There thing that really bugs me is that the net fees to the restaurant are usually hidden from the user, so when users who care (which I admit was probably few, until this recent wave of indignation) couldn't take this into account.
I hope that the result of this new wave of concern is forcing the delivery apps to display the total fees they are charging the restaurant.
In a related business, AirBNB straight-up lies about its service fees. I got a refund but it was much less than expected and they informed it was their service fees, after pressing them that that didn't add up to the service fee in my receipt, they admitted that there is also a service fee hidden in the part that is labelled as going to the host. So they take a chunk out from what I send them and then they also take a chunk out from what they claim to send the host and this matters both to the host and also to me since it affects how much can be refunded. I can't imagine itemizing a customer's receipt incorrectly like this is truly above-board with the law but what am I going to do?
In Europe that's actually illegal. A middle man should represent the buyer or the seller but can not represent both and charge a commission to both. Interesting. This could easily be a point where they can be hurt.
Are you similarly annoyed that you can’t learn the rent, ingredient prices, or wages costs?
I think that businesses have all kinds of expenses and that they’re in business to abstract that away and offer me dish X for $Y at place P and time T. I’m not inclined to care about their bank fees, advertising costs, health care costs, or SEO strategy.
While we may not be able to know those exact costs we can get close.
I know that a restaurant in an upscale mall is paying more for rent. I know the minimum staff costs depending on the city they’re in (minimum wage).
What I don’t like is that these companies will flaunt “No delivery fee!” And then in the cart you see a $5 “service fee”. Okay, what’s the difference? Who is actually getting that money? Is any of it going to the driver? The restaurant? All of these factors would help me decide which platform to use, which restaurant to order from, and how to tip.
Delivery cost is different in that you normally avoid it as a customer if you go in person. So it's not actually abstracted away from you. You can't avoid their rent, wages, etc.
If you're ordering from a chain then taking delivery could allow them to arbitrate on the rent part. And you wouldn't be taking up any of their table space either.
Restaurants are very competitive and few can charge exorbitant fees. They are the opposite of cartels.
With regard to ingredients we can likely guess ~60-70% discount over supermarket prices.
In any case this has been a business model for centuries and people have a decent idea of how it works. With delivery apps the economics aren’t well understood by end users, moreover users don’t fully understand the impact they have in the restaurants they want to support.
One is that people are obtaining the delivery service and are billed through a third party. There is a reasonable expectation to know how much of that money is going to the intended recipient.
The second is that this is something new and very few people have any concept of what it is costing the business. While they may not know the particulars, they have a general idea of how much rent, labour, food, and credit card fees cost since they have been part of business planning for a third time.
I also hope that a third factor is starting to come into play: an understanding of the barriers to creating businesses and the costs of operating. It will, hopefully, help consumers make conscious decisions of how they interact with small businesses to make them more viable.
The general public increasingly does care about wages. They care about it in a seemingly random manor, chiding certain industries and completely ignoring other, larger industries. But nonetheless, people do care more now than they seemed to in the past.
Yes I would be annoyed if, in addition to charging rent to the restaurant, the landlord appeared when I tried to go in and pestered me into paying a ‘service fee’ or ‘entry fee’ and ‘landlord tip’ or whatever other nonsense that these services come up with.
Yes, in general all prices ought to be transparent. It's a basic necessity for a competitive market. You want people to be able to easily find out if some firm is making a lot of money, so they can do it cheaper.
If you ask politely most chefs would just tell you the approximate costs. That information is well known, only minor details of rent might be off a bit.
I do care that the people who make my food are properly paid for it. But more than that, I really care when I'm wasting money to pay extra for delivery when I might easily be able to pick it up.
This is different because it’s the app you are USING. It’s been added to the chain late in the game and therefore we as a society care about how the restaurant has been affected by this new development. Like are they in a race to the bottom now.
It’s a bit like the Trolley problem where you only agonize about the latest decision, and not what happened before you came on the scene.
You might care that you are paying $10 for $1 quality burger?
But more I think people want their money to support the businesses that are making the food. Restaurants are very difficult businesses, and people that like them want to support them vs the VC backed startups.
With the extreme cost disparity in your example, it’s only Taking your example a tiny bit further to say if the restaurant was paid zero by the app but the app somehow got their food, you’d be be okay with it.
It’s not much more extreme from what your comment said to say if you value a burger $10 it doesn’t matter if the $10 went to someone who involuntarily coerced the restaurant and $0 went to the restaurant. What is the name for workers who do work without pay?
Most people have some sense of moral rightness in their supply chain when an injustice is visible. That is why the apps hide their exorbitant fees.
