Many people take advantage of the convenience of food delivery apps like Uber Eats, GrubHub, and Door Dash. Their popularity soared during the Covid lockdown era when people were reluctant to go out and they were a boon to restaurants struggling to stay afloat then. But they have stayed popular even after things returned to almost normal as people had got used to the convenience and. continued to use them. It definitely helps those who for whatever reason are unable to cook their own food or are unable to go out.
In his latest episode of Last Week Tonight, John Oliver takes a close look at this business and finds that the two categories that we think benefit most from this model (restaurants and delivery workers) are in fact benefiting the least.
It turns out that restaurants have to share as much as half their sales with these delivery companies, thus eating into their profits. As a result, some restaurants have tried to get out of using those services, only to find that the companies have put them back on without their permission and sometimes even added menu items that they do not offer.
Meanwhile, the delivery workers are poorly paid and treated as independent contractors and thus get no benefits and have to depend largely on tips. They do not get even health insurance even though the work they do is dangerous (especially for those who use bicycles) because they have to maneuver through busy streets quickly to meet the tight delivery schedules and thus are at great risk of accidents and injury.
The strange thing is that despite gouging both ends of the business (restaurants and delivery workers) the delivery companies in the middle are losing money. So why is such an unstable system still in existence? It is because currently, the delivery companies are supported by venture capitalists to provide services at lower than the cost of doing business. They are doing this until they can drive out the competition and then, as any monopoly with a captive market, they can jack up the prices and start making huge profits. They are following the same model as Amazon and the ride share companies like Uber and Lyft that initially seemed to offer a good deal for their customers until they drove their rivals (small retailers and taxis) almost out of business but now charge a lot more, more than the companies that they once undercut. It is predatory monopoly capitalism in action.
I sometimes order take out but have never used these food delivery services because I am old school (a dinosaur, if you want to be less polite). I use the online or paper take-out menus to make my choices and phone the restaurant and give my order to a human being and then go and pick up the food myself. Oliver makes fun of people like me in his opening but it looks like at least the restaurants get a better deal from dinosaurs like me.
I knew a guy that lived one small block away from a great restaurant that also did takeaway, yet still insisted on using Uber Eats to get food from further away. Baffling.
IIRC you live in Carmel. In the mid-90s there was a local company pioneering this idea called Gourmet to Go. They bought little 3-cylinder subcompact cars and had them painted in the company logo, and had contracts with about two dozen local restaurants: mostly mid to high priced.
My then husband worked for them as an IT person, I worked part time for about a year as a dispatcher. They communicated with restaurants using a POS system, and the cars had radios. There were a lot of deliveries to hotels, as well as private homes. The pay was better than minimum wage but not by much. The software was custom made, written in Basic, and very easy to crash. I spent one spring break (I was a student at UC Santa Cruz) individually editing the records of every customer to reflect a change in the tax rate.
This was financed by the owner’s elderly father, a retired medical device inventor who lived at Pebble Beach. I don’t know how long it lasted, I moved to Santa Clara when my then husband got a new job.
This is an area where delivery couldn’t be done in most cases by bicycle, and at least the company provided cars.
I’m in Toronto now, and except when both of us are ill, we only use delivery from places that provide it, like our nearby pan-Asian restaurant and a pizza place.
Pizza and Chinese food, directly from the restaurant, when I lived in town. Now, out in the country, I have to pick up any take out.
Tried a delivery service from our favorite little mom & pop restaurant once; the app’s delivery price was twice the restaurant rate (not counting tip) and the driver took 90 minutes to get to us (we are 10 minutes’ drive from the restaurant). Now if we don’t feel like eating in the restaurant, we call it directly, speak to a human being, and go pick it up ourselves. That way the restaurant makes the profit, not the sketchy delivery company. And we don’t have to worry about our information being stored in some app doing who-knows-what with our data. And occasionally the owner tosses in a free dessert because he’s not giving away money to the app’s owners.
I guess I’m the only one who thinks not having to speak to a human is a huge plus. X-D
Enough of a plus to have to pay double for whatever you ordered and wait 90 minutes to get your food? And you don’t speak to the delivery driver?
How is that even supposed to work?
1. Delivery person turns up at restaurant to pick up order placed on app but is turned away because the order was never placed because that restaurant isn’t on the app.
2…?
3. Profit!
Eh? I mean, the particularly dimwitted portion of the app’s users may blame the actual restaurant rather than the app (and express those feelings in an online review, maybe, but surely “order on Grubhub and it never turned up, wouldn’t shop there again” is easily countered with “We are NOT ON GRUBHUB, dumbass, check our website, don’t take any notice of what Grubhub tell you, they’re lying”), sure, but surely even in the famously oblivious US those people would be a minority, right? Right? The delivery person can’t insist the order be prepared, the restaurant can just tell them to take a hike. I know the US value customer service more highly than it values the lives of children, but come on, there are limits, surely. Like if someone turns up at your takeaway window and says “I’m here to pick up the chicken tikka massala, boiled rice and three chappatis for Smith”, and no such order was placed, they’re just going to have to leave, right?
