I actually looked into opening a restaurant in the London suburbs. A friend of mine runs a chain of sushi delivery shops in central London, so I had some advice from an insider.
It seems to not work at all with a 30% cut going to Deliveroo and those types. I went to look at some locations to find out the rent, and I had a look at the ingredient and staffing costs. Then I threw it all on a spreadsheet to make a guess about the breakeven, and I checked it with my buddy.
The thing about Domino's and the sushi delivery is that they run their own delivery network. They don't have the costs that Uber Eats or Deliveroo have with marketing and tech. The delivery management is fairly complicated, perhaps not in a tech way (except for Dominos, who have a big tech arm) but in terms of marshalling a bunch of drivers to efficiently drop off food during the evening rush, it's a fair bit of work in itself. My buddy talked more about that than making sushi.
I’ve been building a better Yelp of sorts, trying to do a variety of things to basically fix ratings and have a great app for finding food even down to the dish.
We’ve been working on it for a few months and are getting close to a beta. But I’m starting to think we may look at building out a “Shopify” market for restaurants. You handle the delivery but we still give end users a consistent experience and single nice app.
If you or anyone reading is interested even in just giving some feedback, we’ve gotten quite far and would love to work with one or two more really great developers. I really do think many restaurants would be happier like this: they already manage staff and do support, and down the road we could add on interesting collaborative tools for them to share drivers.
> We’ve been working on it for a few months and are getting close to a beta. But I’m starting to think we may look at building out a “Shopify” market for restaurants. You handle the delivery but we still give end users a consistent experience and single nice app.
Sounds cool. Take a look at ChowNow, which is a bit similar to that description, if you've not already.
I think Kevin Rose looked into recommendations at the dish level with a startup (milk?). You might consider checking to see if he posted any lessons learned.
>Not sure if they take an extra fee on top of the "pre-delivery price" or how does it work.
Not sure about those but others in my country do - I've talked to a restaurant owner here - he has two companies with marked up prices for the same menu to get arround the app policy that prices must be the same as buying directly from vendor, if you order directly from him it's ~20% cheaper. That's on top of explicit delivery fee.
But doordash, Uber eats etc...receive MORE than just the service delivery fee that they charge you. These platforms separately charge the restaurant itself a fee (rumored to usually be between 10% - 30% of the order total) for every order.
This is the lack of transparency discussed in this thread. People would like to know at the end of the day, how much of the order money goes to the restaurant.
Agreed. In an ideal world, whatever costs associated with delivery should be completely borne by the customer, not the restaurant.
If the restaurant isn't the one providing the actual delivery, the service provided provides most of the benefit to the customer, and it should be us customers that pay for the convenience.
This reminds me of the debate around NYC banning landlords from forcing tenants to pay brokers fees. The landlords are the ones benefitting the most from brokers' services, and should bear the brunt of the cost.
I'm curious to see if any cities/states take a similar approach with food delivery and prohibit delivery companies from charging the restaurants themselves fees.
Technically UberEats etc aren’t charging the restaurants for delivery, but for marketing - “you’ll get more orders by being on our platform” - at least that’s how they’re selling it, and I suspect it’s true at least for some restaurants
They do not. There's a nebulous category that fluctuates. My credit card currently has a deal with door dash they made to kill grub hub so that delivery fees are covered yet there is still a seemingly small random service fee tacked on. I feel bad for grub hub but I absolutely will take vc money propping up a failing business. I usually check all the apps and the restaurants website before putting in an order to account for different menu prices
Same debate happens here in Europe for Just-Eat (originally Danish), and Wolt (bike courier, originally Finnish). There's a cut taken from the restaurant separate from the delivery fee visible.
Is running your own delivery system actually cheaper?
I can see it being the case if you already have scale, but assuming deliveroo collects 1 billion in fees from 100 thousand restaurants, for an average restaurant, it's 10 thousand per year, that is not a lot of money for setting up a delivery system.
Provided, delivery being expensive is probably the reason most restaurants didn't offer that option before. And those who started off as delivery-first probably optimized their business to have the delivery cost in mind, like picking a cheaper location to save on rent (one of my favorite pizza place is in a shady back alley), reduce menu size to optimize kitchen efficiency, increase price to ensure profitability, etc.
For a dine-in focused restaurant to offer delivery option profitably, their incremental revenue needs to be greater than the incremental costs. If a restaurant is not operating at capacity, their incremental cost of more orders is low; if a restaurant needs to expand capacity to fulfill new online orders, then the math becomes more muddy, is it just hiring more kitchen staff? does it require more equipment? does it require more kitchen space or even a completely separate kitchen?
> Is running your own delivery system actually cheaper?
For two reasons: really not. Deliveroo barely promisses to make a profit and that’s with a lot of things for them.
1. It’s surprisingly complicated to run that kind of service. They key issue is schedule: sure, if you have a couple of cousins of yours on mopeds, that’s simple enough but that has no economies of scale. If you want to have 15 people, your sanity will be challenged whether you try to use pen, paper & text messages or dedicated scheduling tools.
2. Scale is everything. More specifically, if you deliver from one restaurant, half of the time, your riders are coming back empty. That really lowers your effectiveness. Deliveroo works by having many restaurants and many customers spread out so that a bike can pick up from a restaurant that is closer.
> If a restaurant is not operating at capacity, their incremental cost of more orders is low; if a restaurant needs to expand capacity to fulfill new online orders
Most restaurants can easily increase how many meals they serve if they know about it days ahead. The market for fast-order cooks and front-of-house personal is fairly liquid (shockingly so); tables not expandable especially at peak shift. A way you can see that is how enthusiastically restaurants expand their terrasse as soon as it’s possible — there’s never a second kitchen that opens in the back alley to match. Deliveries were leveraging existing capacity most of the time. “Dark kitchen” or delivery-only kitchens were suggested exclusively to be closer to customers.
