DoorDash & The Myth of Profitable Food Delivery
ฝัง
- เผยแพร่เมื่อ 15 พ.ค. 2024
- Food delivery is a simple business. While the market today is dominated by DoorDash, Uber Eats, Delivery Hero, and a few others, back in 2014, food delivery and the gig economy were just emerging in Silicon Valley. Back then, the barriers to entry were so low that anyone could open up their own food delivery business in a matter of weeks with just a few thousand dollars and a website.
Food delivery seemed such an obvious million dollar business that as a starry-eyed 20 year old at the time, I left college to start a food delivery company, joining many others in the gold rush. The market in 2014 was wide open for the taking. DoorDash had not yet become a household name, UberEats was just spinning up, and GrubHub was used for looking up restaurant menus online.
6 years after my startup, it’s been interesting to see the continued hype of food delivery companies around the world even though everyone knows that the unit economics just don’t work. When you have to rely on tips to pay a livable wage to drivers, it’s obvious that there is something fundamentally broken with the business model.
In this episode, we’re going to look at the four biggest food delivery companies around the world from DoorDash, UberEats, Delivery Hero, and Just Eat. What are the strategies that these companies believe will lead them to profitability? Are these just fantasies spun for investors and which companies have made the most progress?
💬 Join the Modern MBA community - / modernmba
☕️ Support Modern MBA on Patreon and unlock bonuses like additional content, exclusive essays, and regular Q&A: / modernmba
🎧 Audio Editing & Mixing: Sonalf
0:00 Delivered to Your Door
4:40 Once Bitten, Twice Shy
7:46 Hard Truths Cut Both Ways
9:03 DoorDash, Dashers, & Unit Economics
14:19 Unorthodox Measures of Profit
19:17 Frequency, not Margins
23:14 Same Tide, Same Boats
![ตรงที่เดิม - ฝน พรสุดา [ต้นฉบับ :เบส ขวางหวัน]](http://i.ytimg.com/vi/c5YnbGEztI8/mqdefault.jpg)
🥃 This episode is the Season 1 Finale.
Season 2 is coming soon - thank you for all your wonderful support, engagement, and feedback.
0:00 Delivered to Your Door
3:00 Chicken or the Egg
4:40 Once Bitten, Twice Shy
7:46 Hard Truths Cut Both Ways
9:03 DoorDash, Dashers, & Unit Economics
14:19 Unorthodox Measures of Profit
19:17 Frequency, not Margins
23:14 Same Tide, Same Boats
Hey Modern MBA, love your videos! Could you do your extensive research on the compact prefab home market that is "booming as new companies attempt to build an affordable housing solution during an affordable housing crisis"? I suggest looking at Kerry Tarnow's video. What do you think? Thank You!
Can't wait for season 2, hopefully comes out soon!!
You are killing it 🙏🏼
Hey can you share about how to you do this type of extensive research? I am fresh MBA student and it will help me in college if you share resources like name of websites, books or magazine etc...
Your first business venture may have failed (monetarily), but I think you're on the clear path to success on YT. I had a try at making a company with some friends a handful of years ago, and while the planning/studying phase was fun and exciting, it never ended up going anywhere.
You should consider the things you accomplished with that business a huge success in terms of gaining experience and knowledge. It was very inspiring, thanks for sharing.
Everyone loses. Customers pay too much, drivers don’t get paid enough, restaurants lose money, and deliver companies are still unprofitable
Everything depends on perspective, customers pay more because of the convienince to order food to your doorstep, for a lot of drivers, its worth it and they need the money, the restaruants don't lose money (they have more sales, and they don't have to pay delivery drivers, plus they usually charge more for everything cuz of the interest wich is usually around 30 per cent)
Nope - driver could still be profitable that’s why it’s a best side hustle right now. Only local restaurants maybe losing money but big chain fast food still bringing good profit. Only customer lose in exchange for laziness
Drivers who understand their rights as independent contractors, take offers from multiple platforms, and cherry pick those offers for the most lucrative opportunities, aka just doing your due diligence as an independent contractor in selecting the jobs you choose to work, make plenty. I average between 30/hr and 40/hr on road and 20/hr full time, much of which just consists of sitting on my couch at home watching youtube while watching for an offer I want to take. Considering I jumped from full time employment delivery at Papa Johns and Panera Bread, both at the busiest stores in my region, with me being in top 3 drivers at each location, where it was literally impossible, even with their base wage and mileage pays, to break $21/hr consistently EVER, yeah no. Drivers who know what they're doing make plenty. Drivers who work one app and take every offer make peanuts.
Thats on them though. Their productivity is on THEM, and their knowing their rights fully is ON THEM.
Most of us gig delivery drivers do not want to be employees, and it is because we'd take a hefty pay cut and have to take deliveries 20 miles for base pay all day long with no tips. No thanks.
Everyone except the drivers and restaurants makes money.
everyone makes money except the delivery service company. Yes, restaurants my complain but they still make retail money!
As someone who worked at Chipotle until very recently, I can say that another issue facing delivery services is that the employees making your food do not care about customer satisfaction for out of store customers. If there is a long line in-store and we also have a bunch of online orders piled up, we are much more likely to prioritize helping the customers who are physically present, since we don’t want to have to deal with their complaining to our face about wait times. Also, if our numbers say we’re over-portioning certain ingredients, we will make up for that by shorting online orders. Again, if you’re not in the store you can’t ask for “a little bit more” of something as can those watching you make their food.
I’m a driver, and I found this to be very insightful information!
Helpful too.
It can be frustrating when the employees at a certain store can feel like gate keepers to me making money.
Especially when I first stared delivery.
Now, I have strategies in place, and I know what to expect from the restaurants in my area, so it’s my fault if I’m waiting. Hah
Former White Castle trainer and current driver here. I agree, this is insightful, and must say i hadnt thought of portioning. Tell ya what tho, if they dont have to get the food themselves and get it conveniently delivered, then i doubt theyll notice or care about a few less pieces
This is fax no one cares about drivers which is fair, I just don’t deliver from stores that get busy asf I simply deliver from less busy locations and decline to get orders from “hell stores” such as McDonald’s or taco hell.
i’m both a driver and longtime chick fil a employee, and can attest to this 100%! 👏🏼
This is why I never pick up from chipotle because they are slow
“We lose money with every order, but we make up for it in volume”
with enough volume we'll all be gazillionaires! How much is that volume to turn the tide? Don't know! Now pls give us more money to burn
“So that way we lose more money”
@@MrCTruck congrats you figured out the joke!
It sand logic as dashers that take all low pay orders because "it all adds up" idiotic at best
😂
This video was a breath of fresh air. The personal experience of the creator made if feel like they actually had something to say and weren't just regurgitating content they found after 10 minutes of googling like many other business/finance channels. Thank you.
Could have his bias points though given that his own delivery business failed.
@@vinay052003 They are bots. Look at how he used the word "Creator" instead of the name of the channel or youtuber.
Yes, this guy is someone who actually understands the business instead of spouting corporate nonsense like some other channels
@@tomyao7884 is the tax loss/look of a slow failing business/company a business model/strategy? aka legal tax dodging ect by door dash? or others
Yeah and something is off about the cadence
Back when these apps first started coming out, I predicted that it would lead to higher food prices and boy was I right. Food delivery companies have now encouraged me to cook my own food.
