They will be fine. It's the consumers and delivery drivers who will mostly pay for it.
The players: restaurants, drivers (current and former), platforms and consumers. Former drivers, those who don’t make the new cut, will lose. Drivers who stay on will gain. Looking at leverage, consumers are less likely to bear the burden than restaurants. Given the new fixed cost of operating a delivery platform, the incumbents’ threat of competition from new entrants is reduced; that will help them.
If I were to make predictions, I’d expect to see some consolidation among the platforms with the winners squeezing restaurants and consumers waiting longer more than paying a higher price. (It is notable restaurants have virtually no representation in this debate.) The pie will be smaller. But the platforms’ role in it will be more stable and secure.
1. An affected restaurant increases costs for online purchases to compensate.
2. An affected restaurant stops offering delivery. If it's not worth the money, why offer it?
3. An affected restaurant gets its own drivers. That's how delivery used to operate before the gig economy, and it allows them to control costs and fees.
I've already seen restaurants start putting on delivery charges, and often significant ones (a $6 delivery charge doesn't seem unusual where I am).
> But the platforms’ role in it will be more stable and secure.
I don't think it will be. The platforms currently offer discoverability and drivers. If platforms aren't willing to bear the costs of the drivers, restaurants will stop using their driver services. And if the platforms are reduced to just discoverability, it becomes much easier for competitors to enter the market.
Can’t say I agree with this logic. Apple didn’t sue the FBI from a position of weakness [1]. DoorDash et al, reasonably, don’t want to be disadvantaged in their grocery business [2]. They also don’t want to change the status quo, which is less reasonable, but not a sign of strength or weakness per se.
In any case, most small businesses in America operate on single-digit margins. Almost every restaurant would be wiped out by what, from a tech perspective, is a meaningless change in margins. There is nothing meaningful to conclude simply from the fact DoorDash is challenging the rule.
[1] https://en.wikipedia.org/wiki/Apple–FBI_encryption_dispute
[2] https://doordash.news/get-the-facts/why-were-filing-a-lawsui...
It also sued the government. My point is “suing the government is not a sign of strength” or weakness. It’s a non-signal. I think DoorDash is wrong here, though they have a kernel of a point in why grocery delivery is not covered by the rule. But their suing the government says nothing about their strength or weakness.
Companies that have made similar moves are Uber, Airbnb for example, but not Apple.
Fine, Disney. Or hell, Oracle [1] and Boeing [2]. Is there a serious view that someone suing the government always does so out of desperation?
[1] https://en.wikipedia.org/wiki/Joint_Enterprise_Defense_Infra...
[2] https://en.wikipedia.org/wiki/CSeries_dumping_petition_by_Bo...
In the former, companies sue because it doesn't really cost them much to try and see if something works out in their favor, while in the latter they're suing because the legislation would have some negative effect on their existing business.
The rides are somehow cheaper, have no surge pricing, and from some insider reports, has profitable unit economics.
Their app isn’t quite as snappy, but it works fine.
They’re eating Uber’s lunch in my city and makes me wonder how Uber is screwing this up so badly.
This is just guesswork. May it be related to the VC funding that holds them afload, where at every turn they need to think about the future (and quick-as-possible) 10x return on investment that is in the fine-print of the VC contracts?
Or they may be so imbibed by startup-culture "Greed is good" mentality from the very start, that it is unthinkable to consider not squeezing it, and shaving off for every penny.
That may be, but are they equal or more profitable than the Uber, et al model? I'm willing to bet if it were that they would be doing that instead. These companies are in the U.S. where maxing profits/shareholder value vs. taking care of employee needs (or any other need) is generally the name of the game for a major majority of companies.
It’s just that Uber and co are overwrought beasts that never had a successful plan in mind.
> The rides are somehow cheaper, have no surge pricing, and from some insider reports, has profitable unit economics.
So a fleet of depreciating assets with a major infrastructure dependency, lower implied gross margins, and word from insiders of a positive bottom line without publicly disclosed financials to sanity check claims against. Curious to see what their balance sheet looks like.
The entire Asia Pacific geographic region, including India, accounted for 10.9% of Uber's FY22 revenue[1; p. 94]. It's likely more of an incidental snack than full lunch, but it would be funny if Uber lost out to what sounds like an upstart taxi company.
[1] https://www.sec.gov/Archives/edgar/data/1543151/000154315123...
Tax deducting depreciating assets ;)
Turns out uber isn't magic and the market settled on taxi companies being a thing that exists for a reason.
[1]: https://www.livemint.com/companies/start-ups/blusmart-mobili...
How about when SpaceX sued the US government because they were awarding launch contracts to Boeing without competing? SpaceX largely won that and they had a good point.
That said I don't think a win here would help the current workers. Like all minimum wage laws this will reduce demand (obviously people don't want to pay a 12$ delivery fee for an order of $20), push business towards even shadier employment practices and medium term towards automation / "self-service".
As much as I would want it not to be true, the low-skill end of the employment market will always be easily replaceable and consumers won't be willing to pay unlimited amounts for something they could easily do themselves. As such it would help people a lot more if there was an easy path towards acquiring skills, guaranteeing that these bottom-rung jobs will be only temporary.
I realize there's psychology at play here but to an extent aren't we already doing that through essentially obligatory tips?
> As such it would help people a lot more if there was an easy path towards acquiring skills, guaranteeing that these bottom-rung jobs will be only temporary
When the service industry worker has to spend all their time working in order to make even a marginally livable wage the path is to pay them more money, directly or indirectly. The problem is exacerbated in high COL areas, and sure you can say "ok well just move", but broadly speaking you still need someone to do these tasks and that pool is dwindling.