Doordash and Pizza Arbitrage

I cut this deal with my neighborhood Italian restaurant!<p>I texted the owner about being miffed they hadn’t told me they were on DoorDash. He replied. They aren’t. We compared pricing, and found the prices advertised are way off from what the restaurant charges.<p>So I placed a $5,000 order to the neighbourhood homeless shelter. DoorDash paid him over $20,000, and I get free pasta for the rest of the year. (My neighbours have also partaken.)<p>Glad to know it’s scaling. SoftBank has assembled a unique concentration of stupidity for itself.

This reminds me of a post I submitted a few weeks ago on HN.<p>A friend of mine works for a restaurant group in NYC and they like many they have had to respond by offering delivery to folks in order to keep some revenue flowing. He and I were chatting and he mentioned that lately, a large majority of high value ($500+) orders were fraudulent with the fraudster ordering things that can be resold such as high-value wine, liquor, etc that isn&#x27;t necessarily perishable. He says that the scams work like this:<p>1. The order comes in via Caviar usually with a ridiculous amount of booze. It is usually a courier delivery but he says looking back, some have been picked up by &#x27;customers&#x27;.<p>2. There are some instances where the order gets canceled either by the scammer within the 2 min grace period post ordering of from the actual customer who had their account phished&#x2F;received some sort of alert&#x2F;and stopped the transaction.<p>I am intrigued by this because there is obviously someone on the receiving end that&#x27;s ending up with a boatload of high-end booze and then offloading it somehow while Caviar eats the dispute later on and still pays the restaurant out.<p>Literally, thousands of dollars a week of fraudulent booze orders are being fulfilled to people fraudsters using phished accounts with valid cc&#x27;s. The consumer eventually realizes the charge, disputes it, and gets their money back leaving Caviar with the bill.

I love this story, especially about ordering dough pizzas.<p>It reminded me of this twitter thread: <a href="https:&#x2F;&#x2F;twitter.com&#x2F;meslin&#x2F;status&#x2F;1225834920611848192?lang=en" rel="nofollow">https:&#x2F;&#x2F;twitter.com&#x2F;meslin&#x2F;status&#x2F;1225834920611848192?lang=e...</a><p>In which the author tries to order the Uline &quot;box of boxes&quot;, a box of twenty-five (25) 6&quot; x 9&quot; x 6&quot; boxes, only to have Amazon deliver a 6&quot; x 9&quot; x 6&quot; box containing some random product. The collection product from Uline has the same bar code as the box itself, so the pick up robot would scan the shelf for the box, find something that SOME OTHER VENDOR had put into a 6x9x6 Uline box, and pick that to satisfy the query.<p>Adding automation to a process that any human with visibility to the whole process would say, &quot;Wait, that can&#x27;t be right.&quot; ends up in misbehavior.

Reading the title, I anticipated this was going to be something along the lines of getting Domino&#x27;s delivered for less than their delivery fee. (Side note, does anyone actually order franchise pizza on an app? They all already deliver for far less)<p>But this was far more interesting. The fact that Doordash scrapes prices, and apparently doesn&#x27;t verify... how does this happen?<p>I&#x27;m not familiar with the reimbursement model. I&#x27;m assuming the driver pays with a credit card, and Doordash reimburses this amount. Regardless, there will now be database entries for a customer paying $160 and Doordash reimbursing $240.<p>What happens in a company that allows $80 to vanish like that? Unless this is an incentive (I&#x27;m doubtful this was deliberate). Wouldn&#x27;t one of the first things you do is validate your financials? In which case, is the driver getting screwed here? (They charge the customer $160, and reimburse the driver for only that amount)<p>If not, this opens up a huge potential for fraud. There is a semi-popular YouTube video where some young British folks set up a &#x27;restaurant&#x27; in their home kitchen and successfully list on a delivery app. They deliver several orders (reimbursing the customer of course). If it&#x27;s trivial to get listed, and potentially with the wrong prices, then it&#x27;s trivial to launder money this way.<p>Set up a fake restaurant, deliver little&#x2F;nothing to a known party, profit. Now, maybe it would become obvious if you made the same orders or within the same time frame. But again, trivial to generate randomness.<p>What protection do these companies actually have against fraud? By nature, they&#x27;re assuming trust, and this is exploitable.

