I really can't make up my mind. On the one hand, it's truly unhealthy for the overall job security and the social construct (which is normal given it's modelled after the US).
But on the other hand, it would have been a fucking travesty doing a lockdown without ordering on Uber eats and Co.
And those platforms were the innovators in the space. Restaurants who could develop similar platforms would have never allocated the money, and others who would never have had the opportunity to offer such services, would have never tapped the overall market (i.e. People with Internet who are hungry and need food for any reason, be it no groceries or just laziness).
The American and most of the European labour market cannot be compared like this because of the way regulations in these areas work.
The problem is not that Uber Eats and Deliveroo are making too much money, it's that they're making it over the backs of their employees.
European employment regulations have strong protections of workers, and these companies try to work around those regulations by classifying their employees as gig workers. Delivery drivers used to be regular employees until these companies swept in and used investment money to work the competition out of the market.
It's no wonder the government is stepping in to end this. In the US, this would never happen, because the right to start a job without too much paperwork or get fired on the spot is deeply ingrained in the laws of many US states, at least compared to European labour relations.
The middle ground here is that delivery drivers need to be paid fair minimum wages with the relevant job protections so that restaurants can compete with their own delivery crew without major (foreign) investment. Your local pizza joint can never compete against Uber or Deliveroo without some kind of tax evasion, that's part of the design of the Big Delivery business structure.
These delivery companies make plenty of money, there's no risk of them running into impossible to overcome that their general investment-based mode of operation hadn't already planned for. They may need to raise prices to pay their employees decent wages, but that's only healthy for the free market. In some countries (like mine), delivery companies take a whopping 12-14% of the entire bill as compensation for delivery, which is often listed as free, yet it's economically inviable to go up against these giants now that they control the market.
Last I checked, none were yet profitable so unless that has changed, this should probably read "These delivery companies lose plenty of money" and we should stop making arguments based on the false assumption that they are making plenty of money and can shoulder additional costs.
I'm failing to see how these platforms were innovators. There have been countless multi-restaurant delivery services going back to the initial Internet startup boom in the late 90s. With a few exceptions in large metropolitan areas they have all failed.
Even with a much higher level of investment, willingness to play dirtier than previous attempts and a huge increase in demand because of the pandemic there doesn't seem to be money to be made here.
> But on the other hand, it would have been a fucking travesty doing a lockdown without ordering on Uber eats and Co.
Why? I know a lot of people who didn't order food online. I get it if you say that restaurants needed it, but do most people need to order food online during a lockdown?
> And those platforms were the innovators in the space.
The main innovation of Uber Eats and Deliveroo was using fake self-employment to reduce costs and scale faster.
> Can't there be some sort of middle ground ?
Yes. There are already companies (Just Eat comes to mind) that do hire workers and do not rely on fake self-employment, and they're able to do delivery just fine. I also know a lot of restaurants that hire their own delivery employees.
The middle ground is that consumers have to be willing to pay more for their deliveries so that drivers can receive a reasonable salary. Delivery companies know consumers won't pay for it, so they are attempting to violate labour law by calling these drivers self-employed.
When I get a 50% discount I sometimes am tempted to order. But with additional surcharges now the discount is usually gone. Then I realise I'm a massive slob and there's perfectly good food in the fridge.
Restaurants don't want to care about deploying their own delivery services. If they can pay a fee and outsource that they will.
Open Source would only work if there were vendors to sell a packaged solution that restaurants can just plug into their systems (menu/ordering), no small restaurant will want the headache of maintaining their own software infrastructure...
So you say your need to have cheap food on your table trumps other peoples right to be treated like human beings and be hired and paid for their work fairly and protected as workers?
European countries have already decided that we want workers protected with minimum wages and other rights and that there are limits to free market.
It is understood that large number of people just need to be protected because they can't do it for themselves. If you are willing to honestly work 40 hours a week you should be compensated enough to pay at least for very basic existence.
