DoorDash and pizza arbitrage (2020)

https://www.readmargins.com/p/doordash-and-pizza-arbitrage

by jer0me • 4 years ago

191 230 4 years ago

jer0me• 4 years ago

Previous discussion: https://news.ycombinator.com/item?id=23216852

kache_• 4 years ago

I started boycotting food delivery services because the quality & service was just god awful. I found that if I drive, I actually don't spend that much time, and I get wayyyy better service.

petrikapu• 4 years ago

Premium is that you get to do other things while waiting for delivery

krisroadruck2• 4 years ago

You also pay way less. DoorDash and all the others don't just charge the fees and the tips and what not, they also inflate the food cost by a pretty hefty amount. A simple example:

McDonalds has a 2 for $2 deal on sausage mcmuffins & hashbrowns - been around forever. Let's say you and the wife want a McMuffin & a hashbrown each - you're in for $4 dollars and a bit of change for tax.

Here is the same meal via DoorDash:

McMuffins: $2.87ea Hash browns: $1.91ea

Subtotal: $9.56 (just below the 10 dollar minimum to wave the fee if you have DD+)

Delivery fee: $1.99 Service fee: $3.00 Tax: $0.91 Dasher Tip: $5 (good luck getting your order on time if you tip less than this)

Grand Total: $20.46 for $4 of food.

You can "optimize" by ordering an additional hash brown to get over the $10 hump so you can wave the delivery fee and reduce the service fee - which will instead cost you a total of $17.91 for $5 worth of food. Either way it's a shit deal. Not included here are the costs associated with 1 in every 4-5 orders being incorrect, or delivered to the wrong house and the hassle that adds to your life.

Obviously I went with low cost items to illustrate a point but often any food prices you see on DD are a good 50% markup vs going in person regardless of the restaurant before you even get into fees and tips.

shyn3• 4 years ago

UberEats in Canada inflates the regular menu price as well.

scarface_7414• 4 years ago

But guess how much money I can save by not having a car?

apalmer• 4 years ago

This to me is what killed delivery as a service. It doesn’t work even when they are charging what works out to be double the salary the restaurant pays its own delivery people. And it works out for no one, restaurant, driver, even the delivery as a service providers since they are all hemorrhaging money.

It’s a fake industry held up by VC money.

NavinF3• 4 years ago

Who would be dumb enough to pay $20.46 for that?

I looked at my most recent receipt for something more realistic: A $12 (in store) pizza was listed on doordash at $14.25 and I paid $17.30 in app with the Chase CSP discount. I guess not everyone has the card, but IMO it’s financially irresponsible not to.

Note that this restaurant is a 20 minute drive each way. Even if I worked minimum wage ($15/hr in CA) it would have cost me a lot more ($10 time + $5 gas!) to pick it up myself.

tomcam5• 4 years ago

Wherever you’re living, stay there! I haven’t seen prices like that at my local McDonald’s for years

scarface_7414• 4 years ago

I found:

1. When I am on business trips and getting reimbursed, I don't care. It's "other people's money"

2. The food delivery services have made it possible for us to have one car off an on since 2020 and not have to pay for two cars. In fact, we just sold our newer car back to the dealer and are sharing one car now saving us $900+ a month in car insurance, car payments, gas, maintenance, etc.

We don't plan to have a car for the next three years as we embark on our "digital nomad" existence.

If I can get away without ever having a car again, I will. It just doesn't make sense for me as someone who works remotely and has grown kids and really only needs to get out on the weekend to deal with paying for a car just to sit in the garage most of the time.

happyopossum• 4 years ago

$900+ a month in car insurance, car payments, gas, maintenance, etc.

There's a huge gap between 'no car' and $900/mo in car expenses. Buy a used car, not too old, and do basic maintenance (oil/filter, brakes, etc) yourself where you can. It's trivial to own and operate a car for well under $200-$300/mo - millions of people do it.

mr_cyborg• 4 years ago

What I've found is that normally, the consumer - restaurant contract is between two parties. I pay food, I get to eat. If there's a problem, I tell the restaurant, and they fix it. There's ample opportunity to find an amicable resolution to any issues that arise.

When you add DoorDash or any other third party delivery service into the equation, you add two more parties to this - the service itself, and the driver, who is usually an independent contractor.

What this has led to in my experience is that when something goes wrong, instead of me working it out with the restaurant, I am left frustrated, hungry, and hung out to dry by three parties - the restaurant, the platform, and the contractor.

If you read enough of the DoorDash subreddit[1], you realize that a tip is not a gratuity for good service, it's a bid for an independent contractor to take up your delivery. However, you have no ability to choose which Dasher takes it, and they are under no obligation to represent you as your agent or look out for your interests. So if they show up and the food is cold, not their problem, they get the tip because they accepted the bid.

