So the restaurants are getting the option of delivery and the increased customer base and advertising... for absolutely no change to themselves? And the customers who use delivery are the ones paying for it? And if they don't want to pay it they can still go straight to the restaurant who will again make the same money? Sounds like a win to absolutely everyone involved.

What is everyone's problem? Why do we want to interfere with this?

It's falsifying the restaurants prices. Grubhub shouldn't be able to say a dish costs $15 when it actually costs $10. It's a false statement that harms the restaurant.

Sure, they will get some deliveries but what about the people that would buy at $10 but not $15? And what about the people that won't dine in because they think prices are 50% higher than they are.

GrubHub is skimming valuable customers while discarding others. That's good for them but ultimately harmful for the restaurant.

It is unethical only if Grubhub says “I will deliver joe’s 12$ burger to you for a 4$ delivery fee” when the burger costs actually 9$. There’s nothing wrong if they say “I will bring you Joe’s burger for 16$ including delivery.”

In general we don’t expect resellers to reveal their cost of goods sold.

> It is unethical only if Grubhub says “I will deliver joe’s 12$ burger to you for a 4$ delivery fee” when the burger costs actually 9$

That's exactly what Grubhub is doing.

GrubHub describes themselves as a delivery service company, not a reseller. With resellers, I can comparison shop. GrubHub tries to make that difficult at best.

Is Grubhub the one marking up the prices, or are the restaurants doing it (to recoup their Grubhub fees)?

Finally a reasoned critique I can agree with.

Took you long enough, thread!

> It's falsifying the restaurants prices.

It's marking them up... yeah. Is that a problem? Do you realise when you go to a store all the products are 'falsified' by marking them up on top of what the producer sells them to the retailer for?

Imagine Google Shopping marks up all BestBuy items by 50 percent. And then you decide to never shop at BestBuy, whether it be in person or online, because Google’s marked up pricing lead you to believe that BestBuy’s prices are outrageous.

No, because since the beginning of retail stores that is how it has worked and everyone understands that. For food delivery it has always been that you buy from the restaurant and pay menu price + delivery charge. Grubhub et.al. have come along and used that understanding along with an implied relationship to the restaurant to deceive the customer.

I don't really get it.

Doordash or whatever says 'for $x we will put a WhateverBurger burger into your hand'. As long as that's what they achieve, this seems fundamentally honest to me.

As a consumer I don't really care where that $x goes to - Doordash, WhateverBurger, delivery person... doesn't seem my business to interfere in people's private financial agreements.

The diner gets offered a deal and can take it or not.

The restaurant gets offered a deal and can take it or not.

The delivery person gets offered a deal and can take it or not.

Seems to me like everyone is acting ethically here, and everyone is accepting a deal they're presumably happy with. If they aren't, they can turn it down and go elsewhere.

>Doordash or whatever says 'for $x we will put a WhateverBurger burger into your hand'. As long as that's what they achieve, this seems fundamentally honest to me.

What percentage of customers do you think understand that Grubhub is marking up their food?

>If they aren't, they can turn it down and go elsewhere.

That's precisely the problem. Some of the restaurants customers are turning it down and going elsewhere because Grubhub has misrepresented their prices.

> What percentage of customers do you think understand that Grubhub is marking up their food?

Why do they need to care about the markup? If the burger price seems like a good deal, go for it, otherwise don't.

> Some of the restaurants customers are turning it down and going elsewhere because Grubhub has misrepresented their prices.

Well then that seems like the situation is fixing itself due to everyone's free ability to do what they want? So why are we complaining?

>Why do they need to care about the markup? If the burger price seems like a good deal, go for it, otherwise don't.

Why don't you answer the question?

>Well then that seems like the situation is fixing itself due to everyone's free ability to do what they want? So why are we complaining?

In what way is the situation being fixed?

> Why don't you answer the question?

Well I'm not the one who cares about it. I don't understand why anyone else would. So I can't answer it!

> In what way is the situation being fixed?

People who don't want to do business with Doordash don't have to. If you don't like Doordash you can just forget they exist. It's not a problem.

People always 'find out' about mark ups and get pissed about them, but businesses are not charities.

And let's not act like this law was passed because of consumers- this is restaurant owners trying to have their cake and eat it too.

Is the markup similar for all restaurants? If Joe's burger is $5 marked up to $6, and Fancy Joseph's burger is $10 marked up to $12, isn't any marketing/signalling value of the price maintained?

> Doordash or whatever says 'for $x we will put a WhateverBurger burger into your hand'. As long as that's what they achieve, this seems fundamentally honest to me.

That's not what they do, though. The receipt shows line items with a cost for the food, a fee for the service, and a delivery fee.