Can we put these in specific and measurable criteria? What you've written is a great sound bite and easy to get behind as written, but it's meaningless unless we all agree on what constitutes a "very basic existence". I doubt you'd find consensus on what qualifies as a "very basic existence".
> it would have been a fucking travesty doing a lockdown without ordering on Uber eats and Co.
Sure, these services bring joy to people and create low paid jobs.
But, I think the more essential service is the general grocery delivery and supply chain.
It seems so inefficient to have someone make a toasted sandwich, and then drive it half way across a city burning fossil fuels because customers do not want to cook their own meals.
Uhm. Why would food delivery be allowed during a lockdown? What's the point of it, then? Especially when considering the production of the food which needs 'unlocked' preparators.
Seen like that it is no difference to rush fast and masked through some supermarket, or emergency food collecting point by the red cross, military, FEMA or something.
edit: I mean why should food delivery services being exempt from being locked down? Makes no sense to me when it's just for convenience and not part of emergency distribution, or when other, though limited options exist.
I went through an entire year of lockdown across two major cities without using a delivery service once. Just go out and pick up the food yourself, either on foot or via bike or car.
Also I know what you mean about the job security and so on, but this industry was previously provided by the restaurant/businesses which would offer a base salary and then tips were there's lets say. But deliveroo uber and co, offered the riders a means to earn more money with less job-security, the restaraunts to reduce the fees of delivery..
It was a pretty balanced trade-off.. To which both concerned parties did agree.. Goverment wasn't even needed here. I feel worse for the delivery people in all this because they wont have that extra money, instead deliveroo and co will just reduce their earnings to compensate.
Sure there is merit to them being "coordinated and continuous workers", I can see the argument for that regardless of the gig economy. But having to back-pay the taxes for said workers is close to extortion.
My Middle ground would be a mediator instead of an ultimatum.
> Should the platforms hire all 60,000 couriers, there's a high price to pay to catch up on previous, missed social security payments, said European labor law specialist Luca de Vecchi. Social security contributions in Italy can amount to up to 33 percent of an employee's salary and must be paid by the employer.
This is just crazy.. How can the government expect a company to backpay what the government allowed in the past ?
The government never allowed it. The company is responsible for correctly paying social security of their employees and correctly classifying their employment status. Wrongfully classifying someone as self-employed is illegal and the company will have to pay the social security contributions they missed.
This has nothing to do with taxation.
It's crazy how a company hire 60'000 employees and not know the labor laws of the country they operate in. Every private person that hires a house cleaner has to know and follow these laws.
If you wrongly classify an employee as a contractor the IRS will go after you for back payroll taxes. It's not extortion, its collecting taxes you illegally avoided.
It's not only about employment of the 60 thousand de facto workers. This is about tax evasion through systematic lack of employment contracts. In Italy employers are responsible for paying a number of taxes and contributions on behalf of
and for their employees. Some of them are not even counted towards the wage. So not only the employees who are getting exploitative treatment, but the state doesn't get pension fund contributions, and regional and city taxes are not paid af all.
Given that all other businesses pay these taxes, it's only fair that gig economy startups pay theirs.
I applaud Italy for taking an aggressive stance as long as they are sure of what they are doing. I think very well this might come and bite them in the ass and I certainly won't feel sympathy for them if it does. However, if they can use this as a tool to bargain for better and more equitable arrangements and turn it into something sustainable , more power to them.
We need to understand that different countries have different laws and especially attitudes. What might be called a cute "hack" in USA, in other countries will land you in jail and /or facing crippling fines. EU in general is a lot more "worker friendly" than USA
Meanwhile, these companies can't make any money as it is.[0]
At some point maybe we should consider that this model is completely broken. The gig workers hate it, the restaurants hate it, and the delivery companies can't make a profit. What in the fresh hell are we doing where nearly every part of this "economy" is mad about it?
> What in the fresh hell are we doing where nearly every part of this "economy" is mad about it?
