fee and additional guest fee, if applicable, but excluding Airbnb fees and taxes).
I’m counting a total of at least 5 different line items for taxes and fees. Not all of which will be broken out on the renter’s invoice.
Like when renting a car at the airport, eventually you stop paying attention and just look at the total. You’re only amazed after taking a second look that taxes, fees, concession recovery, environmental etc. fees make up more than half the cost.
Depends how you've paid. If you've paid through credit card or bank transfer there is at least a paper trail and you can claim being defrauded.
I think I lost my airplane ticket money through eSky.eu as well. We'll see. We're still in the "we have forwarded you request to the airline" phase. The trip was cancelled because we got the more expensive "free cancellation" option from bokking.com.
Booking.com also tried to push some friends into getting vouchers instead of money back, but they eventually got their money back after contacting support and making threats.
I would rather deal with Booking/Expedia and get a voucher, than deal with assholes.
Airlines will be forced to give you options, but private hosts will do fuck all. Do you know why? Because the host is still giving me the right to come to Croatia... it's not his problem that the borders are closed.
These middlemen are insurance for the consumer. Be it Booking, GrubHub, AirBnB, Uber, etc...
They are no more a middleman than the grocer or restauranteur is a middleman between you and the farmers. There's an actual value added service being provided: discovery, payment, delivery, order history, etc.
Does this include any monthly fees? Do you have the right to see private party contracts?
Also - fun fact, some places pay more to generate higher placements.
I would also like to see how much restaurants are paying their cooks, waiters, busboys and deliverymen. Some restaurants don't deserve my custom.
PS: AirBnB is a shitty example, as host cancellation rates are ridiculous.
Fun fact - because you are associated to the shitty hosts via AirBnB, you get the some of that tar drops.
I'm a consumer and I don't give a hoot about what kind of "policies" AirBnB offers.
I've had hosts cancel a week beforehand, without explanation. Thankfully they paid me back, but rebooking was triple the price.
That's literally the reason why I will only book at chains, that can upgrade or shuffle me around their networks at worst.
Yeah, I always tell people to beware of hosts who cancel on their guests. You can easily see if they do, by looking at the reviews. Whenever a host cancels on a guest an automated review is posted that says "This host canceled a reservation X days before the stay." If I see that, I move on to a better host.
On a related note, I would love for all businesses to periodically send customers an email or other notification showing them how much of the money they spent went to taxes on a monthly basis and yearly basis.
People would give a lot more thought to taxes if they added up all the different ways the government nickels and dimes them.
I would go even further and suggest that a lot of the high standard of living we enjoyed post WWII can be attributed to all these inefficiencies of cost information. Due to the lack of transparency, pretty much every profession and industry was able to pad enough margin into their business that they could make a decent living.
The acceleration of information diffusion means that no one's margin is safe anymore and why we have Bezos' favorite aphorism "Your margin is my opportunity".
Historically, margin was not the opportunity except maybe between grocery stores or gas stations (businesses where discovery of two or more providers of the same good/service was trivial and all where easily accessible to the customer). Historically, simply providing the customer with the product or service they need was the opportunity. It was only when discovery became easy (first the yellow pages, later the internet) and competition ceased being local (first franchises, later the internet) that margins eroded across the board.
My argument is that less price transparency (due to less competition and diffusion of information about prices) produced less aggressive competition based on margins. You only needed to provide a good or service people wanted and charge them a price they were willing to pay. There was far less need to worry about competing on price.
I loved when there was no competition for stuff in my town of 100k people.... LOL! (I suspect that you aren't actually against competition. But all competition is based on price, ultimately.)
There's no value judgment in my statement. I'm for competition, but I'm just pointing out that it's easier to everyone to embed a margin they can live on when there is less competition.
> "Stop believing you are supporting your community by ordering from a 3rd party delivery company," Badalamenti wrote. "Out of almost $1,100 of orders. Your Restaurant you are trying to support receives not even $400. It is almost enough to pay for the food."
Then why even have your restaurant on the app?
More and more, it seems like "restaurant" is not a viable business. They already don't pay their employees, offloading that on to customers via tips. Where does all the money go? Rent, I guess.