I got to question this. For at least 30 years before these apps, pizza places and Chinese restaurants had figured out how to handle their own driver service. I think the apps want people to think that it’s. Or possible to handle your own delivery.
I'm not questioning that some restaurants do it. I’m not sure how it can be cheaper for a single-address restaurant to do it, compared to a pooled service. If half of your workforce is just driving back, that can’t be efficient.
In Amsterdam, plenty of small pizzerias also have or had their own delivery. It doesn't sound that hard to do. And especially with the Corona crisis, turning your waitstaff into deliverers sounds like an obvious solution. That seems to be what a lot of restaurants here have done.
Of course we also have Deliveroo, Uber Eats, and of course our home-grown giant Thuisbezorgd (though I think Thuisbezorgd restaurants still do their own delivery, though they too have recently been complaining that Thuisbezorgd is raising their margins too much). But it seems to me that if those are more expensive to a restaurant, the restaurant should raise their prices only for those orders. Let the customer swallow the extra cost of the expensive delivery. That way you get cost transparency and fair competition between different options, and restaurants will get their share.
How difficult it is to build a B2B, white labeled software and charge as subscription for these shops? These shops can market the link on social media and yellow pages?
Is it because Deliveroo also is the default source for online order making customers? Curious.
I wonder a bit why there is no player like amazon in the food business. I mean a completely integrated one from buying ingredients to cooking to delivering.
A lot of things that typically fall under the heading "women's work" are tough to make profitable as a business. This includes food prep and child care.
Restaurants have notoriously slim margins. Yes, there are many restaurants on the planet. But it's a tough business. Adding delivery or what not just makes it tougher.
What you are describing is like a personal chef, which is out of the price range of most people. (Or it's called a full-time wife, which is also out of the price range of most people these days.)
I don’t know why you don’t think child care can be operated profitably. In Seattle you can have something like 6 kids per caretaker can charge about 2k/month a head. There is a minimum size though that makes sense because you get to take credit for contact staff so you can up that to 8+ if you have a cleaner or receptionist on site.
It’s not programmer money but it can generate decent stable revenue. Better that most non high tech low education required jobs.
Minimum wage in Seattle is $12/hour. $12/hour x 40 hours per week x 4.3 weeks in a month is $2064.
Presumably, that's before taxes, etc. (Yes, I know Washington doesn't do income tax, but you still have to pay federal income tax.)
Obviously, boutique-style businesses aimed at wealthy clientele can be made profitable. But that's not what most people are dealing with.
I never said that daycare cannot be profitable. Just that these tend to be tough things to make profitable.
Similarly, some restaurants are making a killing. But most restaurants have slim margins. And daycare is generally considered to be a tough business as well for various reasons.
As a husband of a now full-time wife, who decided to stay on external parental leave to spend more time with our child and improve her career skills (in whatever little free time), I'm deeply saddened by how society sees this kind of work. Every couple of days I have to reassure and remind her that what she does - raising our child, feeding us, caring for the home - is a real job, is a hard one, and it's more important than mine. I just push buttons on the keyboard for 8 hours a day, and somehow convince people to pay me for it.
> Since it started in Seattle in 2015, Amazon Restaurants has struggled to gain a foothold in the restaurant delivery market. Together, UberEats, Grubhub and DoorDash control nearly 80 percent of the restaurant delivery business, according to the research firm Edison Trends.
> Still, Amazon Restaurants is unlikely to be the company’s last venture into restaurant delivery. Earlier this year, Amazon invested heavily in Deliveroo, signaling its sees long-term interest in the area.
Costs don't scale linear with the production of more meals. If the variable costs (like food and staff) are lower than or roughly equal to the fixed costs (like rent) then 30% off the face price of food might be still be a money making proposition.
That being said, it's becoming increasingly clear that restaurants and delivery services need to be co-designing to make widespread delivery work long term.
I don't know why there isn't an app that simply only lets you order from places that are within 30 min walking distance. (I don't know why this isn't written in law - having someone drive more than a few minutes to deliver you food should be considered a crime against humanity because it is so dumb, inefficient and demeaning to those involved)
That way people on bikes, mopeds, whatever can do the delivery and it's fast, easy and cheap for everyone involved.
The people making the deliveries have to live within a specific radius of you and the delivery spot, that way people in affluent neighbourhoods get paid more to deliver, because it costs more to live in that neighbourhood and people who live in poorer neighbourhoods, get paid less.
You know where I'm going with this - it should be teenagers and college/uni students doing these deliveries part time, not grown adults. We as a society should be moving beyond menial labor, not creating new 'gig economies' that prey on folks who have trouble finding stable jobs because we've optimized away any semblance of community and dignity in exchange for billionaire mansions and yachts.
It seems to not work at all with a 30% cut going to Deliveroo and those types. I went to look at some locations to find out the rent, and I had a look at the ingredient and staffing costs. Then I threw it all on a spreadsheet to make a guess about the breakeven, and I checked it with my buddy.
The thing about Domino's and the sushi delivery is that they run their own delivery network. They don't have the costs that Uber Eats or Deliveroo have with marketing and tech. The delivery management is fairly complicated, perhaps not in a tech way (except for Dominos, who have a big tech arm) but in terms of marshalling a bunch of drivers to efficiently drop off food during the evening rush, it's a fair bit of work in itself. My buddy talked more about that than making sushi.