When DoorDash had a major outage some time back, I had placed an order for about $70, generous tip (because I realize it's really a bid) and fees included. My order was prepared and ready for pick up just as the whole platform went down. It was impossible to cancel my order, because DoorDash was down, so I made alternate arrangements for dinner and figure I'll reach out for a refund when things are back up.

About three hours later, I get a notification that my order is out for delivery. The optimist in me hoped that the restaurant saw that some food sat out in the "danger zone" for several hours and remade it, or that the Dasher realized that the containers weren't the slightest bit warm, or something like that, but nope. I got dropped off a lot of food that was beyond safe to eat, not even worth saving to have as leftovers for a later meal, and now I have to dispose of all of it.

When I finally got through to support later that night, I asked for a refund, and they said they could only give me a credit for the meal, not the tip. I said I want the whole order refunded to my original payment, they said well, here's a credit and it will convert over to that later. One week and several phone calls later, they stopped telling me it was "too late to get a refund" and I got my refund and uninstalled the app. I don't need that negative energy in my life.

1: https://www.reddit.com/r/doordash/

dragonwriter• 4 years ago

What this has led to in my experience is that when something goes wrong, instead of me working it out with the restaurant, I am left frustrated, hungry, and hung out to dry by three parties - the restaurant, the platform, and the contractor.

My experience with delivery services (mostly, but not exclusively, Postmates) is that they are usually very good at giving refunds (your experience clearly sucked, though!), which is nice (but I’m guessing not for the drivers, who may or may not be at fault), but that restaurants with their own delivery services have been more willing to send out the missing food on an expedited basis, which is often a better resolution (if I didn’t want the food more than the money, I wouldn’t have ordered in the first place.)

I’ve also noticed that wrong or missing food items are more common with third-party delivery services.

scarface_7414• 4 years ago

This is the same reason I never use "portals" to book travel and airlines. It's even worse because I also don't get any loyalty points.

Of course this is different with my work travel portal run by Concur. I get to keep the points/miles and "non refundable" tickets are refundable when the airlines are trying to stay in the good graces of a company that books...a lot.. of money in travel.

tomjakubowski• 4 years ago

I avoid them too. Delivery apps:

- Give hilariously bad estimates for delivery time. Dan Luu tracked this. https://twitter.com/danluu/status/1469755162004582400?s=20&t...

- Cause huge pileups for restaurant workers, who in pre-delivery app times were shielded by the presence of "a line", which puts a natural limit on order throughput (people drop out of line or don't enter when it's too long)

- Generally aren't good at giving prompt notifications, which sucks for both the driver and the order maker

I'm starting to believe two sided marketplaces tend to be worse for everyone except for the intermediary

kmeisthax• 4 years ago

People who do not understand the role of balking and price information act at their own peril. This economic backpressure is something that executives hate - it keeps line from going up - but people who actually do the work love, because it keeps workloads manageable.

If you ever wanted a feature-length explanation of queueing theory and how ignoring it makes everything worse, well... here you go: https://www.youtube.com/watch?v=9yjZpBq1XBE . The context is Disney parks and Fastpass, but the lessons are applicable to basically any business. Everything is a queue.

kelnos8• 4 years ago

Give hilariously bad estimates for delivery time.

Huh, I wonder how universal this is. I agree with this take for Lyft and Uber (for rides), but for Uber Eats, at least, it's been incredibly rare for it to take longer than the estimate, and in the majority of cases the food arrives 5-10 minutes faster than the estimate suggests.

Nextgrid11• 4 years ago

Give hilariously bad estimates for delivery time.

They lie and try to blame restaurants for slowness too. I've found that most of them have a specific timer for the all the stages before "driver waiting at the restaurant". If they can't allocate a driver or he doesn't arrive there by that time, the status will switch to "driver waiting at the restaurant" even if that's not yet the case, putting the blame on the restaurant.

I had suspicions about most of them doing it but what I can say for sure is that I caught Uber Eats doing this by calling the restaurant directly and confirming that there was absolutely nobody there and the food has been ready for 40 minutes.

mywittyname• 4 years ago

DD drivers definitely take their frustration out on both restaurants and DD customers.

I've seen a lot of drama from DD drivers at restaurants, one thing that sticks in my mine was during a midnight run to White Castle. The place was packed and the workers kept asking about this huge bag of food for DD. The bag was easily 2 foot tall and completely packed full of food. The entire time I'm waiting on my food, people keep asking "any word on this door dash?"

