The platform fees and the insane menu price markups that restaurants apply for delivery app orders have made it impractical to use Uber Eats & DoorDash for a couple years now IMO. I only ever consider using them when offered at least 50% off.
Mandated minimum earnings will benefit the drivers, but that won't help drivers that have to quit the platforms because people stop using them.
> The only way it works is if someone else's time is an order of magnitude less valuable than yours.
Ish.
There's clearly a logistics problem here. 1-meal being delivered promptly on time scales poorly. But 15 meals delivered to 15 different people within 45 minutes is in fact, a net gain.
Alas, Doordash and Uber have gone about it in all the wrong ways. Its the drivers who double-book this process (ie: picking up more orders than they can handle), leading to inconsistent quality, cold food, late deliveries and more.
Its a legitimate model though. A more "proper" company that's doing this officially is Foodsby, where one Restaraunt makes a single delivery to 15-ish people in one trip at a designated time and location (usually within 5 minutes walking distance of an office complex. IE: One particular office building has a Foodsby drop-off point).
Everyone pays $2 each, the driver is happy, the restaraunt is happy (their personal staff deliver and therefore ensure quality food / hot food at the appropriate, predesignated time), and a ~5 minute walk for a bunch of office workers is a good idea anyway cause we're all sitting on our asses all day.
---------
It double-benefits because professional chefs like doing ~15 or 20 of the same order all at once, its more efficient for them... especially if they can plan such an order ahead of time (Foodsby isn't offered every day for a Restaraunt, they pick-and-choose the days that they'll offer the service).
So the chefs can cut-down on scheduling if they're burning out, or they can plan ahead and offer more days if they know some days are lulls / they have extra freetime.
Doordash / Grubhub / Uber is almost malicious for everyone involved. There's some ideas of convenience to some people, but its not good enough for the overall environment. In contrast, Foodsby (and hopefully more companies that adopt that model) has proven itself sustainable, at least in my area.
You are describing a completely different service though. Prep-meal delivery also works, but it's addressing a different usage pattern.
In the same way you could propose to replace Uber with... buses? 15 people get on the same bus at a specific time and get dropped off within 5 miles, thus optimizing the process.
I've seen the Uber drivers come in. They always grab like 4 or 5 orders, and possibly drive to a 2nd or 3rd restaraunt before they start delivering.
Its not like those UberEats drivers have a big penalty if they arrive late or if the food is cold.
-----------
What I'm saying is, consolidated food delivery services is *already* what we have with DoorDash/UberEats/whatever, they just lie to you about the details.
The reason why Foodsby works (albeit on a smaller scale) is because they're honest about it. There's nothing wrong with consolidating orders to minimize driving time, the problem occurs because those other services _PRETEND_ they're a 1-to-1 order service with dedicated drivers. IE: Its the lies where things have gone wrong, not necessarily the practice.
If all the drivers are double-booking / consolidating orders anyway, then work it into the model. Embrace it, rather than pretend otherwise.
>I've seen the Uber drivers come in. They always grab like 4 or 5 orders [from the same restaurant], and possibly drive to a 2nd or 3rd restaurant before they start delivering.
Having done Doordash/Ubereats in the past myself that is ABSOUTELY not the norm, god I wish it was that streamlined. Picking up a single order and delivering it straight to the customer is by far and away the most common scenario for the drivers.
They do have stacked orders which are the multiple pickups you're talking about, but I've never had more than 3 orders "stacked" together, and I would say it's more common to have stacked orders from multiple different restaurants rather than multiple orders from the same restaurant. And from the driver point of view stacks suck because almost always only one order in the stack will have a tip, the others will be no-tip orders they couldn't get someone else to deliver by themselves.
Doordash also recently changed how they pay out on these stacked orders to the drivers detriment. It used to be you'd get the base rate for each order in the stack, so 3 orders stacked together would be the base rate x 3 + whatever tips by each customer, but now they pay them out as one big order no matter how many orders are stacked together, so you get a single count of the base rate even if you're delivering two or more orders in a stack, which again are usually only a single order with a tip, so you're effectively delivering the other orders for free.
Thanks for the anecdotes. Good to hear how things work from someone who has actually experienced it.
All I've seen are the big orders that get handed to someone who immediately runs out the door and into a car that they left running (with the keys in and everything), lol. They're obviously stressed and trying to make time.
I guess the big orders / stacks are more noticeable to me and obvious what's going on. If a more "normal" driver comes in, it looks like any other internet order (like my own, except I'm picking it up personally).
