I was the former Head of Innovation at Grubhub, so I have seen the truth behind many of these claims first hand. Sadly, I invented a lot of the food delivery technologies that are now being used for evil. There were so many great points made here, and I’m glad people are finally paying attention to this. I will try to only add to a few.
COVID-19 is exposing the fact that delivery platforms are not actually in the business of delivery. They are in the business of finance. In many ways, they are like payday lenders for restaurants and drivers. They give you the sensation of cash-flow, but at the expense of your long term future and financial stability. Once you “take out this loan” you will never pay it back and it will ultimately kill your business.
In the case of restaurants, these platforms slowly siphon off your customers and then charge you to have access to them. They are simultaneously selling these same customers to your competitor across the street, but, don’t worry, they are also selling their customers to you.
For drivers, they are banking on a workforce that is willing to mortgage their assets, like cars and time, well below market value, in exchange for money now. They know that most delivery drivers are simply not doing the math on the actual cost of providing delivery (time, gas, car maintenance, payroll taxes...etc). If they did, drivers would realize that they are actually the ones subsidizing the cost of delivery.
Delivery platforms are “hyper-growth” businesses that are trying to grow into a no-growth industry. Food consumption really only grows at the rate of population growth, so if you want to grow faster than that, you have to take market share from someone else. Ideally, you take it from someone weaker, who has less information. In this industry, the delivery platforms have found unsuspecting victims in restaurants and drivers.
The competition for customers has not gone away. It has simply moved online. Many restaurants have been too slow, or unwilling to adapt. Delivery platforms and other restaurants are taking advantage of this to gobble up market share. Restaurants need to realize that they are now running e-commerce businesses and they need to act accordingly. Being proficient on Google, Yelp, Facebook and the dozens of other platforms is no longer optional, it is essential.
My team is trying to do everything we can to help restaurants transition, but restaurants have to be willing to change. You can learn more about what we are doing to fight back at zero.eatgeek.com. Stay hungry.
"They give you the sensation of cash-flow, but at the expense of your long term future and financial stability. Once you “take out this loan” you will never pay it back and it will ultimately kill your business."
Dude.... exactly my thoughts as a delivery driver, I was piling data that shows exactly this.
"...drivers would realize that they are actually the ones subsidizing the cost of delivery."
-- Thanks... I did the math (read my comment below) -- again spot on my thoughts.
Thanks for such a great comment, it gives me some sanity back after arguing for hours with a friend about these things. His angle was that if people lost money then nobody would do it... He kept on coming back that their cashflows proved otherwise, that some people would receive $3,000 or more a month by doing Uber or Lyft. (Yes, mix of things there)
My point, is that the loss of money was hidden in their future, something that many people oversee, specially when their background is not very financially savvy, or their immediate situation calls for quick income.
Unfortunately, this is my current situation. Due to the COVID19 crisis I have had to resort to doing deliveries to at least get some cash coming.
The good thing for me at least, is that I know that I need to stop asap so I never declare an actual loss, while I transform my motorbike and phone into tax deductible assets, instead of absorbing the full cost of their maintenance for private use.
So essentially these things can be used as well as a tool for offsetting cost, which is in my opinion their best, and only use.
Ismael, you are spot on! The data is really clear, but you have a lot of very smart people at the delivery platforms working to muddy the water. (Have you ever noticed how the same people that make it possible to order a meal with the push of a single button; also give you a breakdown of your payout that an accountant could not decipher. That is not an accident. It is deliberate)
I completely understand your situation and there are thousands in the same spot. I'm sorry that this is happening. The good news is you are aware of what is happening and that is half the battle. If you know the rules of the game, you can at least play, but if you don't know the rules, you will always lose. Stay hungry.
There may be an opportunity for our businesses (www.thanx.com) to collaborate but most importantly we need to help restaurants simply survive right now — the crisis is turning more and more to 3PDs for that short-term revenue which will be their long-term downfall.
Hey Emily, sorry our site does not do a very good job of describing the product. We will do some work on that.
We built a software, ZeroStoreFront, that collects all of the restaurant's data from all of the applications that they use to run their restaurant every day (point-of-sale, Google, Facebook, Yelp, Tripadvisor, Opentable, Wifi...etc), including third-party food delivery platforms. Once ZSF collects all of the restaurant's data, it connects everything so that it becomes really clear where customers are coming from, how much each one is costing, and how much revenue each one is generating. (There are a lot of other features, but that is the biggest one)
We basically realized, like it or not, restaurants are effectively becoming e-commerce companies, so they have to have the tools that let them monitor, measure, and manage their customer channels. From our perspective, the issue was never that third-party delivery apps are expensive customer channels, the issue is that most restaurants don't even collect the data to know that!
As a restaurant, you can't live without DoorDash, but you also can't live on them. You have to develop your other channels. If we can help restaurants easily understand what channels and behaviors are actually helping their business, and which are just costing time and money, then they will be able to grow in a consistent and stable way. ZeroStoreFront is just an attempt at a cheap and easy way to do that.
Hey Emily, we are primarily focused in the US at this time. This is where we have found that we can best use data to show restaurants which channels are generating profits and which ones are not. However, because what we provide is mostly software, it can be used almost anywhere.
This is spot on Colin. We are based in the UK and have spent years trying to develop a fair model with commissions involved for the restaurant or driver. It would be great to setup a call.
Hey Gurpreet, thanks for reaching out. I'm happy to connect. If you just message us through our website www.eatgeek.com then I can get back to you directly. Happy New Year!
I work on the Google Search team. We understand the concern about unauthorized order links. That's why we remove any order links from Google business profiles if a business reports there's no authorized relationship. They can do that following the instructions in our help page about order links here: https://support.google.com/business/answer/9503613
Hi Danny, I operate the stop sex offenders network. We put any name we can find on our list of sex offenders. I see you're on our list. If you have any complaints you can file a complaint via form A9874B, but make sure to also have form 5465DF8 with you, you can find a more detailed FAQ on our website, we're always happy to help if there's been a mistake!
@Danny, the problem is the *majority* of DoorDash links on Google My Business profiles are not authorized, particularly concerning the Active Links program.
I serve on the board of the RMDA, and I'm the immediate Past President.
When DoorDash enters a new market, they immediately list *every* restaurant in that market on their platform, and they use those links to drive business to their platform without having to do the hard work of partnering with the restaurants.
Until last year, GrubHub put "Active Links" to Grubhub and Seamless on the GMB profile of EVERY restaurant in America, automatically, through special access granted to them by Google. I know this because 2 friends who own local independent restaurant delivery services changed their GMB type from "caterer" to "restaurant" and a Grubhub Active Link immediately appeared on their GMB profile. Seriously. A link to a direct competitor on a small business' own GMB profile.
When GrubHub did this with local restaurants, clicking the Active Link took customers to a scraped version of that restaurant's menu on GrubHub, with a message reading "This restaurant isn't currently available through GrubHub, but they will be soon! In the meantime, click here to order from a similar restaurant.." eg. "please order from one of their competitors." At least DoorDash will actually *deliver* from the restaurants whose profiles they hijack.
Google will not give Active Links access to my company, Takeout Central, or any of the hundreds of other locally-owned independent restaurant delivery services in America, even though many of us have partnered with our local restaurants for over 20 years. You won't let us participate in Google's "On Demand" ordering platform (the blue "Order Delivery" buttons in this article), and you won't even sell us "Local Promotions" ads in the GMB profiles that you sell to DoorDash and GrubHub. Even my Google Premier Partner ad agency can't get us that placement because "the program is currently closed".
You could allow all of these independents to participate in these programs by integrating with 3 or 4 providers; Takeout Central, Data Dreamers, Deliver Logic and Lodel.
...but you either won't, or you turn a blind eye to what is going on.
Our business is down 60% - 70% in some markets since the funded companies arrived, and you continue to funnel business to them.
We can't compete with companies that lose hundreds of millions of dollars per year. Google is helping them put us out of business.
Please consider changing your policy. Call me if you wish. (919) 260-0803.
It's already everywhere. Also, they used to publish *books* with everyone's phone number listed, and then mail the book to everyone in an entire city. I think I'll be alright.
Thanks, Wes -- I'll add this feedback to the feedback that I previously passed on, so it can be looked at more. Our guidelines on how we take in information is pretty clear -- any platform should only provide that information if they have an authorized relationship::
I believe the team has made a lot of improvements in this since the time frame this article talks about (May 2019), and businesses do have options to control, as I mentioned earlier. But we'll look to see if there's even more that we can do.
I know you're trying to help, but this feels like a joke. It is such a mine field to try to find the true website, phone number, and preferred online ordering site of local restaurants. This is something that Google should make *easy*, but I feel like I need to do multiple searches, look at Facebook, Twitter, and Instagram to have a hope of getting it right.
It shouldn't be on the business to fix this, other than actual exceptional situations, Google just shouldn't have things in the info box it doesn't know is right and should largely downgrade the fake websites various VC-backed ordering services create.
There's been a lot of confusion with order links and phone numbers. From everything I've seen in this article and a similar one before, there's no sign there's a mass problem with us listing a restaurant's actual phone number. We seem to do a very good job of that learning from their web sites (which we also do well in listing) and other signals. And third-party delivery services aren't going in and changing those phone numbers.
The concern is about order links. We show third-party order links from companies that restaurants have partnerships with -- which we learn about because when they engage with those firms, we then get a feed from those firms. But sometimes, firms may claim an authorized relationship they don't have. And that's where an order link might appear where a restaurant doesn't want it.
This doesn't appear to happen that often. Not saying it doesn't happen at all, nor trying to dismiss the concern here. And that's feedback we're taking in, to improve better. But the phone numbers and order links are different things.
That's feedback they are taking in, to improve, don't you see? Google didn't know they sent their team to work with Doordash, Grubhub, etc...it's all news to them. I'm also selling you a bridge if you're interested.
"there's no sign there's a mass problem with us listing a restaurant's actual phone number...
Absurd. Simple Google Search: "pizza restaurants in my area." So, you see a search result you find interesting for "Arturo's." Now, tell me how many more steps does the average user have to take to ascertain "Arturo's" REAL phone number? Is it the one listed on Yelp? No. Any of the other (many) listings that show up before Arturo's actual web site? No. You must wade thru (click) various listings (and waste time). This is a basic failure of a system that is supposed to be user friendly. For years, you have talked about providing good content. But the real answer is clear. Make money first. All other considerations are second.
Google is certainly better at this than Yelp, which actively tries to divert traffic to GrubHub, so they can collect a cut of the fee. But still, every unaffiliated upper-midrange restaurant in my area, and most areas I travel to, has a Google ad for Grub Hub placed above all other business information. Hey, you don't work for free, it is what it is.
Hi Danny do you really believe the stupid shit you're saying or are you trying to crisis manage a PR shitstorm? If the later then escalate this to your PR team as you are only digging a deeper hole here as no one is buying the stupid shit you're saying, so add that feedback to the feedback that you added to that feedback and get your PR team on the case before it's too late, and I hope it's too late.
I don't work for our comms team. I work for our search team. My role it to explain how our systems work and bring back feedback directly into the search team to explain how they might improve. So just as I'm sharing here about how things work, I'm also taking back into the search team some of the constructive feedback people have raised on how we might improve.
I feel sorry for you man, you're getting a bit hit with all the hate here when you're just a molecule of the tip of the iceberg.... But at the same time, is obvious and expectable hate.
More often than not, all these feedback loops and whatever lead nowhere. Is very seldom that they actually yield some change or results. And if that was even to happen, sometimes the change or improvement happens SO slow, that is too late for some people who lost in a rigged game.
Bloated chains of command and/or systems are many times used to precisely delay or dilute efforts towards changing systems that favour a few.
How are you validating the "authorized relationships?" Did it not raise a red flag at google headquarters when you turned this whole thing on and door dash suddenly had "authorized relationships" with every restaurant in America, essentially overnight?
The delivery companies are OBVIOUSLY abusing their preferred access to your platform. They are OBVIOUSLY listing themselves on restaurants where no "authorized relationship" has been negotiated. There's no way you didn't see this happening.
Now you've created a situation where the delivery companies are going into negotiations with restaurant owners after they've ALREADY stolen their customer relationships by abusing your system.
Do you have any plans to punish them for this obvious abuse?
I do commend you for your "clear guidelines," which very clearly state that none of this is google's problem. Restaurant owners need to talk to the delivery companies:
"If you want to remove or fix a link in your own listing, please contact the third-party provider’s support team or a technical contact to request they remove your data from the information they are sending Google."
You understand that the delivery companies are entering into adversarial contract negotiations with the restaurant owners, right? And then you gave the delivery companies sole authority to add or delete themselves from the restaurant owner's google listing? Do you not see the problem here?
I'm definitely not an expert on this, and I don't know much at all from the backend.
But seems to me that GrubHub, DoorDash and more are technically handling orders on behalf of a restaurant and claiming some representation by listing a restaurant's menu on their websites.
Wouldn't this constitute as an agency relationship? -- And aren't agency relationships required to be approved and authorised by both parties through a contract?
So technically, falsely claiming they are a representative of the restaurant and handling orders on their behalf when they weren't authorised should be illegal. (could there be a lawsuit chance? -- yes, I know would be daunting for a single restaurant... how about a class action?)
Very different would be to advertise an order-placing service than outright listing the menu. Like "call me and we'll place your order, for a fee" -- as retarded as it sounds, because it is what DoorDash was or is doing according to the article.
That would need to happen without hijacking the google links system.
I really don't know... It's an information problem, as restaurant menus are obviously public information, so they're obviously not stealing anything either...
This is why associations are necessary.... a "USRA" (US Restaurant Association) could run a more verifiable list of these "authorised relationships" in a more independent way instead of corruptible corporates like Google. And deem all these delivery platforms as representatives of the restaurant, forcing an agency relationship, making any breach more enforceable.... as it seems now is a huge grey area.
A bit of red tape could prevent some abuses I guess...
I'm in Australia btw, so nevermind the Aus spelling and forgive the ignorance of law components in the US, a lot of this was "thinking out loud".... I might be talking crap
That's not dismissing this on the business. That's informing the business they may want to contact the third-party company because even when we take action to remove on Google -- which we will do even if they DO NOT CONTACT the company -- those links could appear on other platforms.
That said, those instructions should be updated to link to our help page that explains how to remove the links without contacting a company. That page was in my initial reply, but you'll find it also here: https://support.google.com/business/answer/9503613
My experience is there needs to be a strong punishment for this. second or third strike should be a banning of use of the service. doubtful google would do it, but it's the only way to stop it. (or at least would not do it to a large customer: i suspect if i did it at best i'd probably make it too second strike)
Bottom line.... Google doesn't give a whit about Small Businesses. They simply look to perpetuate their "hands-free" automation and dominance. Danny, I don't think you are intentionally being obtuse. You have your turf to protect and I give you credit -- you are good at it,
I don't have any "turf" I'm trying to defend other than to foster two-way communication between people within the Google Search team and those outside, especially when there are real, honest concerns being expressed, as here.
We use automation because there are millions of businesses that have authorized relationships with third-party providers, relationships that can change day-to-day. Automation means we can keep up with those without requiring a businesses to remember to keep adding or removing something they've changed. But we balance that with allowing businesses controls in case the automation isn't doing what they should.
