I just call my orders in and pick up now. The prices in-restaurant aren't even close to what is on door dash and the likes menus anymore, it's gotten ridiculous. Then there's all the fees and tips added on top. If it's just myself ordering (which it usually is, if I'm with friends we actually just go out to eat!), the overhead on a single-person order is around 40%. I hate all these online platforms now, it feels like a constant ripoff, like Airbnb and all the cleaning fees..
They’ve just pivoted to what prices need to be to be a profitable business. Previously everything was being subsidized to promote growth. It would appear those Hindenburg days are sone until a new food delivery startup with a fresh gimmick is able to convince investors to subsidize growth again.
Food delivery and courier services have both existed for a long time and worked quite well. The business model is entirely sustainable if you don't position yourself as a VC startup and light cash on fire in the way that VC startups are expected to.
The service wasn't being subsidized. The company was.
Yes, but as you’ve pointed out not at their desired multiples.
The history of the concept goes line this:
1) Some restaurants begin offering delivery for a fee as a service to busy customers.
2) Restaurants figure out free delivery is a great loss leader and make it up on volume.
3) Seamless figures out they can centralize the menus of these companies using the Web. Restaurants still handle the delivery themselves and pay Seamless a small referral fee.
4) DoorDash innovates on this by vertically integrating the delivery aspect themselves allowing scale and access to restaurants that did not previously offer delivery.
5) DoorDash begins the process of “delivery arbitrage” betting people will pay more for individual items if delivered.
6) Ghost Kitchen are invented to vertically integrate the restaurant into the service. This bets that people are price sensitive to delivery fees/arbitrage.