We're at the point in the hype cycle where the service has become popular, so the media has flipped to the contrarian takes about how it's bad, actually. It wasn't that long away that we were reading stories about how food delivery services were providing restaurants an opportunity to keep their doors open during COVID lockdown.
Restaurants only hate food delivery when the companies try to force them to lower prices (so the delivery service can capture the margin) or when they perform bad-faith actions like misrepresenting themselves as an official partner of the restaurant when no such deal has been made.
The restaurants who simply prepare orders at their normal retail price and hand them off to delivery drivers who deliver to customers who know what they're getting into are actually loving this boom. It's extra business without the hassle of dealing directly with customers.
That's actually the driver of the problems: Restaurants have been so eager to get a piece of this booming business that some of them have given up their own margin to partner with delivery services looking to squeeze every dollar out of the restaurants. I suspect that era won't last long as restaurants do the math on what it's costing them.
> It wasn't that long away that we were reading stories about how food delivery services were providing restaurants an opportunity to keep their doors open during COVID lockdown.
Can you link to some stories? I didn't see any in my bubble.
>That's actually the driver of the problems: Restaurants have been so eager to get a piece of this booming business that some of them have given up their own margin to partner with delivery services looking to squeeze every dollar out of the restaurants. I suspect that era won't last long as restaurants do the math on what it's costing them.
They don't have a choice, with covid etc. Many restuarants would rather not have delivery, or delivery that didn't cost them 20% of gross.
I'm kinda surprised that food delivery apps and ride-hailing apps are all money-losing. Why?
It's a modernization of an already-proven business model. Chinese food and pizza was orderable by phone, and delivered for free or a small fee, 30 years ago.
So, the pizza restaurants proved that there's enough margin in a 25$ pizza to pay a minimum wage driver to drive it to your house. Delivery platforms come in and break this up: instead of the restaurant having someone on payroll to deliver orders, you just outsource that to another party (and pay them a fee, which is passed-through to the customer, and replaces money you would've paid the on-staff driver otherwise).
Why can't the food delivery companies provide delivery services for basically the same total cost as before, and subsist on extracting a small percentage of the value, which is freed up by the massive economy of scale that they can create by aggregating orders from several restaurants into a single pool?
Ditto for Uber... it's possible to operate a taxi company profitably, and has been for a hundred years. Shouldn't Uber have basically the same economics / cost per mile as a traditional taxi company, except be more efficient thanks to top-notch demand prediction that no local taxi company could ever build?
> It's a modernization of an already-proven business model. Chinese food and pizza was orderable by phone, and delivered for free or a small fee, 30 years ago.
Different business model.
Drivers went back and forth to a single location, and had a fixed delivery radius. A driver who wasn't delivering could also be helping out at the restaurant.
Orders could be batched up, go and deliver multiple pizzas in a row.
Uber Eats is super inefficient, drivers aren't based at a restaurant, the delivery radius is much larger, density isn't taken into account, and orders aren't batched up from a single location.
Or to put it another way, I live in a major suburb of Seattle. All the years prior to Uber Eats, my only delivery options were Pizza from a handful of places. That is it, they had the scale, and I was in their delivery radius, those small # of restaurants had determined it was profitable to deliver to me.
Uber Eats comes along, and now restaurants that, honestly, are far enough away that I wouldn't consider driving to pick up food from them, are available to deliver to me.
Of course none of that is economically feasible. As stated above, Uber Eats is already less efficient than directly dispatching from a restaurant. In super dense areas (e.g. NYC, SF) maybe couriers can be kept so busy that bouncing from place to place all night long to pick up and drop off food makes sense, but in the suburb of a third tier city? No way is that a good business model.
No, not really surprising. Uber used classic anti-competitive pricing tactics to drive competitors out and consolidate market share. As the marginal acquisition cost of a customer declined, they had to start burning more and more cash to keep their market share. In order to stay solvent, that money had to come from somewhere. Some of it comes from VCs, but alot of it comes from the "efficiency" of squeezing drivers, offloading the cost of maintenance and insurance, etc.