We have made improvements here; we'll keep doing that, and I (and we) do appreciate the feedback.
My concern is not with automation, but rather with the 'hands-free' aspect. Although you have staff (customer service) to address concerns, they do a bad job. And this cannot be dismissed with the wave of a hand and "we will do better" The clamor over Google's ham-handed systems is growing. Clearly I am not the only one who sees these issues as detrimental to small businesses.
Danny, thanks for taking the time to reply to these. It is much appreciated.
Things certainly improved since mid-2019 when GrubHub was on every restaurant profile, but DoorDash is as bad as ever, and aggressively re-adds themselves to restaurant profiles even after they've been removed. Restaurants have to wait on hold for an hour with DoorDash to remove themselves, and then 6 weeks later they're back on there.
In late 2019, GrubHub announced their intention to offer "non-partnered" restaurants to help DoorDash and Postmates burn through their cash faster, and since January 2020 GrubHub now has Active Links on the profiles of non-partnered restaurants in areas where they deliver.
When can independent restaurant delivery services join the Active Links and On Demand programs? This has been absolutely devastating for our businesses.
Since DoorDash and GrubHub came to town, nearly all of the new business goes to them, because their links are on every restaurant.
Again, 3 to 4 software integrations gets you nearly the entire independent industry, and most independents only work with partnered restaurants.
I'm glad you've seen an improvement. It's part of what I mentioned on how the team was working here. As I said before, I've brought back to the team the latest concerns. We'll continue to work to improve based on that feedback.
I ordered food just the other day. The listing for the restaurant said had a Grub Hub ad on it. It looked like it was linked to the restaurant. It advertised free delivery special. However their website was so wonky I went back to the listing and saw that it said AD. So Google knows good and well what is where. You sold them the ad space!!! Just do as everyone says and make the system opt in. Period. You are not trying to balance squat, you are not trying to do anyone favors. You are simply hoping to not get caught.
Restaurants don't have time to notice issues or report them unless they become extreme. Google also can't validate with each owner due to the scale. The real problem is these scam techniques need to be found and penalized. It wouldn't take many complaints for google to then see a pattern and act (like they have with others that have tried to trick search engines)
Btw, Danny is a stand-up guy and I'm glad he is on that team. Their challenges are very complex and constantly changing.
If Google can't validate, then they shouldn't show it. They created an infrastructure for some companies to rip off others, and put the burden on the victim, but Google is enabling the scam and creating the victims. It's scumbag behavior.
1) Google has all the data to know if the number is the actual number for the business.
2) "Scale" in this sense, and in many situations tech tosses the word to claim impossibility, is about them not wanting to have to spend any of their enormous profits on hiring checkers to verify information. It is absolutely possible for them to check every number. Just as it is possible for them to verify every other bit of information they offer. They choose not to, as that would change a business model they do not wish to change. They are nearly pure profit currently, this would force them to operate like other businesses, many of which they are upending, with much lower margins.
I don't feel sorry for them at all. If they cannot make it work without harming people then they need to rethink their business model, not defer all the cost onto society while keeping all the profit for themselves.
To be clear, we are not allowing third-parties to change phone numbers for business profiles -- and that's not what was being raised here. We try to determine a business phone number using our own systems (typically, we'll find it on the business site), and we allow businesses themselves to manage that number or change it to what they want.
What was described here was about order links. We may show links to various online delivery companies if we determine they have an authorized relationship with a business -- and many restaurants do. This explains more about that:
These links would appear *in addition to* a restaurant's phone number. Restaurants have the ability to manage them or disable them entirely, if they want. And if we have reports of unauthorized relationships appearing, we may take action on our end, as well.
To be fair, I conflated both articles I read on this topic, this one and the one about Grubhub changing numbers. Both are real issues, but I know you don't own the phone number issue.
I will also be clear: I don't blame you, personally, for this situation. Having spent the past 20 years in big tech, I am very aware of how myopic management can be about the world and how it 'should' work vs how it actually works. You are doing the job you were assigned as best you can given the parameters you have.
That said, before even accepting an order link an effort should be made to reach out to the business to 1) verify they want an order link on your site, and 2) verify that they are the ones placing it there and that it is correct. Whether that is done in an automated or manual fashion is not really the business owner's problem.
I also do not believe they should be forced into a reactive state where they can correct misinformation. That is an endless rabbit hole chasing down every site that lists information. Get permission first. By the time they find the source of bad information the reputational damage is already done.
Well, we "own" both issues to the degree that we want to show the best information in our business profiles. We want to show the correct restaurant number -- and we generally do. I think there's a lot of confusion, as said, that we don't. We also do want to show authorized delivery services.
Potentially, we could do that only if a restaurant specifically asks. However, as many have noted, restaurants can also be busy. They might not get into update a relationship they've started -- and want -- in their profile or even on their web pages. That's why we take in data feeds from providers, and those providers should only feed data if they have an authorized relationship.
That's also a win. It saves everyone time all around. And it's a loss if we change to force millions of restaurants to manually manage relationships -- and then change those again if they change the relationship.
That's why we use automation. Because millions of businesses and millions of relationships that can change from day-to-day is a process of scale. It's not because we don't care -- it's because that's the nature of the challenge.
And that's why we also have the ability for businesses to manage those panels. It allows us to balance getting so much of this correct through automation with the targeted control if we do make a mistake or if a business wants more control.
All that said, I definitely appreciate the useful comments and thoughts in this thread. I have and will continue to pass it back to our local search team.
I see that not many here are familiar with PR speak, so here’s a PR translator.
Google via Danny: “I work on the Google Search team. We understand the concern about unauthorized order links. That's why we remove any order links from Google business profiles if a business reports there's no authorized relationship. They can do that following the instructions in our help page about order links here: https://support.google.com/business/answer/9503613”
PR Translator: I work on the Google Search team. We understand we have an issue with unauthorized order links but it’s a money maker so instead of adding any friction to DoorDash (our customer) we partnered with them, sent our sales teams to help DoorDash understand how they could better integrate Google My Business into their core acquisition funnel and decided to pass the friction to hundreds of thousands of small businesses instead. But if small businesses take action they end up hurting DoorDash which diminishes our profits, so we buried a support page with some convoluted instructions here: https://support.google.com/business/answer/9503613
I like how you put the onus on the business, rather than actually doing any work yourselves to check if the information submitted to you by third parties is correct.
This is so important: verifying information. I have a beef with Google's policies regarding "fake negative reviews." Google has a policy of allowing for "anonymous" reviews. So far, so good; anonymity can foster 'honest' reviews. But, competitors take advantage of this by pumping out "fake negative reviews" which negatively impact SEO. I have reported obvious impersonations (no substance in a review, just negativity) and Google does nothing. There should be verification (proof) of a reviewer's identity on the back-end, even if they appear as 'anonymous' on the front end. Again, that would take work on their part, which they so far have been unwilling to perform. Google doesn't "do" verification.
This comment confirms how scams like the one reported here come to fruition, people like Danny boy believing they are doing the ethical thing when they are actually the real culprits. You are not helping the restaurants Danny, you are fucking them over, but I don't expect you to realise how you could be fucking them over, but you are. Wake up mate.
I hear that you're trying to sound responsible, but a responsible... say, "non-evil"... business would FIRST verify that there IS an authorized relationship. And you know this. And still you work there. Shame on you, pal.
Please remember that Google has extremely limited resources. This is a problem that's very hard to solve. Google is primarily a search engine. What you're asking is for them to undertake an effort that's as implausible and as difficult as, I dunno, some outlandish thing like mapping every single street in the world with an up-to-date 3D navigable map system...
Thanks for posting on this, Danny :) Can you share more about why the service is opt out as opposed to opt in? Was this based on the desires of these businesses? I imagine that you couldn't count on getting a lot of negative signal on this service because many small businesses may not even know that they've implicitly signed up for this service. Thanks for reading my post :)
It's a balance. Many restaurants do have relationships with delivery services. Some of them may depend heavily on them (especially right now). But businesses are also busy, and they might not get in to update their profiles when they add a new relationship. So order links come through services -- and those services should only be feeding information if they have a relationship. More about this here: https://support.google.com/business/answer/6218037
If we went the other way, you get the opposite issue -- businesses (and customers) might complain that it's harder to get delivery (especially if some restaurants haven't updated their web sites, which can also be challenging for small businesses).
So the opt-out is meant to help balance these things. Businesses don't have to do more work to add authorized delivery services, but they do have the ability to indicate a preferred one or say they don't want any at all.
So, instead of a single email or, if no respose, 'gasp', a phone call requesting fhe owner to validate the change, you've given everyone who doesn't use these services a new task EVERYDAY to go and make sure their service hasn't been hyjacked. EVERY. DAY.
I'm sure those owners really appreciate your kindness.
This is really it. Letting this be changed without confirmation means owners, most of whom run very slim margins, have to check their status routinely if not daily as any loss of business can be bad for them.
Without taking away from the concern, nor suggesting that it is flawless, my understanding is that we don't see some massive "hijacking" as is suggested. Providers should only be feeding information where they are authorized to. That's the first line of defense, so to speak. We've made improvements to catch cases where this might not happen. That's the second line. We also have controls for the businesses to manage, if something does get through the first two lines. And we look to keep improving those.
The claim that Google's policy (that providers should only update delivery links if authorized) is a credible defense needs interrogation. Why should providers do so? What are their incentives to do so?
I'm not sure why relaying community feedback to the search team is a reasonable mitigation either. Isn't this a policy question?
If a service is found to have fed erroneous information, how about simply delisting that service entirely, forever. Period. Trust me, another will arise to take its place, and people will learn good behavior very, very quickly.
Wouldn't this concern fall on the delivery service coaching the business owner through setting this up? They are the one who wants to make money delivering the product.
Then why not let the local delivery services have access to these Links. There is a higher probability that they have existing relationships with the restaurants?
U could easily email restaurants to let them know of any changes though and with a link of accept change or deny, I’m sure u have their emails and any business reads their email. For me is crazy how google is super hard on mistakes on seo, ads, etc but does nothing to these big companies about their clear misuse of the system.
@Danny thanks for the response. Why can't Google just send a verification to restaurants as they do for Google My Business?
The issue with the delivery platforms is largely a trademark issue, where the platforms are using the restaurant's marks without permission. It is not illegal for delivery platforms to re-sell restaurant food, but it is likely illegal for them to impersonate the restaurant using their brand and likeness.
Google has a very robust system for protecting trademarks as it relates to ads. In fact, Google will reject ads that use unauthorized brand names. Why can't you explore a similar system to protect restaurants and other hospitality providers?
There's already a verification process for restaurants to use to claim their panels. It is done through Google My Business. Those panels are part of that.
Maybe don't put the link there in the first place unless the business requests it, instead of letting the delivery services insert themselves without permission.
I think there is some confusion here. Doordash nor can any third-party go in and change a business profile. We might list third-party delivery services based on data feeds we receive (see here: https://support.google.com/business/answer/6218037), but they can't go changing business phone numbers nor set themselves as a preferred delivery service. The business owner controls their profile.
"Google works with select third-party providers that provide booking and ordering services for local businesses. Links for third-party providers display as a result of a relationship your business previously established with them. These links lead to the website of the third-party provider. From the third-party website a User can take an action such as ‘place an order’ or ‘make an appointment or reservation’. "
So, clearly some of these services are lying about having a relationship with local businesses. That shouldn't be in dispute at this point. Given that, why are you still allowing those services in particular, and any service more generally, to claim association without verification by you or authorization by the business?
Danny- This was not the case. Every time I edited the listing I could not get the door dash listing off it (I manage the profile). Nor could I find any instructions . I could make any other change to my google listing, however taking the door dash off never worked.
You should have been able to remove the link regardless. Sorry to hear it didn't work -- ping me on Twitter (easiest way) if that ever happens again, so we can investigate. Moreover, if they were doing a test without your permission, we should have never been fed that information. That sounds similar to the situation described in this post, and we're definitely looking to prevent that type of thing from happening in the future, to the degree it might be still happening.
Hi, Danny. I discovered a couple of years ago that some enterprising entrepreneur has scraped the web sites of at least two local restaurants, and created identical sites that are better SEO'd. They make just one change: the order link goes to their own ordering platform. They charge the customer, take the order, forward it to the restaurant, and then keep the money. The customer arrives at the restaurant, the restaurant asks for payment, and the customer says they already paid and shows the receipt ... which was generated by this fake website. The restaurant owners have no idea what to do to get the fake sites taken down. Google gives no guidance. What should we do?
LOVED THIS ARTICLE! I've been a chef for about twenty years. Third party delivery is becoming a plague, and over the last several months, everyone is starting to finally realize it. Business models vary, but I think it's fairly accurate to say that if a restaurant takes home 20% after all of their expenses, then they're doing pretty well. If a third party company like Door Dash wants to take 20-30% off your sales as a delivery fee, you're not making money - so who cares if you're getting more sales? What I don't understand is that when you go to a restaurant, there's generally a gratuity, roughly 15-20%, and sometimes a lot more if the service is really on point - if everyone tipped the drivers that amount, then people would be falling over each other to be able to work as a driver making the deliveries. I work in a restaurant that is only doing to-go and delivery food while everyone is closed - our Service Staff does the deliveries instead of waiting tables. They're making more than twice the amount of tips they made before, and we don't have to deal with third party companies taking their cuts. When a Grub Hub driver shows up at the door with your food, they don't always get a great tip because there's already a fee for the delivery - but if it's someone from the restaurant, they seem to be very well taken care of. Cost vary depending on restaurants, but the packaging can cost a lot more than people think - I did rough calculations and we have about $1.85 per person invested in the food before it even leaves the building. Granted, we don't have to pay someone to wash plates, silverware or glasses, but that packaging really adds up. I've seen places have aline on the bill for "To-Go Packaging," but it seems sort of tacky, so we opted to not do that. And regarding Note #2 - third party delivery people are complete unknowns to restaurant owners, and in some cases are not the person you want associated with marketing your restaurant. Ever looked in the delivery vehicle? Probably not, but maybe you should. We spent $400 on insulated food carriers - those things are not cheap! But when you get a pizza that's 140º twenty minutes later on the table, it's easily worth it. I really think that the only drivers who care are the ones working directly for the restaurant - I get Domino's once to twice every month and the drivers are much more professional than most third party carriers.
The 20-30% off your sales with Grubhub etc is generally only if you're using their drivers. If you have your own delivery crew, it's 5% I think. For places with their own crew it's manageable, and worth it for the discoverability through the app.
There are other apps, like ChowNow (not as widespread) which simply charge a monthly subscription fee from restaurants and no per-order commission. Sometimes the same restaurant will be on multiple apps, but the end-customer doesn't know which one is better and they tend to just go with whatever the first one they installed was.
Id there was a mass, concerted exodus from per-sale commission apps to monthly fee apps, it might have some effect on the industry.
