Reading this article (which, to be clear, absolutely does support the claims I asked for a citation of [but see end of comment]—my comments below are about a different aspect of the issue), I was slightly taken aback by this bit:
These delivery companies charge restaurants exorbitant commissions off of every customer order, when the only real the value they bring is helping new customers find your restaurant for the first time. When a customer orders again and again, it’s because your staff was friendly, the food was delicious and they had a great experience. Why should you pay Grubhub a 30% commission every time a customer orders?
This does not even begin to match my own experience.
When I use GrubHub, I order almost exclusively from places I have physically been to.
By far the greatest value I get out of using GrubHub is convenience—and that’s huge. At least half of all the times when I’ve used the service, if I instead had to telephone the restaurant, I just… wouldn’t. Nine times out of ten, I would, quite literally, rather go hungry than place a phone order. (Of course, in reality, I’d simply eat leftovers, or cook something quickly, or go out for a bagel, etc. It would be an inferior meal, but I’d gladly pay that price, in order to avoid having to make an order over the phone.)
If I order again from the same restaurant, using GrubHub, it has exactly nothing to do with the staff being friendly. I don’t interact with their staff in that situation—that’s the point! The only thing I’m interested in is (a) food quality, (b) delivery speed, and (c) price.
Then there was this rather appalling bit:
Furthermore, third-party marketplaces like Grubhub and Postmates don’t give restaurants access to their own customers’ email addresses, which makes marketing directly to your own customers virtually impossible. There’s so much value in owning your own customer’s information, so that you can encourage them to order directly from you and not pay marketplace fees time and time again for the same customer.
This is an excellent reason to use a service like GrubHub. If a restaurant wants my email address so that they can market directly to me, they can go to hell. I would avoid patronizing a restaurant like that, on general principle.
… then again, maybe all of this is a moot point. After all, the linked article is, in fact, an advertisement in disguise—an advertisement for ChowNow, which seems to be a company that’s selling a competing product to GrubHub, etc. Can we trust that what they tell us about how online delivery services work, their pros and cons, etc.? We absolutely cannot! Even the true facts they tell us will be framed so as to make their offering look good. The author of this article started with their bottom line.
Does anyone have any citations that come from a neutral source?
I agree that delivery services provide significant value to the consumer for the reasons you describe. I suspect that in the situation where a specific class of restaurant (pizza places) already have their own delivery network in place (fixed costs already paid, domain-specific efficiencies already captured), a bare-bones online order system could easily beat out a full-service middleman like UberEats or Grubhub.
The thing I don’t understand is how the market got (and stays) this way. Slice successfully created a new (much lower margin) service for this. Why is everyone else putting up with 30% fees on something that’s trivial to replace? For example, why aren’t all of the businesses using ChowNow?
Presumably part of this is that some ordering systems get top billing in places like Google Maps, but given that Google Maps seems to show every order system under the sun, it can’t be *that* hard to get a new one in there.
Also that article seems to equivocate between services like UberEats that provide their own delivery drivers and are plausibly worth paying a large fee to and services like GrubHub that are just online order systems and could presumably be trivially replaced.
That’s 30% for delivery, not just taking the order. OP is a little unclear, but a phone call is only a substitute for ordering online, not for delivery.
In fact for some services it’s 30%: https://get.chownow.com/blog/restaurant-delivery-killing-restaurants
I only learned about this a few days ago, and (bizarrely) thought it was only UberEats that had such a high fee schedule.
Reading this article (which, to be clear, absolutely does support the claims I asked for a citation of [but see end of comment]—my comments below are about a different aspect of the issue), I was slightly taken aback by this bit:
This does not even begin to match my own experience.
When I use GrubHub, I order almost exclusively from places I have physically been to.
By far the greatest value I get out of using GrubHub is convenience—and that’s huge. At least half of all the times when I’ve used the service, if I instead had to telephone the restaurant, I just… wouldn’t. Nine times out of ten, I would, quite literally, rather go hungry than place a phone order. (Of course, in reality, I’d simply eat leftovers, or cook something quickly, or go out for a bagel, etc. It would be an inferior meal, but I’d gladly pay that price, in order to avoid having to make an order over the phone.)
If I order again from the same restaurant, using GrubHub, it has exactly nothing to do with the staff being friendly. I don’t interact with their staff in that situation—that’s the point! The only thing I’m interested in is (a) food quality, (b) delivery speed, and (c) price.
Then there was this rather appalling bit:
This is an excellent reason to use a service like GrubHub. If a restaurant wants my email address so that they can market directly to me, they can go to hell. I would avoid patronizing a restaurant like that, on general principle.
… then again, maybe all of this is a moot point. After all, the linked article is, in fact, an advertisement in disguise—an advertisement for ChowNow, which seems to be a company that’s selling a competing product to GrubHub, etc. Can we trust that what they tell us about how online delivery services work, their pros and cons, etc.? We absolutely cannot! Even the true facts they tell us will be framed so as to make their offering look good. The author of this article started with their bottom line.
Does anyone have any citations that come from a neutral source?
Here is a neutral (from the perspective of potential competition) source, that quotes industry insiders: https://nypost.com/2016/02/06/tech-giants-start-getting-serious-about-food-delivery/
I agree that delivery services provide significant value to the consumer for the reasons you describe. I suspect that in the situation where a specific class of restaurant (pizza places) already have their own delivery network in place (fixed costs already paid, domain-specific efficiencies already captured), a bare-bones online order system could easily beat out a full-service middleman like UberEats or Grubhub.
The thing I don’t understand is how the market got (and stays) this way. Slice successfully created a new (much lower margin) service for this. Why is everyone else putting up with 30% fees on something that’s trivial to replace? For example, why aren’t all of the businesses using ChowNow?
Presumably part of this is that some ordering systems get top billing in places like Google Maps, but given that Google Maps seems to show every order system under the sun, it can’t be *that* hard to get a new one in there.
Also that article seems to equivocate between services like UberEats that provide their own delivery drivers and are plausibly worth paying a large fee to and services like GrubHub that are just online order systems and could presumably be trivially replaced.
Grubhub also exclusively uses its own drivers. See my response to Said: https://www.lesswrong.com/posts/z9hqPS6NNdNYLYunT/minimize-use-of-standard-internet-food-delivery#XRNiX7GgZ7pF6HD5Y
Thanks!
That’s 30% for delivery, not just taking the order. OP is a little unclear, but a phone call is only a substitute for ordering online, not for delivery.