The only innovation was exploiting regulatory sluggishness to nationalize the taxi monopoly instead of a series of regional (and heavily regulated, for this and other reasons) taxi companies. I'm also not sure that Uber has a significantly better idea of what demand is compared to the New York taxis who have been doing that business for ~100 years now. None of this is to defend the taxi companies either - Uber blew up in popularity for a reason, but they aren't profitable because their economic model doesn't work if they have to pay their workers fairly.
Food delivery seems more straightforward as a largely unnecessary middleman, but comes from the same broken, VC-subsidized model. They acquired customers using anti-competitive pricing models, then they lost customers as they started charging the full cost of service. In addition, the food delivery companies have less incentive to perform, because the restaurants take the blame when something goes wrong. None of that is efficient, or worth the tax being placed on them. I don't think very many restaurants are benefiting from an increase in business, and the companies aren't making money by lowering costs - they add huge fees to every order, so things cost 50-60% more than they would if you picked it up yourself.
I think the reason is that some foods are cheap enough in materials, quick enough to prepare and maintain their edibility in transit that they are conducive to home delivery. Those foods have therefore been available for home delivery for some time.
Pizza has very cheap ingredients and has a consistent highly transportable form factor. A kebab (Schwarma) contains a lot of expensive meat and will fall apart in transit. Therefore pizza has long been available for home delivery and kebabs haven’t.
I suspect a lot of restaurants are willing to stay open using deliveries just to stay open, even if they get no profit of make a loss, just to stay open. At least they get to pay some of the rent, keep staff and hopefully keep a customer base until they can open properly again.
Notice that Uber is facing much the same, just at more than twice the amount. The UK correctly decided they are a transportation provider and they will have to pay VAT on the services provided, not the pseudo small businesses of their fake contractor drivers:
> Ditto for Uber... it's possible to operate a taxi company profitably, and has been for a hundred years. Shouldn't Uber have basically the same economics / cost per mile as a traditional taxi company, except be more efficient thanks to top-notch demand prediction that no local taxi company could ever build?
Owning taxi medallions was a pretty profitable business. Driving? Not so much.
Basically the medallions were often rented to middlemen who would also maintain cars and then rent them for the day (or night, a lot of these cabs were on the road 24/7). All paid upfront each night by the driver who then had 12 hours to try to break even and get a profit. No guaranteed minimum wage here.
It is possible to do this profitably. However the app companies are more interested in spending marketing dollars on discounts with the end goal of becoming a monopoly over the market. The end goal is to restrict customer and restaurant choice so they can charge both parties and take their cut.
They will spend big over the next couple of years to see which markets they become dominant in. Once the land has settled they will do deals with competitors to exit certain markets so each can extract margin from that geography.
I think this is making clear how many restaurants were only making margin on the up-sells like beverages. At the high-end it's alcohol and dessert and at the low-end it's soft drinks and packaged snacks. It's extremely often discussed that your fancier restaurants live or die by their bar.
I guess when you pay a part timer to deliver you’re not paying for the added overhead for a whole new division of highly paid engineers, marketing folks, advertising, expansion budget, underselling, etc.
There is no incentive for startups to actually profit. The whole goal is to throw enough money at the problem until you can IPO and dump your shares.
I honestly think companies should have to be profitable / trending towards profitablity to IPO. Otherwise you get situations where investors pay people to use the service, and then go public saying "look how many users we have". No proven business model and not a single cent of profit.
Yes, people love getting stuff cheap. But if, say, an auto shop was offering cheap oil changes because they're just dumping the used oil down the sewer instead of properly disposing of it, "people like cheap oil changes" isn't justification for the continued harm.
At what point do hundreds of millions of dollars in operating losses begin to constitute "dumping," where a product (service in this case) is priced below its cost in order to accumulate market share and harm competitors?