Using our own drivers was not an option, or I gladly would have taken it. I'm guessing that there are different rules depending on the size of the area. My first experience to third party delivery services was in Chicago, almost ten years ago. Currently, I'm in a town of under 20k, so I'm sure different rules apply, and there are also a lot less competing companies. Either way, until there was a recent "cap" put on the costs that were being added on, your percentage may have been referred to as a "marketing cost." Smartest thing to do: When you bag up the order for the third party guy, along with the menu and other promotional materials that go inside the bag, include a flyer stating something to the effect of, "NEXT TIME, CALL US DIRECTLY AND WE'LL GET IT TO YOU OURSELVES FOR A LOT LESS." Same concept as when you do an AirB&B and the owner asks you to contact them directly next time and save one third of the cost. I would like to see a mass exodus, or maybe even a competing service that could maybe keep the restaurants' best interests in mind.
Something else to consider is the food costs and margins of different menu items - Some items make enough money where you could very easily handle a larger fee for delivery. If I sell five steaks for $30 each, I'm probably making about $100 on those items alone. I'd be very happy if it was $75 instead. If I sold ten entrée salads that totaled $120, no problem there, either. But on smaller ticket items that involve more complicated labor, it's generally not worth it, even if the fee is as low as 15-20%.
If I could do it all over again, I'd invest in some sort of Ghost Kitchen model and not even have to deal with the service side of things in the restaurant - bit the big issue is that the profits from beverages generally don't get into the delivery bags. Even now, where most states are allowing third party services to deliver alcoholic beverages, I'd like to think that most people are smart enough to know they can get a twelve pack of beer from the neighborhood store for the same cost of a couple bottles delivered at restaurant pricing.
They are making profits. Huge profits. They're just not on the balance sheets, but in the investors' pockets, and what's left is offset by creative math in the amortization and depreciation columns.
to drive down the pizza costs to zero, you could also have sold the same pizzas over and over again, bringing them back to the restaurant over and over again
Or just put napkins in the box. Or just tell the Doordash driver what you’re doing. Since they’re not technically employees of Doordash they don’t care. It’d be fun for them too.
This entire article is missing one big thing - it doesn't ask why the companies spend so much money. And the answer is - they spend it on market share. When you're sufficiently large and most of your competitors dropped off in this war of attrition then your customer acquisition costs drop precipitously - because you've already acquired all the customers you need and new ones may no longer even have an alternative.
That's why, in the long run, it inevitably leads to mergers and takeovers. Uber ejected out Southeast Asia and Grab basically took over the entire market for private drivers and a good chunk of the food delivery business, though Foodpanda and Deliveroo are still alive - but how much longer for?
To understand why investors are putting so much money into these businesses you have to take a very long-term view - not the immediate profitability today. They have their eyes on the prize - becoming the next SV giant worth hundreds of billions of dollars.
There's even more to it, actually, if you consider the entire market of door-to-door logistics. Food deliveries are just an element in a larger whole - that's why Uber launched Uber Eats - because it's all about moving things or people from point A to point B using private individuals and their vehicles.
This extends also to things like courier services - i.e. delivery of parcels within a city, that you can order on the spot and have stuff delivered within an hour or two for a slightly higher price. Or groceries, another service within this space.
At this point it's no longer about simply replacing taxis or carrying food, or delivering packages - the winners become a complete platform for rapidly moving stuff and people around in a highly distributed fashion.
Once users pick their winners and get used to being able to go to a single app and order anything that needs simple logistics - from ordering a cab to, let's say, moving a house or ordering a pizza - then, again, acquisition and marketing costs drop nearly to zero.
The goal for these startups is to become the Google or Amazon of logistics.
Does Google have to advertise for anybody to use it? No. Does Amazon? Also no. They are, of course, conducting marketing activities of course but there is no need for them to spend massively on customer acquisition because most people already know about them.
The potential for apps like Uber is in the hundreds of billions of dollars per year globally. The winner is going to become the next trillion dollar business in a decade or so. Dumping a few hundred million per year is nothing in comparison.
Plus, owning this much consumer data, including physical location, travel routes, food choices etc. is also extremely valuable and allows them to launch new services on top of what they've acquired.
The metric to focus on is not profit but LTV.
It's actually pretty simple math - let's assume you're losing $1 billion dollars every year for 15 years - but in the process you've built a company worth $100 billion. Was it worth it? And here we're really talking about at least several hundred billion. Investors will be eager to burn tens of billions of dollars for many years just to have their share of the big pie in the end.
Also, here's another thought to consider (and it is already happening) - how is it going to change the food business as such?
As the food delivery market grows, the need to have a restaurant in a good location drops. You can open a kitchen in a low-cost location to cater only to deliveries. Why splash out on a high street spot when you can turn some disused industrial building a few miles further for a low cost alternative? From the user perspective it doesn't matter where the food is made.
It's already happening, as I said. Business owners either set these up themselves or the delivery companies do it for them. Grab has a GrabKitchen concept, where it offers food from several outlets - including virtual restaurants that are away from expensive locations.
If every company has to operate at a -30% profit margin to gain market share as you can only operate at a profit if you are a monopoly provider and can therfore use that to leverage fees to a point that the business becomes viable... You dont have a business - you have an extortion racket.
That's just how competition works, it's a free market. Competition always lowers prices - and if the reward is big enough then investors are willing to put in a lot of money into customer acquisition over the long term.
Just because there's an annual or quarterly loss doesn't mean the business model as such is not viable. It just takes longer to generate the reward, that's it.
Would you say the same of SpaceX? The company has been operating for years burning money investors have put in. Does that mean its business model is not viable? No, it just means it takes a lot of time to produce enough progress for the economic returns to outweigh years of investments.
Because that's what it really is - these are not losses, these are investments.
And economic monopolies do not extort anybody - in fact they become monopolies because they're by far the most efficient companies in the market. People who talk negatively about economic monopolies usually have no idea what they are talking about. Legal monopolies are a problem, because they cannot be competed against at all. But economic monopolies provide the biggest benefits of economies of scale.
The world wouldn't be better with 10 Googles and 17 Facebooks.
The problem is that the theory is completely wrong (taking it at face value, and assuming that the actual end-game isn't just to go public and get out). Delivering food has a very, very low entry cost and very low margins (restaurants have tiny margins without delivery, let alone with it). There will be no monopoly rents at the end of the rainbow; these companies will never be able to turn off the subsidies they use to keep people on their system because they'll never really be able to get to profitability. Unit-level. You can't scale your way out of that problem. Barring massive automation well beyond currently feasible technology, which seems to be what they're mostly praying for at this point.
This strategy works for some industries, but not others. WeWork, the idiotic scooter/bike-sharing companies, and Uber are all cases in point. If you have negative unit margins and you can't change that without charging more than the product or service is worth to people (if you can change it at all), then people will exploit your service while it lasts and stop using it when you try to jack up the costs to pay back the billions you spent. Or you'll get undercut by another VC-backed start-up moving in on your space.
And, no SpaceX doesn't really have a viable long-term business model. They've got a lesser version of the same problem. There are too few customers that need orbital launches and they can't charge enough to each one to cover their costs (I think they could be unit profitable, but I doubt they're viable as-in for the long-term). Starlink might get them out of that problem, but they need something like that to pay off. Launching satellites isn't very profitable. Certainly not profitable enough to pay for all the over-head and give a big payout to investors.
All these companies spent astronomical sums of money to scale low-margin (at best) industries, and they're all gradually realizing that, even with a monopoly, it's going to take them a generation+ to pay back all their investment costs, even if they actually get ruthlessly efficient (Amazon-style) and dominate their markets, which most of them aren't capable of doing. You can't abuse drivers/gig-workers much more; they'll quit. And that's the only real cost lever some of these companies can push on. The selling point was never monopoly rents - it was the theory that these are tech companies, and tech companies are magically efficient and can solve problems in industries that the existing people have somehow failed to solve after decades in business. Turns out that this premise isn't true if they're not selling software. If anything, all these VC companies are worse at delivering food/running taxi-services/etc. Amazon is the exception that proves the rule. There's only 1 Amazon right now, and they got where they are by a relentless, ruthless focus on costs and logistics. That's the only way you win in a low-margin space. It's very difficult, and very few companies have figured it out.
The problem is that in this case the basic principles and cost structure of the product or service is just not sound.
The service itself, with their fees, structure and everything is just not profitable.
This is very different to, as you say, SpaceX where a lot of the losses are incurred on R&D, and when that is done the business is able to turn a profit when getting the correct volume of sales.
Or selling cars... if you want to keep Musk in the example then we can look at Tesla.... they went through billions in losses, year after year, because they are building and spending heavy in R&D, and after a certain threshold of development or scale that expenditure decreases and then again by selling the right number of cars (volume), you make a profit. The cost of making a car is obviously less than its price... the basics are sound.
With the food delivery service, no matter what you do, no matter what volume you sell, your basic margins won't change, and it is screwing restaurants and drivers. The basic product is insolvent itself. The cost of the delivery is bigger than what the driver is paid, and the fees that the platform charges to the restaurant eat away their basic product margins.
Buying a pizza directly from a restaurant is okay as it will probably leave an appropriate margin to the restaurant. But then buying through a platform like this, you either increase your prices to accommodate for the fees involved, which means playing with price-elasticity issues, or you absorb the cost.
It's almost like physics; to move forward, you need to leave (push) something behind... in business to make a profit, there must be a cost.
The problem is that the cost is being deliberately externalised and put in restaurants and drivers, forcing them to subsidise the system.
So it is a racket.... and anyways it's all as you say to grab a bigger market valuation. I posted a comment on facebook yesterday to someone who shared this article saying the same thing.
It's just a race for valuation. They pour millions and billions into acquiring market share, to then get a 20x valuation, sell it and grab a profit. Then the next owners will keep doing the same, and passing the time-bomb onto someone else, until someone needs to bear the cost of an intrinsically insolvent and unsound business model.
But who profit here are the key, early shareholders and executives; seed investors and founders, not the drivers and restaurants. (And also not the later, shareholders that get diluted on each acquisition/merger)
It could be seen similar to a pyramid or Ponzi scheme to be honest... as the later in the game you enter, the higher the chances for you to lose.
The problem is that so far none of these platforms has totally collapsed yet, as it is still early in this racket so it seems like if they were chasing something worthwhile.
There are no profits in any distant future if your basic product or service is not profitable nor sustainable. In this case, the "sustainability" of these platforms also come from the ability of bearing churn. Restaurants and drivers come in and out all the time, and since the current trend is towards more connectivity and networks development, every year you will get new 'freshmen' drivers eager to exploit themselves to make a side buck (or even try to sustain themselves through it), oblivious to the fact that they are being exploited and economically abused, until they realise it and quit. So as long as the rate of desertion from drivers and restaurants does not surpass the rate of addition of new ones, the platform will grow. To do that, you need to either lawfully negotiate it (hard and slow), lure people (false promises ? -- all platforms), or outright destroy all around them and leave them no other choice (DoorDash, GrubHub and probably more).
You’ve done a lovely job of explaining, in a very long winded way, a rationale that makes no sense. This is the fucking pizza delivery and mini cab business. There is no such thing as defensible market share, or sustainable supply side pricing power, because there are no barriers to entry. It is utter insanity.
Customer acquisition costs is not the issue, it is the delivery costs (mostly labor & transpo) and they are already not charging enough for that and it is only going up. Also, delivering cold food from a "virtual kitchen" is not the future of dining. A "few miles further" is likely 15-30 minutes in city traffic and that turns your dinner from perfect McDLT style (hot stuff hot and cold stuff cold) to a heterogeneously thermal unappetizing $50 styro boxed "doggie bag".
Of course it's acquisition. Otherwise Domino's model wouldn't work. And cheaper locations don't have to be far, I just gave an example. Restaurants by their modus operandi are forced to pay the highest rents because location is key in this business. But move the restaurant to the back, away from main streets and remove all or most of the seating area since it's not needed and your rent goes down to just a fraction.
This article couldn't be suggested to me with a better timing....
Due to the pandemic I've found myself doing food Deliveries in an attempt to get some income as I have lost all work.
After a few days doing deliveries, I started to feel it was a waste of time.
I had always been reluctant and skeptical of the delivery business model as here in Australia where I live, it has always been seen as a really low paying job. Normally international students or people with low qualifications take it as they have very little options within the market place, specially if they don't know english very well.
But then after my job in events totally crashed, I bit the bullet and enrolled.
I started tracking myself with a GPS and the app, so I could generate some data.
Pooling that data I'm starting to see the real income per hour, and trying to make sense of the math I envision that the only way to make it viable is to have an extremely low-cost lifestyle (like... sharing a room with someone and have zero leisure expenses while eating chinese noodles and frozen pizza almost every day).... Otherwise it explodes into a need of 50-60+ hrs per week of driving. For which you'd need to be lucky to get enough orders at an equivalent frequency/consistency.
If I continue to do it, at the pace that I'm doing it, as a main income source, at some point I will not be able to maintain or renew my basic working assets; motorbike and phone.
So at this pace I'm operating on a loss... I get some cash in, but somewhere in the (distant?) future I will net a loss if I were to keep doing vehicle maintenance and/or eventually getting a new phone (cracked screen? Software obsolescence?).
So as a delivery courier, the system essentially banks on you having your working assets before hand, not getting them for going into business, as otherwise your payback is very far in time (perhaps even farther than the actual asset life cycle), unless you live on chinese noodles and frozen pizza.
Anyways, this is only my opinion from my experience, as I know that I have a somewhat increased cost structure compared to other people (slightly bigger bike, and I don't share a room... luxury 😂). Maybe some others do make a bit of a long-run profits. (Short-term profits are there, but what I say is that they are wiped out when you have to either do some maintenance, or renew your assets)
And all what I said, without any sort of social security (my income is kind of unverified, got not retirement savings from the platform, can't afford any sort of insurance beyond the compulsory third party for vehicles)..
I'm reminded of the Chayanov thesis about early industrialization (aka putting out system): peasants would effectively work at a loss because their labor was impossible to monetize most of the year anyway, and they would otherwise just be sitting there. The resulting excess profits to the middlemen who shuffled yarn and cloth between peasant households and urban merchant houses generated free capital. The thesis has been chipped away at over the years, but the idea of self-exploiting labor sounds eerily familiar, here.
I drive for Doordash. The model is horrific for food delivery apps. The way I look at, food delivery is a luxury not a necessity. That being said the customer should pay a per mile fee of $2.00 with a 5 mile minimum. The fee to the restaurant for the app should be no more than 5% of food costs. The pay to the driver should be $1.50 per mile $7.50 minimum plus tips. I don't think most customers realize currently drivers receive next to nothing and restaurants pay as much as 30% in fees. I am not sure if that works fiscally but it is more fair.
But that wouldn’t make sense to pay $10 to get something that costs $10 delivered a few blocks, it would only make sense to pay that large of a delivery fee if you didn’t care about money or if you were ordering for many people at once. My guess is that most diners order for one or two people. I feel bad the drivers are getting so screwed here but I wouldn’t pay that much for delivery and neither would a lot of people, if they were willing I’m sure doordash and grub hub would be charging more
I personally don't get food delivered. I find that I can pick up my own food because I don't want to pay for delivery. And doordash and grubhub are charging more. In most cases they are charging more for each item. It is rare that the food is less. When you say why should you pay to have your food delivered for a few blocks you are not considering that the delivery person was not at the restaurant when the order came in they have to travel to get there. They also frequently have to wait for the food. You spoket about a few blocks, you are talking about city living. Think about how hard it can be to find a parking spot and how long it takes to get to an apartment. The reason you want your food delivered is so you don't have to be bothered. I feel like that is something that you should pay for. I also feel like restaurants should stop getting screwed by delivery apps.
