What I find interesting about the food delivery business is that there's clearly a market for this but nobody's happy.
- Restaurants (rightly) complain that the drivers provide a poor service. For example, pizza delivered cold because the drivers have no heat bags. I've even heard of a pizza box mounted vertically on a delivery bicycle.
- Customers are unhappy because food can be delivered cold through no fault of the restaurant. To save money, multiple deliveries can be scheduled at once. You can see this as your assigned driver drives passed the restaurant when your food is ready, clearly they're on another delivery. They come back 20 minutes later and turn what should be a 10-15 minute delivery (from the time the order is ready) to a 45 minute disaster;
- And drivers don't seem happy, complaining about low pay.
Yet... people want food delivered. Is this really just a case of people not willing to pay what the service truly costs? If so, no consolidation will help. I imagine fairly small delivery areas is really the only thing that can be economical.
I foresee a future where the entirety of listings on food delivery apps will be ghost restaurants - those whose menu and processes are optimized for delivery.
Many high street brick-and-mortar restaurants will shut, but those that remain will likely make being "not available on any food delivery app" a unique selling proposition.
Kalanick's next startup is basically this concept: CloudKitchens. At this point, it might be more of a risky real estate play than anything (to get these ghost kitchens set up in major cities with many hungry would-be customers).
Centralizing the restaurants seems key to profitability. The current format is too costly.
You're suggesting that the act of eating out, or walking for takeout is going to stop for a sufficient percentage of the population that regular restaurants are going to disappear?
That people are going to pay a premium to have their food always delivered and that people actually want to be in their homes / offices all the time, rather than get out of their current place to go and do something?
Well as an extreme example: I can picture myself subsisting on Soylent every day, ordering from a ghost restaurant every other day, then visiting a restaurant for social fuel once a week.
I don't have a kitchen.
With the time saved I reckon people will find something else to do outside instead of eating.
That's not a good example to bring up, especially if you take into account the recent layoffs and their current operations.
In Estonia they still seem to be doing a sort of a limited trial where they only deliver to a small area of one part of the town. The robots are too slow and get ignored by traffic all the time since their programming is very conservative. They try to avoid accidents but at the cost of delivery times.
> Is this really just a case of people not willing to pay what the service truly costs?
I think so. If a driver spends an hour on delivery, they have to make $15 in NYC or ~$8 elsewhere (USA) to be worth their time. For a single person, that can be the price of the whole meal again.
I've run into this when seeing the fees reflected on a final checkout page, and decided to cook for myself instead.
A single person isn’t really an efficient use for delivery. When I’m ordering for four people it’s $80+ so paying $20 for delivery is totally fine. And most places I order from are <10min drive.
Maybe it's due to my childhood, but even as someone who could easily afford a $25+ meal, it would hurt me emotionally to pay that much for delivery. Very few restaurants even offer a meal worth $25 in the first place (compared to what I can make at home), even in SF/NYC/London, and on top of that you don't know how long the driver is going to take, what kind of measures they are taking to keep it warm, and/or if they tamper with the food.
I'm guessing you don't know how much your time is worth. Suppose you wanted a nice meal for a friend you spontaneously invited over. You’ll go to the grocery store, cook, clean. Not only have you spent say two or more hours for a meal. If you paid yourself minimum wage, you wouldn't break even no matter how cheap the ingredients.
Frugality is a useful mentality, but it’s important to account for the economic value of time, energy, focus, and happiness. If you try billing yourself for your chores at your normal wage, your behavior will change.
We always have lots of food in the house as we cook on an ongoing basis, someone or even a few people coming over won’t make us go to the grocery store.
And my family prefers home cooked food not because of frugality, but because it’s much healthier and tastier. We can usually make a convoluted meal with at most 3 man hours (split amongst 2 or 3 people), including cleanup. But it will taste thousands of time better, and I will be able to trust the ingredients and quality more.
I’ve actually calculated that we spend more on ingredients and labor than going out to eat, but no normal takeout restaurant offers what we can make at home (it’s not affordable for most people to buy that quality food when you account for overhead and profit margins).
Although I do understand the convenience of ordering out if you live in a cramped apartment in downtown SF/NYC/other big city. But once you have the facility to cook, the marginal cost is tiny.
- Restaurants (rightly) complain that the drivers provide a poor service. For example, pizza delivered cold because the drivers have no heat bags. I've even heard of a pizza box mounted vertically on a delivery bicycle.
- Customers are unhappy because food can be delivered cold through no fault of the restaurant. To save money, multiple deliveries can be scheduled at once. You can see this as your assigned driver drives passed the restaurant when your food is ready, clearly they're on another delivery. They come back 20 minutes later and turn what should be a 10-15 minute delivery (from the time the order is ready) to a 45 minute disaster;
- And drivers don't seem happy, complaining about low pay.
Yet... people want food delivered. Is this really just a case of people not willing to pay what the service truly costs? If so, no consolidation will help. I imagine fairly small delivery areas is really the only thing that can be economical.