Then some lady comes in screaming, "f- y'all, I've been waiting 20 f- minutes for a f- order and y'all slow mfers won't do shit!" The manager tells her the order is here and has been ready for 15 minutes. She goes up to the counter, takes the food, then throws the drink at the manager, screaming "f- you", throws the bag of food back at them yelling, "f- door dash" and "f- this $4 tip!"

So, not only did the person not get their food (and probably didn't find out for a long time afterwards), the restaurant had to cover the costs of all of it, and the delivery driver was out like her time and gas.

fundad• 4 years ago

She was out her mind if she was waiting but not checking inside and then abused people and didn't realize most people are bad tippers.

Dylan168074• 4 years ago

I sure hope the restaurant didn't have to cover the cost.

If they did, they need to sign a less abusive deal with DD.

harles• 4 years ago

Interestingly, I found tipping less will get you way better service and quicker food. I did some experiments after I found food always comes quicker when my wife orders - turns out she doesn’t overtip like I do. I tried a bunch more times and found this to be true, at least with Uber Eats.

What I’m guessing happens is that if you tip high, less scrupulous but tech savvy drivers will snag the delivery. These folks have multiple accounts and work for multiple services at once, so your order is way down on their list. It frequently comes with location spoofing, where the driver is supposedly waiting at the restaurant for nearly an hour, and once they’re actually on their way, they’ll teleport miles away (having unlocked their location).

When I tip less, I don’t see this behavior. It’s probably folks not gaming the system that will take whatever delivery pops up.

kelnos8• 4 years ago

It's bonkers to me that the drivers can see the tip before they accept the delivery. Hell, weird that they can see it before the delivery is completed, even.

Tips are supposed to be for good service! I know they've been perverted into more than that by a combination of unscrupulous business owners and the US's broken tax code, but... c'mon. These services shouldn't even ask for a tip until the delivery is complete, let alone show the amount to the driver before they accept the job.

(I'm fine with them asking for the tip as a part of the initial checkout, though, since I imagine many people won't remember to revisit the app post-delivery within the tipping window, even if they did want to leave a tip, and that alone would unfairly take money out of drivers' pockets. But the tip should be adjustable for some amount of time after the delivery completes, and the driver shouldn't see it until that time expires. Amazon's grocery delivery has this right.)

If drivers can see the tip before accepting the job, then it's not a tip: it's a competitive bid that the customer makes for delivery drivers... though if your theory is correct, it's already gamed into uselessness.

effingwewt• 4 years ago

This is 100‰ false.

Uber Eats drivers aren't shown any of the tip beforehand, in fact they will never know whether or not yoy tipped until one hour after delivery has been completed.

Doordash on the other hand will hide any tips over $4 and have also gone back to stealing them.

I used to drive for both and had to stop when UE no one was tipping meaning jobs paid only $2.50-3.50 for the whole job, meaning with Cali gas prices even before the pandemic you were losing money on 90% of jobs.

Went to DD only for a while after that until I caught them lying and underpaying on mileage and keeping tips again.

So, to reiterate, UE doesn't show drivers your tip until one hour after drop off. DD hides all tips over $4 until after drop off,but will keep tips over $4 probably 80% of the time.

I had to start texting customers at drop off to let them know what the job had paid and what the tip was and to please let me know if there were any discrepancies.

It got to the point where more often than not DD was keeping part or all of the tip over $4. Ie customer tipped 10, I received 5. Wal-Mart is known to keep 100% of tips through DD, as well as Mountain Mike's Pizza and a few others.

The subreddits will show customers things from the driver's point of view.

pyrolistical• 4 years ago

Seems like all restaurants should charge an extra fee to delivery services they didn’t sign up for. If the policy for the driver is just to pay whatever then there is no crime here.

Restaurants use this extra fee to compensate for the bad reviews.

If the policy changes for the driver then a customer is screwed over with a canceled order, guess who gets the blame? The delivery service!

shagie6• 4 years ago

Name mismatch fee.

For carry out orders, there is an additional $5 surcharge added. This is in place to cover issues arising from stolen orders and poor 3rd party delivery experiences. Display your ID matching the name on the order to receive a refund of the fee.

na852• 4 years ago

So I gotta pay extra if my wife orders Thai but I'm the one that picks it up?

chrisseaton3• 4 years ago

Showing ID to get food sounds a bit dystopian.

seoaeu3• 4 years ago

Wouldn’t the delivery service just use the driver’s name when placing the order?

karaterobot• 4 years ago

I liked this article, and I like the cleverness of the scheme. But I wish it had offered more of an explanation about the economics of delivery. He said his friend was just figuring it out: two years later, can he offer a reason for why Doordash can be losing so much money, other than a network of pizza arbitrageurs?

