Coronavirus Recession

[Sidehussle]

Average restaurant net profit margins are between 2%-6%. Where does doordash take their 30% charge? from the net margin line or up top from gross sales?

If up top, you lose $ for every sale on doordash.

I agree with IHO. Also, if you order try to pick it up yourself. Because business give a percentage of the sale to delivery services.

We were getting Ajisen Ramen and they don’t have their own online ordering system but they use the door dash ordering system. I’m not a fan of the food delivery services so I was going to pick it up. She was going to place the online order through door dash for pickup and I told her to just call it in so the restaurant wouldn’t lose a piece of the revenue.

I think these delivery services probably do more harm than good at least to the restaurant itself. I’m curious what the break even is for them on the higher volume/lower profit vs lower volume/higher profit is for them.

[Cares]

I think they take it off the top of gross sales. That's why you will frequently see DoorDash prices higher than the regular menu prices. Either the restaurant has to price in the fees or if the menu cost is the same then they absorb it. Just my guess though.

[nosuchreality]

A dark view of the delivery apps https://www.washingtonpost.com/outlook/2020/05/29/delivery-apps-restaurants-coronavirus/

[HMart]

Average restaurant net profit margins are between 2%-6%. Where does doordash take their 30% charge? from the net margin line or up top from gross sales?

If up top, you lose $ for every sale on doordash.

Yeah, I think a lot of restaurants are losing money on Doordash if they are low margin operations.

[daedalus]

You can't just extrapolate based on net profits.  If you're a restaurant owner and you get an extra takeout order from Doordash, your marginal expense to cover the order is almost entirely the raw food ingredients.  Your hourly staff might have to work a bit harder or get a shorter smoke break, but they'll clock out at the same time.  Your rent is fixed.  Your insurance is fixed or nearly so.  Same for utilities.  Any additional orders from delivery services are entirely welcome.  What's not wanted is the scavenging of orders you would have gotten directly if not through a delivery service.

[HMart]

You're right if it's a marginal order. The danger is that these apps want to be a middleman between your entire future customer base and you (the restaurant owner/operator). Doordash's revenue has tripled during the pandemic, and that means more and more orders are going through an intermediary that charges 15-30% an order.

https://www.bloomberg.com/news/articles/2020-12-08/dash-ipo-doordash-is-a-powerful-ally-and-foe-to-restaurants?sref=FwBADu0L

[daedalus]

The danger is that these apps want to be a middleman between your entire future customer base and you (the restaurant owner/operator).

That's what I mentioned in my last sentence. 

Is Doordash tripling revenue because of true long term changes in customer behavior, or is it purely a pandemic-driven shift?  Is takeout business across the board stagnant compared to before the pandemic, or up a lot?  Personally my takeout frequency is up 400% in the pandemic, and I don't use delivery services, so I don't think we can draw a lot of conclusions based on random stats.

No restaurant is forced to use Doordash or Grubhub.  If a restaurant partners with them, then there must be a net benefit.  They must be profiting on sales via Doordash, even after a 10-30% cut.   The article states as much.

[qwerty]

Time to short the food delivery apps!! They need to be careful because they themselves can put themselves out of business. They need to find the right balance of letting the restaurant benefit while as well as themselves.

What they can’t be is a parasite that kills the host and then it dies

[sleepy5136]

Time to short the food delivery apps!! They need to be careful because they themselves can put themselves out of business. They need to find the right balance of letting the restaurant benefit while as well as themselves.

What they can’t be is a parasite that kills the host and then it dies

I believe the big local markets they restricted the commission fee to nothing more than 15% surcharge towards the restaurant owners. Normally its 30% I believe

[nosuchreality]

Time to short the food delivery apps!! They need to be careful because they themselves can put themselves out of business. They need to find the right balance of letting the restaurant benefit while as well as themselves.

What they can’t be is a parasite that kills the host and then it dies

Careful, they’ve been successfully killing the host then bankrolling ghost kitchen replacements which make overburdened franchisees look angelic.