After reading more about how these delivery companies function, we stopped using Door Dash a few days ago. We found it very convenient during the pandemic, but we like our local restaurants and we thought we were helping them out by ordering delivery pretty often. So now we just order it as take-out and then we go pick it up ourselves. Screw Door Dash.

Very important note (near the bottom of the post) on why Doordash did what they did:<p>&gt; Note 1: We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform.

Wow, that was great. And honestly good on them for profit-taking on this arbitrage.<p>The author likes to pin this on zero-interest rates (&quot;ZIRP&quot;) and that certainly explains why the system is awash with cash but I&#x27;d say he&#x27;s missing a key point here.<p>When I moved to NYC (~10 years ago) I didn&#x27;t order delivery at all. Honestly it&#x27;s a huge pain. To call someone up and try and communicate an order to someone who probably doesn&#x27;t have the best grasp of English (no offense intended here). I just couldn&#x27;t be bothered.<p>What changed was Seamless came along and suddenly I could order food and not have to talk to anyone. It was (and is) amazing. In NYC at least the restaurants are still handling deliveries (with Seamless anyway) so there&#x27;s still that control. Seamless&#x2F;Grubhub seem to charge exorbitant fees but that&#x27;s another issue.<p>As an aside, this is a key factor in my use for Uber&#x2F;Lyft: the fact that the process is <i>seamless</i> (pardon the pun). You order a car without talking to anyone, it arrives and it drops you off. There&#x27;s no awkward payment step. No dealing with a machine that&#x27;s broken. No card skimming. It just reduces friction.<p>This is the promise of food delivery platforms: they benefit the consumer in terms of discovery, convenience and the seamlessness of ordering and payment. You might point out that people get cold pizza because UberEats drivers don&#x27;t have the bag and you&#x27;re right. But that&#x27;s not an unsolvable problem.<p>Oh and this is the first I&#x27;d heard of Grubhub replacing Yelp phone numbers with their own call center. More evidence that Yelp is a cess pool that needs to be flushed. It&#x27;s sad Grubhub is engaging in this. We have enough rent-seekers. Thanks anyway.

Just some back-of-the-napkin math if you wanted to do this &quot;right&quot;.<p>Let&#x27;s say you hire drivers as employees and pay them $15&#x2F;hr plus tips and reimburse them for mileage. You charge a $4.99 delivery fee. Drivers work set shifts and are paid hourly whether they are making deliveries or not.<p>That means each driver needs to be making at least 4 deliveries an hour or you&#x27;re losing money. That&#x27;s not even really counting for mileage or any other benefits like health insurance or retirement (not that jobs like this usually provide this, but people seem to think that they should).<p>When I lived in DC, driving <i>anywhere</i> could take at least 15 minutes. Getting 4 different trips from a restaurant to somewhere reliably every hour would be difficult. Obviously, drivers can pick up multiple orders and take them in one round trip, but you&#x27;re at the mercy of what orders happen to come in and where they happen to be located. It seems like it would be very hard to make that sustainable.<p>Of course, Domino&#x27;s and lots of other places do it, but they probably aren&#x27;t paying $15&#x2F;hour and they also have one central location and more predictable demand. It&#x27;s more feasible if drivers always go back to one central hub rather than having to get orders from random different restaurants all over the city.

This is absurd. Can someone explain to me why DoorDash exists? They&#x27;re #1 in share, but I get the impression that they basically bought their spot.<p>Grubhub has been operating in the space forever, is public, and generally had been profitable until VCs came to town. How is DoorDash doing anything than Grubhub? Wouldn&#x27;t this capital do better in other investments?<p>From the outside it seems like they&#x27;ve duped investors into burning hundreds of millions of dollars to hopefully build a monopoly in a structurally iffy market.

This is the sad state of VC funding in this day and age.<p>I can’t help but wonder if movie theaters could have exploited a similar loophole with MoviePass before they went bankrupt. Something like this:<p>1. Movie theaters buy up MoviePass subscriptions<p>2. They use those subscriptions to pick different movies to see every day at their location<p>If they picked 30 movies a month that would be approximately $450 a month in revenue (at $15&#x2F;ticket), $440 of which would have been pure profit.

