Did prices go up? Nope, it was doordash.
A side of garlic sauteed edamame is $4.75 on the restaurant menu, but $7.85 on the delivery app. $7.85 isn’t too much for a good tasting side, but I am not a fan of being lied to about pricing. Felt like getting ripped off.
It obliterates my trust in today’s delivery apps and damages the value proposition.
One wonders: How much of the revenue is coming from markup in menu prices? What happens to this revenue when the average consumer grows wise to these markups?
Re: https://www.forbes.com/sites/suzannerowankelleher/2020/02/27...
A sushi order I made last week would have been $77 (delivered) on Postmates. I ordered the same items from the restaurant directly and picked it up myself for $36. The restaurant is a 10-minute walk away.
This makes me skeptical of the business model. Those margins will absolutely get whittled down over time and these companies are already unprofitable.
Truth is - if you're paying $36+tip for the same food delivered, you're literally enabling underpayment of the delivery person.
I tend to pick up, because I really don't want to enable abusive relationship that restaurants have with their drivers.
The $36 was specifically for pickup, the restaurant doesn't offer their own delivery service as far as I know.
How much would it cost where you live?
Keep in mind 2 pieces of salmon belly nigiri will be $6-9 depending on the restaurant. And this excludes taxes, driver tip, delivery and service fees, etc.
The markups for ordering through doordash are ridiculous. I can afford to pay $25 for a burrito, but I'm not going to do that. That's a ridiculous price for being lazy/greedy.
Can you calculate how much the delivery person got out of that trip?
On the other hand... the materials cost of an egg roll in quantity 10 is $0.51 based no some research I just did. In general a restaurant should expect to price a menu item at 4X food cost, so right around the $2.00 mark.
This forces local small places to have to raise their costs whereas the big chains cut deals with these platforms and don't have to raise their prices as their cut is much smaller.
So now if I want to buy local I am paying more for the food than I would if I went into the place. But that doesn't even then account for me having to also pay a delivery fee and a service fee. Oh and if my order is under $12? They'll slap a "small order fee" on. If I am already paying a fee to use the service on every single order, then why is the restaurant still getting screwed out of 30%? I just paid the company a fee for the service. That service fee and that cut from the restaurant is not going to the person doing the delivery work. I'm already paying for that in the delivery fee and tip.
What ever justifies a price apart from what people are willing to pay?
If the restaurants are willing to pay their part and the consumer is willing to pay their part, then the price is right. If anyone was getting 'screwed' and the price wasn't worth it they'd walk away. We're talking delivery of junk food here as well - it's not like it's an essential service.
Unfortunately you'd think it is a choice, but in today's day in age a restaurant cannot afford to skip being on the delivery apps. People are lazy and are likely to just not order from a place if they don't see it on a delivery app. No one I have talked to has ever been happy with the way the apps work. However part of the problem is that most people don't know how much these apps are screwing over the restaurant. I have talked to people who were happy to have so many options of local places on these delivery apps and were happy to be able to support them. But they did not even know that these companies were taking such a huge cut of the money that it meant those local companies often weren't making profit on the orders at all.
Even various leaders in different provinces were making statements publicly asking food delivery companies to not be greedy and to lower fees: https://mobilesyrup.com/2020/10/16/premier-ford-food-deliver...
I wish I could be more specific but I’m just working here while in school. I don’t really know the full detail of what doordash charges us.
If a restaurant is just present to get existing customer orders - then they pay little, but if they want to expand their user base... marketing isn't free.
p100 of the S1 explains their business model. DoorDash charges both the consumer and the merchant based on the order amount.
With that said, I do think food delivery and pickup will be more popular in general after the pandemic, but I highly doubt it will ever be as commonly done as it is now.
For the record, I'm in the US; I can't speak for other countries. Notably, I was in London about a year and a half ago, takeaway and delivery already seemed to be extremely commons way to dine.
Also, delivery is only a replacement for dining out if your reason for going out is the food/drink. If, on the other hand, you dine out for the social aspect, then delivery is never going to be a replacement for you. My hunch tells me that the latter is more common, but I'm not as confident in that prediction.
> On a quarterly basis, our revenue increased for all quarters presented as a result of increases in Total Orders. The increase in Total Orders was primarily driven by an increase in new consumers acquired as a result of our continued expansion in our existing markets and expansion into new markets, increased engagement from existing consumers, and growth in orders completed through Drive. In the second and third quarters of 2020, these trends accelerated in part due to the effects of the COVID-19 pandemic, which resulted in in-store dining shutdowns and the adoption of shelter-in-place measures.
The pandemic has helped DoorDash. There's an increase of revenue from $362M 31.03.2020 to $879M 30.09.2020 (p128). This has also led to an increase in Working Capital $1156M at 30.09.20 from $616M (31.12.2019).
In the 9 months ended 2020-09-30, DoorDash had a net loss of $149 million on $1,916 million in revenue (see page 93). Which implies if they can raise their revenue by ~7.78% while keeping costs steady, they can break even. Given their rate of revenue/cost increases (in the same timeframe as above compared to the 9 months ended 2019-09-30, revenue grew 326% while costs grew 192%), they could very plausibly do so within the next year.