Doordash should be glad they are not running in China.
They would've been scammed so badly.
On a more serious note tho, I think there are multiple business model problems here:
- on demand food ordering is biggest limiting factor for optimization: if doordash were to launch a pre-ordered lunch / dinner subscription service, they can batch more orders and minimize most cost.
- existing restaurants are not set up to win the delivery game: easy to access locations, high cost rent, menu choice,and many other operations are built for dine in.
The scam of the system occurred when Doordash claimed to Google that they were authorized by the restaurant to deliver.
The damage occurred when Doordash damaged the restaurant brand through a low-quality delivery process that claimed to be authorized.
The scam may have been furthered if Doordash then used their sales numbers that were inflated by offering below-cost pizza to entice the restaurant into entering into an unprofitable business arrangement.
Sure and you know what? The article could have been just about that. Without trying to take advantage of it to prove of point. By releasing this type of articles you are potentially enticing other business owners to do the same. Do you know who make fake orders ? 12 years old making prank calls. I'm sure the people who worked on the pizzas and who delivered them found the joke super funny.
I genuinely don't understand your objection. DoorDash inappropriately offered a restaurant's service without permission, at a price point that the restaurant would not offer. This is entirely on DoorDash for choosing that pricing structure. Why is the restaurant wrong for ordering a product DoorDash is claiming to sell for the price they're selling it?
DoorDash is shady for sure as well as their competitors. And the restaurant owner and his friend could have contacted DoorDash support to stop being listed. They could have contacted DoorDash to correct the price. But it doesn't make a flashy article that is going to be retweeted. So they choose to make money of the issue. They didn't order the pizzas directly. They had to use a third party because DoorDash doesn't allow restaurants to order from their own place. And then realizing they could make a bigger profit they sold fake pizzas. They sold to themselves a product that does not exist using a third party. Again, this is exactly what you do when you launder money.
surprised I had to scroll this far for someone to tell Benjamin the hard truth.
Kid, the sooner you learn to admit your beliefs are wrong, the sooner you will find a lot of problems disappear and stop being that guy Soo committed in his beliefs, people screw him over.
But carry on internet ethics and fraud emperor, carry on!
So your whole argument is about not writing a "flashy" article and deal with it in private? LOL ok. Not when this issue is valid for thousand of businesses out there. Stop being a stubborn manchild. Man up and tell the world that you're wrong.
And I call bullshit on a large part of the article. The article starts by explaining that the restaurant was getting delivery orders without knowing they were on DoorDash. That sucks but that can happen specially with algorithm driven apps. But it states that the employees of the restaurants were making the pizzas ordered. "Customers called in saying their pizza was delivered cold. Or the wrong pizza was delivered and they wanted a new pizza." So let me get this straight. A DoorDash delivery guy shows up at the restaurant with an order. The employees don't have the app but suddenly they decide without consulting their management to install it and set up the restaurants on DoorDash? And nobody asks DoorDash support to ask "hey how come we're getting orders ?" ?
Umm.... You do know that 3P delivery services can fly under the radar right? Order can be called in, orders can be placed by drivers, orders can be paid with preloaded company cards.
Sure but somebody still need to fulfill the orders aka make the pizzas and give them to the delivery person. And somebody still need to connect DoorDash to the company account for the restaurant to receive the money. My point is that there's no chance than a restaurant starts accepting orders without going through a pretty big setup process and notifying their bosses.
Oh really? The article is valid? Does it give any solution to the problem? Does it give any leads on how to contact DoorDash to get delisted? Does it offer any alternative? Where's DoorDash's comment?
Ok so if it's so legal, why did he stop at a few trades? After all the restaurant could have made quite a bit of money. A 30% margin that's not something you refuse.
Holy moron, Batman. What are you talking about? Fraud is lying to someone for monetary gain. Where is the lie here? The guy ordered a pizza through Doordash, and paid the price doordash charged for it. The pizza was for him, so he knew he was only getting the dough and no sauce or toppings. Where is the lie? I cannot believe you read this whole article and your takeaway is that the owner of the restaurant committed fraud. Wow.
Actually, the fraud was in that he "sold" pizzas to Doordash that weren't what was ordered by Doordash, because he knew that they wouldn't be checked at all.
Doordash was buying pizzas from the restuarant, and reselling them back to the owners friend. But the pizzas that were being given to Doordash didn't match what was paid for. That's fraud.
He didn't *order* no sauce and no toppings, he *prepared* it that way. They ordered a pizza, got charged for a pizza, but provided only dough. What pizza restaurant has an option of ordering just dough?! Learn to relax, Josh.
Except the restaurant that makes the pizza after knowing that they could scam the system which they did. They even made "fake" pizzas only made with dough.
Yes, except that they ordered them for themselves, and had no expectation of a full pizza. Its not a scam if you pay the asking price for goods or services, its the provider that is screwing themselves. If you go to a gas station and they set the price on the pump lower than their cost, are you committing fraud by filling up? Of course not.
You're not because you're not working for the gas station. Making money out of selling a fake product to yourself through a third party and a fake client is how money laundering works.
this is not how money laundering works. money laundering requires that the transactions be conducted in order to conceal criminal activity, and in california also requires a minimum of $5000 a week in transactions. at most this is a misdemeanor violation of penal code section 531, except that i've only ever seen that applied to real estate or cars, and i'm not sure how a delivery company could claim fraud when they are willingly paying $24 that they only received $16 for.
Exactly right on. To make this money laundering they would have had to take proceeds from illegal activity (such as illegal drug sales) to purchases the pizzas for the purpose of getting back the arbitrage difference as "clean" money.
That's not what fraud is. No deception occurred. They ordered the pizza at the listed price and paid the agreed-upon fee. If they had entered into a contract with the delivery service, it might be different (depending on the wording of the contract), but that's not the case here.
If the owner had somehow tricked the service into charging the lower price, that would be much different. You could argue that the opposite is actually true, as the service infringed on his business by offering his products at a lower price than he chooses to sell them that.
It is odd that you see fraud in the behavior of the author or his friend.
You’re both right and wrong... but there’s more wrong than right on your assessment.
- The only bit that might be considered “fraud” is where DoorDash is paying more than what they’re charging the end user. Unless you read this article before it got updated, the author himself said that this was actually done by DoorDash on purpose as a “test run”.
- Serving fake pizzas to someone who is expecting fake pizzas isn’t fraud.
- Nobody was “working extra” for nothing, it’s HIS business and he’s not going to take any money away from whoever made those pizzas. For all we know, he himself baked ‘em. Same for the DoorDash delivery guy.
- If anyone can claim damages, it’s the pizza place owner, because DoorDash actually harmed his brand/reputation with their crappy delivery method.
So i take back the right and wrong bit of my comment; you’re actually wrong all the way around.
So Benjamin it is OK that the Door Dashes of the world are defrauding everyone they touch, including their investors? If pizza arbitrage could force them out of business I'm all for it.
I'm not saying that DoorDash is right either. All the gig economy is going to hell and we're probably better off. But that's still not a reason to scam DoorDash. Mr Trader sure made a flashy article about it but probably didn't think about the people who made and delivered the food not knowing that it was a similar prank than a 12 year old making fake pizza orders.
“ Maybe it’s some ghost kitchen / delivery platform hybrid...”
This feels like what INDIANAPOLIS’ Cluster Truck has become. They are a centralized kitchen that offers a wide variety of cuisines more like a food court’s selection than a restaurant. There is no customer storefront or seats available because the centrally located kitchen facility is optimized only for the pickup of orders by a fleet of drivers and bicyclist. No option exists other than delivery. All the food seems to travel well, likely because it wouldn’t be an option otherwise and because they optimize packaging. For some of their dishes they partner with other local business on recipes so they can say “Get so-and-so’s burger here”.
You have missed the entire objective of making a loss! This is a customer acquisition Stratergy once critical mass has been achieved and market dominance the orders being to be directed to Ghost Kitchens and the poor businesses are left with no direct access to what was their customers.
By position themselves (delivery platofmrs) between consumers and the businesses they effectively become the gatekeepers who decide where an order is sent for fulfilment.
By the time businesses realise it is to late, they (the business) have helped build up the delivery platforms business, expanded their reach and portfolio of products and services and become so.dependant on them that little or no attention has been made to build customer lists for future indirect.marketing activities (not that this is easy to do.when the business never has direct access to the customers details not even the delivery address! As only the driver has this, data protection lol)
This is also the same business model.used by the likes of Uber hailing services and also tripadvisor booking.com and alike!
Quietly position yourself between consumer and business! Then control the market and demand high commission and fees!
What is needed is a new paradigm! Thankfully I have developed such a solution....
You are exactly right. The further you are from your customer, the closer you are to being disrupted. For years restaurants have thought that they could "outsource" customer acquisition, and delivery platforms were all too happy to let them do it. Now they are realizing what a mistake that was. We have tried to build some tools to help with this at zero.eatgeek.com, but even now restaurants are falling into the same trap. Hopefully, COVID will wake some of them up.
Nice theory! Honestly interesting, and yes restaurants should beware. But... How is it working in practice, so far? We're what, 3 or 4 years in now... about time to see some profit? Or does the theory plan for bleeding out hundreds of millions every year for the first ten years?
If you're interested in a downward, equitable wealth transfer, your friend could order pizzas to deliver to the needy. Capital from Softbank converted to food for those who need it during the pandemic, and your friend can even -make money- doing it!
Additionally, as someone who worked postmates for extra cash a few years ago, it's obvious why this stuff doesn't work. Way too many resources (both labor-wise and in terms of driving etc) are spent per order. It's super inefficient. Domino's has deliveries down because their employee returns to the same place, helps the store during downtime, and batches out several deliveries within a reasonable radius. All of which make the business model possible.
Yup, I worked pizza delivery for a bit over a year. To do profitable delivery the business must be designed around it end to end. Grafting it on after the fact is just never profitable.
This makes some good points. Some things I have observed being in the commercial real estate space:
1. Dominoes takes the bare minimum amount of space needed for a kitchen only. So they are saving on how much space they have.
2. They don’t rent in more expensive sub markets like a lot of restaurants on these platforms so beyond the little amount of space they rent, their cost PSF is low.
3. Their product is scalable (relative to other food stuff). One pizza can feed a family. The time to assemble and cook a pizza is super fast; the ancillary products they offer are all the same way. Unlike a more typical restaurant where maybe each person in a household is ordering an individual dish.
Most restaurants make little money on food and pay a shit ton in rent to be in a high traffic area because they want people coming into the restaurant and ordering booze with their food. So the things they are paying the most for (their space and location) doesn’t help them on delivery.
It's rare that a very well written "everything is broken" piece misses one of the most broken aspects. Gig economy. Gig worker. No allegiance or accountability to merchant, gig company or consumer. Gig worker delivers food for MULTIPLE companies (whoops). Drives your food around a bit before even heading in your direction. (double whoops). Drinks your milkshake because it can't be stapled shut in the bag that holds the food. Pretends the restaurant is to blame. Shouts dismissively "Report it to the website" as they side hustle back to the car to screw another set of people. Side hustle, my butt. It's a straight up hustle. And their tip was collected an hour ago. Long gone. Hustled.
I was the former Head of Innovation at Grubhub, so I have seen the truth behind many of these claims first hand. Sadly, I invented a lot of the food delivery technologies that are now being used for evil. There were so many great points made here, and I’m glad people are finally paying attention to this. I will try to only add to a few.
COVID-19 is exposing the fact that delivery platforms are not actually in the business of delivery. They are in the business of finance. In many ways, they are like payday lenders for restaurants and drivers. They give you the sensation of cash-flow, but at the expense of your long term future and financial stability. Once you “take out this loan” you will never pay it back and it will ultimately kill your business.
In the case of restaurants, these platforms slowly siphon off your customers and then charge you to have access to them. They are simultaneously selling these same customers to your competitor across the street, but, don’t worry, they are also selling their customers to you.
For drivers, they are banking on a workforce that is willing to mortgage their assets, like cars and time, well below market value, in exchange for money now. They know that most delivery drivers are simply not doing the math on the actual cost of providing delivery (time, gas, car maintenance, payroll taxes...etc). If they did, drivers would realize that they are actually the ones subsidizing the cost of delivery.
Delivery platforms are “hyper-growth” businesses that are trying to grow into a no-growth industry. Food consumption really only grows at the rate of population growth, so if you want to grow faster than that, you have to take market share from someone else. Ideally, you take it from someone weaker, who has less information. In this industry, the delivery platforms have found unsuspecting victims in restaurants and drivers.
The competition for customers has not gone away. It has simply moved online. Many restaurants have been too slow, or unwilling to adapt. Delivery platforms and other restaurants are taking advantage of this to gobble up market share. Restaurants need to realize that they are now running e-commerce businesses and they need to act accordingly. Being proficient on Google, Yelp, Facebook and the dozens of other platforms is no longer optional, it is essential.
My team is trying to do everything we can to help restaurants transition, but restaurants have to be willing to change. You can learn more about what we are doing to fight back at zero.eatgeek.com. Stay hungry.
"They give you the sensation of cash-flow, but at the expense of your long term future and financial stability. Once you “take out this loan” you will never pay it back and it will ultimately kill your business."
Dude.... exactly my thoughts as a delivery driver, I was piling data that shows exactly this.
"...drivers would realize that they are actually the ones subsidizing the cost of delivery."
-- Thanks... I did the math (read my comment below) -- again spot on my thoughts.
Thanks for such a great comment, it gives me some sanity back after arguing for hours with a friend about these things. His angle was that if people lost money then nobody would do it... He kept on coming back that their cashflows proved otherwise, that some people would receive $3,000 or more a month by doing Uber or Lyft. (Yes, mix of things there)
My point, is that the loss of money was hidden in their future, something that many people oversee, specially when their background is not very financially savvy, or their immediate situation calls for quick income.
Unfortunately, this is my current situation. Due to the COVID19 crisis I have had to resort to doing deliveries to at least get some cash coming.
The good thing for me at least, is that I know that I need to stop asap so I never declare an actual loss, while I transform my motorbike and phone into tax deductible assets, instead of absorbing the full cost of their maintenance for private use.
So essentially these things can be used as well as a tool for offsetting cost, which is in my opinion their best, and only use.
Ismael, you are spot on! The data is really clear, but you have a lot of very smart people at the delivery platforms working to muddy the water. (Have you ever noticed how the same people that make it possible to order a meal with the push of a single button; also give you a breakdown of your payout that an accountant could not decipher. That is not an accident. It is deliberate)
I completely understand your situation and there are thousands in the same spot. I'm sorry that this is happening. The good news is you are aware of what is happening and that is half the battle. If you know the rules of the game, you can at least play, but if you don't know the rules, you will always lose. Stay hungry.
That's some good shit here.
Collin, this is an epic comment! Please publish it in a more public form, I've just shared it on https://twitter.com/randolf/status/1262784027611869186 please make contact for a followup for your eatgeek product!