One thing that bothered me a little was the "fuck Doordash" mentality as an excuse for something which may not legally be stealing, but is ethically equivalent to it. I think "fuck X, they deserve it" is an excuse a lot of people use, but obviously it's still wrong even if you don't like your victim, or if you can get away with it.

scarface_7414• 4 years ago

DoorDash is ruining the reputation of a legitimate business. The correct approach is "fuck DoorDash".

Delivery economics makes sense when the restaurant is doing it because the delivery drivers are also employees helping to make the order. They are getting paid for each hour they work and the stores have a set delivery area and a base.

AlbertCory• 4 years ago

I agree that in general, people use "fuck X, they deserve it" way too much and way inappropriately.

I think, though, that when a company's whole business is dishonest and based on screwing all their stakeholders (restaurant, driver, customer) and loses money despite all that, then one may look at it differently. Your parish priest or rabbi might not, but I might.

mcculley• 4 years ago

It is the duty of every capitalist to exploit market inefficiencies once they are discovered. How else would the VC funds learn?

bee_rider5• 4 years ago

"Here at meta-dasher, we don't actually exploit market inefficiencies -- we offer an app that connects individuals to local arbitrage opportunities, and allows them to correct the market."

gspencley• 4 years ago

I'm not sure I see the ethics violation. DoorDash was paying them full price and charging their customers less, which meant DoorDash was paying out of pocket to under-cut the restaurant's prices.

If anything DoorDash is the unethical actor because it can cost the restaurant future business. Imagine you're a customer and you're faced with choosing to buy directly from the restaurant (for $24 a pizza) or order through DoorDash (for $16 a pizza). You're going to choose DoorDash. You are now a DoorDash customer, not a direct customer of the restaurant. Now imagine the restaurant has it's own in-house delivery service. DoorDash is undercutting the restaurant's prices to put the restaurant's drivers out of work by heavily incentivizing customers to purchase through DoorDash, all without even consulting the restaurant!

Then factor in that people might mistake bad service from DoorDash as bad service by the restaurant, resulting in negative Yelp reviews and lost business and things kind of start to border on fraud a little bit.

For the restaurant to realize that they can game DoorDash back to try and recoup some of the damage that DoorDash is causing them is not unethical in my opinion. It's the restaurant's business that DoorDash is messing with and the restaurant has every right to recoup every penny of damage caused... and DoorDash has contractually agreed to it by agreeing to pay what the restaurant is asking literally everyone to pay.

shagie6• 4 years ago

Imagine you're a customer and you're faced with choosing to buy directly from the restaurant (for $24 a pizza) or order through DoorDash (for $16 a pizza).

It's worse than that. The pizza company appears on the web for delivery with a $16 pizza. They come in to the pizza place and get charged $24 and that's a customer negative experience. The pizza company adds delivery to their service and chases off Door Dash, and now it looks like they've raised prices by $8 (and meanwhile other pizza places in the area that are getting undercut with $16 pizzas from door dash means that the pizza company isn't getting business to be able to support the delivery drivers).

DSMan195276• 4 years ago

I'm not sure I see the ethics violation. DoorDash was paying them full price and charging their customers less, which meant DoorDash was paying out of pocket to under-cut the restaurant's prices.

I'm on the fence on this, I completely agree with your analysis but I would note that they originally thought DoorDash just scraped their website incorrectly for the prices. Even with the update at the end it's not exactly clear to me what happened to cause the lower price (I would assume 'no fees' just means the price would be the same as at the restaurant, not lower). That said, whether it's unethical to abuse a mistake made by such a company is up to you, I'm certainly not losing any sleep over it :D

game-of-throws• 4 years ago

I don't think there's anything ethically wrong with this. It's the textbook response to predatory pricing. Replace "bromine" with "pizza": https://fee.org/articles/herbert-dow-and-predatory-pricing/

TheCoelacanth• 4 years ago

The unethical part is Doordash's predatory pricing.

There's an aphorism "You can't cheat an honest man". Probably not strictly true, but it applies in this case.

Anyone who takes advantage of this is doing the world a favor by punishing bad actors.

bitpow• 4 years ago

can he offer a reason for why Doordash can be losing so much money

Just speculation, but Doordash is obviously loosing some money due to poorly implemented "tests" like these, and who knows what other experiments-at-a-loss they are running.

Maybe if they toned down their "web scraping auto delivery option" program, and who knows what else, they could show a profit (and maybe they know this). But why bother if you can get away with it, and something truly innovative and profitable may come out of it.

bee_rider5• 4 years ago

I don't think it is unethical, to accept the deal that Doordash for some reason decided to offer. I mean you'd have to read the fine print I guess since you have a relationship with Doordash as the customer using their app, which probably has some contract.