Fixed it for you.
From my home I can walk to a Turkish bar & grill (with takeaway service), a Thai restaurant (ditto), a fish & chip shop, and Indian takeaway and a Chinese takeaway in a little under four minutes. None of them are on any of these apps, and they all appear to be thriving. None of them have volunteered to give away half their profits, funnily enough, and yet whenever I go to pick up food there I’m never the only person in there, in any of them.
The question here is, if the model is to drive “rivals” out of business… which “rivals”? Can’t be the restaurants -- none of these services runs their own food outlets. Amazon targetted a pre-existing industry (brick and mortar shops) that it wanted to *replace*. Uber and Lyft were targetting existing cab firms. What are these services replacing, that they need to drive out of business? I don’t see the endgame here.
I would suggest that if you run a restaurant and the only way you can see to stay in business is to give away half your profits to a delivery service that’s also touting the food of every other restaurant in town, then just possibly you’re in the wrong business and there are too many restaurants in your town for the market to support. Nobody has a RIGHT to make a profit running a restaurant, right?
Also, my best friend’s son worked for one of these delivery companies for a while. He thought it was great -- whenever he needed some spare cash he’d log on, do a few deliveries, get paid, and go out and get drunk. He loved it. He didn’t have a boss, no set hours, it fitted him perfectly. Of course he doesn’t live in the sort of dystopian shithole where he’d have to worry if he broke his leg how much money it would cost him, so there’s that.
Heh heh I do love me some John Oliver. So I am a dinosaur, I know. Rawrrr.
But seriously, I am not a customer for these people and I loathe their omnipresent ads on the net, even if some of them are quite well done with singing, dancing and all. If I wanna eat, either I cook it myself (98%) or I order it on the resto’s site and then I’ll bike-pootle out and collect it myself (2%, mostly sushi).
On the other hand, that amusing and luxuriantly bearded driver nailed it: there are people with little time or reduced mobility. For them this has been a boon, and I’d gladly do the same if needed.
It’s just regrettable that an useful, reasonable idea is being bollixed up by greedy practices, regrettable but not surprising alas…
@7 sonofrojblake:
The delivery company takes the order online with their app and then somebody on their staff calls the restaurant and place the order over the phone. It would be pretty obvious in big cities where the delivery people have distinctive gear and use bikes. Move out from the city and the delivery people don’t wear company coats and just drive around in their cars, making it a lot less obvious. I imagine the delivery company tacks on something to the prices listed in the app so they are not losing (at least not any more) money without it being added to the delivery charge.
The goal of companies like UberEats is to get people so used to using their app that they don’t think to call the restaurant directly. I have my doubts if they will ever get that kind of market leverage. Still people got so used to using Amazon that they don’t think of buying online from any other site so it’s possible.
I have known a couple of Uber driver and the pattern was consistent. The ones that really did it part time were happy with it. The ones that actually tried to live off Uber ended up hating it. The income was too erratic and after you figured in wear and tear on your car wasn’t that great. At the same time it was nerve wracking because any accident or bad customer or screw up or just getting sick could ruin it.
Well, OK… that’s pretty labour intensive though, even before you factor in the person who has to turn up at the restaurant.
Well they’d have to. They’ve got minimum TWO additional salaries to cover (telephone operator and delivery person). And this is during the time when they’re supposed to be undercutting “the competition”. But OK then…
That’s… optimistic, in a world where Google exists and anyone with the app BY DEFINITION can simply Google the restaurant in SECONDS and get their contact details.
I’m still struggling to see who they’re competing against, other than places that already offer their own delivery service. I don’t know about you, but if I can call out for e.g. McDonalds, and get it for a (guessing, I’ve never and would never do it) £5 service charge, well, I might do that. But if a couple of years goes by, the delivery service gets monopolised, and the service charge gets jacked up, well, I’d just… stop. Wouldn’t you? I mean we’re talking almost the definition of a discretionary luxury service here, right? I’m already not using it because it’s too expensive, and that’s while it’s as cheap as it’s supposedly ever going to be. Surely if the plan is to jack up the prices later, people will simply cook at home or go out of the house, like they’ve had to do for the rest of human history up to about ten years ago. I don’t have enough disrespect for the young people of today to picture them simply unable to cope without having finished meals brought to their door. I’d rather think of them as having enough sense to think “screw that” and buy a Pot Noodle, like I had to.