> it wasn’t always this way — margins used to be double, if not triple, what they are now. But for the past couple decades, while menu prices should have been rising to keep up with things like inflation and rapidly increasing rent, price wars instead drove them down ($1 value meal anyone?). All this eroded margins til restaurants were left with nothing but bread crumbs. This failure to manage expectations has simultaneously obliterated margins, all the while skewing and reinforcing our perception of what food should cost.
reinforcing our perception of what food should cost
It's supply and demand. Our perception of what food should cost has nothing to do with it (and this argument is an unhelpful culture war framing). Food is in extremely abundant supply. Same goes for cheap restaurant labour (which is often dodging labour laws). What is scarce in this equation is real estate in high traffic locations. That is why rent goes up and margins go down.
During the virus lockdown, restaurants are trying to operate a low margin business (food service) while paying high rents for valuable real estate they aren't benefitting from, at all. You don't need a fancy restaurant in a high-traffic urban location to prepare orders for delivery. You'd do just as well with a commissary kitchen in a warehouse somewhere.
Honestly? Common food has become so good that only a few restaurants can produce food and provide experience to justify paying what they ask for it.
I can only count one restaurant that surprised me with quality, while a few Michelin star places disappointed here in NYC.
But that's a result of food production becoming better and more efficient, while mid-range and high-end restaurants are standing mostly still. I still get the same service and same quality of food from Milos today as I got 20 years ago... and prices only went up. Meanwhile Popeyes and McDonalds have improved dramatically in the last 4 years alone!
Unfortunately it took this pandemic for restaurants to start feeling the burn from their conservativism.
It's unclear that restaurants are free to opt out. Grubhub "growth hacked" by listing restaurants that didn’t agree to be listed. It becomes a real problem when customers aren't aware, and complain about delivery problems and seek refunds from the restaurant, who didn't agree to do delivery with Grubhub.
There is the issue of brand dilution. Grubhub screws up the order, pockets a large margin, and restaurant gets an angry call and maybe a bad review on Gmaps or Yelp.
I believe DoorDash or Grubhub actually got sued for this and lost.
That's not true because Grubhub can cause customers to actively lose interest in a restaurant by mucking around with prices.
Let's say Grubhub lists a restaurant at 130% of normal menu prices so that they can earn their cut. The perception isn't of restaurant 100% + Grubhub 30%, it's restaurant 130%.
This. I’m pretty sure it’s illegal for businesses to create fake web sites for their competitors, and then post menus with inflated prices on those sites.
I’m surprised they haven’t been successfully sued for libel.
If the restaurant didn't have an agreement with Grubhub, that has to mean they get the full amount for delivery, right? How is that bad for the restaurant?
Restaurants pay expensive rent, then pay their employees extra to pay expensive rents too (sometimes in the form of a higher minimum wage).
To help with this+, big US cities have for the past several decades set about making building competitive housing stock more expensive. Because some hope to escape this through a commute, these cities have also been spending more and more money than ever to build increasingly less-effective transit systems!
(+ To help make it worse)
Some cities have mandatory health coverage too, and some restaurants cover that without a mandate, but the increasing cost of health care is a snafu that goes all the way up to the federal level, and discussing that will be far less productive.
So but really though. Why even list on these apps if they aren’t profitable? What leverage do delivery apps have if a restaurant tells them to go away?
Like it would be quite the sales pitch “join our platform and lose money!”
If restaurants don’t pay up, the delivery services provide menus with incorrect, inflated prices to potential customers. They also often screw up orders and let the restaurant deal with the fallout.
DoorDash switched to a complicated bidding system that means they pay drivers less if you offer a tip. This is equivalent to stealing the tips, but they’re hoping it is complicated enough to confuse a judge into allowing it.
Tip in cash if you must use DoorDash. I switched to carry out, or delivery direct from the restaurant. It saves a surprising amount of money and helps local businesses.
Yes, that's about right. More and more of money in general (and not just restaurants) is being absorbed by rent seekers. That's partially a function of how our economy is functioned around housing and real estate as an investment rather than a place to live, which means said investments are being bought up by the hyper-wealthy and then sat on to earn money or sold at a premium.