Thanks Randolf. I hope it helps. We spend so much time thinking about this space that we are always trying to share the knowledge. All the best!
Collin, appreciate the very thoughtful commentary here and frankly the honesty. I wrote about many of these same points in a (lengthy) post last fall: https://medium.thanx.com/four-horsemen-restaurant-apocalypse-64947b3d9657
There may be an opportunity for our businesses (www.thanx.com) to collaborate but most importantly we need to help restaurants simply survive right now — the crisis is turning more and more to 3PDs for that short-term revenue which will be their long-term downfall.
ZACH! I was just thinking about you! We would love to collaborate, and I still owe you a coffee. Talk to you soon. 😄
Collin, How do I get in touch with you? Would love to talk, I'm in the same space. - Very well written
Hey Vinh, happy to connect. You can reach me at info@zerostorefront.com. Looking forward to it. Thanks.
I clicked on zero.eatgeek but I don't understand what services you offer or what you are doing to "fight back". Can you explain? Thanks.
Hey Emily, sorry our site does not do a very good job of describing the product. We will do some work on that.
We built a software, ZeroStoreFront, that collects all of the restaurant's data from all of the applications that they use to run their restaurant every day (point-of-sale, Google, Facebook, Yelp, Tripadvisor, Opentable, Wifi...etc), including third-party food delivery platforms. Once ZSF collects all of the restaurant's data, it connects everything so that it becomes really clear where customers are coming from, how much each one is costing, and how much revenue each one is generating. (There are a lot of other features, but that is the biggest one)
We basically realized, like it or not, restaurants are effectively becoming e-commerce companies, so they have to have the tools that let them monitor, measure, and manage their customer channels. From our perspective, the issue was never that third-party delivery apps are expensive customer channels, the issue is that most restaurants don't even collect the data to know that!
As a restaurant, you can't live without DoorDash, but you also can't live on them. You have to develop your other channels. If we can help restaurants easily understand what channels and behaviors are actually helping their business, and which are just costing time and money, then they will be able to grow in a consistent and stable way. ZeroStoreFront is just an attempt at a cheap and easy way to do that.
Ohhhhh, OK. Where are you working out of? What kind of coverage do you have?
Hey Emily, we are primarily focused in the US at this time. This is where we have found that we can best use data to show restaurants which channels are generating profits and which ones are not. However, because what we provide is mostly software, it can be used almost anywhere.
Hi Collin. I wonder if I can work with you ? It sounds so interesting.
PS. This is some good shit, here.
Stay hungry? Mate. 🤦♂️
This is spot on Colin. We are based in the UK and have spent years trying to develop a fair model with commissions involved for the restaurant or driver. It would be great to setup a call.
Gurpreet
www.easyfood.co.uk
Hey Gurpreet, thanks for reaching out. I'm happy to connect. If you just message us through our website www.eatgeek.com then I can get back to you directly. Happy New Year!
I work on the Google Search team. We understand the concern about unauthorized order links. That's why we remove any order links from Google business profiles if a business reports there's no authorized relationship. They can do that following the instructions in our help page about order links here: https://support.google.com/business/answer/9503613
Hi Danny, I operate the stop sex offenders network. We put any name we can find on our list of sex offenders. I see you're on our list. If you have any complaints you can file a complaint via form A9874B, but make sure to also have form 5465DF8 with you, you can find a more detailed FAQ on our website, we're always happy to help if there's been a mistake!
LMFBOSHIDMT! ;) <3 8-) (Laughed My Fre@kin' Butt Off So Hard I Dropped My Taco!) ;) <3 8-)
Perfect! Just PERFECT
THIS !!!!!
The spam reporting lists actually work that way, but you have to pay to be removed...
@Danny, the problem is the *majority* of DoorDash links on Google My Business profiles are not authorized, particularly concerning the Active Links program.
I serve on the board of the RMDA, and I'm the immediate Past President.
When DoorDash enters a new market, they immediately list *every* restaurant in that market on their platform, and they use those links to drive business to their platform without having to do the hard work of partnering with the restaurants.
Until last year, GrubHub put "Active Links" to Grubhub and Seamless on the GMB profile of EVERY restaurant in America, automatically, through special access granted to them by Google. I know this because 2 friends who own local independent restaurant delivery services changed their GMB type from "caterer" to "restaurant" and a Grubhub Active Link immediately appeared on their GMB profile. Seriously. A link to a direct competitor on a small business' own GMB profile.
When GrubHub did this with local restaurants, clicking the Active Link took customers to a scraped version of that restaurant's menu on GrubHub, with a message reading "This restaurant isn't currently available through GrubHub, but they will be soon! In the meantime, click here to order from a similar restaurant.." eg. "please order from one of their competitors." At least DoorDash will actually *deliver* from the restaurants whose profiles they hijack.
Google will not give Active Links access to my company, Takeout Central, or any of the hundreds of other locally-owned independent restaurant delivery services in America, even though many of us have partnered with our local restaurants for over 20 years. You won't let us participate in Google's "On Demand" ordering platform (the blue "Order Delivery" buttons in this article), and you won't even sell us "Local Promotions" ads in the GMB profiles that you sell to DoorDash and GrubHub. Even my Google Premier Partner ad agency can't get us that placement because "the program is currently closed".
You could allow all of these independents to participate in these programs by integrating with 3 or 4 providers; Takeout Central, Data Dreamers, Deliver Logic and Lodel.
...but you either won't, or you turn a blind eye to what is going on.
Our business is down 60% - 70% in some markets since the funded companies arrived, and you continue to funnel business to them.
We can't compete with companies that lose hundreds of millions of dollars per year. Google is helping them put us out of business.
Please consider changing your policy. Call me if you wish. (919) 260-0803.
Hi Wes! Great comment! Hope you are well! Kathie - Cafe Courier (Ohio) - taken down by the big guys
Great to hear from you Kathie! We're still fighting the good fight.
Reconsider posting your phone number online! Best wishes.
It's already everywhere. Also, they used to publish *books* with everyone's phone number listed, and then mail the book to everyone in an entire city. I think I'll be alright.
Wes, you made me smile just now, dude. Phone books, ah yes.
Holy crap! We need to hangout. I think I found my mental doppelganger. Google can suck it!
Thanks, Wes -- I'll add this feedback to the feedback that I previously passed on, so it can be looked at more. Our guidelines on how we take in information is pretty clear -- any platform should only provide that information if they have an authorized relationship::
https://support.google.com/business/answer/6218037
I believe the team has made a lot of improvements in this since the time frame this article talks about (May 2019), and businesses do have options to control, as I mentioned earlier. But we'll look to see if there's even more that we can do.
I know you're trying to help, but this feels like a joke. It is such a mine field to try to find the true website, phone number, and preferred online ordering site of local restaurants. This is something that Google should make *easy*, but I feel like I need to do multiple searches, look at Facebook, Twitter, and Instagram to have a hope of getting it right.
It shouldn't be on the business to fix this, other than actual exceptional situations, Google just shouldn't have things in the info box it doesn't know is right and should largely downgrade the fake websites various VC-backed ordering services create.
There's been a lot of confusion with order links and phone numbers. From everything I've seen in this article and a similar one before, there's no sign there's a mass problem with us listing a restaurant's actual phone number. We seem to do a very good job of that learning from their web sites (which we also do well in listing) and other signals. And third-party delivery services aren't going in and changing those phone numbers.
The concern is about order links. We show third-party order links from companies that restaurants have partnerships with -- which we learn about because when they engage with those firms, we then get a feed from those firms. But sometimes, firms may claim an authorized relationship they don't have. And that's where an order link might appear where a restaurant doesn't want it.
This doesn't appear to happen that often. Not saying it doesn't happen at all, nor trying to dismiss the concern here. And that's feedback we're taking in, to improve better. But the phone numbers and order links are different things.
Oh yeah, Grub Hub adding themselves to every single restaurant was just a coincidence.
Nassim did nothing wrong.
That's feedback they are taking in, to improve, don't you see? Google didn't know they sent their team to work with Doordash, Grubhub, etc...it's all news to them. I'm also selling you a bridge if you're interested.
"there's no sign there's a mass problem with us listing a restaurant's actual phone number...
Absurd. Simple Google Search: "pizza restaurants in my area." So, you see a search result you find interesting for "Arturo's." Now, tell me how many more steps does the average user have to take to ascertain "Arturo's" REAL phone number? Is it the one listed on Yelp? No. Any of the other (many) listings that show up before Arturo's actual web site? No. You must wade thru (click) various listings (and waste time). This is a basic failure of a system that is supposed to be user friendly. For years, you have talked about providing good content. But the real answer is clear. Make money first. All other considerations are second.
Don't. Lie. Google-faggot. The only thing that will work to correct this is throwing acid on your faces.
Nassim Did Nothing Wrong.
Google is certainly better at this than Yelp, which actively tries to divert traffic to GrubHub, so they can collect a cut of the fee. But still, every unaffiliated upper-midrange restaurant in my area, and most areas I travel to, has a Google ad for Grub Hub placed above all other business information. Hey, you don't work for free, it is what it is.
Hi Danny do you really believe the stupid shit you're saying or are you trying to crisis manage a PR shitstorm? If the later then escalate this to your PR team as you are only digging a deeper hole here as no one is buying the stupid shit you're saying, so add that feedback to the feedback that you added to that feedback and get your PR team on the case before it's too late, and I hope it's too late.
I don't work for our comms team. I work for our search team. My role it to explain how our systems work and bring back feedback directly into the search team to explain how they might improve. So just as I'm sharing here about how things work, I'm also taking back into the search team some of the constructive feedback people have raised on how we might improve.
I feel sorry for you man, you're getting a bit hit with all the hate here when you're just a molecule of the tip of the iceberg.... But at the same time, is obvious and expectable hate.
More often than not, all these feedback loops and whatever lead nowhere. Is very seldom that they actually yield some change or results. And if that was even to happen, sometimes the change or improvement happens SO slow, that is too late for some people who lost in a rigged game.
Bloated chains of command and/or systems are many times used to precisely delay or dilute efforts towards changing systems that favour a few.
It takes molecule's to make an iceberg.
How are you validating the "authorized relationships?" Did it not raise a red flag at google headquarters when you turned this whole thing on and door dash suddenly had "authorized relationships" with every restaurant in America, essentially overnight?
The delivery companies are OBVIOUSLY abusing their preferred access to your platform. They are OBVIOUSLY listing themselves on restaurants where no "authorized relationship" has been negotiated. There's no way you didn't see this happening.
Now you've created a situation where the delivery companies are going into negotiations with restaurant owners after they've ALREADY stolen their customer relationships by abusing your system.
Do you have any plans to punish them for this obvious abuse?
I do commend you for your "clear guidelines," which very clearly state that none of this is google's problem. Restaurant owners need to talk to the delivery companies:
"If you want to remove or fix a link in your own listing, please contact the third-party provider’s support team or a technical contact to request they remove your data from the information they are sending Google."
You understand that the delivery companies are entering into adversarial contract negotiations with the restaurant owners, right? And then you gave the delivery companies sole authority to add or delete themselves from the restaurant owner's google listing? Do you not see the problem here?
I'm definitely not an expert on this, and I don't know much at all from the backend.
But seems to me that GrubHub, DoorDash and more are technically handling orders on behalf of a restaurant and claiming some representation by listing a restaurant's menu on their websites.
Wouldn't this constitute as an agency relationship? -- And aren't agency relationships required to be approved and authorised by both parties through a contract?
So technically, falsely claiming they are a representative of the restaurant and handling orders on their behalf when they weren't authorised should be illegal. (could there be a lawsuit chance? -- yes, I know would be daunting for a single restaurant... how about a class action?)
Very different would be to advertise an order-placing service than outright listing the menu. Like "call me and we'll place your order, for a fee" -- as retarded as it sounds, because it is what DoorDash was or is doing according to the article.
That would need to happen without hijacking the google links system.
I really don't know... It's an information problem, as restaurant menus are obviously public information, so they're obviously not stealing anything either...
This is why associations are necessary.... a "USRA" (US Restaurant Association) could run a more verifiable list of these "authorised relationships" in a more independent way instead of corruptible corporates like Google. And deem all these delivery platforms as representatives of the restaurant, forcing an agency relationship, making any breach more enforceable.... as it seems now is a huge grey area.
A bit of red tape could prevent some abuses I guess...
I'm in Australia btw, so nevermind the Aus spelling and forgive the ignorance of law components in the US, a lot of this was "thinking out loud".... I might be talking crap
That's not dismissing this on the business. That's informing the business they may want to contact the third-party company because even when we take action to remove on Google -- which we will do even if they DO NOT CONTACT the company -- those links could appear on other platforms.
That said, those instructions should be updated to link to our help page that explains how to remove the links without contacting a company. That page was in my initial reply, but you'll find it also here: https://support.google.com/business/answer/9503613
No amount of google support articles is going to stop you from getting your rightfully deserved acid wash on the face, google-faggot.
My experience is there needs to be a strong punishment for this. second or third strike should be a banning of use of the service. doubtful google would do it, but it's the only way to stop it. (or at least would not do it to a large customer: i suspect if i did it at best i'd probably make it too second strike)
Bottom line.... Google doesn't give a whit about Small Businesses. They simply look to perpetuate their "hands-free" automation and dominance. Danny, I don't think you are intentionally being obtuse. You have your turf to protect and I give you credit -- you are good at it,
I don't have any "turf" I'm trying to defend other than to foster two-way communication between people within the Google Search team and those outside, especially when there are real, honest concerns being expressed, as here.
We use automation because there are millions of businesses that have authorized relationships with third-party providers, relationships that can change day-to-day. Automation means we can keep up with those without requiring a businesses to remember to keep adding or removing something they've changed. But we balance that with allowing businesses controls in case the automation isn't doing what they should.
We have made improvements here; we'll keep doing that, and I (and we) do appreciate the feedback.
My concern is not with automation, but rather with the 'hands-free' aspect. Although you have staff (customer service) to address concerns, they do a bad job. And this cannot be dismissed with the wave of a hand and "we will do better" The clamor over Google's ham-handed systems is growing. Clearly I am not the only one who sees these issues as detrimental to small businesses.
Right, the corporates can do whatever they want as long as it's automated, and they won't be punished. Understood.
punishment is better without warning and it is coming
Yet another "we'll do nothing because it doesn't improve our profit while trying to not make a complete PR disaster of this" response.
So terribly unsurprising. Hopefully the antitrust suit against Alphabet helps to sort things out and stop this corporate stupidity.
Danny, thanks for taking the time to reply to these. It is much appreciated.
Things certainly improved since mid-2019 when GrubHub was on every restaurant profile, but DoorDash is as bad as ever, and aggressively re-adds themselves to restaurant profiles even after they've been removed. Restaurants have to wait on hold for an hour with DoorDash to remove themselves, and then 6 weeks later they're back on there.
In late 2019, GrubHub announced their intention to offer "non-partnered" restaurants to help DoorDash and Postmates burn through their cash faster, and since January 2020 GrubHub now has Active Links on the profiles of non-partnered restaurants in areas where they deliver.