Tipping will be the least of these drivers worries if it keeps going that way.
I used to deliver pizzas in house for a restaurant I worked at. I did it for a little over a year before I started looking into doing gig deliveries, and realised that I would need commercial car insurance. After inquiring with my manager, I realised that the “pizza insurance” form she had me fill out when I was hired, didn’t actually insure me whilst delivering for them. There was no way that I could afford commercial car insurance working only part time, especially when I had to split tips with the rest of the team. I told her I couldn’t deliver anymore, and eventually moved onto other work. The whole ordeal really opened my eyes to how unsustainable food delivery is as a business model.
Thank you for saying this. For some reason people actually think that there is money to be made in delivering food. If that were true restaurants would have been doing it.
I'm not understanding your comment, why do you necessarily need a delivery insurance? I can hop in my car and doordash no problem
@@warfare20111 If you get into a crash, you'll find that your personal insurance *won't* cover you if you are driving commercially. Maybe Doordash provide you with commercial car insurance, but when I was researching, that didn't look to be the case. Unless you know for sure that you are insured whilst delivering, I would proceed with caution. And as I say, if it turns out that you aren't, you may find the cost of commercial car insurance to make delivering unsustainable.
@@jsward96 okay so if i get in a crash and they find out i was doordashing i am no longer covered even if i have regular car insurance? in that event it sounds like i shouldn't mention i was a dasher lol
@@warfare20111 If you lie about not being on a delivery you are committing insurance fraud, which is a felony. If Doordash aren't providing you with commercial coverage, you should shop around to find an economical solution. And if you can't you should find other work.
Fulltime third party food service driver here, what annoys me, is apps will allow restaurants to have closed lobbies, packed drive thrus, and no way for the driver to come in lobby or have order ran out to them, thus leading to you having to wait in a 40 min line, thus guaranteeing a late order. If a location cannot accommodate for delivery orders, then they shouldn't do them.
I've been in food management, corporate does not care. The bottom line is getting the orders out. There was a week period at a time where i was the only assistant manager in the store I was running with one other person being forced to keep the lobby, drive thru, and Doordash orders going.
These delivery services have done their damage and won't be going away anytime soon.
@@CerealKiller420 See your anecdotal is due to lack of staffing, making it difficult to run all of that. I'm talking about places with full staff, even when they arent busy have locked lobby, because they enjoy it too much after covid gave them a taste of not having to deal with managing/cleaning dining area. Thats the real issue. Then when those places get busy, you are waiting in a drive thru for no reason. Almost all locations have a door bell, or at least keep their lobby unlocked, but s sign that says closed. So delivery drivers know they can walk in or ring the bell. These locations that already walk outside to hand food to those who park to side after drive thru. You can't walk out with the delivery order as well? Its pure laziness at the paticular locations im talking abou, where I live.
I never understood how food delivery companies actually turn profit.
Now I know they don't.
Thank you!
Growth stock. It took Amazon almost two decades before they turned a profit.
@@joey199412 Amazon is about to crash
@@joey199412 If I understand correctly, Amazon lost money BECAUSE it was pursuing growth, though, not because it was in a fundamentally unprofitable business. Growth is expensive. These companies have achieved scale, and they still just lose money on every transaction. Even if they do achieve minor profitability by eking out a little more efficiency, they will still be in an extremely precarious position and have a pathetic P/E ratio based on their current stock prices.
@Swarmpope Honestly, that's an interesting perspective. I wonder if food delivery has already reached peak market saturation in that light: there's not really any way to raise prices because it's already so expensive, and there's not really any way to drive down costs when drivers make below minimum wage.
@@121Zales Drivers are temporary solution. Their ultimate goal is to replace drivers with autonomous vehicles so that they can cut down costs and turn a profit. Labor costs can vary wildly depending on how many drivers they recruit and what price they’re willing to work for. Unlike a human, a machine is gonna work nonstop until it breaks without demanding any pay raise or break, which makes it a much lower cost than a human. That’s what these companies are betting on. That’s why investors are still putting money into these companies.
I placed my first-ever DoorDash order after receiving a gift card from someone. My $16 meal cost me a total of $25. I knew it would be expensive to order food through the delivery app, but I had no idea it would be this expensive. So, I will not make another order unless I am extremely sick and can't move my ass to cook or go to a restaurant.
It’s for rich people that don’t care to pay for the convenience… (or broke people that think they’re rich)
@@hectorabreu2502 It's for lazy people who were having their laziness subsidized by venture capitalists.
The door dash delivery driver isn't being paid an hourly wage so the tip is needed for the service.
@@Default78334 It's also for the elderly and infirm. I deliver to a lot of housebound people. They are grateful for the service because they have mobility issues. Not everyone who uses delivery services is "lazy". You might want to consider that other people have various issues and a delivery service is exactly that, a service.
@@merrimcarthur7198 Well yes but that's a small segment of the customer base. The large majority of customers really are just people who are paying a convenience premium on top of their food order.
The thing about all this "disruptor" businesses is that they exploit their employees and still do not make a profit. Its like doing evil to lose money. I can never understand why investors throw money at the "potential"
I got like genuinely scared when he started describing Doordash's "world domination plan". Not just those "disruptors" don't actually disrupt shit (pizza delivery has always existed), they always come with these huge ambitions bordering on sociopathy.
They exploit customers, employeers and suppliers, still can't make a profit, and think this plan is so good that they have to expand to every economic activity on earth.
They don't make a profit because they have high advertising costs.
But if you look at their costs vs return for each order they are making a HUGE profit per order delivered.
Tech bros (and it's always tech bros) don't have any regard for humanity. They're just awful people, sociopathic by their very nature.
Because when they get the monopoly and create enough barriers for entry then they can charge as much and give as little fucks as they can
Cos tech is the new pozi scheme. Bunch of well known 'tech bro's' advertise to thier followers that they are investing, which generates more investors. Those same people then quietly sell out. It's the early adopters that make the real money on these, relying on the 'fear of missing out effect', which they bump up by showcasing their lives on social media.
Food delivery companies are the primary reason I no longer have food delivered. They are no more reliable than the in-house services vendors used to offer, but they are WAY more expensive. When the costs associated with deliveries started to approach half the price of the product, I'd had enough. The convenience is no longer worth the cost. Now, if I can't walk to a restaurant and pick up what I want, I do without. My bank account has never been happier. Neither has my waistline.
I mean I definitely agree but it's definitely not same service as your pizza or Chinese place back in the day I have no clue what you mean. Before you literally call and just hope they show up with no clue when or any updates as to what's going on. I think it's pretty fair to say Doordash service is probably better...
@@ykonratev Uhh no. The old days were definitely better since you didn't have to pay an arm and leg for delivery. If your food didn't show up, you simply stopped ordering from that restaurant and that restaurant would take notice and try to rectify their delivery system.