Citation needed -- I agree people will likely try shopping online before going out the door, but only using Amazon? When any other online retailer is a click away? Really? (I mean… in fairness Amazon is often my first port of call for simple small things (e.g. kitchen knife, an audio cable) but for anything substantial (e.g. a TV) or odd (e.g. a lightsaber) there’s no way I’m going there first, or indeed at all).
Oh, and…
Turns out that in the 21st century just driving a car around isn’t a skill on its own that you can rely on for a career. Who knew?
@10 sonofrojblake
I think so also but somehow Amazon has managed to make it work for online shopping.
A company doesn’t need to be competing against anybody. A company that patents a truly novel idea is limited only by demand/price ratios. Delivery services like to talk about optimization, that they don’t pay for people when they don’t need them, how they move people around for efficient coverage, how they shuffle orders/delivery for maximum efficiency. Which works but isn’t nearly as important for food delivery as they want. If they are really profitable long term it will be the same way Amazon/Walmart does it, with leverage. Getting enough of the delivery market in their hands that they can start setting terms for restaurants that want to do delivery and force them to sign contracts that preclude them from doing any other delivery. I still don’t see it working in food delivery.
Well yeah, but Amazon was competing against non-online shopping (where people had to pay rent on brick-and-mortar shops and couldn’t realise Amazon’s economies of scale), and also against other online stores where the economies-of-scale thing (and union-busting worker exploitation) would also work in their favour.
These delivery companies seem to me to be only competing against each other.
You said: “A company doesn’t need to be competing against anybody. A company that patents a truly novel idea is limited only by demand/price ratios.”
But the OP explicitly says this:
You suggest that “they can start setting terms for restaurants that want to do delivery” -- how? They can’t stop a place from simply hiring their own delivery people. You say “force them to sign contracts that preclude them from doing any other delivery” -- how? There’s no mechanism for doing that short of turning up at the restaurant and saying “nice place you have here, shame if it burned down”, which the Mafia can do one by one but it’s not an approach that scales.
https://en.wikipedia.org/wiki/Non-compete_clause
What makes you think you can trust the result? There’s a whole other tier of scams there, as Cory Doctorow describes here: This is your brain on fraud apologetics:
He also describes in detail some of the predatory practices of places like Grubhub and Doordash here: Foodcrime.
Holy shit. Thanks for that link. I hadn’t appreciated that these places (some of them at least) have as their business model “commit fraud with the connivance of the credit card company”. It’s… well, not amazing. Surely a class-action lawsuit is brewing?
Wow, that’s…something.
If I want to order from a restaurant I don’t usually order from, I googlemap it and click on the link to get the website and/or phone number. That way I know I’m ordering from XXX restaurant in (my location) instead of XXX restaurant in (some other location).
But for my favorite, go-to restaurants, I just bookmark their websites and put their phone number in my contacts.
Example scenario because apparently this is apparently too complicated for people:
Me: *selects restaurant from contacts, presses Call button*
XXX Restaurant: “XXX Restaurant, what’s your order?”
Me: “THIS and THAT and THIS OTHER THING for pick up.”
Restaurant: “Okay. 20 minutes. Name?”
Me: *name*
Restaurant: “Okay. {$Total}. See you soon.”
Me: *goes to restaurant* “Pick up for *name*”
Restaurant: *hands over food*
Me: *goes home happy, with food I ordered at price listed on menu*
Bless. Tell me you didn’t click on the links in #15 without saying you didn’t click on the links in #15.
Example scenario because apparently this is apparently (sic) too complicated for people:
YOU CAN’T TRUST THAT LINK.
Incredible as it sounds, Google will and does accept payment to make that link point somewhere other than to the website of the actual restaurant, so that you can be directed there via a middleman.
Seriously: check out the links Dunc provided.
1) I have never, ever clicked on a link that didn’t take me to the website I wanted in part because I pay attention to the link’s URL before I click on it, but also,
THE WHOLE SECOND HALF OF THE EMAIL, which was that I have the restaurant in my contacts and call. You know, talk to people? That seems to be a real problem for people who insist they must order food? Way back in the olden-day times, people actually remembered numbers they called a lot and could recall them from memory.
Yeah… you still didn’t read those links, did you?
I do what you do, as it goes, so I do understand. The difference is I acknowledge the existence of something called “other people who aren’t exactly like me”.
Did you even read post 15 AT ALL? Specifically, did you notice that it included a quote where Cory Doctorow related how he’d searched for a restaurant called Kiin, a Thai place in LA, and clicked on a link for Kiinthaila.com ? And you, “paying attention”, would know that that was not the legit website of the restaurant by… what? Fucking clairvoyance?
sonofrojblake: Don’t front. You’re actually outraged that there are people who aren’t exactly like you, and you really, really hate women. Seek help, dude.
The only thing I need help with is how you form those conclusions, because neither of them follow from anything I’ve ever said or done.