How Delivery Apps May Put Your Favorite Restaurant Out of Business (newyorker.com)

In a piece this month, The New Yorker argues that online food discovery and delivery platforms are bad for restaurants. From the report: In recent years, online platforms like Uber Eats, Seamless, and GrubHub (which merged with Seamless, in 2013) have turned delivery from a small segment of the restaurant industry, dominated by pizza, to a booming new source of sales for food establishments of all stripes. When the average consumer logs in to the Caviar app to order a Mulberry & Vine salad for the office or a grain bowl on the way home from work, she might reasonably assume that her order is benefitting the restaurant's bottom line. But Gauthier, like many other restaurant owners I've spoken to in recent months, paints a more complicated picture. "We know for a fact that as delivery increases, our profitability decreases," she said. For each order that Mulberry & Vine sends out, between twenty and forty per cent of the revenue goes to third-party platforms and couriers. (Gauthier initially had her own couriers on staff, but, as delivery volumes grew, coordinating them became unmanageable.) Calculating an order's exact profitability is tricky, Gauthier said, but she estimated that in the past three years Mulberry & Vine's over-all profit margin has shrunk by a third, and that the only obvious contributing factor is the shift toward delivery.

Comments

Restaurants with ridiculous pricing structures . .

[Wrath0fb0b]

Reading this article will give you a good feel for how dependent restaurants are on beer/liquor sales to stay afloat.

Delivery of food with no high-margin drinks wrecks that model. In a world where you can order any combination of items alone, each item has to be priced reasonably.

dirty secrets

[supernova87a]

Everyone should really read this article to know the kind of bullshit that these apps are inserting into the restaurant business. You may love the convenience, but they're 0-value adding middlemen that are sucking the restaurant dry: http://tribecacitizen.com/2016...

Seamless, for example, not only takes a commission on every purchase (even if you would just call up the restaurant on an ongoing basis, and not being a new customer) -- the telephone numbers you sometimes see for a restaurant are actually Seamless's number, piped through their system to the restaurant. And they monitor transactions to make sure they're getting their cut.

Technology is great and all, but you should realize the ways that people use it to take advantage of those who aren't the masters of it.

Re:they pay to outsource what they won't manage

[AmiMoJo]

They pay to be on the app. Having your own website only works if people come to it, and a lot of people just use apps.

Platforms like this as undermining the idea of a free internet with a level playing field. It's not new either - try setting up an online store but not being on Amazon, Etsy, eBay etc. Unless you already have huge brand recognition it doesn't work.