Other comments mention that delivery "worked fine" before, which implies DoorDash can't argue that they were perfectly innovative against a "dumping" accusation.
In legal terms "dumping" is only applicable to imports. There's generally nothing illegal about delivering a local service at a loss, except in limited cases when one company has an effective monopoly and uses that pricing to drive out competitors. For now the food delivery market is still highly competitive.
Gig work and Airbnb saved my life and kept family off street.
I got injured and disability decided to play hard ball.
Working whatever hours I could be functional and being able to stop and rest, or wait for medication side effects to ease off. These are the only thing that kept us off the street.
That's great but gig work is possible without false self-employment. Most European countries have laws for this. That's why you see articles like this.
Eat operates similar to Uber Eats here while paying a higher wage than Uber Eats after they payed social security and provide a bike. Meanwhile Uber eats drivers have to pay social security and their vehicle from a lower wage. The social security is what keeps them off the street in the case they are out of work or disabled.
Why are some people defending companies that try to go around existing labor laws by claiming their employees are different contractors just because everything is done over an app?
Luckily our laws are relatively clear and the courts will probably keep on ruling against Uber.
I'm glad you managed to stay afloat through gig work but this example really seems to point out that it's prevalence is due to failing social systems (job market/safety nets) driving people into insecure forms of work.
I think drones will save them. Can't wait to spend a romantic dinner in a small restaurant with my girlfriend and watch the delivery drones come and go, humming around us.
I mean, speaking personally as a customer, I'm a pretty big fan of being able to search for food online and order it. When we're trying to figure out whether a market is broken, the question of whether customers are happy is a pretty important starting point. (But maybe I'm just a weirdo and everyone else who uses Yelp etc. is miserable?)
How many restaurant owners and delivery gig workers do you know? From my (admittedly very limited) experience long-term gig workers have a "system" that tends to work well enough for them, though they're not so successful that you'd hear about it on the news.
Everything is anecdotal. I live in NYC and I talk to restaurants, or I used to before the pandemic. I know the owner of this restaurant, and he absolutely hates these delivery companies. He’s not alone.
The gig economy is just a return to the basics of the industrialization and the machine age; where people went to the factories' gates to seek a job for the day. During this period, such flexibility brought a huge boost in production, innovation and revenue. So this model isn't necessary broken.
Under a dumping accusation, their competitors are the victims here. Operating at a substantial loss as a strategy to expand your market footprint is pretty textbook anticompetitive.
Readit News
But on the other hand, it would have been a fucking travesty doing a lockdown without ordering on Uber eats and Co.
And those platforms were the innovators in the space. Restaurants who could develop similar platforms would have never allocated the money, and others who would never have had the opportunity to offer such services, would have never tapped the overall market (i.e. People with Internet who are hungry and need food for any reason, be it no groceries or just laziness).
Can't there be some sort of middle ground ?
The problem is not that Uber Eats and Deliveroo are making too much money, it's that they're making it over the backs of their employees.
European employment regulations have strong protections of workers, and these companies try to work around those regulations by classifying their employees as gig workers. Delivery drivers used to be regular employees until these companies swept in and used investment money to work the competition out of the market.
It's no wonder the government is stepping in to end this. In the US, this would never happen, because the right to start a job without too much paperwork or get fired on the spot is deeply ingrained in the laws of many US states, at least compared to European labour relations.
The middle ground here is that delivery drivers need to be paid fair minimum wages with the relevant job protections so that restaurants can compete with their own delivery crew without major (foreign) investment. Your local pizza joint can never compete against Uber or Deliveroo without some kind of tax evasion, that's part of the design of the Big Delivery business structure.
These delivery companies make plenty of money, there's no risk of them running into impossible to overcome that their general investment-based mode of operation hadn't already planned for. They may need to raise prices to pay their employees decent wages, but that's only healthy for the free market. In some countries (like mine), delivery companies take a whopping 12-14% of the entire bill as compensation for delivery, which is often listed as free, yet it's economically inviable to go up against these giants now that they control the market.
