In my country the market leader is TakeAway / Just Eat (Thuisbezorgd) and they just mention a price for the food and a price for the delivery. Nothing else, no bullshit. If you're a regular customer, you're better off ordering directly though, since they take a cut of about 10%. Websites of restaurants regularly mention this, and since Dutch like to be cheap I suppose it works. In a way its honest to mention the 'service fee', if they were also upfront that the cut is because they're a broker/middleman.
The problem is really that in total Uber Eats was asking for 300% what they claim delivery costs in exchange for what they provide as a broker. That's pretty absurd.
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And I was skeptical seeing "no bullshit" in the same sentence as a gig economy app so I had to search, and of course the first result for "Thuisbezorgd service fee" was that they're hiding service costs by charging more than menu price... then turning around and claiming that's because it's the delivery menu.
Which of course would mislead any reasonable person expecting to pay what the menu says... the one they'd hand you if you sat down.
There's no way to make the current delivery app model work. The app needs to be small in scope and/or localized otherwise it seems without exception, "growth at all costs" leads to heavily subsidizing food and labor, then increasing costs drastically and decreasing pay once you have people hooked on the system.
Of course they somehow need to earn money. So it is 10% on top of the price in exchange of being listed in a centralized DB of delivery application (in this case the defacto standard). Do I find 10% a lot? Oh yes (although less of a problem than 300%), but that's the problem of the network effect. They would start for free or very low margin, and once they have market share they slowly increase that percentage. The problem I have with it is that I want customers to keep having default choice, that they are not honest about it. They should be honest they are a middleman. So that they get flak for delivery, not the restaurant. Also, the customer should be informed they are not dealing directly with the restaurant.
Even your Dutch service you brought up is actually charging more than 12% when they deliver, and like I said above was found manipulating prices
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It is almost tautological, you cannot have a delivery service spending millions on non-operational expenses like expansion, and not take advantage of restaurants, drivers, and customers.
It's simply too expensive for fair business.
NYC has small privately owned players who take a flat monthly fee to provide a simple web interface for ordering. They don't advertise, they don't deliver for you, they just provide a boring reliable service. That was originally how Thuisbezorgd operated before growth pressure forced them to start their own courier service.
They could run indefinitely without taking advantage of anyone because of the fixed scale, and that's really just another indicative case of our current growth culture.
Its a subsidiary of JustEat/TakeAway btw, they got different brand names in different countries.
I agree its disgusting, my point is there's degrees of disgust. For me, 13% is ridiculous given the service they provide. But from the PoV of restaurant owners they could get away with a very simple website. IMO its a deal with the devil.
Anyway, 13% is a different league from 300%.
Same with dark stores, the value being paid isn't worth it. The profit should go to the hard working restaurant, the owner and the employees.
There is a difference between gross margins on the food items in isolation vs the overall restaurant's profit margin. The point I was making to the OP, seemingly lost on you, is that there are plenty of costs that Uber (or a restaurant) must bear, such that earning a large gross margin on a specific item or service doesn't guarantee an overall profit.
The only thing I see lost is you. The complaint isn't that Uber is bearing costs, it's that they bare costs in the neighborhood of 3x what the delivery costs!
For a restaurant food needs to compete with paying for actual humans to cook it, paying rent, etc. all things reasonably expensive and costs huge money to scale.
For Uber owning a human's time for the next X minutes should be by far the largest expense because the other side of it is software!
If you understand how software works this shouldn't be hard to grasp... software scales for relatively nothing compared to human labor and rent!
The only way to break that equation is to squander your cut on overaggressive expansion. Overaggressive of course being defined as the point where you spend so much money drowning people who aren't using in perks and advertising that you end up having to squeeze restaurants drivers and existing users harder and harder to keep the ponzi scheme going...
So according to you, delivery companies have fat margins and zero marginal costs because it's all infinitely-scalable software. The only thing holding these companies back, then, from massive profits is "overaggressive expansion."
Very impressive. Your plan is impeccable, I cannot find any flaws whatsoever (keep in mind, however, that I'm a dummy who doesn't understand software). You've obviously cracked the code that has eluded the existing executive teams at GrubHub, Postmates, Door dash and Uber. I hope you have submitted your resume to all of them, clearly you are all set to be CEO!
What have I said that's incorrect, or where have I mischaracterized your statements? You wrote: The only way to break that equation is to squander your cut on overaggressive expansion. If "overaggressive expansion" is preventing profitability, why aren't any of the delivery companies reversing course and doing what you suggest?