&gt; The owner insisted the driver take the pizza in a heated bag so the customer didn’t get cold pizza, but leave an ID so the driver would be compelled to return the bag.<p>&gt;Doordash was causing him real problems. The most common was, Doordash delivery drivers didn&#x27;t have the proper bags for pizza so it inevitably would arrive cold<p>What this means is that the restaurants really care about their customers. The delivery really really don&#x27;t care.<p>I spoke with a few restaurant owners in NYC and they all universally hate the delivery companies. The restaurants are charged anywhere between 30% - 40% which is a ridiculous amount.<p>There&#x27;s another company in India called Swiggy. I used to travel to India and would frequent a few bars in Bangalore and Hyderabad. All of them absolutely hated them for the same reason.

This reminds me of the SliceLine episode of Silicon Valley Season 5. <a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=Txl90NEl92U" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=Txl90NEl92U</a><p>Its even better, DoorDash is doing this without even switching boxes.

I don&#x27;t understand why doordash, uber eats, deliveroo, and similar business are starting to exist. Restaurants have been running successful delivery operations independently for ages. And there are many software offerings to help businesses get set up with delivering food.<p>Why do we need a centralized on? Is it just the benefit of being able to browse in one app&#x2F;website everything available for be delivered to you?

Lose a few 100 million today for a monopoly next year. I make the assumption here that these delivery services are intent on dominating the search results so that independent restaurants are not able to compete. They are forced into using the services, or rather having a large majority of other orders coming from these services.

This quote summarizes it all for me: &quot;Amazon just bailed on restaurant delivery in the U.S.&quot;<p>If amazon, a &quot;real&quot; business with a reputation built on ruthlessly cutting margin can&#x27;t get it to work why would anyone else?

The restaurants need to work through their own trade organization where they band together and push out the delivery businesses that are costing them money, and then allow delivery companies to bid for their business.

In another form of arbitrage with “substitute goods”, we’ve noticed restaurants with completely different menus on delivery sites than directly. We ordered anyway and the packaging was totally different. Someone is fulfilling orders for a fancier restaurant with generic food. I ended up throwing it out because I wasn’t comfortable with it.

The real arbitrage opportunity is for a competitor to DoorDash to place orders through DoorDash, and pay the delivery person a small fee plus let the delivery person collect the DoorDash fee. You could scale this up to huge numbers.<p>Curious if doing so would survive a lawsuit. On the one hand, DoorDash could argue that it&#x27;s unfair competition, but only by admitting that their deliveries are priced too low, which itself is unfair competition. I don&#x27;t know how unfair competition is regulated.

I&#x27;ve noticed the opposite phenomenon at a popular restaurant in Austin. The menu through DoorDash is priced higher than the normal price. Curiously, the restaurant&#x27;s own, in-house delivery system is the same price as dining in. This is when I stopped using DoorDash...when I discovered that using the restaurant&#x27;s own delivery system is just as easy and maybe cheaper.

it will be interesting to see the impact of SoftBank withdrawing on consumption patterns of city-dwelling professionals. So much of their daily life is subsidized courtesy of Son

<i>&gt; How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners?</i><p>“(…) What sphinx of cement and aluminum bashed open their skulls and ate up their brains and imagination?<p>Moloch! Solitude! Filth! Ugliness! Ashcans and unobtainable dollars! Children screaming under the stairways! Boys sobbing in armies! Old men weeping in the parks! (…)”<p><a href="https:&#x2F;&#x2F;www.poetryfoundation.org&#x2F;poems&#x2F;49303&#x2F;howl" rel="nofollow">https:&#x2F;&#x2F;www.poetryfoundation.org&#x2F;poems&#x2F;49303&#x2F;howl</a>

This whole sphere of economic activity is a gigantic farce. It would be hilarious if it weren&#x27;t so pestilent. The only upshot I can see is that it feels like people are finally catching on to it.

&quot;Which brings us to the question - what is the point of all this? These platforms are all losing money. Just think of all the meetings and lines of code and phone calls to make all of these nefarious things happen which just continue to bleed money. Why go through all this trouble?<p>How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners? My co-host Can and my restaurant friend both defaulted to the notion &quot;delivery is a shitty margin business&quot; when discussing this post.<p>You have insanely large pools of capital creating an incredibly inefficient money-losing business model.<p>It&#x27;s used to subsidize an untenable customer expectation.<p>Third-party delivery platforms, as they&#x27;ve been built, just seem like the wrong model, but instead of testing, failing, and evolving, they&#x27;ve been subsidized into market dominance.<p>The more I learn about food delivery platforms, as they exist today, I wonder if we&#x27;ve managed to watch an entire industry evolve artificially and incorrectly.&quot;<p>A contrary view, from 4 days ago, arguing third party food delivery market is not created by VC, the startups are not over-funded and that they are delivering splendid returns to investors.<p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=23171915" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=23171915</a>

&gt; <i>Now suddenly each trade would net $75 in riskless profit ⇒ $240 from Doordash minus ($160 in costs + $5 in boxes).</i><p>If you do this over and over, obviously you can use the same dough and boxes, so costs are just what you pay Doordash.