The problem is there's an additional fee for the service hidden in the supposed cost of the food; customers don't actually know what Doordash's cut really is.

> customers don't actually know what Doordash's cut really is

But why would you care? I don't need to know the bill of materials for all my transactions. When I buy a coffee I don't expect to know how much they paid for the beans.

That doesn't seem like a good comparison, the burger is not a "bill of materials" it's a final product available directly to customers by the restaurant, consumers would definently care that they are being sold a marked up burger that is available to them for 25% cheaper. If a delivery company charges me 70 dollars to deliver a flat screen tv that's fine, but if they charge me 70 dollars but also markup the price of the TV 25% I'd consider that pretty dishonest and would at least want to know that I have the option to save 25% by managing delivery on my own.

> If a delivery company charges me 70 dollars to deliver a flat screen tv that's fine, but if they charge me 70 dollars but also markup the price of the TV 25% I'd consider that pretty dishonest and would at least want to know that I have the option to save 25% by managing delivery on my own.

...but this is exactly how other industries already work and everyone's fine with it!

When you buy a TV from Amazon they both mark it up and also charge you delivery!

And they didn't give you the option to save by managing delivery on your own!

Why don't you get mad at Amazon for marking up products as well as charging delivery?

Amazon is a marketplace not a delivery service. It is expected that you might pay different prices in different marketplaces, it's not expected that a delivery service would charge you a delivery fee and a markup on the cost of the product that you're buying - that is not normal.

I care because they're explicitly listing a fee for the app that doesn't accurately reflect what that fee is.

If you wanna say "delivering a pizza will cost you $20" and leave at that, fine. If you tell me the Grubhub fee is $5 and it's actually $10, I'm upset.

That is fundamentally not what Doordash says.

Doordash or whatever says 'for $x we will put a $y WhateverBurger burger into your hand,' but $y is already higher than a WhateverBurger costs. People are left thinking that $x isn't that high a cost for delivering a $y burger, but the actual delivery cost is $x plus some percentage of $y, so both the numerator and denominator are falsified.

They're lying about their value proposition.

> Doordash or whatever says 'for $x we will put a $y WhateverBurger burger into your hand,' but $y is already higher than a WhateverBurger costs.

So add $x and $y together. If that price works for you go for it, if not, don't.

A markup plus a fee is already a common thing. It's done so that there is a minimum to cover expenses plus something that can vary with higher value items because you can get more profit from people who are willing to pay for more luxury items. It's not strange or unusual or a foreign concept to anyone already living in a Western economy.

I don't see why you'd care how they arrive at the final price. Just look at the final price.

What I think you're missing is that price is (or has been) an incredibly valuable input signal when determining the value of a previously-unknown restaurant. if I'm in the mood for a $20 meal, I know to avoid places that offer $40 meals, and vice-versa. My expectations for a $15 lunch are different than my expectations for a $25 lunch. Most people use price as an important signal, communicating something about the restaurant or meal.

These vendors are distorting that signal by misrepresenting the price. If it were clean-cut, and the original price were still visible, and the delivery as a separate 15-20% fee, then fine, I could do exactly what you suggest. Is it or is it not worth it to have this delivered right now?

But it's not. Let's say I see an arbitrary restaurant serving the kind of food I'm in the mood for, say Vietnamese food. I can then look and see the price to know roughly what quality of food to expect: Is it closer to $10 or $30 for an entree, since those are two very different things.

The total price might not even matter to me. But if I order a $20 entree with an extra delivery fee, and what shows up is a $10 entree, then that's a problem and most people will believe that the restaurant offers terrible value, because they were lied to by the intermediary.

That's the issue. It's not "am I will to have my In-N-Out burger delivered for $6 extra," it's "with Doordash lying to me about these restaurants I've never been to, I have no idea whether this is worth doing or not until I've already paid and accepted delivery."

A restaurant is a brand and a brand gets to determine the pricing of their products. Pricing is one of the ways customers relate to the brand's identity. Having a 3rd party, which may still add value to both the brand and end-user, interject and abstract from the brand's determined prices is unethical, period. These delivery services should really be increasing their delivery fees to cover their costs, but they know customers will not go for a higher line item fee, so they choose to obscure it through price inflation that is not obvious to the customer. Now the customer may think the price of an item is always higher, so they may avoid the location in a future dine-in experience. This is harmful.

> A restaurant is a brand and a brand gets to determine the pricing of their products.

But that’s just not true. Branded products vary in price on different retailers. A can of Coca-Cola can be wildly different prices in different places. Are you not used to this as a consumer?

> Having a 3rd party, which may still add value to both the brand and end-user, interject and abstract from the brand's determined prices is unethical, period.

I don’t understand - have you never bean to a supermarket or a department store before? They sell other brands in their store. Do you not realise they’re also marked up?