I cannot think of a single time that I have ordered delivery, though there was one time where someone in a group I was in ordered delivery for everyone in the group but I have never ordered delivery myself. Some reasons I don't is that I choose to put a barrier between me and unhealthy food. If I'm gonna eat junk food I'm gonna get it myself (sometimes by bicycle). I don't want delivery apps advertising to me on my own phone. The price of all this convenience we have in the world is not healthy. I don't like the idea of never going outside to do things cuz everything you could possibly want is in your own house. I should cut back on fast food as a whole, which I am being more conscience of.
Edit: Oh these delivery apps _still_ cannot turn a profit so good idea to not be reliant on them anyway
Food delivery is a premium service. The fact that we have been living under the disillusionment that we can have adequately priced food and also have it delivered on time at very little expense tells me that we are in for a rough wake up call. I will say though, when they invent fully self driving cars or robotic delivery people they don't have to pay, maybe there will be a legitimate value preposition lol.
But the drivers barely make any money unless they are tipped. Autonomus won't fix much if the business model is fundamentally flawed. These companies will never ever turn a profit. Expect mergers and take-overs until the one player left can charge any price and you will see $10-$15 delivery fees come into the mix.
Exactly !
Ordering online should be a treat.
‘The youth of today’ think it’s a normal everyday thing they’re entitled to
@@KOSMOinfinite And yet paying $11 on average (at least) in fees, etc just for a single, cheap fast food order.
Yeah, people overestimate artificial intelligence for food delivery. People, also underestimate the complexity of the job of food delivery drivers. There are so many situations where a robot will not work. Not in the near future at least. In those situations, you will still have to tap "I would like a human to deliver my meal."
There's a certain human element that machines just aren't ready to replace, like a driver's local knowledge of the roads and routes, and also customer ordering patterns. Maybe AI can replace some of that insight, or maybe not.
But as soon as they tell me they are delivering I knew it's going to be bad considering a person's minimum wage in the US 7.25 per hour and typical delivery takes 20 to 30 minutes MINIMUM, often the driver is carrying one single order. You know the economics will not work out.
modern mba is so consistently well-researched, engaging, and interesting. well done yet again, and here's to an even better season 2! Love your work 😊
Agree. Very well put together and interesting.
Also has a great voice for this, tbh
I fully agree. I think this is one of the best (if not THE best) business content channel in the entire youtube - and believe me I've searched.
Saying this having been an entrepreneur for the last decade - 90% of my adult-life professional career.
@@McMalhon do you know what's his background? or does he have a blog anywhere? his analysis and point of view is so thorough that is even better than some of the top think tank
He's so well researched, that I wouldn't be surprised to learn he took on a professor job.
wow, finally a business youtuber who actually has an education AND experience, and isn't just reading paragraphs ver batim off wikipedia
great video
Not experience alot of wrong info 25,000 deliveries rideshare
@@thewonderingbuddhist6123 what
@@thewonderingbuddhist6123please cure your stroke before giving criticism.
Hey modern MBA. Would you have ever thought that your videos will be used as video course in a university in Cameroon? Yeah that's right. It's been used. Big up to you educating kids even in war zones
Really? Wow
I'm getting great business education from this channel. Sent links to friends, love from Nigeria
you still would have to pay a hefty licensing fee for that
When did Cameroon become a war zone ?
@@shodunke we have had a war now since 2016. With over 1 million displaced people and about 300,000 refugees in your country Nigeria. More than 15000 people have been killed. It's called the Anglophone crises. The English speaking minority region of Cameroon wants to break out into a separate Country. It's a long story. You should read about it bro. One of the wars no one talks about.
I actually ordered less delivery during the height of the pandemic. Working from home gave me more of an opportunity to cook for myself and, when I did order out, I preferred to go pick up the food myself as it gave me an excuse to get out of the house for a little while.
That's a good spirit!
Gas prices and inflation have killed a lot of that.
lotta ppl got into blue apron and such
During early pandemic, my apartment actually organized weekly food trucks, and that was way more convenient and cheaper than ordering from doordash(no $10 delivery charge and tips for an order that costs at most $15).
Yup, most people order out because they can't cook as in, no time to. With the pandemic more people had time to cook for themselves so those who could likely did.
I'm sad you're going away. Season 2 can't come fast enough. I'm very impressed you started your own business. Even though it didn't work out the education, experience, and memories are valuable.
interesting video. I personally ran a delivery company in Halifax NS Canada (not a huge city like Toronto or Montreal but still still decently populated). I had around 50 drivers in total staff and 4 or 5 dispatchers to handle the phones. On any given night we usually fielded about 15-20 drivers and 1 dispatcher was always sufficient. We usually did anywhere between 75-150 deliveries per night and about 50 or so during the day with the hours of operation being 11am-11pm.
This "business" though was not official, we never kept any records, we never had a payroll, it was all cash and done on a per delivery basis. We basically ran the entire operation under the table... but still we had over 100 local restaurants on board, including all the local KFC's.
The benefit to this was that my core group of drivers were actually Courier drivers during the day... delivering things like envelopes and printer cartridges which were not time-sensitive like food. So when I got a call come in for a food delivery I could always get one of my courier drivers to divert from their current route and do the food delivery real quick then get back to their other deliveries. This really helped a lot because it made it so that I didn't have to have any drivers just sitting around doing nothing while waiting for a call.
I was doing this just before Uber eats and Door Dash even existed, they started to try and break into our market just as I was getting out of the business.
Our pay structure was 6$ per delivery (going higher if long distance)(the restaurant usually passed on this cost to the customer although some only would charge half and pay half themselves) and the drivers all had to pay the dispatcher 1$ per call that they got (Drivers kept all the tips). Typically most drivers would see about 10-20 deliveries a night and the real winner was the dispatcher who made close to 200$ some days just sitting at home on the phone.
I remember some nights making close to 300 bucks driving if the tips were going really well, but then there were other nights when you only made 100 bucks if you were lucky. The main cost for me was the repairs to the Car. I was driving a 2nd hand car and it needed fixing A LOT when ur putting like 400 kms a day on the thing. In your video this factor wasn't even included, and if the drivers already don't make a livable wage without tips, after you factor in the car repairs it's even worse. I was always jelly of anyone could deliver on a bike, my city was too vast to do it in.
Every time it felt like i was starting to get ahead of my finances, boom 500 dollar car repair bill. After years and years of struggling with this, I eventually gave up driving all together and left the business in the hands of my head dispatcher who still runs it to this day. There was definitely money to be made... but real "profitability" wasn't actually there.
The issue with a business not paying its employees and relying on tips is one almost exclusively in NA. I live in a country where food delivery is utilized more than the US, and not a single app offers tipping option to employees. People can either deliver however many or little they want, or they can be fulltime drivers and have to deliver a certain amount monthly to receive a steady income. I nevertheless still tip in cash when I know that either the restaurant is very far or is in a very crowded area during the weekend. Restaurant industry in the US is incredibly greedy and I cannot fathom how it is still operating using its unethical business model where customers are scrutinized for not paying the employees rather than the company providing the service.
In my experience, tipping can be seen as richer customers subsidizing poorer customers.
Poor customers don't need to tip, or can under-tip, and it's made up for by the average and wealthy customers who over-tip.
End result being more people can afford the service.