This is one of those free markets that is directly at odds with the freedom of other markets to operate. Unfortunately I don't see us fixing it any time soon.
If you're providing a service (discovery+delivery), you're not exactly a rent seeker. Rent seeking implies charging rent on some asset. What's the asset in this instance?
I was more explicitly referring to rent (which is what was mentioned in the comment chain), but I'll bite.
Grubhub was known to list restaurants on their app without their permission, mark up the prices and then pocket the difference. Is this not the definition of rent seeking behavior? They're forcefully inserting themselves as a middle-man so that they can siphon money off the top. Regardless of how you define providing a service (landlords are 'providing locational support services') a lot of how Grubhub functions is by obfuscating costs and skimming off the top.
Well no, you can't. This isn't a matter of them reselling your product, this is them impersonating your business and acting like an official partner. Not only that, but they're passing down all liability back down to you (eg if the food is cold or if there are delivery issues) for something you never approved of.
If Grubhub acted like a reseller and took on the associated obligations you'd be correct. But they don't. So first sale doctrine does not apply.
Pretty sure both doordash and grubhub make it very clear they are doordash / grubhub and doing things for you, instead of pretending to be the restaurant that is making your food.
They also in fact do not pass on the liability, but frequently make me whole when the food is not up to standard. Have you even used doordash or are you just trying to bash them?
Many restaurants are still "profitable" because the restaurateurs use the business as a tax shelter. For sure, this isn't the only type of small business that does so, but based on my observations, it's far more rampant in the food service industry than elsewhere.
If everyone had to disclose their margins and we removed this information asymmetry, it could be a great thing for consumers, and a great thing for efficient markets.
There are a lot of grandmas and tech illiterate people buying laptops for incredibly inflated prices, from often smaller and more questionable computer shops. We're talking about 5 year old CPUs, 4GB of RAM, sometimes even a hard drive and no solid state drive.
If they had to disclose that the $999 laptop they're selling only costs $400 and they make a margin of $600 on it, and the consumer takes their money elsewhere and buys a genuinely reasonable laptop, I think that's a fantastic outcome.
The customer can make that decision without seeing margins. While I generally argue in favor of transparency, I think this would end up incentivizing the wrong things.
There's a lot of examples of industries where the price of the actual materials used is not as important as the expertise/training/tools of the person who assembles/installs/prepares/etc it. A policy encouraging consumers to make decisions on margin would would favor companies that skimp on their employees and punish those who are smart about their materials costs. Ultimately, it could end up encouraging wastefulness and inefficiency.
Say you’re a country store in Alaska 300 miles from the nearest town with active business. You have a plane. You bring in goods once in a while. You add what seems a hefty margin.
In those situations I don’t see it as excessive—of course it would be contextual. And some of this is case-by-case.
It would just cause deflation. Everyone who now has their margins eroded now has less money to spend on things. Apply this to everyone and whatever good/service they provide and you end up with everyone having less to spend on goods and services that cost less. The only people that win are those that aren't subject to price transparency and compressed margins, which would likely end up being just those that work for the government, because that's a cost-plus activity.
It think it's more helpful when exposing their fraudulent offers. An easy example was loyalty cards that had one purpose but were sold on the lie of big savings. A common trick was to inflate the "regular" price above what was common, offer a card-only "discount," and show the "savings" that came with it. It sounds like they're hooking you up until you go to... any... of the other large competitors seeing similar prices. Even worse, one in my area started adding "You could've saved X dollars" on their fake sales at the bottom of the receipt.
It's stuff like that which might justify rules for transparent pricing. Then, consumers can just avoid companies playing a lot of games with them. Or choose or be stuck with them due to other reasons. This is just one tool in the toolbox.
Most retail stores aren’t known for inflating prices while adding marginal convenience. They add a service to me and many. The relationship is more symbiotic than parasitic, as I see it.
Looking at this recursively I don’t need the restaurants’ price breakdown, but I think I want to know what the restaurant gets from me if I buy direct vs when we use these services.
Same with Uber vs a regular taxi. I want to know their vigorish.