You are partially correct describing that some delivery drivers already batch their orders. But that's still a different use case. Foodsby can't scale to 15 min increments for all restaurants in the city. While some people can preplan and are OK ordering food from a specific restaurant that Foodsby works with, most people don't want that. How many people want to order food from an expensive Spanish (i.e. Spanish, not Mexican) restaurant I order from sometimes? So my options are going to be: #1 not ordering from this restaurant because it's not a common food preference and is expensive or #2 wait for 15 people to join the order for this restaurant and get food hours or days later.
It's a good business idea, it's just a different usage pattern. I order food when I am hungry. I don't preplan, don't like food from the majority of popular local places (pizza, Mexican, Chinese).
> Foodsby can't scale to 15 min increments for all restaurants in the city.
For some definition of increments and "all", yes they can.
Restaraunt#1 delivers at 10:15am.
Restaraunt#2 delivers at 10:30am.
Etc. etc. etc. Covering the entirety of lunch hours. This is how it works in practice, today.
If you're in a location with lots of Foodsby usage, then you might have 3 or 4 different Foodsby locations to check within a reasonable distance, which dramatically increases the restaurants and timeslots available. Like 1x Foodsby is already fine, but if you're in an area with 5x walking-distance Foodsby dropoff points like I am, things start to get really convenient, and the selection becomes dramatically wider.
It also means for the drivers, that one "trip" can hit 3, 4, 5 offices in one drive. I'm sure that on Foodsby days, these drivers are delivering multiple dozens of meals. In fact, the *MANAGER* of one local Restaurant was the driver for one of my recent orders (we recognize each other's faces because I visited his restaraunt a lot, so it surprised me to see the manager making delivery runs). So its more fulfilling work than typical grunt labor, since they're making so many deliveries on relatively low effort. If he's got ~30 orders, that's $60 ($2 per meal) in less than 30 minutes of driving/delivering, which is certainly more money flowing than most UberEats / DoorDash setups.
--------
Now yes, you may be arguing that "its not what you want". But... when that Spanish Restaraunt says "We're offering $2 delivery (no tip) 3 days from now at X-oclock"... I think you'll be thinking of using Foodsby that day.
Or maybe you check the website to see today's Restaraunts and whether or not your favorite is on the list.
-----------
In any case, _THIS_ is innovation. Actually playing with models and finding things that are better for everyone (chefs, restaraunt owners, drivers, users) as a whole. I'm sure other models can work too, for some sliding scale of individualism, bulk deliveries and whatnot.
But as far as the personalized 1-to-1 service? Its dead, its so dead I'm convinced it never even existed. UberEats _never_ promised a driver on the standby ready to personally serve you, and months/years of using the service has made it obvious to everyone.
There's only so many times that I get a meal 1.5 hours too late that causes me to give up on UberEats (and similar) services.
Interestingly in Silicon Valley, there's an angel funded startup founded by an ex-Google foodie who worked with some of the more notable Asian restaurants (the super popular ones with long lines).
She arrange it such that users from a given neighborhood could order via the website app by 4:30 from a specific set of 2-3 restaurants per day. The orders from a given neighborhood are bulk ordered for 3-4 drivers to pick up from the 2-3 restaurants and delivered to the same neighborhood between 6-7pm.
The list of 2-3 restaurants for a given neighborhood are shared a week in advance and in cooperation with the restaurants so they can handle the surge. Since the restaurants no it will likely be reheated the packaging is optimized.
Because there is a rotation of the restaurant - it paradoxically avoids the tyranny of choice issues with picking a restaurant and actually feels fresher in a discover new restaurants type of way.
During ZIRP/Covid the menu prices were sometimes lower and there was no delivery fee. Post Covid they do have a membership option or a very modest delivery fee.
Hello, what is the name of this? I am currently working with a few restaurants to launch almost the exact model. The idea is to transition from on-demand to in-advance.
Uber was experimenting with that exact process before covid. For a lower fare, you let Uber dynamically re-route your driver to pick up more people headed in roughly the same direction as you. Worked alright, maybe took 1.5x as long for you to reach your destination while you paid about half as much as you did usually.
Busses work, though. If you removed busses, there is no amount of Ubers you could add to the roads to "fix" the system. It's clearly impractical for each office worker to pay for even half an hour of someone's time every day to deliver a meal just to them. While most counter services can serve 20 meals with the same half hour of wages.
Uber Eats is doing it here in London with "ghost kitchens". 15 fast casual brands cooking (mostly reheating really) from 3 kitchens in 1 building. A much better chance for delivery drivers to be able to pick up multiple orders. It still isn't enough optimising though, as the destinations are still scattered.