I'm in Australia and tipping isn't custom here either. Apps have the option but it's not pushed to you, but we also likely have better protections for the contractors/employees (eg min wage). Not sure how the financials add up, but its likely not good, and unfortunately that should mean the prices will have to go up to fix this.
tipping is a reward, not a requirement.
@@jessh4016 To an extent, definitely. I used to be a waiter. Every now and then you have someone leave a $50 or something.
@Bobspineable Yeah, it’s such a cultural thing. I’ve traveled a lot and lived in Asia for a couple years, and even though I knew tipping was against etiquette, I still felt physically uncomfortable not tipping just because it’s so ingrained in me.
Ironically, I now live back in the States right next to the Asian district in my city, and the business owners there are some of the most shameless tip-solicitors I have ever come across lol. They’ll demand a tip before service and will publicly shame you if they don’t find it adequate. Talk about taking a new custom a running with it way past it’s intended purpose lol
I've worked restaurant management and also drove for Uber Eats. I reluctantly ordered from an online AP and was sorry I did. The wait time was ridiculous and the food when it finally arrived was poor quality. As a restaurant manager I've experienced rude drivers, witnessed drivers eat out of peoples food packages or cancel the order a soon as they walk out of the restaurant. As a driver I experienced long wait times to pick up the food, restaurant locations with no convenient parking as well as no or low tips and/or pay outs. Food service is a grueling business to work in- general. It makes people not want to be bothered with the many headaches associated with working in the food industry.
on one side the restaurant employees treat you like shit, had a fusian employee tel me that im just a DD driver, and i said so you are just a food counter employee, and explained to him if they expect drivers to be nice to them they have to return it you get what you give. there was a police officer standing rt next to me, in fact the officer suggested i go first and i said i had already been helped and the guy took her order made it first when i was already in the store and had already talked to him. they are lucky the cop was there as i had to be strategic and polite in my reprisal, if there had been no officer i would have gotten quite belligerent
@@chrisfrisch1347 Exactly! No respect. That's the problem😐
As someone who has worked in fast food for 5 years, I agree. Customers suck. I chose to work in the kitchen but Ive had my fair share of bad customer stories. There were some good ones, and some cool regulars who were really nice. One of my least favorite things to do in fast food was cooking food fresh for people, unless it was for a nice regular. We had a regular who would order 2 Filet-O-Fish's fresh and I would happily make those fresh for the guy cuz he was nice to everyone and chatted with the drive-thru/counter workers. If you're nice to fast food workers they'll probably be nice back.
I'm not disputing you seeing drivers eat for out of customers bags. However, every order I've ever received was sealed with a sticker from the place I ordered from, their logo on the sticker. Noting ever showed having been tampered with, and even when I've tried to see if it could be opened without showing evidence I always ripped the bag or damaged it in some way that would be a big tell.
I'm sure it has happened, and maybe that's why they seal them now?
I used to work for a delivery Startup in college. What he said is Spot on and things I realized as I was working that job - realizing what a dead end industry it was
Proud to say I haven't used a food delivery service since 2019 when they all started adding "service fees" and "small cart fees" and all that scammy nonsense
I've been contemplating unsubscribing from these services for a while and this video was the motivation I needed to do so.
It'll allow me to order fewer things and just directly support the restaurants by picking up from them or calling them for delivery. You made a great point about if there is nothing new then the consumers won't be interested and that made me realize, as someone in a suburban area, there aren't new things popping up, I'm just hurting the businesses that are already here.
I hate that these apps pit the delivery and consumer against one another.
these apps provide employment for people who need flexible work hours due to other work/ family commitments have mental health issues or just want a better work life balance. you not supporting these apps makes these drivers lives even more difficult. shame on you
The vast majority of restaurants don't deliver... probably for similar reasons as why these delivery companies can't be profitable.
I make about 112k a year including my two bonuses and I've been doing this for years. It's just too expensive.
I don't understand why people who in lower wage jobs pay so much for such a commodity. These services is what keep people lazy and broke. Just make your own food or go buy at a restaurant, you will save money and help the restaurant more.
@@greenlamp9219 it's a business, not a charity, with unsustainable financials. if anything, these gig companies are fueling regulatory capture that will outlast the runway they are burning up and drivers will come out behind.
@@greenlamp9219 Keep spitting my guy.
I really can't express how valuable these videos are. I've always had a hard time being interested in business-focused content because of the level of flash and presentation used by many other channels, which I think obscures whether or not they have actual insight. By contrast, this channel is precise, understated, and extremely clear. I feel like I'm absorbing so much information and genuinely understanding it as I watch, and its given me an entirely new interest in how businesses are managed. Thanks for all you do
I feel the same way about business channels in general. I'd also recommend Company Man, another well-researched and fairly well-presented channel.
Pp
This was so well said. I, as a fellow viewer just want to say thank you for your comment. The whole #TH-cam needs to see this comment. 👌🏾
As a doordash driver, you have to have a strategy. Be picky, avoid restaurants that make you wait, no orders less than $1 per mile, or orders out of bounds that make you drive back to the delivery zone. Also, I don’t consider what the customers give as a tip, more like a bounty. If you want your order to get to you offer a decent bounty.
I would also add to this great list of tips one thing....Dont pay any attention to getting or maintaining "Top Dasher" status. Taking all those 2.75 deliveries 15 miles away are not worth it.
Yes yes and yes 🙌 I give this advice to people who want to start. I just do it because I can’t sit still when I’m not working. I’m picky. I do Grubhub and DoorDash. I have a dismissal 40% acceptance rate on DD but after taxes, gas, wear and tear on my car I’m still turning a small profit.
Now I read their forums and they decline anything under $2 / mile
I found GrubHub paid the best out of each one.
@@mingchi1855 Bc 2 dollars a mile turns into a dollar a mile round trip that’s why people say that
There's so many problems with these food delivery services. For one, they're trying to find margin in what's already a tight margin industry. For two, food delivery is a commodity - anyone with a car and a license can do it. How do you differentiate? And are those differentiations profitable? For three, no one wants to pay a premium for delivery that may or may not happen. It needs to be rock-solid. With the "auction" style pricing between buyers and drivers, this will never happen. Fourth, when there's a problem, there's no good path to resolution - if my pizza shows up burnt from a company driver, I know exactly who to complain to. With doordash, that driver is gone from the transaction the moment they hand you the food. Now the consumer has a difficult follow-up, and most resolutions do not resolve the issue of not having food to eat when you need it. Just credits that basically say, "Better luck next time." It also creates too many scenarios for abuse. Restaurants keep lists of bad customers they won't deliver to because it only takes a handful of disastrous orders to throw your operation into a miasma of bad service and lost profits. Now bad customers can "surf" these delivery companies and keep abusing drivers and restaurants. And lastly, restaurants are generally modeled for delivery/takeout or they aren't. Pizza is great for delivery because it travels well and presents nearly as well at home as in a pizza parlor. Many others don't. 15 minutes in a heat bag and the food is mush.
or a bike, some ppl even deliver with walking in a place like NYC where i live. a guy i know uses a skateboard to deliver food!
If restaurants cannot turn a profit based on marginal costing on the online orders, they will leave the platform. If there are enough lower cost quality black kitchens on the platform, maybe the delivery service business will be profitable. And R&D costs will have to be reduced over time. Customers will be more reluctant to pay for price plus premium service as inflation bites and cost of living rises.