It may be possibly ethically questionable to intentionally post a menu that Doordash's automated system will misinterpret (which would clearly be possible in this case, since they figured out that Doordash was charging the plain slice price for the custom one, so they could just drop the plain slice price to $1). I mean, again they didn't ask Doordash to start this relationship and they don't have any contract, so... I guess their obligation would be to honor the $1 plain slice for anyone who wants it. Maybe make it a $1 no-cheese, no-sauce slice.

Another option would be to spread word about the community that Doordash offers a $8 discount on your pizza. Like, if you tell the person "hey, order on Doordash to this address, they'll give you a $8 discount and we just have to have a dude come hand the pizza off from me to you" right before they get to the register... seems pretty ethically clean to me, you are just informing people of an offer you heard about, you have no contract or relationship with Doordash, right?

Nextgrid11• 4 years ago

But I wish it had offered more of an explanation about the economics of delivery

I believe delivery is a viable business model, but that isn't what these companies are offering. These companies are trying to monopolize access to restaurants with some "growth & engagement" sprinkled on top.

A simple delivery service where you pay X amount of money to get something from point A to point B would be viable with a network of hyperlocal, real-time-geolocated couriers and modern routing software. It will however not give you a monopoly and the returns VCs hope for (however, in the end the current system doesn't either as VCs spend more money trying to undercut each other's attempts at monpolizing the vertical).

ejb999• 4 years ago

this is pure genius.

dang• 4 years ago

Ex-Grubhub exec calls delivery apps “payday lenders for restaurants and drivers” - https://news.ycombinator.com/item?id=23278157 - May 2020 (8 comments)

Doordash and Pizza Arbitrage - https://news.ycombinator.com/item?id=23216852 - May 2020 (514 comments)

rascul2• 4 years ago

I'm about six miles from the restaurants and neither DoorDash nor any other delivery service or in house delivery will deliver to me, except Walmart. I wouldn't mind getting 1/3 off my pizza price as it would cover the delivery fee.

Victerius• 4 years ago

neither DoorDash nor any other delivery service or in house delivery will deliver to me

Why?

milkytron• 4 years ago

Maybe outside the delivery radius, or not enough drivers to have one cover that distance when they could perform two deliveries closer in the same time.

Not certain, but maybe that's why.

MerelyMortal• 4 years ago

If your address is blacklisted because of a previous owner, I wonder if you could try reaching out to customer service, or appending something like a fake apartment number.

atlasunshrugged• 4 years ago

I think it's probably because of the distance right? At least to me 6 miles is pretty far out for a delivery

rascul2• 4 years ago

You may be on to something. I might try appending a fake apartment number in the future.

simonebrunozzi• 4 years ago

Was this a bit shady? Maybe, but fuck Doordash. Note: I did confirm with my friend that he was okay with me writing this, and we both agreed, fuck Doordash.

Loved it.

gnicholas7• 4 years ago

I was recently offered an affiliate link for a company that charges $20/mo for its service. They offered me $25 per sign up, and the end-user gets 50% off using my affiliate link.

I am not an unethical person, but the thought of arbitrage did cross my mind...

dfee2• 4 years ago

I’m not clear where ethics fits in here. Was that expressly limited? They’re offering you an affiliate link to drive conversions - they’ve externalized sales to you - what (more) permission do you need from them?

seoaeu3• 4 years ago

They’re paying you to get real people to sign up with the intention of using the service. If you sign up a bunch of sock puppet accounts, or pay a bunch of people to sign up for a month and then cancel, then you aren’t holding up your part of the (perhaps unwritten) deal

bee_rider5• 4 years ago

This seems pretty different -- you have a relationship with that company. Probably there's like a contract, right? They must have included something in the fine print about not taking advantage of the service yourself (unless they are, like, real dumb).

Restaurants have no obligations to random people on the internet who decide to re-sell their food without permission.

kelnos8• 4 years ago

Not the same, but this reminds me of years and years ago when Google was giving away free AdWords credit. I think I got $75, and spent it on ads using my affiliate link for another service that offered credit for affiliate signups. I very easily maxed out my credit allowance for that. Not long after, the company got wind of what was going on and added something to their affiliate terms to disallow that.

It's funny, because there was no deception involved: the ad text I used was something like "Sign up for [service] and get $[discount] off", which was true, as the affiliate link offered a discount for the person signing up (in addition to the credit I would get as the affiliate). The company in the end just didn't like that I spent $75 of someone else's money to acquire customers for them.

mod• 4 years ago

Why wouldn't they like that?

bombcar8• 4 years ago

There was a lot of this for awhile with various affiliate links.

travisjungroth• 4 years ago

When I worked at Coinbase, a Data Scientist did that to some huge volume. Company didn't care. Instead of hiring a bunch of people to manage ads, it was someone doing it in off-hours for $10 per signup.

weird-eye-issue• 4 years ago

That's just fraud not arbitrage. If you include illegal activities you could "arbitrage" almost anything

gnicholas7• 4 years ago

I created a DD account but never placed an order. Quite some time later, they emailed to try to convince me to place my first order — with a $35-off coupon (min $30 order).