When can independent restaurant delivery services join the Active Links and On Demand programs? This has been absolutely devastating for our businesses.
Since DoorDash and GrubHub came to town, nearly all of the new business goes to them, because their links are on every restaurant.
Again, 3 to 4 software integrations gets you nearly the entire independent industry, and most independents only work with partnered restaurants.
I'm glad you've seen an improvement. It's part of what I mentioned on how the team was working here. As I said before, I've brought back to the team the latest concerns. We'll continue to work to improve based on that feedback.
What will you be doing to punish DoorDash and GrubHub for their fraudulent business practices, which you have openly colluded with? Nothing, right?
I ordered food just the other day. The listing for the restaurant said had a Grub Hub ad on it. It looked like it was linked to the restaurant. It advertised free delivery special. However their website was so wonky I went back to the listing and saw that it said AD. So Google knows good and well what is where. You sold them the ad space!!! Just do as everyone says and make the system opt in. Period. You are not trying to balance squat, you are not trying to do anyone favors. You are simply hoping to not get caught.
Do you have your own drivers?
So rather than validate a relationship prior to link creation you want the victim to report first before you take it down. *sarcastic applause*
Restaurants don't have time to notice issues or report them unless they become extreme. Google also can't validate with each owner due to the scale. The real problem is these scam techniques need to be found and penalized. It wouldn't take many complaints for google to then see a pattern and act (like they have with others that have tried to trick search engines)
Btw, Danny is a stand-up guy and I'm glad he is on that team. Their challenges are very complex and constantly changing.
If Google can't validate, then they shouldn't show it. They created an infrastructure for some companies to rip off others, and put the burden on the victim, but Google is enabling the scam and creating the victims. It's scumbag behavior.
And Google/Facebook name themselves to be the “fact-checkers” deciding what is a fake political ad or not...hahahahaha!!!
They actually hire independent third-party fact-checking agencies to do that.
Yes...sure they do...(eye roll.) Did you read that somewhere on the internet? (chuckle)
1) Google has all the data to know if the number is the actual number for the business.
2) "Scale" in this sense, and in many situations tech tosses the word to claim impossibility, is about them not wanting to have to spend any of their enormous profits on hiring checkers to verify information. It is absolutely possible for them to check every number. Just as it is possible for them to verify every other bit of information they offer. They choose not to, as that would change a business model they do not wish to change. They are nearly pure profit currently, this would force them to operate like other businesses, many of which they are upending, with much lower margins.
I don't feel sorry for them at all. If they cannot make it work without harming people then they need to rethink their business model, not defer all the cost onto society while keeping all the profit for themselves.
To be clear, we are not allowing third-parties to change phone numbers for business profiles -- and that's not what was being raised here. We try to determine a business phone number using our own systems (typically, we'll find it on the business site), and we allow businesses themselves to manage that number or change it to what they want.
What was described here was about order links. We may show links to various online delivery companies if we determine they have an authorized relationship with a business -- and many restaurants do. This explains more about that:
https://support.google.com/business/answer/6218037
These links would appear *in addition to* a restaurant's phone number. Restaurants have the ability to manage them or disable them entirely, if they want. And if we have reports of unauthorized relationships appearing, we may take action on our end, as well.
To be fair, I conflated both articles I read on this topic, this one and the one about Grubhub changing numbers. Both are real issues, but I know you don't own the phone number issue.
I will also be clear: I don't blame you, personally, for this situation. Having spent the past 20 years in big tech, I am very aware of how myopic management can be about the world and how it 'should' work vs how it actually works. You are doing the job you were assigned as best you can given the parameters you have.
That said, before even accepting an order link an effort should be made to reach out to the business to 1) verify they want an order link on your site, and 2) verify that they are the ones placing it there and that it is correct. Whether that is done in an automated or manual fashion is not really the business owner's problem.
I also do not believe they should be forced into a reactive state where they can correct misinformation. That is an endless rabbit hole chasing down every site that lists information. Get permission first. By the time they find the source of bad information the reputational damage is already done.
Well, we "own" both issues to the degree that we want to show the best information in our business profiles. We want to show the correct restaurant number -- and we generally do. I think there's a lot of confusion, as said, that we don't. We also do want to show authorized delivery services.
Potentially, we could do that only if a restaurant specifically asks. However, as many have noted, restaurants can also be busy. They might not get into update a relationship they've started -- and want -- in their profile or even on their web pages. That's why we take in data feeds from providers, and those providers should only feed data if they have an authorized relationship.
That's also a win. It saves everyone time all around. And it's a loss if we change to force millions of restaurants to manually manage relationships -- and then change those again if they change the relationship.
That's why we use automation. Because millions of businesses and millions of relationships that can change from day-to-day is a process of scale. It's not because we don't care -- it's because that's the nature of the challenge.
And that's why we also have the ability for businesses to manage those panels. It allows us to balance getting so much of this correct through automation with the targeted control if we do make a mistake or if a business wants more control.
All that said, I definitely appreciate the useful comments and thoughts in this thread. I have and will continue to pass it back to our local search team.
You're a shill. You will be hunted. #ThrowAcidOnShills
Good luck getting a response from Google.
absolutely right, if it wasn't for the food delivery apps Google wouldn't be making any money the restaurant industry.
I see that not many here are familiar with PR speak, so here’s a PR translator.
Google via Danny: “I work on the Google Search team. We understand the concern about unauthorized order links. That's why we remove any order links from Google business profiles if a business reports there's no authorized relationship. They can do that following the instructions in our help page about order links here: https://support.google.com/business/answer/9503613”
PR Translator: I work on the Google Search team. We understand we have an issue with unauthorized order links but it’s a money maker so instead of adding any friction to DoorDash (our customer) we partnered with them, sent our sales teams to help DoorDash understand how they could better integrate Google My Business into their core acquisition funnel and decided to pass the friction to hundreds of thousands of small businesses instead. But if small businesses take action they end up hurting DoorDash which diminishes our profits, so we buried a support page with some convoluted instructions here: https://support.google.com/business/answer/9503613
I like how you put the onus on the business, rather than actually doing any work yourselves to check if the information submitted to you by third parties is correct.
This is so important: verifying information. I have a beef with Google's policies regarding "fake negative reviews." Google has a policy of allowing for "anonymous" reviews. So far, so good; anonymity can foster 'honest' reviews. But, competitors take advantage of this by pumping out "fake negative reviews" which negatively impact SEO. I have reported obvious impersonations (no substance in a review, just negativity) and Google does nothing. There should be verification (proof) of a reviewer's identity on the back-end, even if they appear as 'anonymous' on the front end. Again, that would take work on their part, which they so far have been unwilling to perform. Google doesn't "do" verification.
This comment confirms how scams like the one reported here come to fruition, people like Danny boy believing they are doing the ethical thing when they are actually the real culprits. You are not helping the restaurants Danny, you are fucking them over, but I don't expect you to realise how you could be fucking them over, but you are. Wake up mate.
Google always been a gig scam..facebook, twitter all the same. Theft any way they can!!
I hear that you're trying to sound responsible, but a responsible... say, "non-evil"... business would FIRST verify that there IS an authorized relationship. And you know this. And still you work there. Shame on you, pal.
Please remember that Google has extremely limited resources. This is a problem that's very hard to solve. Google is primarily a search engine. What you're asking is for them to undertake an effort that's as implausible and as difficult as, I dunno, some outlandish thing like mapping every single street in the world with an up-to-date 3D navigable map system...
oh, right.
Counterpoint: Google can go fuck itself, because I got a business to run and can't monitor search engine results. Do your jobs and let me do mine.
Thanks for posting on this, Danny :) Can you share more about why the service is opt out as opposed to opt in? Was this based on the desires of these businesses? I imagine that you couldn't count on getting a lot of negative signal on this service because many small businesses may not even know that they've implicitly signed up for this service. Thanks for reading my post :)
It's a balance. Many restaurants do have relationships with delivery services. Some of them may depend heavily on them (especially right now). But businesses are also busy, and they might not get in to update their profiles when they add a new relationship. So order links come through services -- and those services should only be feeding information if they have a relationship. More about this here: https://support.google.com/business/answer/6218037
If we went the other way, you get the opposite issue -- businesses (and customers) might complain that it's harder to get delivery (especially if some restaurants haven't updated their web sites, which can also be challenging for small businesses).
So the opt-out is meant to help balance these things. Businesses don't have to do more work to add authorized delivery services, but they do have the ability to indicate a preferred one or say they don't want any at all.
So, instead of a single email or, if no respose, 'gasp', a phone call requesting fhe owner to validate the change, you've given everyone who doesn't use these services a new task EVERYDAY to go and make sure their service hasn't been hyjacked. EVERY. DAY.
I'm sure those owners really appreciate your kindness.
This is really it. Letting this be changed without confirmation means owners, most of whom run very slim margins, have to check their status routinely if not daily as any loss of business can be bad for them.
And who has time for that when your running a small business
Without taking away from the concern, nor suggesting that it is flawless, my understanding is that we don't see some massive "hijacking" as is suggested. Providers should only be feeding information where they are authorized to. That's the first line of defense, so to speak. We've made improvements to catch cases where this might not happen. That's the second line. We also have controls for the businesses to manage, if something does get through the first two lines. And we look to keep improving those.
When a business does report, how much do you penalize the business that made the fraudulent claim? How much do you compensate the business?
You lie.
The claim that Google's policy (that providers should only update delivery links if authorized) is a credible defense needs interrogation. Why should providers do so? What are their incentives to do so?
I'm not sure why relaying community feedback to the search team is a reasonable mitigation either. Isn't this a policy question?
If a service is found to have fed erroneous information, how about simply delisting that service entirely, forever. Period. Trust me, another will arise to take its place, and people will learn good behavior very, very quickly.
Wouldn't this concern fall on the delivery service coaching the business owner through setting this up? They are the one who wants to make money delivering the product.
Then why not let the local delivery services have access to these Links. There is a higher probability that they have existing relationships with the restaurants?
U could easily email restaurants to let them know of any changes though and with a link of accept change or deny, I’m sure u have their emails and any business reads their email. For me is crazy how google is super hard on mistakes on seo, ads, etc but does nothing to these big companies about their clear misuse of the system.
...or... hear me out... don't allow them to show up in the first place until there's a relationship.
@Danny thanks for the response. Why can't Google just send a verification to restaurants as they do for Google My Business?
The issue with the delivery platforms is largely a trademark issue, where the platforms are using the restaurant's marks without permission. It is not illegal for delivery platforms to re-sell restaurant food, but it is likely illegal for them to impersonate the restaurant using their brand and likeness.
Google has a very robust system for protecting trademarks as it relates to ads. In fact, Google will reject ads that use unauthorized brand names. Why can't you explore a similar system to protect restaurants and other hospitality providers?
There's already a verification process for restaurants to use to claim their panels. It is done through Google My Business. Those panels are part of that.
So you are forcing restaurants to do the work. I suggest they'll be better off suing you and your preferred customers for trademark infringement.
Maybe don't put the link there in the first place unless the business requests it, instead of letting the delivery services insert themselves without permission.
Hell, you could do it with a meta tag.
<meta name="deliveryServices" content="doordash,ubereats">
Why is Doordash permitted to make these changes without any authorization in the first place?
I think there is some confusion here. Doordash nor can any third-party go in and change a business profile. We might list third-party delivery services based on data feeds we receive (see here: https://support.google.com/business/answer/6218037), but they can't go changing business phone numbers nor set themselves as a preferred delivery service. The business owner controls their profile.
"Google works with select third-party providers that provide booking and ordering services for local businesses. Links for third-party providers display as a result of a relationship your business previously established with them. These links lead to the website of the third-party provider. From the third-party website a User can take an action such as ‘place an order’ or ‘make an appointment or reservation’. "
So, clearly some of these services are lying about having a relationship with local businesses. That shouldn't be in dispute at this point. Given that, why are you still allowing those services in particular, and any service more generally, to claim association without verification by you or authorization by the business?
Danny- This was not the case. Every time I edited the listing I could not get the door dash listing off it (I manage the profile). Nor could I find any instructions . I could make any other change to my google listing, however taking the door dash off never worked.
Adam, if you want to share with me the listing, I'll have this looked into. That's definitely not how it should work.
Danny- Once the demand test from door dash was over and we did not partner up with them the problem fixed itself magically
You should have been able to remove the link regardless. Sorry to hear it didn't work -- ping me on Twitter (easiest way) if that ever happens again, so we can investigate. Moreover, if they were doing a test without your permission, we should have never been fed that information. That sounds similar to the situation described in this post, and we're definitely looking to prevent that type of thing from happening in the future, to the degree it might be still happening.
How about you just dont do it period?? Its not right.
Not good enough. They shouldn’t be allowed in the first place.
Hi, Danny. I discovered a couple of years ago that some enterprising entrepreneur has scraped the web sites of at least two local restaurants, and created identical sites that are better SEO'd. They make just one change: the order link goes to their own ordering platform. They charge the customer, take the order, forward it to the restaurant, and then keep the money. The customer arrives at the restaurant, the restaurant asks for payment, and the customer says they already paid and shows the receipt ... which was generated by this fake website. The restaurant owners have no idea what to do to get the fake sites taken down. Google gives no guidance. What should we do?
LOVED THIS ARTICLE! I've been a chef for about twenty years. Third party delivery is becoming a plague, and over the last several months, everyone is starting to finally realize it. Business models vary, but I think it's fairly accurate to say that if a restaurant takes home 20% after all of their expenses, then they're doing pretty well. If a third party company like Door Dash wants to take 20-30% off your sales as a delivery fee, you're not making money - so who cares if you're getting more sales? What I don't understand is that when you go to a restaurant, there's generally a gratuity, roughly 15-20%, and sometimes a lot more if the service is really on point - if everyone tipped the drivers that amount, then people would be falling over each other to be able to work as a driver making the deliveries. I work in a restaurant that is only doing to-go and delivery food while everyone is closed - our Service Staff does the deliveries instead of waiting tables. They're making more than twice the amount of tips they made before, and we don't have to deal with third party companies taking their cuts. When a Grub Hub driver shows up at the door with your food, they don't always get a great tip because there's already a fee for the delivery - but if it's someone from the restaurant, they seem to be very well taken care of. Cost vary depending on restaurants, but the packaging can cost a lot more than people think - I did rough calculations and we have about $1.85 per person invested in the food before it even leaves the building. Granted, we don't have to pay someone to wash plates, silverware or glasses, but that packaging really adds up. I've seen places have aline on the bill for "To-Go Packaging," but it seems sort of tacky, so we opted to not do that. And regarding Note #2 - third party delivery people are complete unknowns to restaurant owners, and in some cases are not the person you want associated with marketing your restaurant. Ever looked in the delivery vehicle? Probably not, but maybe you should. We spent $400 on insulated food carriers - those things are not cheap! But when you get a pizza that's 140º twenty minutes later on the table, it's easily worth it. I really think that the only drivers who care are the ones working directly for the restaurant - I get Domino's once to twice every month and the drivers are much more professional than most third party carriers.
The 20-30% off your sales with Grubhub etc is generally only if you're using their drivers. If you have your own delivery crew, it's 5% I think. For places with their own crew it's manageable, and worth it for the discoverability through the app.