And yet door dash has 100 000 drivers and we work around the clock
For rich people all this price talk is peanuts
I'm not even sure that driverless cars would save these services.
They would save money by cutting out the driver's wage, but with a huge tradeoff; they then have to take on the expense of owning, maintaining, titling, insuring, storing and fueling their own vehicle fleets. Right now the driver takes on most of that expense. I'd also assume that their vehicles would have to be specialized to maximize how many meals can fit in the vehicle (but not too much or one delayed drop off or pickup makes everyone's food late) while also preventing theft, most likely with some sort of "techy" locker system. Outfitting a car with this sort of customization would add to the expense. Finally, it's assumed that restaurants will be cool with interfacing directly with the driverless car instead of just handing the order to a delivery guy. Now they have to send their busy employees out to the parking lot to interface with some sort of locker in the car.
Somebody would still have to be on staff to clean these cars every day, there would have to be a system to deal with glitches where food arrives at the wrong location or the customer can't access their food, you'd have to account for customers who can't jump out of the house to pick up their order the minute it arrives (because you have to keep that vehicle rolling to maximize profits), and once you start adding these costs up and comparing them to the fact that simply hiring a driver a driver saves them from most of these logistics, I don't see how it could ever be profitable.
My city applied a cap to the fees delivery apps could apply, and thus they created an ADDITIONAL fee, on top of their regular fees. Now we're expected yo pay a higher tip just to receive a service? It's too much. I feel the same going out to eat these days. Sure, the old saying "if you can't afford to tip you can't afford to eat out" was all fine and well when that was a standard 10 or 15%, but now that the shaming to tip 20, 25 or 30% it's crazy!
In the case of these delivery services, think of it as less of a tip and more as a bid for service. If your bid is too low, your food sits and waits.
Who's making you pay 25 or 30% tip? Just stick with the 15% and if they're uppity about it then don't give them recurring business.
@@realtalk6195 The delivery drivers do. If you don't tip/bid enough, no one will take your order and the drivers don't really care if you'll never order again because they would likely never cross paths with you again even if you did keep ordering.
Tipping a percentage doesn't make any sense for food delivery in general. It costs a driver an almost identical amount of time and gas to deliver a $10 order vs a $50 order. But most drivers won't take an order that will take 30 minutes for a $2 tip, even if that's 20% of the order.
@@ellienyah Exactly - and even tipping 30% on a $10 order ( $3.00 ) still doesn't pay the driver for the gas/time it is going to take them to deliver your food from a restaurant 10 miles from your home esp. since once they drive to your home they have to return to their area so it's a 20 mile trip for that $3 + $2.50 base pay from the app. - so the driver is making $5.50 to go to the restaurant - wait for the restaurant to get your food ready and pick up your food drive it 10 miles to your home - drive back 10 miles to the area they pick up in ( so approx 30 - 45 minutes of their time and a gallon of gas ) - so even with that your food is going to sit at the restaurant waiting for a driver to decide to accept the order when they are losing money delivering it.
21:20
100% this, yes. The only reason I don't use delivery services, is because I dont usually WANT to make a 15, or 20 dollar order. I JUST wanna get my 7 dollar combo, and I'll happily pay more tip. My issue is spending double (or even tripple) of what I'd usually even get, and then all the fees on top of that.
I think whichever company can outlast the competitors will win. The market share shift that would occur if any of the main delivery companies were to shut down would be huge
"When you have to rely on tips to pay a livable wage to drivers" 8:34 Customers often don't give sufficient tips to make delivery worth it for drivers once they pay their gas insurance and maintenance. I think that is one reason drivers quit
Yeah all these drivers thinking they make 30 an hour are just trading their car's value for money. Its delusional.
@@sniperassasin1264 I think it is too
That's why I do it on bicycle. I am faster than a car for journeys 2 miles and under. No gas or insurance but there are maintenance costs and increased food costs for greater calorie intake.
@@manoz6194 You must be strong to do that all day
Certain cities have walking deliveries.
Man, this channel does business analysis right. Ties in economics with financial statement analysis and real-world references. Big up bro, this shot.
"Babe wake up new Modern MBA video"
Omg this is funny
Wake up nation
Love your videos man. As a DoorDash driver in Australia servicing the city and regional areas I can agree with a lot of what you said, and the economic problems that come with running a business where most pay is based on tips are pretty big. In Aus where tipping is very abnormal and considered a strictly American thing your pay is almost always only the base pay rate of DD and that is not often high enough for the the driving costs and things to balance out. More than once have I done DD for a week only to realise I wasn't financially better off for it
Over 60% of my pay is tips, idk how you even survive.
It's the same in the U.K.. Tipping is only really done when a service has been memorable.. I always find it amazing that the Americans are willing to work for tips but I guess it keeps their servers desperate enough to be polite to customers.
@@alfsmith4936 Funnily enough, customer service is actually MUCH worse when tips are the norm. Staff makes less and is ready to start screaming if you tip whatever they personally deem to be too little, and tipping extra for excellent service goes by the wayside because tips are seen as mandatory on all orders, so in the end it just makes everything worse
What's nuts about Doordash is that they do not allow you to tip after delivery. Which is completely awful in a place like Australia. I want to tip drivers who read instructions and no tip ones who do. But if you have to chose the tip ahead of time, it's impossible to reward unusually good service.
Australians are acutely aware that tipping is unfair and a terrible system. Its one of the general things that we don't want to be like America for. It also is why service in American restaurants is so terrible, since you can't get any waiter/tress to help you, they need to get your one, who might be busy. Its insane.
why are you doing it then and not something else where you can actually earn money?
I lived in Miami in the 1990s, we ordered from something called a cafeteria. (It was a little different from a cafeteria in English.) They solved a lot of these food delivery problems because of the way they were set up.
You would fill out a form every weak in advance. You would pick your lunches and your dinners, and they were pretty cheap, and then they would be delivered at 11:30 and 5:00.
They could cook all of the lunches in the morning and get them delivered. The afternoon was spent making the dinners.
The delivery was extremely efficient. A driver would load up a van and drive around the city dropping everything off. It was almost like a postal route, because they were pretty much doing the same route every day.
There was no tipping. Food was pretty darn good.
I think the problem with individual orders being made and picked up and delivered is that it is an enormous amount of waste. I don't think there's any way to make this cost-effective or efficient. But those cafeterias were the best experience I ever had with meal delivery.
That sounds like a really good business model, as it makes the whole process so much more efficient. Nothing that can be scaled (but not everything has to be), but something that any decently well established local business can do by themselves. It's strange that this hasn't caught on.
There's almost no room in the economy for middle men.
Consumers are too sensitive to price, and it's too easy for manufacturers to sell directly to consumers.
I don't know how you're getting such high-quality, well-researched and succinct videos out so consistently, I subbed like two months ago at 20k and you're already at 100k. The quality of work is absolutely key and keeps me coming back and watching.
Been working Doordash for 3+ years. My business has grown to the point where I'm making a full-time income working part time hours driving about 30-hours per week. Between tens of thousands in extra income, learning my area, finding out about different restaurants and meeting great people, I've had nothing but a positive experience.