I am very aware of how wholesale and retail pricing works - but that is a very different distribution channel, and customers enter supermarkets and department stores well aware of this. Restaurant pricing is based on (with maybe some outlying exceptions) a direct-to-consumer distribution model - something you seem be be having an impossible time understanding. I'm fine with delivery companies marking up the prices - as long as they are transparent about it - which they are not. it's deceitful to the customer experience, and I think you are intentionally playing dumb here.

> I think you are intentionally playing dumb here

I think everyone else is playing dumb!

They're telling me they're shocked that a business would mark up a product they buy from someone else to re-sell? And I think it's a bit off they're calling it 'unethical'. It's no different to what other companies do all the time and people consider it acceptable and the only distinction is the label of delivery/retailer?

The restaurants do it themselves! They resell wine with their own markup plus charge a service fee!

Also, this is a luxury product we're talking about - restaurant food delivered to you home. Why are people so aghast that they're having to pay a marked-up premium for it?

I’m pretty sure that in most countries, a store can’t just sell another company’s products without entering an agreement with them. This agreement allows the company to set a minimum and maximum price for the product.

Imagine you’re selling chocolate that you want people to associate with luxury/wealth. To achieve this you might want to limit resellers to be 5 star hotels and luxury stores rather than the 1 dollar store.

> I’m pretty sure that in most countries, a store can’t just sell another company’s products without entering an agreement with them.

Of course you can. What makes you think you can't?

The fact that your company’s product end up being represented by the store and its actions. Mistreating employees and customers, discrimination, bad customer service/return policy, terrible product placement, etc. There are so many ways a store can hurt your company’s reputation by association.

But I mean there just isn't any law like you think there should be.

People are free to resell any goods they own (exceptions for things like controlled substances, other things with regulations etc.)

Look up 'grey market'. Lots of companies try to do what you suggest, but in the US there are very few laws that support such a business model.

I don’t know what countries are like that, but that’s certainly not the case in the United States.

It is, even amazon bans resellers sometimes.

>What is everyone's problem? Why do we want to interfere with this?

Because customers who order through Grubhub/Doordash blame the restaurant for issues such as high prices and wrong orders instead of Grubhub/Doordash. So on one hand, the restaurant gets increased business but on the other they never interact with the customer directly and so their business' reputation depends on Grubhub/Doordash/etc to not fuck up, which is unlikely.

That's a messaging/marketing issue, which we regulate all the time.

It would be better and fairer to legislate that GrubHub and others must be clear about where their pricing comes from rather than legislating what their prices should be.

That's what this does.

They can still charge whatever they want for their fee. They just can't hide their fee in the list price of your sushi.

What? Are we reading the same article? As far as I can tell this new rule caps fees at 10%, it doesn't say anything about charging whatever they want, while being more transparent or disclosing the fees more clearly.

The headline says "Portland approves 10% cap on fees that food delivery apps can charge RESTAURANTS". There's no cap on what they can charge customers.

Legal: "Your pizza is $10. Our fee is $3, delivery is $5. Total bill $18." Restaurant gets $10.

Not legal: "Your pizza is $10 (but we quietly take $3 of that). Our fee is $3 (but we hid an extra $3 in the pizza!). Delivery is $5. Total bill $18." Restaurant gets $7.

Legal: "Your pizza is $7. Our fee is $6, delivery is $5. Total bill $18." Restaurant gets $7.

Legal: "Your pizza is $10. Our fee is $6, delivery is $5. Total bill $21." Restaurant gets $10.

Legal (but not great for business): "Your pizza is $10. Our fee is $600 because 'fuck you, we have VCs to pay', delivery is $5. Total bill $615." Restaurant gets $10.

Am I the only who one thinks it's weird they itemize their service price into two types of delivery fee? Just say pizza $10, delivery $8. Restaurant gets between $9-$10.

Option implies that restaurants can opt in/out which for cases like GrubHub isn’t possible.

These apps can lead to poor experience and perception of the restaurant due to the delivery short comings and customers tend to transfer any unhappiness with the delivery as being the restaurants fault (eg late delivery and cold food).

> Option implies that restaurants can opt in/out which for cases like GrubHub isn’t possible.

Should a manufacturer have the right to say that you can't re-sell something that you bought from them fairly? That doesn't sound great to me. If Doordash fairly buy the food then they can sell it to me (as long as they follow food regulations). That sounds fine, doesn't it?

If the reseller is pretty much pretending to be the manufacturer, and goes on yelp and change the manufacturer's phone number to their own.. I don't know if they have the right, but it's pretty scummy.

It shouldn't have the right to restrict re-selling but sure it's ok to have the right to not sell to somebody anymore.

They've already got that right.