Last I checked, none were yet profitable so unless that has changed, this should probably read "These delivery companies lose plenty of money" and we should stop making arguments based on the false assumption that they are making plenty of money and can shoulder additional costs.
Even with a much higher level of investment, willingness to play dirtier than previous attempts and a huge increase in demand because of the pandemic there doesn't seem to be money to be made here.
Eh? Just Eat/Takeaway.com has operations in 23 countries and made more than €400 million in revenue pre-pandemic (according to Wikipedia).
Why? I know a lot of people who didn't order food online. I get it if you say that restaurants needed it, but do most people need to order food online during a lockdown?
> And those platforms were the innovators in the space.
The main innovation of Uber Eats and Deliveroo was using fake self-employment to reduce costs and scale faster.
> Can't there be some sort of middle ground ?
Yes. There are already companies (Just Eat comes to mind) that do hire workers and do not rely on fake self-employment, and they're able to do delivery just fine. I also know a lot of restaurants that hire their own delivery employees.
Just Eat is on the list of companies impacted by this in the article.
When I get a 50% discount I sometimes am tempted to order. But with additional surcharges now the discount is usually gone. Then I realise I'm a massive slob and there's perfectly good food in the fridge.
Deleted Comment
Consumers do not, in fact, have to be willing to pay more. Not at all.
I think restaurants would love to pay $xxxx upfront and a small monthly or annual fee for updates.
But software developers want a slice of the revenue.
It’s greed in a low margin industry.
It’s a perfect Open Source project.
Open Source would only work if there were vendors to sell a packaged solution that restaurants can just plug into their systems (menu/ordering), no small restaurant will want the headache of maintaining their own software infrastructure...
European countries have already decided that we want workers protected with minimum wages and other rights and that there are limits to free market.
It is understood that large number of people just need to be protected because they can't do it for themselves. If you are willing to honestly work 40 hours a week you should be compensated enough to pay at least for very basic existence.
Can we put these in specific and measurable criteria? What you've written is a great sound bite and easy to get behind as written, but it's meaningless unless we all agree on what constitutes a "very basic existence". I doubt you'd find consensus on what qualifies as a "very basic existence".
Sure, these services bring joy to people and create low paid jobs.
But, I think the more essential service is the general grocery delivery and supply chain.
It seems so inefficient to have someone make a toasted sandwich, and then drive it half way across a city burning fossil fuels because customers do not want to cook their own meals.
Deleted Comment
Seen like that it is no difference to rush fast and masked through some supermarket, or emergency food collecting point by the red cross, military, FEMA or something.
edit: I mean why should food delivery services being exempt from being locked down? Makes no sense to me when it's just for convenience and not part of emergency distribution, or when other, though limited options exist.
It was a pretty balanced trade-off.. To which both concerned parties did agree.. Goverment wasn't even needed here. I feel worse for the delivery people in all this because they wont have that extra money, instead deliveroo and co will just reduce their earnings to compensate.
It's stupid.
Sure there is merit to them being "coordinated and continuous workers", I can see the argument for that regardless of the gig economy. But having to back-pay the taxes for said workers is close to extortion.
My Middle ground would be a mediator instead of an ultimatum.
> Should the platforms hire all 60,000 couriers, there's a high price to pay to catch up on previous, missed social security payments, said European labor law specialist Luca de Vecchi. Social security contributions in Italy can amount to up to 33 percent of an employee's salary and must be paid by the employer.
This is just crazy.. How can the government expect a company to backpay what the government allowed in the past ?
This is wrong.
This has nothing to do with taxation.
It's crazy how a company hire 60'000 employees and not know the labor laws of the country they operate in. Every private person that hires a house cleaner has to know and follow these laws.
Given that all other businesses pay these taxes, it's only fair that gig economy startups pay theirs.