What’s your nearest metro? I’m in Chicago land area just south west of the city.
@@julisa3100 The Suitland Metro in Suitland Maryland. I live in one of the best areas for Doordash, made $350 in the last 3 days, and that's typical. To me, DD is a great opportunity, you just have to have the work ethic and discipline.
Good lord I hope my country won't pick the US' tipping culture. It really seems like a lose-lose on user/workers except for the companies
It's absurd. Tipping started for paying for extra service, something more than initially promised. It was never meant to being a regular thing.
@@incremental_failure Tipping was an a way for restaurants to offset the loss of alcohol sales because of prohibition. They simply decided that it just made sense for a business to not pay their employees if they could get the customers to do it for them, generating more profits for the owner. Honestly, it needs to go away and restaurant owners who claim they can't afford to pay their staff a living wage and force consumers to pay their salaries for them need to close because they suck at business management.
@@nobodyspecial4702 I know, that's what I meant by "extra service". Nowadays it could be something else which is not standard practice.
@@jessh4016 That's literally how tipping started. "Tipping" refers to tipping the booze bottle.
I hope tipping ends in the USA. Tips are for exceptional service, not the bare minimum. The only time I tip is a sit down restaurant and even then the server needs to just be paid a living wage off of what the menu price reads, even raising prices a bit to cover the server's wage. Tipping needs to end.
At some point everyone will just have to accept paying significantly more for delivery. Delivery can be a huge value to consumers that don't want to go out, but paying another human to do a task costs money, and we as a society need to accept that. I do think that the existing companies are a bit too "finance bros" though, and need to stop jockeying for market position or siphoning money up to investors. It just needs to be a simple, low profile system for routing delivery orders, and the bulk of the revenues should go straight to drivers.
well its all beautiful, but no one want to pays 10$ to be deliver. Its cute and all to say "we need to accept paying more", well, then Im not going to use delivery then
@@siyano Ok, maybe you won't, but then you don't deserve to have delivery. Other people would pay that because they don't want to go through the hassle. Delivery is not some human right, it's a privilege, and it should only be available to those that are willing to pay what it actually costs.
The times in my life when I’ve been extremely sick or when my mother passed away, I was so grateful for Doordash! It feels like such a kind service to have someone bring you a hot meal of your choice, and even 3x the expense was absolutely worth it.
No they won't, the costs are only so low because the gig economy workers aren't paid, however once you pay them hourly from a new startup which doesn't have the 12x shareholder return obligation but does have experienced and valuable couriers? the company doesn't have the same financial squeeze.
@@timogul Saying, "Well, if you won't pay more, then you don't get delivery" is the same energy as "if you don't like how much it pays, find a different job"
As an on again off again dasher since 2018 by choice and necessity, and an occasional customer, this video was nice to hear. It highlights a lot of stuff I've thought about. From a driver perspective it's so hard to make a profit after gas, maintenance, bills, and saving for tax because as an 'independent contractor' you get no benefits and tax isn't taken out so you better save and track your miles or Uncle Sam will slam you with an unexpectedly high tax bill. So please please please tip well. I never take orders that are less than $1 per mile now, and hate how they make you gamble on an order sometimes. Guaranteed pay for an order might be listed as $2.50, and tips MIGHT make it higher, so go ahead and drive 10 miles in the hope they tip well. Or risk sitting around waiting for another order, and have to settle for the WC order that takes forever and a half, especially at night. I've not seen DD say exactly what the split between base and tip pay is before an order too, and it's so hard to anticipate what your earnings might be day to day and week to week. Not to mention driving around all day isn't great for your health, safety, and mental well being if the app crashes, traffic gets bad, people drive poorly, or road conditions/design get wonky. It's a real mixed bag. I'd rather they have an option to just work a schedule and get paid a non tipped hourly wage. I've never in my years had a "big tipper" where I went, woah, that was a nice tip, thanks, and I like to think I'm not a bad delivery guy.
im sure u would love to be paid 200k per year just for ur dasher job, entittled baby, if u worked at mcdo ud complain ur not paid enouh, whiner baby
Zerald, may I suggest you find another line of work.
As someone who used to work with Uber as a delivery driver... I'm very happy to be getting a normal retail job soon lol. At least I'll actually get paid!
We are so lucky to have your content! It is always so relevant, well-researched and engaging. Thank you so much!
This is by far the best and most thorough explanation of the food delivery market I’ve ever seen. Seriously incredible research!
The main problem is the business model that delivery companies have. When partner merchants join the platform, they get paid for 100% of deliveries placed regardless if they get delivered or not minus the app's commission fee of around 15%. When a customer doesn't tip the driver, there is a high chance that that order will not be delivered or DD will have to add bonus pay to base pay in order to have the delivery completed. This process takes time and time is the enemy of hot food. Many low tip and no tip orders get delivered late due to the low payout for the driver and then DD refunds the customer whilst paying the merchant for the food and the driver for the delivery. This is why all food delivery companies in America and Canada have yet to make a profit. You can't pay merchants for every order placed and then have customers not pay the driver anything. This happens way too often and this is why these companies are going bankrupt. The only profitable business model is what exists overseas in England and the UK and that is the flat fee system. The delivery fee is very high, but no one tips the driver because tipping is not customary in the UK. This makes it so that the delivery company has enough money from the customer to pay the driver a fair wage to deliver the order and while they have less orders placed due to the high fees, all companies are able to make a profit. The other way to solve this problem is end relationships with all merchants and make everything a place and pay order for the driver so if the order is never delivered then DD just refunds money they were holding while no merchant was paid for food that was made and never delivered. This will never happen though so the only option is for America and Canada delivery companies to switch to the flat fee model for consumers. The problem is who will make that change first? Whoever does will loss significant market share (customers) but they will start to make a profit.
When I first began doing delivery in the Los Angeles area, the company I worked with (which was eventually bought out by GrubHub) was privately held and from all indications profitable mainly because the focus was on high value orders. So, while there was tipping involved, because orders were high value, revenues theoretically reflected accordingly. Also the average base pay + tip was much higher. On the flip side, volume was lower.
Up here in canada - we have skip the dishes and well the owners pretty much just let that run as a loss-leader and went to start a fintech company (also just as a bad as their food app). They made a ton in vc valuations but that really has no recourse on the business model as a lot of the companies here have stopped signing on because they kept increasing rates yet never have turned profit. The thing of the gig economy and these sorts of apps is that there is no moat and the barrier to entry is still basically super low. Uber and lyft have only survived due to crazy amounts of VC funding rounds, and they will never turn a profit until self-driving cars become more prevalent, which is their entire plan.
they are part of just eat
Even with self-driving vehicles, they will still make loses because apparently, the business model is bad. Which I have no idea how that is when they are overcharging people but hey.
I cannot express for how long I have been waiting to find a TH-cam Channel that creates exactly this type of content. I'm so glad I found you guys, keep up with the good work, great great content.
I've never understood why people use these apps. At least when I order pizza I know the driver has a responsibility because he works directly for the store and I know where to complain when an issue arises.
In the UK, at some places, the driver is directly employed by the shop/restaurant when using the apps, Don't have that in the US?