Same with hospitals and doctors. I want to know if I’ll be paying $100 for a Tylenol when I can go down to their own pharmacy and get one for pennies.
> Unfortunately, this unnecessary and overreaching regulation, issued under the guise of the current emergency, will only lead to confusion and hurt restaurants and delivery workers...
It will confuse customers as to the virtue these third-party delivery services. They might even question their own decency in using these services and may change their behavior as customers, possibly in restaurants' but not these middlemen's favor.
Is there any virtue in these third party services, or is concealing their fees allowing them to extract significantly more value than they would otherwise be able to in an honest marketplace?
Who doesn't conceal their fees? What consumer industry gives you detailed cost break downs?
I assume when you are looking at, say, getting a Netflix subscription, your first question is "what portion of my dollars are going to AWS, and of the dollars going to AWS, what go to Intel and of the dollars the go to Intel, what go to buying sand"?
> If you pay with your bank account’s debit or credit card, you don’t see those merchant or interchange fees itemized anywhere either.
But arguably you should - most people have no idea that they’re paying a large tax on all their card purchases to private companies.
In fact, if these charges were actually appended to the bill, I reckon we’d see proper competition in this space, as users would be incentivised to choose the lowest fee option.
Unfortunately EEA legislation has gone in the opposite direction and processing surcharges are no longer allowed, largely due to merchants taking the piss and making up surcharge numbers (but I’d also suspect some lobbying went on by payment processors here too, since this it’s in their interest to hide their fees).
This effectively means that customers are incentivised to use their Amex (which charges stupid fees to the merchant) and everyone ends up subsiding Amex users because prices must increase across the board to compensate.
Some of this stuff is reaching the limits of practicality. Many of the costs that a business might incur when doing business are non-linear with respect to a single sale and/or undefined at that point in time.
If a payment processor charges (made up numbers):
* $100/month/account
* $250 flat hardware cost per POS
* $50/month/POS
* $0.30 + 2.9% per transaction for the first $10k transactions per month
* $0.25 + 2.5% per transaction for all transactions after $10k per month
Only the per-transaction costs are relevant. Just like VAT, you don’t include that you had to pay a VAT registration fee and accounting costs of X per year to process it.
Agreed that it does become complicated when you have multi-tiered fee structures like that though.... Also the fact processors charge different amount to process payments from different countries.
It definitely needs some thought - but the current state of things is not an ideal place (users incentivised to use expensive and inefficient payment solutions while private corporations siphon off large amounts of money from the economy just for the privilege of being able to move money around).
They do make original content now, but Netflix is in general the exact definition of a middle-man. You paid them monthly rent to deliver content created by others (via mailed disc or streaming).
> or is concealing their fees allowing them to extract significantly more value than they would otherwise be able to in an honest marketplace
Which of these services is extracting value right now? Even Grubhub I believe is now running at a loss or close to it.
What's missing in this is that you know how much those businesses are charging, but you don't know how much it costs for those businesses to provide their service.
My bet is that is has the opposite effect. It will overload the customer because it's antithetical to the experience the service will provide. People use these services because they want something quick and easy. Instead they are being given more information than they will know what to do with. The smart way for platforms to handle this will be to provide too much detail in a way that it's incomparable to the competition when broken out so things get to the point where people collapse the details and just look at the total because the details just add confusion, not transparency.
End of the day, if you want delivery, what matters is which company, A or B, provides a delivery service that is faster, cheaper and better.
More important as Uber tries to monopolize the space by buying GrubHub. These delivery companies are going to encourage fly-by-night/cloud kitchen operators to increase their margins and reduce prices on the already hurting restaurants. Wish a not-for-profit platform for delivery existed that didn't squeeze the maker or the delivery driver.
Yeah. It doesn’t seem hard for a few independently wealthy activists to make a “craigslist for restaurant delivery”, where the restaurants handled the delivery logistics directly, and the website took ~zero cut.
This looks super confusing. So now in addition to presenting me an itemized breakdown of what I am paying, I have to also see an itemized breakdown of what the restaurant is paying?
In the example invoice in TFA, how would they allocate the promotional fee without knowing in advance how many customers the fee will generate?