If they prosecute UberEats, who exactly would be the one serving prison time?
At some point maybe we should consider that this model is completely broken. The gig workers hate it, the restaurants hate it, and the delivery companies can't make a profit. What in the fresh hell are we doing where nearly every part of this "economy" is mad about it?
[0]: https://www.marketwatch.com/story/doordash-shares-sink-as-re...
We're at the point in the hype cycle where the service has become popular, so the media has flipped to the contrarian takes about how it's bad, actually. It wasn't that long away that we were reading stories about how food delivery services were providing restaurants an opportunity to keep their doors open during COVID lockdown.
Restaurants only hate food delivery when the companies try to force them to lower prices (so the delivery service can capture the margin) or when they perform bad-faith actions like misrepresenting themselves as an official partner of the restaurant when no such deal has been made.
The restaurants who simply prepare orders at their normal retail price and hand them off to delivery drivers who deliver to customers who know what they're getting into are actually loving this boom. It's extra business without the hassle of dealing directly with customers.
That's actually the driver of the problems: Restaurants have been so eager to get a piece of this booming business that some of them have given up their own margin to partner with delivery services looking to squeeze every dollar out of the restaurants. I suspect that era won't last long as restaurants do the math on what it's costing them.
Can you link to some stories? I didn't see any in my bubble.
They don't have a choice, with covid etc. Many restuarants would rather not have delivery, or delivery that didn't cost them 20% of gross.
It's a modernization of an already-proven business model. Chinese food and pizza was orderable by phone, and delivered for free or a small fee, 30 years ago.
So, the pizza restaurants proved that there's enough margin in a 25$ pizza to pay a minimum wage driver to drive it to your house. Delivery platforms come in and break this up: instead of the restaurant having someone on payroll to deliver orders, you just outsource that to another party (and pay them a fee, which is passed-through to the customer, and replaces money you would've paid the on-staff driver otherwise).
Why can't the food delivery companies provide delivery services for basically the same total cost as before, and subsist on extracting a small percentage of the value, which is freed up by the massive economy of scale that they can create by aggregating orders from several restaurants into a single pool?
Ditto for Uber... it's possible to operate a taxi company profitably, and has been for a hundred years. Shouldn't Uber have basically the same economics / cost per mile as a traditional taxi company, except be more efficient thanks to top-notch demand prediction that no local taxi company could ever build?
Different business model.
Drivers went back and forth to a single location, and had a fixed delivery radius. A driver who wasn't delivering could also be helping out at the restaurant.
Orders could be batched up, go and deliver multiple pizzas in a row.
Uber Eats is super inefficient, drivers aren't based at a restaurant, the delivery radius is much larger, density isn't taken into account, and orders aren't batched up from a single location.
Or to put it another way, I live in a major suburb of Seattle. All the years prior to Uber Eats, my only delivery options were Pizza from a handful of places. That is it, they had the scale, and I was in their delivery radius, those small # of restaurants had determined it was profitable to deliver to me.
Uber Eats comes along, and now restaurants that, honestly, are far enough away that I wouldn't consider driving to pick up food from them, are available to deliver to me.
Of course none of that is economically feasible. As stated above, Uber Eats is already less efficient than directly dispatching from a restaurant. In super dense areas (e.g. NYC, SF) maybe couriers can be kept so busy that bouncing from place to place all night long to pick up and drop off food makes sense, but in the suburb of a third tier city? No way is that a good business model.
The only innovation was exploiting regulatory sluggishness to nationalize the taxi monopoly instead of a series of regional (and heavily regulated, for this and other reasons) taxi companies. I'm also not sure that Uber has a significantly better idea of what demand is compared to the New York taxis who have been doing that business for ~100 years now. None of this is to defend the taxi companies either - Uber blew up in popularity for a reason, but they aren't profitable because their economic model doesn't work if they have to pay their workers fairly.