In 2014, I joined Caviar as a bicycle courier. I was still in college, and around that time, if I worked standard 9-5, M-F, I would make around $400 a week (pre-tax). If I took purely night shifts and weekend shifts, I would make nearly $100 per shift.
DoorDash bought Caviar in 2020, and since then, I never made more than $39 in an entire day. In fact some days I'd make a whopping $0. I'd say more than half of my customers did not tip, and a wide majority of orders took forever waiting at the restaurant and would waste time.
The same situation is in the courier industry. Daily volume is up and down, and competition is on price only. Unless your company is a big player in the industry with a warehouse, software, and a sufficient amount of drivers. Plus, customers expect you to be a superhero and drive for 7 days a week in any weather condition.
Thank you for the good ideas. I just signed on with Uber Eats and on my first delivery by bicycle. The drinks spilled halfway out all over my insulated bag. Work scoliosis. I can't wear a backpack. I'm only 4'11" and 95lbs. I'm to little to hold a lot of weight. My customer was so kind despite his drinks being half gone. He tipped me extra. I guess because he appreciated how fast I got the food delivered and how tiny I am. He didn't even want me to go get me drinks even though I offered.
Exactly why I would never engage delivery service of my food.......
The thought of it bouncing around in some stinky old bag or dropped a few times before appearing as an unidentified food product along with an outstretched hand looking for a tip!?
@@fabianmckenna8197 I now carry tape to tape the tops of the drinks so they don't spill. I wedge them in my backpack so that they move very little riding on pothole roads.
@fabianmckenna8197 yup, I'd be pissed if my order was all jacked up and then I had to tip. No way José. I even pick up my own orders from Domino's.
This channel deserves millions of followers. Such insightful, well researched content!
3 things I wish were covered in this video:
1. The marketing/advertising is huge for Doordash. How much, and how, do they attract customers?
2. What it meant for Doordash to go public on the stock exchange?
(3. What does Doordash pay for their customer service out of Southeast Asia?)
This is the content I always wanted more from TH-cam! Amazing work!
A subscription well deserved, thanks! This was incredibly insightful, it really shows complete inside out blueprint of how food delivery companies are working, thank you so much!
As a delivery driver for Doordash and Uber Eats I have to wonder how much money these companies are losing based upon orders which need to be refunded due to them not being delivered? I know I will frequently decline orders due to the low payout to the estimated time or mileage the delivery will require. It is very common for me to decline orders that are not paying enough for the total mileage it expects me to drive and I am sure I am not alone.
You can get apps that will automatically screen order offers and reject the ones that don't meet your pre set parameters.
I do the same thing. You’re not alone. I a couple requirements an order has to reach for me to pick it up. I do Grubhub and DoorDash.
I do the exact same thing, got like a 30% acceptance rate
don't worry theres always someone else who accepts the ping
4100 dd deliveries and my acceptance rate this week is 18%
I am thankful for Doordash because its the only job I have actually liked and been able to keep because I can make my own schedule. I can't really deal with obligation like others as I have social and anxiety problems as well not being able to keep a schedule and keep track of time. Doordash let's me start and go whenever I feel up to it and I make more than I did in retail or fastfood. I feel that they will eventually raise prices for costumers driving away lower earners but higher income people will pay for the convenience that it offers to them. Also its very useful for older people or the disabled to have their groceries and food delivered.
It'd be nice if they could up the base pay and make it more livable.
Same friend, same. If only customers realized how important tips are to us.
Here in 2022, I've had so many orders just not arrive or partially arrive, I'm giving up on Doordash and most delivery services. So frustrating. I'm at a point where I've pretty much used up all of Doordash's goodwill and one more bad order, they're likely not going to compensate me back.
@@BewareTheLilyOfTheValley I’m sorry you’ve had such a bad experience.
@@BewareTheLilyOfTheValley Yeah, I've had the same issues. The ever pissed off drivers demanding more and more tips bc Doordash doesn't pay them, the lower quality food bc restaurants are slammed with online and in person orders, and the wait times just aren't worth it anymore. I agree that everyone is losing in this game now, and I refuse to participate any further.
Best channel I've watched in business or any kind of long-form video essays. Thank you!
Another great video. Can't believe it's already the end of season 1. Started watching at 20k subs, and the videos have just been getting better and better. Looking forward to season 2 !
Doordash driver here. I have NEVER made 7.90 base rate on a delivery. I think the most I've ever made was 4 or 4.50. Their base rate, at least where I dash, scales by rejection rate, starting at $2. This is despite the difference in delivery fee - delivering from two different restaurants to the same address can have 3-5$ difference in the delivery fee charged by Doordash. We as drivers see the exact same amount as base pay, changing only if other drivers have declined that order.
Have you considered changing areas? I get much more than that all the time dashing in the West Hollywood/Beverly Hills zone. Still making less than minimum wage in total, but, I think it could work if I got a bit better at which orders to accept and such.
I don’t take an order unless is 1.75-$2 per mile, and shop and pay has to be less than 15 items or I’m not taking the order. I “dirty stack” (use multiple apps at once) when possible. I try to stay in the $17-$20 per hour that way. I don’t take $1 a mile or no tip or big shopping orders because I can do better. You have to work smart to make driving profitable as well. I make $18 picking up two orders that were literally on my way home last night in 40 minutes to go where I was already going.
I'm really glad you talked about your personal experiences in this space as well.
Oh my GOD. I’m surprised I wasn’t in one of those screenshots from Reddit😂 finally someone has directly called this stuff out. DD is pimping out drivers lol
This was a fascinating insight into your own personal journey! Can't believe you pulled this off at 20 years old... I am desperately trying to learn (a lot from your videos!!) and am almost 40 😁
He said he didn't pull it off, as the big companies also are not, but that he attempted it
@@jaredhicks5655 He pulled off a working company with deliveries, a different business model and a website with payments that was barely profitable
He chose to close it down, but he "pulled it off" in the sense that he did the entire thing
"Oh, a Modern MBA Video"
*reaches for headphones*
Even going through this horrible pandemic, I still haven’t order any delivery from these platform once. Food always best serve straight out of the kitchen
One of the best channels on TH-cam! Thanks for sharing!
This channel is amazing, can't wait to see season 2 man. Keep it up!
This video was crystal clear and immaculate, I'd pay money to watch more like it. Well done man bravo 👏🏻 ✅️
One thing that I haven't heard mentioned is car insurance, where I'm from in order to be covered you have to pay 3x - 4x as much for commercial insurance because it's considered "Hot Delivery" If you don't and you get into an accident you're not covered
i just found this show the other day .. really enjoying the content thank u
Always waiting for your next uploads. Love your work, man!
“DoorDash believes that their drivers are a different kind of gig worker than UberEats drivers”. The reality is that this is far from the truth. It’s pretty well known in delivery driver communities that multi-apping (or signing up and delivering for multiple third party food delivery apps) is just about the only way to guarantee a decent payout. Wondering why your food never gets delivered or it’s always cold when it does? That’s because these food delivery companies consistently make lowball offers to their drivers and nobody in their right mind would take on a gig for such a raw deal. And until these companies make these deliveries worth their drivers’ time, it’s on you as the consumer to make it worth your driver’s time by tipping well.
Well said.