What if you strip out the entire &#x27;aggregation&#x27; and customer facing side of DoorDash&#x2F;GrubHub&#x2F;UberEats and rebuild them as complete back-end logistics services to the restaurants? You charge lower percentage of orders or just a monthly fee to help procure and pay the labor and route deliveries. Seems like that&#x27;s the actual challenge for restaurants

Do businesses have any recourse here? E.g. for the pizza situation - can a business ban DoorDash and its ilk?

&gt; the only viable endgame is a promise of monopoly concentration and increased prices<p>This is it! I&#x27;ve been involved with Foodpanda and Delivery Hero. The name of the game is, indeed, becoming the #1 player in the market. The tool of the game was M&amp;A. That&#x27;s what you see everywhere with Delivery Hero, Takeaway Group, Just Eat trading positions across the world. They are effectively cutting and slicing the world into countries and regions where each of them is #1 and the others don&#x27;t compete. Such &quot;collusion&quot; creates incredibly profitable markets, as the #1 doesn&#x27;t need to share 30% of top-line with Facebook and Google, can charge a 15% take rate to restaurants AND additionally, a delivery fee to consumers.

&gt;I knew Doordash scraped restaurant websites. After we discussed it more, it was clear that the way his menu was set up on his website, Doordash had mistakenly taken the price for a plain cheese pizza and applied it to a &#x27;specialty&#x27; pizza with a bunch of toppings.<p>If that&#x27;s really what happened (sounds plausible) that means that you should be able to trick DD even more by designing a website specifically in order to confuse the scraper. Have some cheap dish listed at $50 but in a way that would be scrapped as $5 or something. As long as a human would have no issue parsing the menu and understanding the actual price I don&#x27;t really see how you could get into trouble, it&#x27;s DD&#x27;s fault for having crappy parsers.

Keep reading the level of skullduggery these companies go through and keep saying to yourself &quot;Tech is a meritocracy.&quot;<p>Yeesh.

&gt;&gt; Uber Eats is Uber&#x27;s &quot;most profitable division” . Uber Eats lost $461 million in Q4 2019 off of revenue of $734 million. Sometimes I need to write this out to remind myself. Uber Eats spent $1.2 billion to make $734 million. In one quarter.<p>These might be stupid questions, but... can this go on forever? No, right? Is there precedent for this? How long of a horizon do companies like this expect to be a money toilet? What happens to everyone else if companies like this collapse? Why hasn&#x27;t it happened yet?

&gt; Amazon just bailed on restaurant delivery in the U.S.<p>Yeah and Amazon just plugged £500m into Deliveroo in the UK. They are going for UK food delivery market and potentially Europe with that investment. Deliveroo is pretty amazing.<p>1. I can track my driver in real-time 2. Communicate with drivers via Whatsapp 3. Great range of resturants 4. Super convenient. Order comes usually within 30 minutes

I&#x27;m curious to hear how restaurant delivery services are meant to make profit; is it really through service fees (or a monthly subscription model), and tips?<p>Cost per meal seems way too high for people to use it often. Maybe it make economical sense for larger party orders, but how often do those kinds of orders happen during considering the COVID situation?

The part of the article that shocked me was the Google hijacking. It seems Google is allowing it as a policy. Why screw these poor restaurants?<p><a href="https:&#x2F;&#x2F;support.google.com&#x2F;business&#x2F;answer&#x2F;6218037" rel="nofollow">https:&#x2F;&#x2F;support.google.com&#x2F;business&#x2F;answer&#x2F;6218037</a>