I spent a number of years working at a pizza place in high school/college and on busy nights they had a dedicated "router", a human who was sometimes also a driver, who grouped orders together so they got where they needed to go in a timely fashion and the food was always warm.
When I order DoorDash my driver either only has my order or they have a secondary delivery that is insanely out of the way. This is a very inefficient use of driver time.
The pizza place is practically all delivery and it's easy to bunch up the orders heading in the same direction. Comparing that to UE/DD, a single restaurant might have 2-3 delivery orders at any given time, but what are the odds they are all headed in the same direction? I wonder if extreme density cities have less of a problem with this.
For reference, I live in a "2nd tier" city. Not NY/LA, but a city everyone has heard of.
On an unrelated note, I've always thought the big problem is their market is too narrow. These companies should deliver literally anything that can fit in a passenger car. One example I know of is that auto shops do not keep parts for every car in the shop all the time. They contract out to parts warehouses. Those warehouses have employees which deliver your new carburetor to the auto shop that's installing it. There's no reason your Uber driver can't pick up pasta and a carburetor.
> On an unrelated note, I've always thought the big problem is their market is too narrow. These companies should deliver literally anything that can fit in a passenger car. One example I know of is that auto shops do not keep parts for every car in the shop all the time. They contract out to parts warehouses. Those warehouses have employees which deliver your new carburetor to the auto shop that's installing it. There's no reason your Uber driver can't pick up pasta and a carburetor.
Looking at the Uber app, under Delivery > Services it actually looks like they do purport to offer delivery for basically anything. Groceries, Alcohol, Pharmacy, Flowers etc. I have never once tried it or met anyone who has. Maybe I'll give it a shot tho.
>The only way it works is if someone else's time is an order of magnitude less valuable than yours.
Targeting mainly the wealthy isn't necessarily a bad business strategy.
It should also be noted that it's also useful for bulk order to people and those unable to physically move themselves to a place (disability, lack of car, etc). It's not a "use everyday" mechanism, but it has uses.
Indeed, the only way it is working right now is because a significant piece of their revenue is from discounted gift cards so their revenue grows while taking a loss. In the future, they will have to replace the driver with something automated if they want to make money.
>It takes 10 minutes for a chef to make my meal, and 25 minutes for someone to come to the restaurant, pick it up, and drive it to my house.
And in that 25 minutes, the food has gotten cold and its chemistry has changed too. You could reheat it in the microwave, but now it'll just taste like reheated leftovers.
> The only way it works is if someone else's time is an order of magnitude less valuable than yours.
Food delivery also seems to work with vertically integrated geo-segmented services like pizza and Chinese takeout. My best guess is that the profit margin and delivery packing are high enough to make it worthwhile.
I wish there were Indian curry vans instead of ice cream vans, driving around the streets playing distinctive music from 5-8pm. Group buy discounts for individual streets to promote pre-purchase, etc. Do a different suburb each night of the week. Please someone make this.
Most of my favorite local restaurants use other platforms now. It's been 3 years since I've last used Uber or DD. If they don't deliver, I just go pick it up myself.
Food delivery existed before platforms, but only where it made sense. You could order something like a pizza, where the marginal cost and effort required to make another meal was low, and the sales volume was high enough to justify using paid employees for delivery. Service area was also chosen by the restaurant itself to ensure that they would not spend too much time on a single delivery.
In the end, it's pretty simple. How many deliveries does a single person make in an hour, including idle time? Is someone paying enough for that? And does the kitchen have enough spare capacity for that?
> Food delivery existed before platforms, but only where it made sense.
This article is about NYC, where food delivery was ubiquitous long before DoorDash. In fact, Seamless in 2010 was a better experience than Doordash is in 2023, when you consider the absurd markup on Doordash.
Doordash struggled to enter the NYC market for a while because it was trying to compete with an established product, yet using a higher price point. It was only with massive amounts of VC funding that they were able to get a foothold.
>The basic concept of food delivery existed long before tech and VC and was viable.
In limited markets, for specific types of food, and for pretty crappy wages for the delivery people. (And, yes, for mostly pretty low tech approaches.)
These companies have spent a ton of money to convince lawmakers and consumers that they are not in the food delivery (or taxi) business. The whole plan was to not have to deal with these pesky regulations.
In NYC, before Seamless and the like, restaurants just offered free delivery when you called over the phone. It was just part of the deal; didn't have to be profitable on its own (the business it brought was enough). Restaurants evidently did fine back then.
Seamless et al are really just siphoning money out of restaurants’ pockets because you cannot, these days, be the only restaurant who still makes people call over the phone.