There are other apps, like ChowNow (not as widespread) which simply charge a monthly subscription fee from restaurants and no per-order commission. Sometimes the same restaurant will be on multiple apps, but the end-customer doesn't know which one is better and they tend to just go with whatever the first one they installed was.
Id there was a mass, concerted exodus from per-sale commission apps to monthly fee apps, it might have some effect on the industry.
Using our own drivers was not an option, or I gladly would have taken it. I'm guessing that there are different rules depending on the size of the area. My first experience to third party delivery services was in Chicago, almost ten years ago. Currently, I'm in a town of under 20k, so I'm sure different rules apply, and there are also a lot less competing companies. Either way, until there was a recent "cap" put on the costs that were being added on, your percentage may have been referred to as a "marketing cost." Smartest thing to do: When you bag up the order for the third party guy, along with the menu and other promotional materials that go inside the bag, include a flyer stating something to the effect of, "NEXT TIME, CALL US DIRECTLY AND WE'LL GET IT TO YOU OURSELVES FOR A LOT LESS." Same concept as when you do an AirB&B and the owner asks you to contact them directly next time and save one third of the cost. I would like to see a mass exodus, or maybe even a competing service that could maybe keep the restaurants' best interests in mind.
Something else to consider is the food costs and margins of different menu items - Some items make enough money where you could very easily handle a larger fee for delivery. If I sell five steaks for $30 each, I'm probably making about $100 on those items alone. I'd be very happy if it was $75 instead. If I sold ten entrée salads that totaled $120, no problem there, either. But on smaller ticket items that involve more complicated labor, it's generally not worth it, even if the fee is as low as 15-20%.
If I could do it all over again, I'd invest in some sort of Ghost Kitchen model and not even have to deal with the service side of things in the restaurant - bit the big issue is that the profits from beverages generally don't get into the delivery bags. Even now, where most states are allowing third party services to deliver alcoholic beverages, I'd like to think that most people are smart enough to know they can get a twelve pack of beer from the neighborhood store for the same cost of a couple bottles delivered at restaurant pricing.
They are making profits. Huge profits. They're just not on the balance sheets, but in the investors' pockets, and what's left is offset by creative math in the amortization and depreciation columns.
Come on, you know this.
evil tho, no?
Using the law to pay lower taxes? Blame the law.
to drive down the pizza costs to zero, you could also have sold the same pizzas over and over again, bringing them back to the restaurant over and over again
Or just put napkins in the box. Or just tell the Doordash driver what you’re doing. Since they’re not technically employees of Doordash they don’t care. It’d be fun for them too.
And tell the driver to save time and gas by not delivering. (Or give a delivery address that's the restaurant's back door.)
They might be tracked on GPS location, if they see the backdoor might be too fishy haha
This entire article is missing one big thing - it doesn't ask why the companies spend so much money. And the answer is - they spend it on market share. When you're sufficiently large and most of your competitors dropped off in this war of attrition then your customer acquisition costs drop precipitously - because you've already acquired all the customers you need and new ones may no longer even have an alternative.
That's why, in the long run, it inevitably leads to mergers and takeovers. Uber ejected out Southeast Asia and Grab basically took over the entire market for private drivers and a good chunk of the food delivery business, though Foodpanda and Deliveroo are still alive - but how much longer for?
To understand why investors are putting so much money into these businesses you have to take a very long-term view - not the immediate profitability today. They have their eyes on the prize - becoming the next SV giant worth hundreds of billions of dollars.
There's even more to it, actually, if you consider the entire market of door-to-door logistics. Food deliveries are just an element in a larger whole - that's why Uber launched Uber Eats - because it's all about moving things or people from point A to point B using private individuals and their vehicles.
This extends also to things like courier services - i.e. delivery of parcels within a city, that you can order on the spot and have stuff delivered within an hour or two for a slightly higher price. Or groceries, another service within this space.
At this point it's no longer about simply replacing taxis or carrying food, or delivering packages - the winners become a complete platform for rapidly moving stuff and people around in a highly distributed fashion.
Once users pick their winners and get used to being able to go to a single app and order anything that needs simple logistics - from ordering a cab to, let's say, moving a house or ordering a pizza - then, again, acquisition and marketing costs drop nearly to zero.
The goal for these startups is to become the Google or Amazon of logistics.
Does Google have to advertise for anybody to use it? No. Does Amazon? Also no. They are, of course, conducting marketing activities of course but there is no need for them to spend massively on customer acquisition because most people already know about them.
The potential for apps like Uber is in the hundreds of billions of dollars per year globally. The winner is going to become the next trillion dollar business in a decade or so. Dumping a few hundred million per year is nothing in comparison.
Plus, owning this much consumer data, including physical location, travel routes, food choices etc. is also extremely valuable and allows them to launch new services on top of what they've acquired.
The metric to focus on is not profit but LTV.
It's actually pretty simple math - let's assume you're losing $1 billion dollars every year for 15 years - but in the process you've built a company worth $100 billion. Was it worth it? And here we're really talking about at least several hundred billion. Investors will be eager to burn tens of billions of dollars for many years just to have their share of the big pie in the end.
Also, here's another thought to consider (and it is already happening) - how is it going to change the food business as such?
As the food delivery market grows, the need to have a restaurant in a good location drops. You can open a kitchen in a low-cost location to cater only to deliveries. Why splash out on a high street spot when you can turn some disused industrial building a few miles further for a low cost alternative? From the user perspective it doesn't matter where the food is made.
It's already happening, as I said. Business owners either set these up themselves or the delivery companies do it for them. Grab has a GrabKitchen concept, where it offers food from several outlets - including virtual restaurants that are away from expensive locations.
If every company has to operate at a -30% profit margin to gain market share as you can only operate at a profit if you are a monopoly provider and can therfore use that to leverage fees to a point that the business becomes viable... You dont have a business - you have an extortion racket.
That's just how competition works, it's a free market. Competition always lowers prices - and if the reward is big enough then investors are willing to put in a lot of money into customer acquisition over the long term.
Just because there's an annual or quarterly loss doesn't mean the business model as such is not viable. It just takes longer to generate the reward, that's it.
Would you say the same of SpaceX? The company has been operating for years burning money investors have put in. Does that mean its business model is not viable? No, it just means it takes a lot of time to produce enough progress for the economic returns to outweigh years of investments.
Because that's what it really is - these are not losses, these are investments.
And economic monopolies do not extort anybody - in fact they become monopolies because they're by far the most efficient companies in the market. People who talk negatively about economic monopolies usually have no idea what they are talking about. Legal monopolies are a problem, because they cannot be competed against at all. But economic monopolies provide the biggest benefits of economies of scale.
The world wouldn't be better with 10 Googles and 17 Facebooks.
The problem is that the theory is completely wrong (taking it at face value, and assuming that the actual end-game isn't just to go public and get out). Delivering food has a very, very low entry cost and very low margins (restaurants have tiny margins without delivery, let alone with it). There will be no monopoly rents at the end of the rainbow; these companies will never be able to turn off the subsidies they use to keep people on their system because they'll never really be able to get to profitability. Unit-level. You can't scale your way out of that problem. Barring massive automation well beyond currently feasible technology, which seems to be what they're mostly praying for at this point.
This strategy works for some industries, but not others. WeWork, the idiotic scooter/bike-sharing companies, and Uber are all cases in point. If you have negative unit margins and you can't change that without charging more than the product or service is worth to people (if you can change it at all), then people will exploit your service while it lasts and stop using it when you try to jack up the costs to pay back the billions you spent. Or you'll get undercut by another VC-backed start-up moving in on your space.
And, no SpaceX doesn't really have a viable long-term business model. They've got a lesser version of the same problem. There are too few customers that need orbital launches and they can't charge enough to each one to cover their costs (I think they could be unit profitable, but I doubt they're viable as-in for the long-term). Starlink might get them out of that problem, but they need something like that to pay off. Launching satellites isn't very profitable. Certainly not profitable enough to pay for all the over-head and give a big payout to investors.
All these companies spent astronomical sums of money to scale low-margin (at best) industries, and they're all gradually realizing that, even with a monopoly, it's going to take them a generation+ to pay back all their investment costs, even if they actually get ruthlessly efficient (Amazon-style) and dominate their markets, which most of them aren't capable of doing. You can't abuse drivers/gig-workers much more; they'll quit. And that's the only real cost lever some of these companies can push on. The selling point was never monopoly rents - it was the theory that these are tech companies, and tech companies are magically efficient and can solve problems in industries that the existing people have somehow failed to solve after decades in business. Turns out that this premise isn't true if they're not selling software. If anything, all these VC companies are worse at delivering food/running taxi-services/etc. Amazon is the exception that proves the rule. There's only 1 Amazon right now, and they got where they are by a relentless, ruthless focus on costs and logistics. That's the only way you win in a low-margin space. It's very difficult, and very few companies have figured it out.
The problem is that in this case the basic principles and cost structure of the product or service is just not sound.
The service itself, with their fees, structure and everything is just not profitable.
This is very different to, as you say, SpaceX where a lot of the losses are incurred on R&D, and when that is done the business is able to turn a profit when getting the correct volume of sales.
Or selling cars... if you want to keep Musk in the example then we can look at Tesla.... they went through billions in losses, year after year, because they are building and spending heavy in R&D, and after a certain threshold of development or scale that expenditure decreases and then again by selling the right number of cars (volume), you make a profit. The cost of making a car is obviously less than its price... the basics are sound.
With the food delivery service, no matter what you do, no matter what volume you sell, your basic margins won't change, and it is screwing restaurants and drivers. The basic product is insolvent itself. The cost of the delivery is bigger than what the driver is paid, and the fees that the platform charges to the restaurant eat away their basic product margins.
Buying a pizza directly from a restaurant is okay as it will probably leave an appropriate margin to the restaurant. But then buying through a platform like this, you either increase your prices to accommodate for the fees involved, which means playing with price-elasticity issues, or you absorb the cost.
It's almost like physics; to move forward, you need to leave (push) something behind... in business to make a profit, there must be a cost.
The problem is that the cost is being deliberately externalised and put in restaurants and drivers, forcing them to subsidise the system.
So it is a racket.... and anyways it's all as you say to grab a bigger market valuation. I posted a comment on facebook yesterday to someone who shared this article saying the same thing.
It's just a race for valuation. They pour millions and billions into acquiring market share, to then get a 20x valuation, sell it and grab a profit. Then the next owners will keep doing the same, and passing the time-bomb onto someone else, until someone needs to bear the cost of an intrinsically insolvent and unsound business model.
But who profit here are the key, early shareholders and executives; seed investors and founders, not the drivers and restaurants. (And also not the later, shareholders that get diluted on each acquisition/merger)
It could be seen similar to a pyramid or Ponzi scheme to be honest... as the later in the game you enter, the higher the chances for you to lose.
The problem is that so far none of these platforms has totally collapsed yet, as it is still early in this racket so it seems like if they were chasing something worthwhile.
There are no profits in any distant future if your basic product or service is not profitable nor sustainable. In this case, the "sustainability" of these platforms also come from the ability of bearing churn. Restaurants and drivers come in and out all the time, and since the current trend is towards more connectivity and networks development, every year you will get new 'freshmen' drivers eager to exploit themselves to make a side buck (or even try to sustain themselves through it), oblivious to the fact that they are being exploited and economically abused, until they realise it and quit. So as long as the rate of desertion from drivers and restaurants does not surpass the rate of addition of new ones, the platform will grow. To do that, you need to either lawfully negotiate it (hard and slow), lure people (false promises ? -- all platforms), or outright destroy all around them and leave them no other choice (DoorDash, GrubHub and probably more).
You’ve done a lovely job of explaining, in a very long winded way, a rationale that makes no sense. This is the fucking pizza delivery and mini cab business. There is no such thing as defensible market share, or sustainable supply side pricing power, because there are no barriers to entry. It is utter insanity.
Customer acquisition costs is not the issue, it is the delivery costs (mostly labor & transpo) and they are already not charging enough for that and it is only going up. Also, delivering cold food from a "virtual kitchen" is not the future of dining. A "few miles further" is likely 15-30 minutes in city traffic and that turns your dinner from perfect McDLT style (hot stuff hot and cold stuff cold) to a heterogeneously thermal unappetizing $50 styro boxed "doggie bag".
Of course it's acquisition. Otherwise Domino's model wouldn't work. And cheaper locations don't have to be far, I just gave an example. Restaurants by their modus operandi are forced to pay the highest rents because location is key in this business. But move the restaurant to the back, away from main streets and remove all or most of the seating area since it's not needed and your rent goes down to just a fraction.
This article couldn't be suggested to me with a better timing....
Due to the pandemic I've found myself doing food Deliveries in an attempt to get some income as I have lost all work.
After a few days doing deliveries, I started to feel it was a waste of time.
I had always been reluctant and skeptical of the delivery business model as here in Australia where I live, it has always been seen as a really low paying job. Normally international students or people with low qualifications take it as they have very little options within the market place, specially if they don't know english very well.
But then after my job in events totally crashed, I bit the bullet and enrolled.
I started tracking myself with a GPS and the app, so I could generate some data.
Pooling that data I'm starting to see the real income per hour, and trying to make sense of the math I envision that the only way to make it viable is to have an extremely low-cost lifestyle (like... sharing a room with someone and have zero leisure expenses while eating chinese noodles and frozen pizza almost every day).... Otherwise it explodes into a need of 50-60+ hrs per week of driving. For which you'd need to be lucky to get enough orders at an equivalent frequency/consistency.
If I continue to do it, at the pace that I'm doing it, as a main income source, at some point I will not be able to maintain or renew my basic working assets; motorbike and phone.
So at this pace I'm operating on a loss... I get some cash in, but somewhere in the (distant?) future I will net a loss if I were to keep doing vehicle maintenance and/or eventually getting a new phone (cracked screen? Software obsolescence?).
So as a delivery courier, the system essentially banks on you having your working assets before hand, not getting them for going into business, as otherwise your payback is very far in time (perhaps even farther than the actual asset life cycle), unless you live on chinese noodles and frozen pizza.
Anyways, this is only my opinion from my experience, as I know that I have a somewhat increased cost structure compared to other people (slightly bigger bike, and I don't share a room... luxury 😂). Maybe some others do make a bit of a long-run profits. (Short-term profits are there, but what I say is that they are wiped out when you have to either do some maintenance, or renew your assets)
And all what I said, without any sort of social security (my income is kind of unverified, got not retirement savings from the platform, can't afford any sort of insurance beyond the compulsory third party for vehicles)..
Churn baby churn.... pizza inferno 🎶🎵
I'm reminded of the Chayanov thesis about early industrialization (aka putting out system): peasants would effectively work at a loss because their labor was impossible to monetize most of the year anyway, and they would otherwise just be sitting there. The resulting excess profits to the middlemen who shuffled yarn and cloth between peasant households and urban merchant houses generated free capital. The thesis has been chipped away at over the years, but the idea of self-exploiting labor sounds eerily familiar, here.