How would a consumer know what a fair delivery commission is? Was my driver carrying multiple orders on this trip? If so, should I reduce my tip?
Adding this kind of complexity to bills is silly when there are options like ChowNow out there that handle the website + app + booking part for a flat monthly fee. (And let the restauranteurs determine the difficulty of offering delivery themselves.)
Sounds simple, but there are at least two obvious problems with this approach:
1) It does not take into account that driver comp and Uber Eats commissions may both well be on a sliding scale, where the percentages depend on order volume on prior days/weeks.
This will make it difficult for consumers to compare these fees across orders, making the actual numbers less meaningful. Did the driver earn less on this order because it's her first order this month, or because the restaurant doesn't do much volume, or because the driver was carrying 3 orders at the same time and delivery fees scale with mileage or time or some other metric, etc. The calculations may involve more context than is reasonable for a consumer to process.
2) This may reward the richer restaurants. Big restaurants & chains may negotiate better deals and get a bigger "Paid to restaurant" number. Choosing to display information to consumers in this fashion might incentivize people to choose bigger restaurant owners at the expense of small shops like those highlighted in TFA.
3) Doesn't address the invoice shared in TFA, where ~20% of the fee to GrubHub was for a promotion that could be CTA or the like and not directly tied to specific deliveries. So you could implement your suggestion and the restaurant could still post the same invoice & complaint.
#3 is fun. Where does the promotional discounts go to? How do I know if the restaurant is price dumping to gain ground or GrubHub is actually screwing them?
Bingo. I would expect that if GH just started separately delivering invoices for marketing & other non-commission charges, a lot of the furor would subside.
That’s my reading of the article. If so, this is huge.
I prepared a few DoorDash orders in the past, and noticed that what was normally about $60 for dine in was somehow $110 after a $10 delivery fee and a “50% off delivery” coupon.
At that point I started spot checking prices from menus on yelp. I don’t appreciate gaslighting, and haven’t used DoorDash since.
It says they were announced today (May 12th) and go into effect May 22nd, and applies to "all websites, phone apps and other internet services that offer the sale of food or beverages by a dining establishment".
Has this been in the works a while, and the app and site makers knew it was coming, or do the app and site makers really only have 10 days to design and implement this?
transparency gives consumers the ability to shop on fairness
'we pay our workers better and don't stiff restaurants' isn't a line anyone has every used to sell a product but 'fair trade' has been a real thing for a few decades now without transparency
if adding in the transparency justifies a higher price (big if), the luxury consumer economy changes for the better
It's not obvious that this well help anything, but at least it's better than Jersey City. They put a cap on how much apps can charge restaurants, so obviously the apps just added more fees for the customer.
Making the customers aware of how much they're paying in fees is a good thing.
Now delivery services have to compete directly on the fee they charge customers. Before, the customer had no idea if one service was charging a restaurant 20% and another was charging 30%, which is effectively one service subsidizing another.
It would be a great way to make this market clearer.
There is 3 visible actors in each order on these apps. The restaurant, the app and the delivery man are all independent and are putting their reputation on the line.
Knowing how much each received is the only way for me to decide if I received the value I expected from each of those actors.
I ordered kfc on grubhub, one item didn’t come. I marked it as such and they refunded me the cost of the item and the sales tax. They did NOT refund me the pro-rata share of their 12.5% fee or “20%” tip though.
This is why i stopped using grubhub. If they screw up in any way, they try not to make the user whole, or offer any incentive for their time wasted. Doordash is much better
* A way to order and pay online.
* Details on their contactless pickup procedure if I drive there. I want them to bring it to my car, then I can unlock my trunk, and they can place it inside and close it.
If they did this, my use of these food delivery apps would drop to almost zero. I don't mind driving to pickup my food, it's even good for my car which has been sitting idle for weeks. But I want it to be contactless pickup. If bringing it to my car is too hard, I might even be ok with waiting outside their restaurant, text them, and they bring it out and place it on a table.
But these restaurants have no plan, put no effort into adapting, then complain about high fees for food delivery apps. I don't like these expensive apps either, please provide an alternative!