Not sure why you got downvoted, its true. These platforms are all a race to the bottom to capture market share and then jack up of prices to recover lost revenue. Overall, it ends up being a terrible experience for the customer and the driver/deliverer.
Because it’s not true anymore, and complaining about high prices for a service that is just moving up market kind of ignores the reality that a business can make fewer sales if its margins on the remaining sales are sufficiently high, which is exactly what has happened.
In other words, delivery apps went through the “burn vc money” phase already, and are now focusing on profitability, and successfully so.
Food delivery products and companies are definitely not moving up market. Valuations have plummeted and many are still struggling to turn a profit despite layoffs and cutbacks.
I'm curious; what do you think "moving up market" means? Does it mean "becoming a company that has a higher market cap and/or is more profitable" or does it mean, "Targeting a wealthier customer"?
Because what you've listed would suggest you believe it means the former, which isn't accurate (it's the latter). Maybe I misunderstand, though.
I think food delivery at scale is unprofitable, at this point the technology in those apps doesn’t really have a moat. The next logical big step is to have drones delivering the stuff, and at that point you have this massive amount of tech and research to get food 2 miles down the street…it seems pretty counterproductive.
Not sure where you folks live but all the major ordering apps present in Toronto have been excellent in the suburbs. I was fully satisfied at least 9 out of 10 times.
And even the most expensive, ubereats is only, at most, a 20% surcharge compared to the in-restaurant price plus tip, for a $50 order.
I live near Mountain View, California and its probably sampling bias but i would swear that for the entirety of pandemic there were complaints about food delivery missteps and prices on my Nextdoor neighborhood.
How does the customer have a terrible experience? I order delivery more often than is reasonable across many different platforms and I usually have a perfectly fine experience.
Because I put it a 9$ burrito in the cart and somehow at checkout the price ends up being 25$ before tip. The only way I use those apps is if I have really good incentives/discounts…so maybe I am not the target market, happy to eat in or not order at all. I have not had any problems with the delivery people, they are always super nice.
I've never really gotten this. We can speculate about the intelligence of VCs, but I assume most of them know a bit of basic math. I wonder if perhaps they are so deep into a bubble of wealth and privilege that to them, spending $50 for a (cold by the time it arrives) burger seemed reasonable. Perhaps they thought that once everyone could experience this for an amount of money they find trifling, it would catch on?
I've used these services a time or two just to see what the fuss is about and I don't get it myself.
The VCs are hoping to hype the product enough in the early stage to achieve a lucrative exit, and do that 10% of the time(or whatever). What happens with the product once the company is public is not of their concern.
>I've used these services a time or two just to see what the fuss is about and I don't get it myself.
It's similar to fast food itself. convenient and cheap. these days the latter is falling off the wayside (again, just like modern fast food). It was invaluable during a pandemic to help encourage social distancing, but even if it was still cheap it was bound to fall off a bit (probably not to pre-pandemic levels, but no longer record customers).
>I wonder if perhaps they are so deep into a bubble of wealth and privilege that to them, spending $50 for a (cold by the time it arrives) burger seemed reasonable.
As others have mentioned, it's more a matter that VC's aren't necessarily looking to be the next big tech company. Many are looking for a profitable IPO and then move on to the next company. Lots of problems with enabling that model to begin with, but that's a whole other bucket of worms.
They work kind of OK in dense expensive cities like SF or NYC where people don't drive as much. Less so in other sparse areas where driving and picking up or even eating out is less of a hassle. I think you're using $50 as hyperbole; more realistically, a $20 takeout becomes $30 with delivery, and a lot of people seem to be OK with that.
Which if I recall correctly they are only profitable due to a one time revenue boost right of something like hundreds of millions ?
And that one time "revenue" boost was that a company they own they are asserting is now valued more than last year. And they are calling that "revenue".
I took a look at a fool article. If you exclude the unrealized return from an investment they made, their profit are in the single digit millions. Not really confidence inspiring, but maybe I am wrong and that they could indeed make their business sustainable.
It implies that their margin is really low. We're talking about revenues in hundred of millions and they're only able to make single digit millions.
Next quarter, their margin might entirely be wiped out by a slight downturn in business. If they could increase their margin and make profit consistently, then I'll change my mind.
Is a particularly big percentage of their costs fixed? Because that affects the math a lot. If we consider a generic slightly-profitable company facing a 25% revenue drop, there's a huge gulf between a world where costs drop 10% and a world where costs drop 22%.
>One of the pre-requisites for that is being profitable on a GAAP basis.