Interesting. I always suspected this to be true but not the extent, especially the overall profits generated by food delivery cos. For e.g. one of India’s largest delivery co reported a loss that was double the revenue! [1]<p>The other way to look at this is to think of it as a global capital transfer mechanism, from the super rich to the “real” economy. Sure, it is not sustainable in the long run but while it lasts there is significant transfer of capital which appears difficult to otherwise do, thanks to resistance to capital taxes. I really do not know what to make of the incentives for fraud though.<p>1 - <a href="https:&#x2F;&#x2F;yourstory.com&#x2F;2019&#x2F;12&#x2F;foodtech-startup-swiggy-loss-revenue-ilfs-financials" rel="nofollow">https:&#x2F;&#x2F;yourstory.com&#x2F;2019&#x2F;12&#x2F;foodtech-startup-swiggy-loss-r...</a>

Initially I thought this may have gone the other way, setup a business with no physical location, get on Doordash, and when you get orders you place orders at other restaurants not on the platform, then pick up and deliver their food, while charging some kind of markup on their prices.

Oh, one other interesting thing I&#x27;ve heard happens regularly. Couriers have multiple cellular devices. The second account usually get batched orders from the same restaurant they are already at which leads to a host of problems for the customer and restaurant. This leads to the order that was ready first to just sit and die in the courier bag while they work to maximize their earnings. Couriers sometimes leave before the second-order is ready and return well AFTER it&#x27;s been ready to retrieve it because they are out and about delivering other orders.

I don&#x27;t see why it&#x27;s hard.<p>Probably because Grubhub and Doordash are approaching this with the &quot;holistic mindset&quot; of a &quot;visionary&quot; mind like the WeWorks founders. Hence we get behaviour like this which is probably illegal in multiple ways.<p>Provide your work at a fixed price per order. Or you might take a (transparent, explicit, of those who actually <i>signed up for the service</i>) commission, fair enough.<p>Providing a good service is hard on itself, but it won&#x27;t distract you from all the other crap and won&#x27;t alienate the people that actually make your service work.

Isn’t this fraud? What’s unclear to me is if it’s illegal, or just unethical.

My initial response to this headline was anger as I assumed that the arb would inevitably screw over the small business owner. That anger quickly turned to glee upon reading the first couple of paragraphs!

Honestly at times it seems like all these Uber for this or that, DoorDash and whatever other logistical services were created with the premise of just keeping people busy and making them feel like they have a job (one that often costs them money to work at).<p>Once upon a time you started something and hoped to figure out how to scale and find product&#x2F;market fit. These days with the cloud it’s become trivial to scale almost anything that’s not building cars or spaceships.<p>All these other BS startups have no hope for profit and no end game in sight. It’s kind of pathetic.

One thing I&#x27;ll point out is that we don&#x27;t actually know if delivery services (for restaurants such as pizza places that the article mentions) are profitable period. It&#x27;s entirely possible that businesses offer delivery at a loss (i.e. cost of delivery is more than the delivery fee, so it hurts their overall profit margin) because they expect the increase in revenue due to added convenience for customers to offset the lower profit margin.

How does the author know it isn&#x27;t the driver that will get the short end of the stick here? To put it differently, what would happen if the restaurant mistakenly charged the driver who is picking up the food more than listed and then the driver pays that mistaken amount with Doordash&#x27;s credit card? Will they be penalized&#x2F;fired once Doordash discovers the accounting error?

I remember the time when I self referred the shit out of doordash, caviar few years back only to stop because I started feeling bad about it.

I&#x27;m surprised a guy in finance can&#x27;t see the potential efficiency gains and economies of scale a delivery company could have over all restaurants having to operate their own delivery service. I don&#x27;t know about DoorDash specifically (not in the US) but it seems obvious to me that those services are here to stay and they can be run profitably.

Reminds me of the discussion in ‘The Bitcoin Standard’ about zombie industries directly or indirectly build on top of unsound monetary policies. One could argue this capital burning colossi exist by virtue of access to a populations purchasing power &#x2F; wealth. Instead of multiplying productivity and increasing living standards they stall progress.

Perverse incentive drives odd behaviors. People would have shipped bricks to themselves if the arbitrage warrants it.

This is so asburd it feels like a story in bad movie. We have pushed finance &amp; capital so far into the realm of fiction that it doesn&#x27;t really make sense anymore.<p>Artificial growth for the sake of artificial growth, just so you can get to your exit and leave someone else holding the bag. Ponzi schemes at massive scale.<p>How did the startup&#x2F;VC world become so entangled in all this bullshit capitalism?

Where I live in India, nearly 90% of the restaurants and hotels get their food from one place at rock bottom price.<p>And the restaurant&#x2F;hotel the customer is dealing is responsible for arranging delivery and serving.