>if the restaurant was paid zero by the app but the app somehow got their food, you’d be be okay with it
If I'm the customer: yes. If I'm the restaurant: no, I would not agree to give out food if I'm getting paid zero.
> What is the name for workers who do work without pay?
Same thing if I'm the worker, it doesn't matter if the pay is $10 - $9 deduction or $1 - $0 deduction, in both case it really is $1. I then decide whether it worth my effort to do it for $1.
Well of you enjoy that restaurant you shouldn't be ok with it, because with price margins like you describe, that restaurant's not going to exist for very long.
> Well of you enjoy that restaurant you shouldn't be ok with it, because with price margins like you describe, that restaurant's not going to exist for very long.
That's only true in a vacuum though. There's so much more variable that makes it absurd to happen, except if we live in some kind of tv show.
Let say Uber eat charge too much and it kill their customer, will they keep doing it? Why would they? Theses customers are the one bringiner them this cash.
Why would no competitor see that and decide to charge 1% less? That would be absurd for the restaurant not to consider that one instead. That strategy would be incredibly easy to apply locally too.
Let's not forget that restaurant still can have their own delivery drivers too, like in the article we are talking about right now. That also means that you will have to pay for the marketing too that the delivery service provided for you beforehands... but that's normal business.
It matters if you like the burger place. There are restaurants in my community that I am genuinely worries will go under in these COVID-19 times, not only because of the good food, but because of the good people I want to see succeed and the people I see when I go there. I don't want to screw them over if I can help it.
To the extent price is correlated with quality, you should very much be concerned about how much the restaurant is getting out of your $10. If they get $9, you can expect some quality food. If they get $1, then let's hope you have a strong stomach.
But at one place, you might be able to pick it up for $1, while at the other place, it would cost $9. The amount of fee matters when the fee is avoidable.
This is not at all the same. These restaurants are willingly and knowingly entering into and maintaining a businesses relationship with the delivery apps.
If they're unhappy with the cut that they get, they can either raise the prices they list on Doordash, or they can just unlist themselves (and the apps may create a listing for them, but then they still pay the restaurant the full menu price).
I don't understand the whole hearted support for a business that is asking consumers to inconvenience themselves to help maximize their profit margins. Where are all the people demanding that we all stop using credit cards to avoid the evil transaction surcharges from Visa?
If the transaction surcharges were 30% then people would be demanding we stopped using Visas. You are being deliberately obtuse and dishonestly sidestepping the issue at hand. The exploitative and abusive charges have gotten dramatically worse in response to the pandemic as GrubHub and other app providers flexed their increased market muscle to extort restaurants facing no alternative. It is “willingly and knowingly” entering an agreement in the same sense that I willingly gave the guy who robbed me my wallet to avoid getting stabbed.
They have not. The surcharges are the same as they always were. And depending on what you buy, the transaction fees might be as high, or higher (which is why you see the minimum credit card signs sometimes).
So I assume you have some evidence that the charges are "exploitative and abusive", right? And not that that's just what it costs to have human beings drive around and deliver food to you, plus some reasonable margin? These companies are losing money. Some portion of that is that they are aggressively growing and re-investing, but let's not pretend that they're basically printing money.
> It is “willingly and knowingly” entering an agreement in the same sense that I willingly gave the guy who robbed me my wallet to avoid getting stabbed.
This is just disingenuous. I don't see any equivalency between someone providing arguably overpriced last mile delivery for my restaurant, and someone literally holding a knife to me.
Restaurant owners have other options. You can raise prices on delivery orders to cover what delivery costs. You can set up your own delivery (which no one seems to be doing because it's not that simple). You can try to advertise enough to get your carry out orders high enough to survive. You can choose to shut down and hope the impact is short enough that your business savings will cover your expenses until business picks back up. You can shut down permanently.
This isn't any different than any other business when the market shifts underneath them. Circumstances have changed. You can adapt your business, you can pay someone that has a solution that adapts you to those new circumstances, or you can close.
It works the same way as for the worker, if you pay is $10 but they took $9 then for the worker the pay is really is $1, no different then if the bos pay $1 with 0 deduction. Then what the worker do is to decide whether it worth to do the job for $1.
Of course if you are taking about actual slave then it moot point.
This is arguably true in a pre-pandemic world. Post-pandemic restaurants have far less choice, especially since delivery apps have an exploitative advantage over smaller shops that can’t create their own mobile phone apps. So the delivery companies jacked up their fees to take advantage of companies whose only alternative was no business whatsoever.
Saying it isn’t coercive is just Lochner-style dismissal of the facts on the ground.
I hope that the result of this new wave of concern is forcing the delivery apps to display the total fees they are charging the restaurant.