> I tell people all the time DO NOT start a restaurant. Margins are super low, (...)

Yes they are. Enter food-ordering apps that are a middle-man between restaurant and customer. Now the margins are even lower. And there's no way out, as these apps become the de facto portal for these customers. The misery of the Uber-concept is not restricted to transportation.

Instead of a coffee shop I would spend all my time on a building the best coffee vending machine. At least you control costs and test your margins.

In many places, (office) managers just buy the cheapest machine, with little regard of quality or what customers actually want.

>Enter food-ordering apps that are a middle-man between restaurant and customer.

Wait, why are those bad? How is a "waiter" as a middle-man between my mouth and the restaurant better? If you're a restaurant owner, aren't these apps (pun not intended) better for you? You could just have a bunch of delivery people and fire all your wait staff? I'm missing something here, what am I missing?

I spoke with a local restaurant owner when she started hosting Uber Eats. Apparently, Uber takes a cut, but they're not permitted to mark up prices to accommodate that. So it's great for volume, but terrible for margins, especially when the restaurant industry is not exactly known for high margins in the first place.

The Uber Eats site is very vague about all this:

"How much does it cost?

We collect a service fee, which is calculated as a percentage of your sales on Uber Eats. Have more questions? Fill out the interest form and a Uber Eats team member will be happy to answer them for you."

https://about.ubereats.com/en/restaurants/faq/

It's not really about the cut they take, but more about the fact that they take over the sales channel, and from there take a bigger cut and eventually drive your margins to zero.

It seems that the middle-man adds value. But, as the middle-man becomes the portal, it can control the customer. With this control, it can control prices. And as such, the restaurant-owner pays, and loses margins.

It is hugely unfair, as the restaurant-owners get caught in a winner-takes-all situation for the middle-men, and are forced into a race-to-the-bottom.

I think it serves well as a prototypical example of what's wrong with the digital economy. This is something everybody should be thinking about. Some people are already reporting about it though: [1]. Quoting:

> Our focus here is the “uberisation” of the economy by which we mean the destructuration of the value chain by new intermediaries which, through the use of digital technologies (mainly apps, smartphones and online payment systems), capture part of the value at the detriment of traditional operators. Not only taxi companies, hotels, restaurants, retailers, but also insurers, banks, travelling services (beyond the reservation services) , operators in the agri-food chain, etc. are likely to be challenged, with many more sectors thereafter.

[1] http://ec.europa.eu/information_society/newsroom/image/docum...

You lose the ability to differentiate your product or offerings and become a commodity supplier to the actual distributor. If the customer comes to your restaurant or calls you to order tacos, it's because they want your tacos (or they read your Yelp reviews and thought you were worth taking a chance on). If they order tacos on UberEats, they just want tacos, and anyone's tacos will serve.

Yes, and also now you're dependent on the middle-man. And they will dictate your margin.

1) Another middle-man takes another cut

2) Your food becomes a faceless commodity

> I'm missing something here, what am I missing?

The ability to pass a Voigt-Kampf test, apparently.

Alternative view - I used to know a local bank's small business manager. She had a good idea who was hot and who was not, and in our area the tea rooms were insanely profitable.

These were light meal plus tea places of no notable distinction or interest - except that they were in a prosperous, quaint, and touristy part of the UK, on a significant A road.

They did very well indeed from a combination of passing trade and regular customers, even with plenty of direct competition in the immediate area - there were maybe eight of these places within a quarter mile of each other.

Rents were relatively low, minimum wage labour was easily available, and the ingredients were generic and not very expensive, but prepared with some skill, so the food was better than average, but not exceptional.

A number of owners set up successful businesses and handed over the daily running to the staff. They'd literally turn up once a day, collect the cash from the till, and go home.

There were some failures, but owners were more likely to leave because they moved - often abroad - than because the business failed.

As an aside. McDonald did exactly this by doing everything efficiently. They increased their margins by improving costs and having a niche product. Still wasn't easy.

See the movie The Founder. http://www.imdb.com/title/tt4276820/

i have to think the sheer aesthetic opulence of the original hamburger stands[1] helped :)

[1]: https://www.thesun.co.uk/wp-content/uploads/2016/07/nintchdb...