They get 5% to 30% from each order paid by the restaurant, then the customer has to also pay 5% to 20% service fee, they only have to pay for the cost of their servers and app development, and like $2.50 to each driver per order.
Doordash, Uber, and Grubhub are not food delivery companies, they are technology companies offering a platform that connects drivers and customers, basically a glorified facebook marketplace with automatic algorithm matching.
Plus legal fees, salaries of everyone at the office (which is a bit more than app development costs when you think of all the middle and upper managers involved), leasing office space itself (and other related costs), assuming they haven’t gone full remote. Marketing, lobbying (at national, regional, and local levels, since individual cities decide whether or not to allow them at this point), PR, finances, paying the team that convinces the investors to throw more money at it instead of pulling the plug (though I bet sunk cost fallacy does a lot of legwork for them).
At this point it is hard to tell because most of the large US tech companies have decayed into this being the only way they can pursue the growth in profits Venture Capital, Private Equity and the US finance system in general demand existentially.
I think there are plenty of ways to make a profit here and these US tech companies will likely kill as many as possible to defend an inefficient, dead end business strategy.
Though I do wonder about profitability. My cousin wanted to start a similarish app (though for connecting yard work providers with seekers) and asked me to join him. I ended up declining because a) there’s already a bunch of players in the area, both online and locally, b) the legal liabilities involved in providing a service where people go to someone’s house and either party could be a sociopath, pervert, or thief. I figured lawyers would end up getting most of the money.
Those also apply to rideshare and delivery services. They thought they could drive taxi services and local delivery services out of business, but didn’t think that others could come along and do the same thing, plus for delivery services, at least, operational costs are already pretty low and adding the infrastructure at the scale required to serve all the areas they want to serve is in addition to all the normal costs. Local delivery services I knew about from before uber and doordash just used cell phones to call the one or two drivers directly and since it was all so informal, they could add less legal options like selling drugs to make even more money, as long as they made sure to build a relationship of trust with clients before opening that up. The online services need to avoid a relationship between driver and client or they risk getting cut out entirely.
And personally, when I need a ride, I’ll still call a cab because I don’t want the services to win because I know they just want to build a monopoly and charge even more than the taxis were.
Are any of them actually profitable or are they still in the “drive established competitors out of business with unsustainably low prices” phase?
They get 5% to 30% from each order paid by the restaurant, then the customer has to also pay 5% to 20% service fee, they only have to pay for the cost of their servers and app development, and like $2.50 to each driver per order.
Doordash, Uber, and Grubhub are not food delivery companies, they are technology companies offering a platform that connects drivers and customers, basically a glorified facebook marketplace with automatic algorithm matching.
Plus legal fees, salaries of everyone at the office (which is a bit more than app development costs when you think of all the middle and upper managers involved), leasing office space itself (and other related costs), assuming they haven’t gone full remote. Marketing, lobbying (at national, regional, and local levels, since individual cities decide whether or not to allow them at this point), PR, finances, paying the team that convinces the investors to throw more money at it instead of pulling the plug (though I bet sunk cost fallacy does a lot of legwork for them).
At this point it is hard to tell because most of the large US tech companies have decayed into this being the only way they can pursue the growth in profits Venture Capital, Private Equity and the US finance system in general demand existentially.
I think there are plenty of ways to make a profit here and these US tech companies will likely kill as many as possible to defend an inefficient, dead end business strategy.
Though I do wonder about profitability. My cousin wanted to start a similarish app (though for connecting yard work providers with seekers) and asked me to join him. I ended up declining because a) there’s already a bunch of players in the area, both online and locally, b) the legal liabilities involved in providing a service where people go to someone’s house and either party could be a sociopath, pervert, or thief. I figured lawyers would end up getting most of the money.
Those also apply to rideshare and delivery services. They thought they could drive taxi services and local delivery services out of business, but didn’t think that others could come along and do the same thing, plus for delivery services, at least, operational costs are already pretty low and adding the infrastructure at the scale required to serve all the areas they want to serve is in addition to all the normal costs. Local delivery services I knew about from before uber and doordash just used cell phones to call the one or two drivers directly and since it was all so informal, they could add less legal options like selling drugs to make even more money, as long as they made sure to build a relationship of trust with clients before opening that up. The online services need to avoid a relationship between driver and client or they risk getting cut out entirely.
And personally, when I need a ride, I’ll still call a cab because I don’t want the services to win because I know they just want to build a monopoly and charge even more than the taxis were.