Something just doesn’t make sense with this story. Ok, it’s possible doordash has accidentally mispriced a pizza. But why would they misprice a pizza but then pay the correct price to the restaurant?

Nice - this made BBC news! <a href="https:&#x2F;&#x2F;www.bbc.co.uk&#x2F;news&#x2F;technology-52724062" rel="nofollow">https:&#x2F;&#x2F;www.bbc.co.uk&#x2F;news&#x2F;technology-52724062</a>

&gt; <i>That’s what is so odd to me about third-party delivery platforms. The business of food delivery clearly is not intrinsically a loser. Domino’s figured it out. Every Chinese restaurant in New York City seemed to have it figured out long before any platform came along. My friend is figuring it out.</i><p>Domino&#x27;s and Chinese are <i>very</i> specific high-margin businesses. Basically the <i>highest</i>-margin restaurant businesses.<p>That doesn&#x27;t, in <i>any</i> way, prove that food delivery in general is <i>not</i> a loser. In fact, if you have to specifically pick the two highest-margin examples as your examples... maybe the industry in general <i>isn&#x27;t</i> all that sustainable.

It&#x27;s kind of hard to imagine how DoorDash execs are going to explain to those investors who find this on HN &#x2F; elsewhere and ask them what the eff is going on ?

Since at a high level this seems like mis-assigning VC funds, could someone who does this arbitrage eventually be sued by Softbank to recover VC funds?

I don&#x27;t get the opening story. If his restaurants weren&#x27;t delivering, who was Doordash picking up from? Did they just get doggy-bags to go?

There&#x27;s an episode of Silicon Valley where Pied Piper bankrupt an unrelated start-up using this method so that they can hire their developers.

Sounds like the driver is the loose end. I wonder if the author considered becoming a Doordash driver just for the arbitrage transactions.

so they have two possible endgames:<p>1) find a sucker (aka retail investors) that buy a loss-making stock<p>2) become a monopoly and squeeze everyone to get higher margins (kind of how booking.com pushes hotels to increase their standard prices so that booking can offer a discount; which you also get if you call the hotel itself).

I said this in another post about Grubhub but similarly to this article I really don&#x27;t get it. Those apps are all 25%+ expensive than ordering take out directly with the restaurant, they screw the restaurants and all those delivery companies lose millions.<p>Did everyone really become THAT lazy that driving 10 minutes to get your meal is that much trouble?

Some background -<p>In my past life I started Crazymenu.com The idea initially started as a central place to host all the restaurant menus with the idea of eventually expanding it to SAAS tech layer for everything restaurant related. The idea ultimately pivoted into google maps for restaurant menus. Meaning companies would just pay me a service fee to incorporate these menus into their services (ordering food, review sites, restaurant apps, etc.)<p>I self-funded the idea and after my first beta launch (2006, I believe) I was pitching an angle investor (Mr. X) who years later became an early investor in Doordash.<p>Right away, Mr. X said why not go into online food ordering business and then may be do delivery, etc. I never liked the idea of dealing with all the transaction headaches and told him I wasn&#x27;t sure about the idea and dealing with so many fragmented restaurant softwares. From what I could gather attending a few National Restaurant Association events in Chicago and speaking with lots of restaurant owners, I noticed two categories. Very small mom and pop operations, or small medium chains. All the small to medium chains already had invested into some technology layer (some were closed off) and unless you could integrate with them, there was no interest to working with you and the smaller mom pop entities were either too busy or they were so bombarded by all types of tech solution offerings that they didn&#x27;t want to listen to you.<p>Years later when Mr. X had invested in Doordash I had private chat with him.<p>I told him in my opinion, restaurant delivery is restaurant business. Meaning that it&#x27;ll be very hard to compete. On top of one huge exception. You never crave DoorDash, you crave pizza or burger or Chinese food.<p>When the OP says Dominos figured out the model as did lots of family owned Chinese restaurants. I can understand that.<p>I believe this is a very vertical business. For one thing it&#x27;s mostly around the brand, and the brand experience. This is the same reason Starbucks avoided franchising (if you think about it, DoorDash is a bit like franchising a delivery business) as did In-N-Out. These smart people had already figured out the nature of building a food brand experience.<p>Getting a cold food, soggy pizza destroys the brand.<p>This is very different than Amazon or UPS delivering books. Because delivery of books or jackets doesn&#x27;t impact the brand at the same level it does with food. Not to mention when you don&#x27;t deal with risk of food getting cold you can really scale delivery by mastering routing and all the different things UPS can do with scale.<p>Ultimately, we either see a very vertical experience. Uber buying several popular food category chains (pizza, burgers, fried chicken, etc.) or the reverse, PEPSI&#x27;s parent company buying UberEats&#x2F;Grubhub or if there is a massive consolidations and Uber or Grubhub can charge in an economically sustainable way.