Uber lost money for 22 straight quarters, then made money for the last two. Bit optimistic to think it's smooth sailing from here, in my opinion. I enjoy Uber, the product, but they are middle manning a couple of low margin industries. Hard to imagine it being a multi-hundred-billion dollar company.
> That's a somewhat outdated narrative to still be parroting.
It's not. Most of those "innovators" are still posting losses in the hundreds of millions
> Uber just got included into the SP 500. One of the pre-requisites for that is being profitable on a GAAP basis.
Because you can somehow lose a billion dollars a year for 10 years, become a publicly traded company with a steatement "we don't even know if we'll ever turn a profit", still continue operating at a huge loss for several years, write off 6 billion in losses, and finally become profitable enough to be included in S&P.
Any any other, sane world, Uber would be gone after two years of losing a billion dollars a year. Not crawl into S&P after 10 years of unsustainable losses.
> it seems as if Uber’s losses were self-evidently sustainable.
With the unlimited free investor money. Same goes for the rest of "amazing starup innovators" of recent years (e.g. YCombinator's startups). The flow of money has now stopped/slowed, and we now see mass layoffs and a wave of bankrupcies.
Losing a billion dollars a year for 10 years is not a sustainable business. But somehow it has become the norm in IT.
I mean I think it can be, given that there's a $20-$30 markup per order, but it definitely requires some particular circumstances.
The bigger thing is that if you're thinking of Lean manufacturing principles or Theory of Constraints, where the goal is to get the noise out of the system, you would never maximize a business the way that Uber Eats and Doordash are. It'd instead be something like the following pipe dream:
- We sell "pizza delivery as a service" to businesses who want it -- at first we're trying to partner with Target and Walmart, etc. Our value proposition to them is "hey Amazon is eating you alive, how about we help you offer ultra-rapid delivery and the people you're working with basically become fellow trusted Target employees?" (Of course, we'd be happy to double-dip -- ideally we'd convince Amazon that we're a cheaper way to reach their customers than their own delivery drivers. But that's a really hard sell.)
- The company rents delivery people from us per day, we provide the delivery network. If you need to "burst" we can provide extra folks to augment at a premium. Ideally someday we'll get some lucrative Amazon contract where the Amazon warehouse, but to start with we're doing laundry delivery and other odd jobs. The company maintains their brand; we're just a courier service. You don't go to the FedEx website to order something, you select FedEx at the end with "how would you like this to come to you."
- On the side, we do sell a service of "we will give you a new pickup/delivery portal web site that works with our delivery service" to smaller businesses so that they can get started with us.
- We are a courier service but we only operate in cities where we can sufficiently average out the volumes needed. Amazon, UPS, FedEx can be the kings of the countryside, that's fine.
- The company, assuming food, sends their delivery-person right when the food is cooked, they are our employee and package it to our standards and bring it straight out to our delivery hub. In general they will not be going to the final address. We use this as a process buffer to maximize our throughput for the people actually driving to the home addresses, we can make sure that certain people get to know neighborhood X better, etc.
- The shipping price should come in two tiers, give people a generous shipping discount for advance orders where we can have more opportunity to batch and optimize.
- Because the company pays us (and the user pays them for "shipping"), under no circumstance does the user tip; that workflow is just too indirect to sustain tipping.
- Which means we have to do a 180 on how we treat the delivery folks; ideally they'd be full-time employees and we'd proactively unionize them.
That last bit sounds like suicide but really there's a ton of noise in terms of all of this "well the question of who are our delivery people is fraught, they can drop off the map at any time" and it's like, no, I want to be able to say at the central hub, "here's the route you're about to follow, review it while you wait 2 more minutes for Tina to arrive with order 6AF12B, that's your third one, we've got the motor running for you and you know these streets better than anybody," and under no circumstance is that person saying "eh, I have a party I want to go check out, I'm just going to go with these 2 orders and leave Tina in the lurch." And, we can sell it to city-goers as "this is the ethical way to deliver, the union makes sure that we maintain the cars and that we pay as well as we can."
And the rest of it is making the profit back up in volume.
FWIW, the people that order food regularly don't care that they are paying an exorbitant fee for it, and there are plenty of them. The folks that don't regularly order may order less, but that's not going to really have a significant impact on the business overall.
It's 50% off the base price, which excludes the delivery fee, the convenience fee, the inconvenience fee, the COVID recovery charge, the Livable Wage surcharge etc.
The last time I ordered UberEats, all the fees plus tip nearly doubled the cost of my order.
Mandated minimum earnings will benefit the drivers, but that won't help drivers that have to quit the platforms because people stop using them.