I ordered $41 of food and was stuck with a $22 bill (including a $5 tip I added). Delivery was "free" for this order.

This taught me a valuable lesson: if DD sends you a coupon for less than $20, it is worth zero. If it's between $20 and $35, it is worth about 10 bucks (especially when you consider how they inflate prices for dishes).

rvnx2• 4 years ago

I don't understand, isn't 41-35=6 USD ?

newfonewhodis• 4 years ago

I'm guessing the coupon only applied to the value of the order items and not to taxes + fees (lol) + tips.

gnicholas7• 4 years ago

There were a bunch of fees that were added on top. I added a $5 tip, but was expecting the total would be around $12.

lkbm• 4 years ago

If I'm understanding correctly, it's worth zero iff you attribute $0 of value to the delivery.

DD's value prop is that they deliver. If you don't want that, then yes it's probably not for you.

BoorishBears7• 4 years ago

With Doordash and co the fees over the normal cost of food are so high that even vs traditional delivery fees you're overpaying.

Off the top of my head, yesterday I passed a billboard for McDonalds advertising two large sandwiches for $6.

Lets open Uber Eats and try ordering two Big Macs... $13.68

So they don't carry the deals. Not looking good already.

Went to checkout...

$1.49 delivery fee for a place 6 minutes away. Fair enough.

$3.27 service fee. The explanation text is implying the cost of servicing my order (orchestration essentially) is more than double the cost of delivery.

$2.00 CA Driver Benefits fee. Delivery drivers were always employees of independent stores, but Uber took such offense to being forced to provide healthcare that they itemize the cost.

Grand total comes out to $20 before tax. For a $6 meal in store.

And in case you were thinking "Well Uber isn't DoorDash" this whole time... DoorDash comes out to $22 before tax.

Has a "traditional" delivery place ever charged you a 60% delivery fee?

It's so absurd I even tried increasing the order size... the ratio of price of fees to price of food actually went up!

And all this is before tips!

gnicholas7• 4 years ago

I do attribute some value to the delivery. But this was a promo code plus free delivery. A future promo code that doesn't have free delivery would result in even higher fees. So if it's a code for less than $20 I'd expect that entire amount would be eaten up by fees and the increased cost of menu items. Delivery would be extra.

chrisacky• 4 years ago

I had identical experience but with Uber Eats. I was given 18 GBP coupon off any orders over 20 GBP. So I ended up buying a breakfast delivery from McDonalds for the family, I added the food and the coupon to the order... The first time I tried the payment my card failed. No idea why... it just said Authorization Failed. Second time round, it went through. Driver came, and I also left a tip.

About a week later I was doing my household budget and looked at the charge on my account, and it excluded the discount. Once you added in delivery, service charge and the tip, I ended up paying 30%+ more for the food (and didn't have my coupon).

I think this was a genuine dark pattern that they use, although I have no interest in putting it to the test. After a failed payment, they auto remove any applied coupons to your transaction....

This was my first and guess-what, last order.

zeroonetwothree• 4 years ago

Paying 30% is worth it to not have to go and get the food for many people.

onionisafruit2• 4 years ago

If you get an Uber credit in the future, you can use it to buy takeout instead of delivery. Of course there is no delivery fee or tip involved for takeout. My credit card gives me a monthly $15 uber credit, and I always use it to get takeout bun from a restaurant down the street.

AmVess• 4 years ago

Aside from fees, there's tax, tip, and DD charges more per menu item than the restaurant does. Markup is about $2 for fast food item and $5 for more expensive places. One place I like to buy food from, our order costs $35 for pick up. DD cost is almost $52 not including tip.

I have no idea how DD continues to lose money with this business model.

lotsofpulp11• 4 years ago

I have no idea how DD continues to lose money with this business model.

Labor in the US is too expensive for sufficient number of people in the US to afford it that would allow a business like DoorDash to earn a profit.

princevegeta89• 4 years ago

DD has to pay drivers, stick to regulations, fight lawsuits and pay their employees and pay for the usual marketing and growth as well. Based on the slim profits they make, it's no wonder they still burn VC cash.

technothrasher2• 4 years ago

I have no idea how DD continues to lose money with this business model.

