I think all those cheap shit places were just winning on marketing for so many years people thought pizza.... Ok what do I know of that's easy..... Now the mindset has changed no one wants to order dog shit pizza that is like five bucks cheaper if it's just as easy not too.... This seems like one of the few areas I can think of where tech is actually going to put tons of local ppl back to work..
I was reading that grub hub charges restaurants between 14-15% commission on each order placed....not for nothing but I'm sure restaurants diners etc have all increased prices on menus to make up for that commission and passing it onto the consumer as usual, so in a way I'm sure grub hub in a way has caused a bit of an up tick in prices at local establishments....
I've always wondered how much these places were charging, I wouldn't be surprised if the number was actually low right now because being the first company to market is so crucial there is only going to be one that comes out of it alive and they will be like the online version of the yellow pages back when we needed a phone book, and there was only one choice.
In my area, Las Vegas, NV, Grubhub (and now Eat24) have a base rate of 15%. That is for use of the online ordering platform. Which does not include sending a driver for delivery. If Grubhub sends a driver, add an additional 12.5%, for a total of 27.5% of the value of the food being delivered. There can be some negotiation, take an online promo we'll waive credit card fees and the like, or 60 day 20% first time new customer rates, but for the most part, here in Vegas, Grubhub is 27.5%, if they send a driver. Eat24 doesn't have drivers, but GrubHub is integrating. In the case of GrubHub, the restauarant has the option of using in-house drivers, or dispathing GrubHub driver. There is no choice with the likes of UberEats, Postmates, and some others. Those services will dispatch a driver for all of their orders. Again, here in Vegas, UberEats charges 30%, PostMates 30%, and Amazon 28%. And of course there are other services here too... DoorDash, BiteSquad, Slice, as example. Most pizza venues have their own drivers on staff... they may have limited delivery radius which is why some of them sign up with the online orrdering/delivery services. At 30% the sale might not be a money maker, but you gained a customer. And you can buy larger quantities of food cutting costs for all orders. And really, you did not pay anything for customer acquisition... slap up your menu and details on one of the big services and agree to pay, but only when used. If no orders, there are no fees.
I know you are paying for convenience...don't get me wrong but the margins have to be extremely thin and with so much competition I believe the next economic slowdown will eliminate at least 2/3 of this market....I have never used any of these services. I rarely do take out, but maybe once a month if anything.....and how much can these drivers be making on a $15-$30 take out order.....
I never thought of it like that before, i guess the restaraunt is benefitting as well from the marketing, and the chance someone tries their restaraunt when they didnt have delivery, at first i thought that places like Grubhub and skipthedishes were just charging like 10% trying to corner the market, cause they know that the first one to sign up the most customers will end up being the winner in that battle. Skipthedishes in Canada charges a 5$ delivery fee, which is automatic but it goes to the driver, then i dont know what they get off the cost of the order as well. I always wondered why some of the more popular chinese restaraunts in my area didnt use them and didnt deliver, it seemed like a no brainer if the choice was between 10% off the bill, or no order at all. But if its as high as 30% like you say, then most of the profit is gone for the restaraunt, and particularly with the popular ones they would have no incentive to do it.
I agree with you... the segment is ripe for consolidation and shake out, no doubt. Myself, I don't use the services either, but I do take-out 3-4x a month. I have a friend who operates a food delivery service... he offers HIS drivers for GrubHub, Eat24, a few other small online ordering platforms, and for phone orders. For 7.5%... meaningfully less than of Grubhubs 12.5%! Phone orders(on demand, no tech) cost more though. He's killing it!! He's got ops in Vegas, LA, Miami. He want to be taken out by one of the majors, in a regional play of course. All orders have a delivery fee, paid by the customer, dependent on distance. In Vegas, the minimum delivery charge is $4 and as high $15. The driver gets 100% of the delivery fee. Additionally, many orders have a prepaid tip. Sometimes tips are cash at the door. A driver earns between 70-100% depending...for instance sushi places take a portion of prepaid delivery tips for the sushi chef. All in all, you are correct though... drivers for my buddy earn about 8-12/hr all-in, includes gas. It's a good 1099 side-hustle if one is so inclined. I don't know how Grubhub pays. UberEats, well, it pays like Uber. Postmates, don't really know.
Grubhubs model seems to be different than skip the dishes, skip the dishes charges flat 5$ which goes straight to the delivery person, so it gets added over the price, it sounds like grubhub is just taking from the restaraunt to pay the driver, but the same thing happens here, there are courier services where you will get the same guy from a restaraunt not on skip the dishes as you would have if you ordered off them there is lots of courier services like that crossing all the different delivery places.
Can't speak for GrubHub regarding drivers, but I do know how they pay the restaurants their money. It's the subtotal of the food/beverage items on the delivery(and/or pick up) order placed through the GrubHub platform MINUS the GrubHub fees. There is no delivery fee paid by the restaurant, other than the fees associated to dispatch the driver, 12.5% in the case of GrubHub. And yea, it's kinda funny... my buddy does business with 150+ restaurants here, and provides their delivery for the multiple platforms. Customers ordering on GrubHub from one restaurant today, ordering from a different place through Eat24 the next day, and a phone order from yet a different restaurant the next day CAN get the same driver. Don't underestimate your delivery driver... he/she MIGHT have the dirt on you!!