So funny how this mirrors the pizza app thing from HBO Silicon Vally.

I think I finally understand &quot;growth hacking&quot;.

Maybe they should rebrand as sliceline.

i know no lawyer wants to provide conclusive opinion here, but this has to be illegal

&gt; If capitalism is driven by a search for profit, the food delivery business confuses the hell out of me.<p>The modern Silicon valley venture capitalism is not about operational profit, it&#x27;s about company valuation.

&quot;Isn&#x27;t business supposed to solve problems?&quot;<p>This is a common misconception... Capitalism is only designed to solve one problem: maximizing shareholder value.

Is there really a monopoly play here for food delivery?<p>Granted, DoorDash can possibly be used for other kinds of delivery, like medicine and groceries.<p>It seems the cost of labor and transportation is too high to make it feasible.<p>But the actual play, might be robotic. To first take over the manual market, and then, conduct research into automated delivery services, like aerial drone delivery, or robotic dog delivery.<p>Once that technology is viable, then phase out the human delivery people, and replace them all with robots.<p>I actually never thought something like this would ever be economically viable. And then one day, a pandemic hit the entire world.

Saying that delivery can work for most food in most places just because dirt cheap pizza and super dense NYC can do it, strikes me quite naive.

&gt; <i>How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners?</i><p>Simple. Capitalism is broken.<p>In order for capitalism to work, there has to be a meaningful profit&#x2F;loss <i>incentive</i>. People who are doing the work must get rewarded if the work is done well and penalized if the work is done poorly.<p>We already started moving away from this many years ago with the growth of large corporations. When was the last time that you at your &quot;capitalist&quot; firm were aware of revenue and costs for the things you were working on in a more-than-superficial way? When was the last time you saw someone make a buy-vs.-build decision based on the actual numerical cost of the employees needed to run the project and not just handwaving? (When was the last time you even knew what the cost of the employees on your team was, given the widespread taboos about compensation?) When was the last time that someone who said &quot;I saved the company X million dollars&quot; got some proportion of those X million dollars? When was the last time that someone who needlessly made the company spend X million dollars in the first place paid for it?<p>The function of a big company is to abstract away the cold, unfeeling invisible hand of the market and protect people&#x2F;groups who make unprofitable decisions. This is actually totally fine and good in the short term - nobody makes consistently good decisions, and insurance is a thing for a reason. You want people to take bigger risks on behalf of the company than they&#x27;re willing to subsidize with their own paychecks, which is <i>why</i> individual artisans and professionals team up to form a company in the first place. But it&#x27;s grown past that. As the article points out, some regional director somewhere is able to <i>convince other people at the company that their work is profitable</i> - with no hard link to whether the work is, in fact, profitable. And that scenario is entirely plausible for all of us; it&#x27;s not specific to this one company in any way. If you&#x27;re in the unlucky position where both you want to draw good charts and everyone around you wants to see good charts, there&#x27;s no real way to figure out if you&#x27;re wrong unless the company as a whole is dying, and there might be a host of reasons why it&#x27;s not dying that have nothing to do with your decision-making.<p>And now venture &quot;capitalists&quot; have decided that this model needs to scale out from protecting teams to protecting entire companies. You can run a business for years without even attempting to make a profit and get acquired based on the potential of the business. No more messy realities of the market determining whether you are in fact profitable or not - what matters is whether you <i>look</i> profitable. And, again, this is genuinely good at small scale, because it allows new ventures to ignore bumps and potholes that would otherwise have ended a small company. But if you scale it up, it also allows new ventures to ignore driving straight off a cliff.<p>I expect capitalism to work very well if implemented right. But I don&#x27;t know how we go from where we are today to actual, functioning capitalism.

We really need a true crisis. Free market economy needs to let such companies to buncrupt. Lesson must be learned.<p>Unfortuanetelly looking what FED is doing, it won&#x27;t happen soon :(