Many years ago when I was living in Rochester, NY as a student there was a service called “Rochester Delivers” which was essentially DoorDash without internet. They printed a big book compiling all the restaurant menus and you ordered over the phone. The price adder was always too much for a poor student like me, but I figured they probably were raking it in from the slightly richer folks.

Fast forward many years, and I mention to one of my good friends this pre-DoorDash service. Turns out he was actually the one running it. I knew he’d lived in Rochester around the same time I had, but hadn’t known him back then and had no idea. He said the entire thing was a disaster, impossible to make money, and it basically drained all his savings trying to keep it afloat.

Spooky23• 4 years ago

Restaurants have no margin to begin with. In the before times, delivery guys made bank on tips and the food sold at retail.

Now you have big VC companies bleeding money while stealing the tips and dumping more costs on the consumer, which further hurts the restaurant. It’s a gross business.

porknubbins4• 4 years ago

Navigating the real world is inefficient and slow. I’m amazed any delivery business except maybe pizza makes sense. Without lucky closely spaces orders you are paying an entire individual worker’s salary and gas for what can easily be a 20-30 min round trip.

rajup• 4 years ago

Use the coupon and pickup the food yourself. Avoids the tip and delivery fee.

gnicholas7• 4 years ago

I considered it. But most of the fees didn’t disappear when I selected that option. I’d have saved the $5 tip, but the hidden fees would have remained. I figured if I’m paying for delivery related fees either way, I might as well get it delivered.

spaetzleesser2• 4 years ago

Same here. They sent me a 50% off coupon a while ago. Once I had completed an order the price with all fees was basically still double the in-restaurant price despite 50% off.

InstaCart’s pricing seems way more reasonable.

gnicholas7• 4 years ago

My friend did the math and found that her Costco orders were 40% more expensive with IC. It does save her the time of going to the store, which is not trivial (especially with two kids), but 40% is one hell of a markup!

irrational• 4 years ago

I won a $100 gift card for grubhub. Awesome! That is about 4 meals for my wife and I based on what we usually order. Uh... after all the fees and everything it came out to about 1.5 meals. Even if I include my time and gas to drive and pick up my order myself, I can't see why anyone would ever spend their own money to use grubhub unless you don't have transportation. In that case, it seems to just be a scam to take money from poor people.

porknubbins4• 4 years ago

If they were upfront about high delivery fees that would be one thing, but what is infuriating is the way prices differ across the reataurant website and various apps that try to sneak in an extra $2-3 per item. I used to use Seamless regularly but have found Uber to be among the slimiest kind of algorithmic price discriminators.

notpushkin• 4 years ago

What's the fuss with SoftBank?

system2• 4 years ago

Did I just read someone scamming a corporate in fine detail?

kelnos8• 4 years ago

I remember reading this around when it was first posted, and I cringed at that too. I saw no problem with their first test: providing 10 perfectly-good pizzas and pocketing the $10 arbitrage; I think DoorDash would be hard-pressed to argue about that. But just putting dough in the boxes for the later purchases felt like something that DD could sue for, and possibly win.

I think it's hilarious, and DD got what they deserved in this case, but it seemed legally risky to write about something like that.

batiudrami• 4 years ago

If the restaurant had signed up for this service then I would feel ethically weird about it; but actually Doordash is trading on the restaurant’s brand without permission so I think it’s ethically fine. My biggest concern is waste of food!

Nextgrid11• 4 years ago

Startups and "corporates" never feel bad about breaking the law (only pretending to do so when it's good for PR), why should this guy? Not to mention, I'm not even sure any law was actually broken here.

I too wish we lived in a society where illegal and unethical behavior was called out and shunned regardless of who's doing it, but let's drop the double-standards since we're not living in such a society and things don't look like they're even heading in that direction.

Overtonwindow• 4 years ago

With regard to the Chinese restaurants, some of those are family operations, and so their delivery charges are much less because the person is not really earning a salary. Perhaps they only work for tips.

evan_• 4 years ago

If DoorDash literally just gives their runners a credit card and pays whatever the restaurant charges, can restaurants just charge them like $1000 for a pizza? There must be a limit but I wonder what it is...

rgj• 4 years ago

You should have set up two pizza restaurants and just sell the same set of pizzas back and forth between them. That would have removed the cost of making the pizzas from the equation entirely.

vzqx• 4 years ago

No need to use two restaurants. Just order 1000 pizzas to your own address. When the delivery person shows up, hand one pizza back and forth between you 1000 times (or until the delivery person gets bored and leaves).

Question - at what point does "abuse of promotional pricing" get classified as fraud?

kuharich• 4 years ago

Past comments: https://news.ycombinator.com/item?id=23216852, https://news.ycombinator.com/item?id=23278157

dwighttk• 4 years ago

I saw a few ads towards the beginning of the pandemic for Dominoes doing delivery from local non-Dominoes restaurants... what happened with that? Did it not work out or are they still doing it?