I drive for Doordash. The model is horrific for food delivery apps. The way I look at, food delivery is a luxury not a necessity. That being said the customer should pay a per mile fee of $2.00 with a 5 mile minimum. The fee to the restaurant for the app should be no more than 5% of food costs. The pay to the driver should be $1.50 per mile $7.50 minimum plus tips. I don't think most customers realize currently drivers receive next to nothing and restaurants pay as much as 30% in fees. I am not sure if that works fiscally but it is more fair.
But that wouldn’t make sense to pay $10 to get something that costs $10 delivered a few blocks, it would only make sense to pay that large of a delivery fee if you didn’t care about money or if you were ordering for many people at once. My guess is that most diners order for one or two people. I feel bad the drivers are getting so screwed here but I wouldn’t pay that much for delivery and neither would a lot of people, if they were willing I’m sure doordash and grub hub would be charging more
I personally don't get food delivered. I find that I can pick up my own food because I don't want to pay for delivery. And doordash and grubhub are charging more. In most cases they are charging more for each item. It is rare that the food is less. When you say why should you pay to have your food delivered for a few blocks you are not considering that the delivery person was not at the restaurant when the order came in they have to travel to get there. They also frequently have to wait for the food. You spoket about a few blocks, you are talking about city living. Think about how hard it can be to find a parking spot and how long it takes to get to an apartment. The reason you want your food delivered is so you don't have to be bothered. I feel like that is something that you should pay for. I also feel like restaurants should stop getting screwed by delivery apps.
Ridiculous. Most customers won't pay a minimum $10 delivery fee and then $2.99+ service fee... and then you want a tip? Get a grip.
HAHAHAHAHAHA love this so much!
Doordash should be glad they are not running in China.
They would've been scammed so badly.
On a more serious note tho, I think there are multiple business model problems here:
- on demand food ordering is biggest limiting factor for optimization: if doordash were to launch a pre-ordered lunch / dinner subscription service, they can batch more orders and minimize most cost.
- existing restaurants are not set up to win the delivery game: easy to access locations, high cost rent, menu choice,and many other operations are built for dine in.
it's such a good idea chowbus.com is already doing it
totally agree, and those unicorns wonder they loose money ....
I love that this guys literally admits to commit fraud without being afraid of any consequences. And you wonder why people dislike wall street...
He didn't commit any fraud. He ordered pizza at the price it was offered.
The fraud was that they weren't making the pizza's that were ordered, when they knew the order was a bogus one they created.
There was no fraud. He ordered a specialty pizza. hold the sauce, hold the toppings.
Hold the oven! hahahaha
imagine being an adult ad reading this story and this is what you take from it. Absolute moron, don't choke on the rain.
The guy who calls someone a moron writes "...being an adult ad reading..." SMH indeed.
it takes a certain level of autism to look at a typo and a horrendously daft post made in earnest and say "these are the same"
Yeah, like I needed a 6 page article to explain me that the gig economy is not profitable to anybody.
The scam of the system occurred when Doordash claimed to Google that they were authorized by the restaurant to deliver.
The damage occurred when Doordash damaged the restaurant brand through a low-quality delivery process that claimed to be authorized.
The scam may have been furthered if Doordash then used their sales numbers that were inflated by offering below-cost pizza to entice the restaurant into entering into an unprofitable business arrangement.
You're leaving out the part where Google gives special dashboard access to Doordash, go try to do the same as Doornobody, you can't.
Sure and you know what? The article could have been just about that. Without trying to take advantage of it to prove of point. By releasing this type of articles you are potentially enticing other business owners to do the same. Do you know who make fake orders ? 12 years old making prank calls. I'm sure the people who worked on the pizzas and who delivered them found the joke super funny.
I genuinely don't understand your objection. DoorDash inappropriately offered a restaurant's service without permission, at a price point that the restaurant would not offer. This is entirely on DoorDash for choosing that pricing structure. Why is the restaurant wrong for ordering a product DoorDash is claiming to sell for the price they're selling it?
DoorDash is shady for sure as well as their competitors. And the restaurant owner and his friend could have contacted DoorDash support to stop being listed. They could have contacted DoorDash to correct the price. But it doesn't make a flashy article that is going to be retweeted. So they choose to make money of the issue. They didn't order the pizzas directly. They had to use a third party because DoorDash doesn't allow restaurants to order from their own place. And then realizing they could make a bigger profit they sold fake pizzas. They sold to themselves a product that does not exist using a third party. Again, this is exactly what you do when you launder money.
You're a fucking idiot.
surprised I had to scroll this far for someone to tell Benjamin the hard truth.
Kid, the sooner you learn to admit your beliefs are wrong, the sooner you will find a lot of problems disappear and stop being that guy Soo committed in his beliefs, people screw him over.
But carry on internet ethics and fraud emperor, carry on!
Doordash investor 👆🏻
You are actually such a special kind of stupid I had to make an account to tell you.
Does this give you the heebie jeebies?
Dude, pack your lunchbox, take your ball and go home.
So your whole argument is about not writing a "flashy" article and deal with it in private? LOL ok. Not when this issue is valid for thousand of businesses out there. Stop being a stubborn manchild. Man up and tell the world that you're wrong.
And I call bullshit on a large part of the article. The article starts by explaining that the restaurant was getting delivery orders without knowing they were on DoorDash. That sucks but that can happen specially with algorithm driven apps. But it states that the employees of the restaurants were making the pizzas ordered. "Customers called in saying their pizza was delivered cold. Or the wrong pizza was delivered and they wanted a new pizza." So let me get this straight. A DoorDash delivery guy shows up at the restaurant with an order. The employees don't have the app but suddenly they decide without consulting their management to install it and set up the restaurants on DoorDash? And nobody asks DoorDash support to ask "hey how come we're getting orders ?" ?
Umm.... You do know that 3P delivery services can fly under the radar right? Order can be called in, orders can be placed by drivers, orders can be paid with preloaded company cards.
Sure but somebody still need to fulfill the orders aka make the pizzas and give them to the delivery person. And somebody still need to connect DoorDash to the company account for the restaurant to receive the money. My point is that there's no chance than a restaurant starts accepting orders without going through a pretty big setup process and notifying their bosses.
Oh really? The article is valid? Does it give any solution to the problem? Does it give any leads on how to contact DoorDash to get delisted? Does it offer any alternative? Where's DoorDash's comment?
They weren't fake orders. They were paid for with real money.
Ok so if it's so legal, why did he stop at a few trades? After all the restaurant could have made quite a bit of money. A 30% margin that's not something you refuse.
Hmmmm, maybe because his passion is being a restauranteur, not simply to broker pizzas?
Holy moron, Batman. What are you talking about? Fraud is lying to someone for monetary gain. Where is the lie here? The guy ordered a pizza through Doordash, and paid the price doordash charged for it. The pizza was for him, so he knew he was only getting the dough and no sauce or toppings. Where is the lie? I cannot believe you read this whole article and your takeaway is that the owner of the restaurant committed fraud. Wow.
Actually, the fraud was in that he "sold" pizzas to Doordash that weren't what was ordered by Doordash, because he knew that they wouldn't be checked at all.
Doordash was buying pizzas from the restuarant, and reselling them back to the owners friend. But the pizzas that were being given to Doordash didn't match what was paid for. That's fraud.
DoorDash allows you to customize / add notes to your order. You can tell them to hold the sauce / cheese / toppings.
But nowhere does it say they did that. It's implied that they just ordered and since it was an order for 10, they knew not to put on toppings, etc.
Under Trade 2: "The order was put in for another 10 pizzas. But this time, he just put in the dough with no toppings" Learn to read Kent.
He didn't *order* no sauce and no toppings, he *prepared* it that way. They ordered a pizza, got charged for a pizza, but provided only dough. What pizza restaurant has an option of ordering just dough?! Learn to relax, Josh.
What fraud? Anyone's allowed to order pizza...
Except the restaurant that makes the pizza after knowing that they could scam the system which they did. They even made "fake" pizzas only made with dough.
Yes, except that they ordered them for themselves, and had no expectation of a full pizza. Its not a scam if you pay the asking price for goods or services, its the provider that is screwing themselves. If you go to a gas station and they set the price on the pump lower than their cost, are you committing fraud by filling up? Of course not.
Maybe all restaurants should jack up their prices by 30%. Who said delivery has to be free?
You're not because you're not working for the gas station. Making money out of selling a fake product to yourself through a third party and a fake client is how money laundering works.
this is not how money laundering works. money laundering requires that the transactions be conducted in order to conceal criminal activity, and in california also requires a minimum of $5000 a week in transactions. at most this is a misdemeanor violation of penal code section 531, except that i've only ever seen that applied to real estate or cars, and i'm not sure how a delivery company could claim fraud when they are willingly paying $24 that they only received $16 for.
Exactly right on. To make this money laundering they would have had to take proceeds from illegal activity (such as illegal drug sales) to purchases the pizzas for the purpose of getting back the arbitrage difference as "clean" money.
That's not what fraud is. No deception occurred. They ordered the pizza at the listed price and paid the agreed-upon fee. If they had entered into a contract with the delivery service, it might be different (depending on the wording of the contract), but that's not the case here.
If the owner had somehow tricked the service into charging the lower price, that would be much different. You could argue that the opposite is actually true, as the service infringed on his business by offering his products at a lower price than he chooses to sell them that.
It is odd that you see fraud in the behavior of the author or his friend.
Fraud? He bought a service at an advertised price. Welcome to capitalism.
Fraud is DoorDash using data from a demand test where they artificially reduced prices to trick restaurants into signing up for their bullshit.
I love it when the market "corrects" imbalances, and this is a whopper.
You’re both right and wrong... but there’s more wrong than right on your assessment.
- The only bit that might be considered “fraud” is where DoorDash is paying more than what they’re charging the end user. Unless you read this article before it got updated, the author himself said that this was actually done by DoorDash on purpose as a “test run”.
- Serving fake pizzas to someone who is expecting fake pizzas isn’t fraud.
- Nobody was “working extra” for nothing, it’s HIS business and he’s not going to take any money away from whoever made those pizzas. For all we know, he himself baked ‘em. Same for the DoorDash delivery guy.
- If anyone can claim damages, it’s the pizza place owner, because DoorDash actually harmed his brand/reputation with their crappy delivery method.
So i take back the right and wrong bit of my comment; you’re actually wrong all the way around.
I think what DoorDash is doing is a form of predatory pricing and also trademark infringement.
OK so it's all normal and fine, how about Mr Trader shows the receipts of the orders? He doesn't even have to redact the restaurant's name.
The name of the business is right there in the article, for everyone to see.
That was added after the original post but yes.
I would argue the fraud is on behalf of DoorDash....I mean the restaurant owner didn’t even know he offered delivery service lol
So Benjamin it is OK that the Door Dashes of the world are defrauding everyone they touch, including their investors? If pizza arbitrage could force them out of business I'm all for it.
I'm not saying that DoorDash is right either. All the gig economy is going to hell and we're probably better off. But that's still not a reason to scam DoorDash. Mr Trader sure made a flashy article about it but probably didn't think about the people who made and delivered the food not knowing that it was a similar prank than a 12 year old making fake pizza orders.
you're either a complete idiot or a troll.
To your comment:
“ Maybe it’s some ghost kitchen / delivery platform hybrid...”
This feels like what INDIANAPOLIS’ Cluster Truck has become. They are a centralized kitchen that offers a wide variety of cuisines more like a food court’s selection than a restaurant. There is no customer storefront or seats available because the centrally located kitchen facility is optimized only for the pickup of orders by a fleet of drivers and bicyclist. No option exists other than delivery. All the food seems to travel well, likely because it wouldn’t be an option otherwise and because they optimize packaging. For some of their dishes they partner with other local business on recipes so they can say “Get so-and-so’s burger here”.
Thank you for the mention :-) Denver, Columbus, Kansas City too!
You have missed the entire objective of making a loss! This is a customer acquisition Stratergy once critical mass has been achieved and market dominance the orders being to be directed to Ghost Kitchens and the poor businesses are left with no direct access to what was their customers.
By position themselves (delivery platofmrs) between consumers and the businesses they effectively become the gatekeepers who decide where an order is sent for fulfilment.
By the time businesses realise it is to late, they (the business) have helped build up the delivery platforms business, expanded their reach and portfolio of products and services and become so.dependant on them that little or no attention has been made to build customer lists for future indirect.marketing activities (not that this is easy to do.when the business never has direct access to the customers details not even the delivery address! As only the driver has this, data protection lol)
This is also the same business model.used by the likes of Uber hailing services and also tripadvisor booking.com and alike!
Quietly position yourself between consumer and business! Then control the market and demand high commission and fees!
What is needed is a new paradigm! Thankfully I have developed such a solution....
Watch this.space 😎
You are exactly right. The further you are from your customer, the closer you are to being disrupted. For years restaurants have thought that they could "outsource" customer acquisition, and delivery platforms were all too happy to let them do it. Now they are realizing what a mistake that was. We have tried to build some tools to help with this at zero.eatgeek.com, but even now restaurants are falling into the same trap. Hopefully, COVID will wake some of them up.
Nice theory! Honestly interesting, and yes restaurants should beware. But... How is it working in practice, so far? We're what, 3 or 4 years in now... about time to see some profit? Or does the theory plan for bleeding out hundreds of millions every year for the first ten years?
If you're interested in a downward, equitable wealth transfer, your friend could order pizzas to deliver to the needy. Capital from Softbank converted to food for those who need it during the pandemic, and your friend can even -make money- doing it!
Additionally, as someone who worked postmates for extra cash a few years ago, it's obvious why this stuff doesn't work. Way too many resources (both labor-wise and in terms of driving etc) are spent per order. It's super inefficient. Domino's has deliveries down because their employee returns to the same place, helps the store during downtime, and batches out several deliveries within a reasonable radius. All of which make the business model possible.
Yup, I worked pizza delivery for a bit over a year. To do profitable delivery the business must be designed around it end to end. Grafting it on after the fact is just never profitable.
This makes some good points. Some things I have observed being in the commercial real estate space:
1. Dominoes takes the bare minimum amount of space needed for a kitchen only. So they are saving on how much space they have.
2. They don’t rent in more expensive sub markets like a lot of restaurants on these platforms so beyond the little amount of space they rent, their cost PSF is low.
3. Their product is scalable (relative to other food stuff). One pizza can feed a family. The time to assemble and cook a pizza is super fast; the ancillary products they offer are all the same way. Unlike a more typical restaurant where maybe each person in a household is ordering an individual dish.
Most restaurants make little money on food and pay a shit ton in rent to be in a high traffic area because they want people coming into the restaurant and ordering booze with their food. So the things they are paying the most for (their space and location) doesn’t help them on delivery.
It's rare that a very well written "everything is broken" piece misses one of the most broken aspects. Gig economy. Gig worker. No allegiance or accountability to merchant, gig company or consumer. Gig worker delivers food for MULTIPLE companies (whoops). Drives your food around a bit before even heading in your direction. (double whoops). Drinks your milkshake because it can't be stapled shut in the bag that holds the food. Pretends the restaurant is to blame. Shouts dismissively "Report it to the website" as they side hustle back to the car to screw another set of people. Side hustle, my butt. It's a straight up hustle. And their tip was collected an hour ago. Long gone. Hustled.
The real winner here is the owner’s friend, who got ten pizzas a day as long as the experiment ran.