It’s really crummy that these companies cause such animosity between drivers and customers
T.I.P.S To Insure Prompt Service. DoorDash ruins this concept most times when they hide TIPS through their offer screens. It’s not food delivery companies job to guarantee your delivery quality if you decide to be a low ball tip or no tip at all. You said no to prompt service. Don’t be mad, preheat the microwave.
People don't really tip. I'm going back to blowing glass which I never made a fortune on but it is better than that!!
@@aaronhughson285 What are you talking about? The tip button is on the page when the payment. It is automatically set to tip as well. Customers have to actively disable it.
Love the diversity of subjects covered on your channel!
I care about getting my food while it's as hot as possible, so from that standpoint I care about speed, but it's only from the restaurant to me that the clock really starts for me. I don't care at all about my order being near the back of a queue BEFORE pick up or the delivery person taking a long time to get to the restaurant (as long as the food hasn't been sitting there getting cold in the interim). I'm the same way in physical restaurants. The kitchen and wait staff can take as much time as they want making my order or do other orders first -- just once it's ready, bring it to me QUICK while it's as hot as possible. It's more "hot" that I care about than "speed."
Are you willing to pay a premium for that?
@@senju31 no
News flash: most of the time your food is sitting there ready in the kitchen getting cold unless you tip well.
@@skycaptain95 microwave or toaster oven
Any discussion about DoorDash should not exclude their earlier practice of combining tips to the delivery fees for the driver. (For example, if a driver made a delivery and the driver fees was $5 and the customer gave $8 as tip. Then the company paid the driver $8 only instead of $5+$8. ). Such practices by startups or established companies should not be rewarded and there should be strict regulation to punish the company runners.
These videos are fantastic! I'd love to know how to properly conduct extensive research and analyses for projects like this because I generally feel overwhelmed and have no idea where to start when I need to write a paper or do a presentation on business cases. Looking forward to season 2 :)
Golly!
I'm sure this one will be great too.
You have all the important qualities for investigative journalism.
Society needs people like you.
Incredibly researched, entertaining videos. I am hooked on your analysis!
The fact that I can get such High quality knowledge for free just amazes me. You deserve more subs!
Speaking of markups, they’ve also resorted to sneaking in slightly higher prices per item than what the supplier’s traditional menu offers.
Holy shit really?
To offset their commission takes I gave these platforms a menu with higher prices pre-printed :P That's about 8 years ago when my last restaurant attempt closed.
@@senju31 Yeah. Go to the restaurant and pay cash instead of getting it from the apps, and they'll almost always give you a better price.
Profit margins at a restaurant is like 15% but these apps sometimes charge 30% commission. We have to raise the prices. It’s the cost of convenience.
@@c87kim They could get around that by giving people the fake number so you do the work of taking the order and processing the charge and still charge you commission.
Amazing content and wonderfully fascinating. Subscribed, can’t wait for S2.
Brilliant! Brilliant! Brilliant!
Learned so much from this video, literally every technical concept makes sense!
Wow, I watch tons of business and finance related videos on CNBC, business insider, Bloomberg,etc.
Nothing compares to this in terms of concepts and sheer practicality of these businesses.
Plus, it cuts out of all the noise and BS that news channels use for these businesses.
Thanks for providing this ☺️
Thank you for the great video. I learned a lot. One phrase confused me tho. "requiring customers to tip" ... a tip MUST be voluntary, otherwise its not a tip. If tipping is mandatory, it's has to be considered part of the regular price. Also, tipping should never be required to make a living wage but always be just a bonus. The base pay should be adequate.
Is property expensive in imaginary fantasy land? I was thinking of moving there.
@@skycaptain95 so you’re against paying people a fair wage? That says a lot about you. And yes, a tip was always meant as a bonus, nothing more.
@@jessh4016 well, where I live the tip is never included in the price and if it would be, no one would consider it a kind of tip. What I described was how it should be handled, not how it actually is handled everywhere
Every tech company that loses money is following the Amazon model of losing money until they're large enough to profit after the competition dies down and/or customer base grows big enough. Naturally, most companies won't survive because only the few companies that make it to near monopoly or duopoly status will ultimately profit.
Great video as always. Looking forward to season 2 😊
Your in-depth analysis is spot on. Thank you for all the time and effort you put into them.
If you want to be profitable, stop artificially stimulating your economy. The only reason these companies are loosing money is to be more competitive and gain greater market share. It will work until it doesn't. Simple as that.
It's a mere matter of charging what the service is actually is worth.
Worth is a combination of supply and demand - any other interpretation is an idyllic irritation of what actually is. Such is the sad result of capitalism.
At current gas prices I Ioose 0.17 cents per mile. So accepting a 6.00 order for 5 miles and 20 minutes is 5.15 for 20 minutes best case scenario. Then subtract for mileage not spent on an order.
Is that including car value and maintenance? People also forget all this stop and go driving isn't ideal for your car and brakes.
i've always wondered about this. thanks for the video
This makes sense in every way. Thank you for such informative video.
I literally feel sorry for their drivers. One 'Dasher' at 7 eleven would repeatedly apologize for cutting in line, but all of us normies got it, he's being exploited, and we know it. I hope he soon finds a better job.
Everyone in that line was being exploited when the delivery order was given line-cutting privileges. It’s just another way the wealthy live a better life at the expense of the ‘normies’.
Wonder if these delivery companies can make money by partnering with chefs/restaurants to open low cost ghost restaurants themselves in many markets. The reason why restaurants with dining space doesn’t have much margins is because they also have dining space costs for their regular customers.
Also it's related to population density. US is too spread out to offer as many choices since we can't just walk around for vendors.
@@KBergs If the US was dense enough where everyone were walking distance from a bunch of nearby restaurants, the need for delivery services in the first place would vanish.
@@AZaqZaqProduction The most successful cities are when doordash drivers can use bikes or scooters, so they have some function.
I know of 1 physical resturant in my neighbourhood that runs about 5 stores on Menulog (An app in Australia, owned by a netherlands parent). It's the only way to get food from them so I hope for their sakes it is working well and they have found a way to make it work.
@@sheldonpopesp so one store with 5 different "store fronts" with diff cuisines in the app? Have you ordered from them?
Another banger like usual
Can't wait for season 2
I just want to have a moment to thank you for the great work.
I work front of house in a restaurant. Don’t ever use these companies if you’re ordering pick up (assuming you have the choice). You’ll be overcharged significantly, and the restaurant usually takes away less. It’s a lose-lose.
Another great video. Thank you for adding your own personal experience to this one. It’s interesting to see your perspective from the inside as to why the food delivery industry is so precarious.
🤯🤯 wow very eye-opening, thanks for making this video
This is some next level fascinating content you're putting out there . I am an investment management student (undergrad degree ), and this video gives me a lot more perspective to analyse certain business aspects
The simple fact is that we currently do not have the technology to enable individualized point-to-point delivery service. It is the polar opposite of the economy of scale. The only place food delivery kind of worked is in China where the population and restaurant density are high enough. But even there the business model is barely holding up thanks to extreme cost cutting by the suppliers and riders working themselves to death. If it barely works even under very lax regulations and non-existent labor rights, there is zero chance it works in a more regulated economy.