I think people get lured in by no delivery fee and reduced prices originally so they order at basically the normal price. But then once the introductory prices go away and the fees go up they get mad at the restaurant, not the delivery service

Actually many times it works agaisnt the restaurant. It misleads consumers into thinking they have high prices for real and many times their own reputation is harmed because these apps use call centers to place the orders and fuck up royally.

There are plenty of “proxy shipping” services that operate under this model. They don’t conceal the fact that they are a third party unaffiliated with the provider.

In addition, most restaurants will not just accept takeout orders from a random person that shows up on a bike, it’s an organized partnership. I wonder how they even achieve that.

> most restaurants will not just accept takeout orders from a random person that shows up on a bike

Why not?

A variety of pedestrian reasons:

- they don’t have the appropriate packaging, ie don’t actually do delivery

- it’s inconvenient for their order pipeline / system

- they can’t vouch for the carrier handling, is the food going to arrive still hot? A shaken mess?

- is the carrier going to add or remove something before it reaches the customer?

Any of those can be damaging for the restaurant, losing a customer, or even downright dangerous in the case of incorrect handling.

I don't think most restaurants have a takeout service in the first place.

> Sounds like a win to absolutely everyone involved.

Let's pare it down to only you and the unsolicited service - You come home from work and the neighbor kid from six blocks down you've never met bills you for mowing your lawn while you were away.

Let's pare it down to only the unsolicited service and the business - Hi, we put out a bunch of ads that say we're you and have a bunch of customers lined up ready to order. We'll tell you who they are for a 10% service fee. Also we lied to your customers about your prices.

Imagine you bought a new car two months ago, then find out the sales person was just some guy who hangs out on the lot, told you he works for the dealership, and charged you a 10% markup over the dealership's actual price. Imagine your elderly neighbors fell for a door-to-door roofing scam that works the same way.

But Doordash don't charge for an unsolicited service. They aren't charging the restaurant at all in this case. They're paying the restaurant's full price for food. Like anyone could.

Then they charge the customer for an additional service actually rendered - the delivery. They charge this as a delivery fee and a markup that they can vary on more expensive items. This is pretty normal for a retail business to do.

The Grubhub UX makes a specific claim, though: "Restaurant X charges $10 for a burger, and we will deliver it for $5".

When they're marking the item price up, that claim is false. Given these apps' SEO juice and ubiquity, users are left with the false impression that Restaurant X sells a pretty expensive burger.

Do they really specifically say 'Restaurant X charges $10 for a burger'? Or do they just say 'the burger costs $10'?

Like when you shop on Amazon - they say 'the TV is $x and our delivery fee is $y' - really the manufacturer charged them < $y but they mark up and then also charge a delivery fee, don't they?

Nobody looses their mind at this.

Grubhub positions themselves as a delivery service, not a reseller. Receipts list the price for the item, Grubhub's fee, and Grubhub's delivery fee. I'm sure they're quite careful with exactly how they word it to avoid legal issues, but the implicit claim is pretty clear: "here's the restaurant cost, and here's our cost".

I would be upset if Amazon had brick-and-mortar stores and they sold me a $100 TV with a $10 delivery fee online, but that same product was available for pick-up at $90. I'd be fine with it sold in-store for $100.

We do flip out when these sorts of pricing tricks are used. One I can recall: Best Buy ran a bestbuy.com intranet in-store to wiggle out of online deals. https://www.engadget.com/2007-03-03-best-buys-secret-intrane...

I'm generally sympathetic to this perspective, but the problem is that the restaurant receives the reputation hit when GrubHub delivers late, cold, overpriced food. Customers don't understand what they're buying, and when something goes wrong, they leave bad reviews on Yelp et al.

This seems like an information problem rather than a pricing problem. As long as the customers understand the relationship between GrubHub and the restaurant, I don't see any problem with GH charging whatever the market will bear. But right now they seem to be deliberately misleading the customer by listing fake prices separate from the delivery fee.

Are you sure these companies are getting an increased customer base? These services are giving them advertising but also giving advertising to all their competitors so I would assume it cancels out to a degree. Also the negative reviews for high prices or food being served cold probably hurt more than they help

What's wrong with that? If the restaurants are getting the price they want to charge, and if the customers are prepared to pay the higher price, seems everything's OK?

I agree that it's scammy that grubhub etc. is pretending to be the restaurant. But if they made it clear, we are a delivery service giving you access to this restaurant, if you want to order this food you can do so for $17.99, I think everything would be fine with that business model.

If, but that’s not what they are doing. So there’s everything wrong with that.

Understood. But then the law should ban pretending to be someone else (it probably does, but evidently not effectively enough). Having a cap of x% on fees won't solve this problem. It will solve another problem which wasn't a problem in the first place.