0xbadcafebee2• 4 years ago

Capitalism, n. A machine for CEOs to transform money from VCs into money for luxury yacht builders.

Maybe we should just cut out the middle man and stop creating businesses. Have a CEO pitch an idea, the VC can hand them a check, they can buy a yacht, and the VC can keep the rest of the money that would have been wasted on jobs that created no value, avoiding the "externalities" of destroying small pizza shops. Or better yet, give that non-yacht money straight to the government to pay for health care, housing, job training, infrastructure, the homeless, veterans, education, social security, regulatory enforcement, thus creating an environment where American citizens can create more real businesses, more people are eligible for good jobs, and the overall quality of life skyrockets.

While I'm dreaming I'd also like a unicorn and a garden robot that zaps snails.

treme2• 4 years ago

or a machine that lifted humans out of zero sum game of war & conquer which brought about the biggest increase in quality of life to biggest proportion of people in the world since dawn of time.

sli• 4 years ago

It is frankly just delusional to act like there aren't solvable problems with the capitalist mode of production and the problems it's caused in, esp., the past two decades. Current wars enrich already massive corporations at the expense of what they see as disposable lives on all sides of those wars. It's very easy to claim people have been lifted out of poverty when we define the poverty line as an absurdly low number.

Just looking at the US, the poverty line is $13,590/yr for a single person, and $4,720 for each additional person. You cannot afford to live anywhere on that income. The global poverty line is $1.90/day, not even $700/yr. That is still poverty no matter how much we pretend it's not, as you cannot just define poverty away, ignore the actual material conditions that these income levels experience, and call it success. That's simply lying on paper and has predictably produced this very persistent and dubious claim.

afterburner• 4 years ago

Top comment on that post is great, I'll just quote it in its entirety:

Collin

May 19, 2020

Liked by Can Duruk

I was the former Head of Innovation at Grubhub, so I have seen the truth behind many of these claims first hand. Sadly, I invented a lot of the food delivery technologies that are now being used for evil. There were so many great points made here, and I’m glad people are finally paying attention to this. I will try to only add to a few.

COVID-19 is exposing the fact that delivery platforms are not actually in the business of delivery. They are in the business of finance. In many ways, they are like payday lenders for restaurants and drivers. They give you the sensation of cash-flow, but at the expense of your long term future and financial stability. Once you “take out this loan” you will never pay it back and it will ultimately kill your business.

In the case of restaurants, these platforms slowly siphon off your customers and then charge you to have access to them. They are simultaneously selling these same customers to your competitor across the street, but, don’t worry, they are also selling their customers to you.

For drivers, they are banking on a workforce that is willing to mortgage their assets, like cars and time, well below market value, in exchange for money now. They know that most delivery drivers are simply not doing the math on the actual cost of providing delivery (time, gas, car maintenance, payroll taxes...etc). If they did, drivers would realize that they are actually the ones subsidizing the cost of delivery.

Delivery platforms are “hyper-growth” businesses that are trying to grow into a no-growth industry. Food consumption really only grows at the rate of population growth, so if you want to grow faster than that, you have to take market share from someone else. Ideally, you take it from someone weaker, who has less information. In this industry, the delivery platforms have found unsuspecting victims in restaurants and drivers.

The competition for customers has not gone away. It has simply moved online. Many restaurants have been too slow, or unwilling to adapt. Delivery platforms and other restaurants are taking advantage of this to gobble up market share. Restaurants need to realize that they are now running e-commerce businesses and they need to act accordingly. Being proficient on Google, Yelp, Facebook and the dozens of other platforms is no longer optional, it is essential.

My team is trying to do everything we can to help restaurants transition, but restaurants have to be willing to change. You can learn more about what we are doing to fight back at zero.eatgeek.com. Stay hungry.

civilized• 4 years ago

I call the local pizza place a couple times a month. I place the exact same order I always do. They ask for my name and phone number each time, but the whole call still only takes about a minute. Who needs an app.

ParetoOptimal• 4 years ago

People who don't want to talk on the phone.

beambot• 4 years ago

The holy grail of food delivery: decent food, delivered reasonably quickly, for the same (or lower) net price as in-person at a sit-down restaurant, without predatory gig economies.

There seem to be one or two key inflections that make this feasible. Examples: (a) autonomous vehicles nuking delivery costs; and/or (b) ghost kitchens to eliminate restaurant overhead.

In light of that... these companies are really just predicting where the ball will be when (a) and/or (b) are commoditized: Capturing market share & distribution now with marginal economics while waiting for one or two key inflections.

DoorDash and pizza arbitrage (2020)

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