Food delivery seems more straightforward as a largely unnecessary middleman, but comes from the same broken, VC-subsidized model. They acquired customers using anti-competitive pricing models, then they lost customers as they started charging the full cost of service. In addition, the food delivery companies have less incentive to perform, because the restaurants take the blame when something goes wrong. None of that is efficient, or worth the tax being placed on them. I don't think very many restaurants are benefiting from an increase in business, and the companies aren't making money by lowering costs - they add huge fees to every order, so things cost 50-60% more than they would if you picked it up yourself.
Pizza has very cheap ingredients and has a consistent highly transportable form factor. A kebab (Schwarma) contains a lot of expensive meat and will fall apart in transit. Therefore pizza has long been available for home delivery and kebabs haven’t.
I suspect a lot of restaurants are willing to stay open using deliveries just to stay open, even if they get no profit of make a loss, just to stay open. At least they get to pay some of the rent, keep staff and hopefully keep a customer base until they can open properly again.
Hubert Horan made this claim in a (very long) series of articles starting in 2016. He based these claims on the history of the taxi business.
https://horanaviation.com/publications-uber
It agrees with my biases so I think he's right.
https://www.icaew.com/insights/viewpoints-on-the-news/archiv...
Owning taxi medallions was a pretty profitable business. Driving? Not so much.
Basically the medallions were often rented to middlemen who would also maintain cars and then rent them for the day (or night, a lot of these cabs were on the road 24/7). All paid upfront each night by the driver who then had 12 hours to try to break even and get a profit. No guaranteed minimum wage here.
Also note that plenty of delivery workers have, historically, been paid under-the-table. Can't get away with that if you're uber
They will spend big over the next couple of years to see which markets they become dominant in. Once the land has settled they will do deals with competitors to exit certain markets so each can extract margin from that geography.
I guess when you pay a part timer to deliver you’re not paying for the added overhead for a whole new division of highly paid engineers, marketing folks, advertising, expansion budget, underselling, etc.
I honestly think companies should have to be profitable / trending towards profitablity to IPO. Otherwise you get situations where investors pay people to use the service, and then go public saying "look how many users we have". No proven business model and not a single cent of profit.
Other comments mention that delivery "worked fine" before, which implies DoorDash can't argue that they were perfectly innovative against a "dumping" accusation.
Food creation & delivery: A hyper competitive, low margin, inventory rotting, regulated, logistical & insurance nightmare.
I got injured and disability decided to play hard ball.
Working whatever hours I could be functional and being able to stop and rest, or wait for medication side effects to ease off. These are the only thing that kept us off the street.
Eat operates similar to Uber Eats here while paying a higher wage than Uber Eats after they payed social security and provide a bike. Meanwhile Uber eats drivers have to pay social security and their vehicle from a lower wage. The social security is what keeps them off the street in the case they are out of work or disabled.
Why are some people defending companies that try to go around existing labor laws by claiming their employees are different contractors just because everything is done over an app?
Luckily our laws are relatively clear and the courts will probably keep on ruling against Uber.
I honestly can't tell if this is sarcasm.
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... but for some reason they keep doing it.
Also, I assume the consumer is very happy that he's getting a venture capital subsidized food delivery service.
https://ny.eater.com/2020/4/23/21231943/grubhub-nyc-phone-or...
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Now it’s time to legislate it away, just like many have done with Uber/Lyft.
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I bet they'd quit if they knew how miserable they were.
https://en.m.wikipedia.org/wiki/Wage_slavery
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Restaraunts don't hate it because they don't have to have staff hired to deliver, infact all the logistics of delivery are removed for them.
> The San Francisco-based company reported a fourth-quarter loss of $312 million
Excuse me while I shed a tear for the billion eur company over the riders who will get screwed for this ruling.
DoorDash's business management is not reflective of its customers, who are the riders and restaurants. Who, in this scenario are the losers.
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That's parasitic behavior. In the end society has to pay the long-term cost for their short-term gain.
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