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Doordash charges $16 for a $24 pizza, so the pizzeria bought its own pizzas
Posted on 5/18/20 at 1:28 pm
Posted on 5/18/20 at 1:28 pm
quote:
In the latest edition of The Margins newsletter, Ranjan Roy tells the story of his friend who owns a pizzeria. He charges $24 for a deluxe pizza but, for one reason or another, Doordash lists the pizza for $16. As an experiment, he ordered 10 pizzas from his own pizzeria and had them delivered to a friend's house. Sure enough, a Doordash driver came to his pizzeria and paid $240 for the pizzas.
quote:
Trade 1
We went over the actual costs. Each pizza cost him approximately $7 ($6.50 in ingredients, $0.50 for the box). So if he paid $160 out of pocket plus $70 in expenses to net $240 from Doordash, he just made $10 in pure arbitrage profit. For all that trouble, it wasn't really worth it, but that first experiment did work.
My mind, as a combination trader and startup person, instantly had the thought - just run this arbitrage over and over. You could massively even grow your top-line revenue while netting riskless profit, and maybe even get acquired at an inflated valuation :) He told me to chill out. Maybe this is why he runs an "actual business" while I trade options while doing brand consulting and writing newsletters.
But we did realize, if you removed the food costs this could get more interesting.
quote:
Trade 2
The order was put in for another 10 pizzas. But this time, he just put in the dough with no toppings (he indicated at the time dough was essentially costless at that scale, though pandemic baking may have changed things).
Now suddenly each trade would net $75 in riskless profit ? $240 from Doordash minus ($160 in costs + $5 in boxes).
This got a bit more interesting. If you did this a few times a night, you could start to see thousands in top-line growth with hundreds in pure profit, and maybe you could do this for days on end.
So over a few weeks, almost to humor me, we did a few of these "trades." I was genuinely curious if Doordash would catch on but they didn't. I had visions of building a network of restauranteurs all executing this strategy in tandem, all drinking from the Softbank teat before the money ran dry, but went back to work doing content strategy stuff.
Was this a bit shady? Maybe, but frick Doordash. Note: I did confirm with my friend that he was okay with me writing this, and we both agreed, frick Doordash.
LINK
This is just too damn clever and funny until the delivery driver opens the box to grab a bite
Posted on 5/18/20 at 1:30 pm to Bamboozles
quote:
Doordash charges $16 for a $24 pizza, so the pizzeria bought its own pizzas
Savage
This post was edited on 5/18/20 at 1:32 pm
Posted on 5/18/20 at 1:32 pm to Bamboozles
Something similar happened in Silicon Valley
Posted on 5/18/20 at 1:35 pm to Bamboozles
quote:
Was this a bit shady? Maybe, but frick Doordash.
A bit shady? It seems outright fraudulent to me.
Posted on 5/18/20 at 1:40 pm to uway
quote:
A bit shady? It seems outright fraudulent to me.
how is it fraudulent? I can see the case for unethical but no one is doing anything fraudulent.
Posted on 5/18/20 at 1:46 pm to Bamboozles
frick Doordash. Good for these guys.
Posted on 5/18/20 at 1:50 pm to VolsOut4Harambe
He is doordash making any money on the pizza? In guessing they get them for cheaper than the $24 he charges?
Posted on 5/18/20 at 1:51 pm to musick
only thing I can figure is a glitch in their system. The delivery driver pays full price. The only way to profit is the pizza guy ordering, with DD taking the hit.
Posted on 5/18/20 at 1:54 pm to Bamboozles
So, he could basically get a bunch of pre-paid debit cards, then create the doordash accounts on "bogus" email accounts. Place an extra 10-20 orders per day on the pre-paid cards. Essentially, expo "nothing" into the delivery boxes, tell the DoorDash driver it's for "banquet/cook at home orders", & just make absolute straight profit, aside from the time/effort to get the cards + make the emails + orders online.
Am I getting this right?
Am I getting this right?
Posted on 5/18/20 at 1:56 pm to AUCE05
I don't understand. I'll concede I can be dingy as a big tittied blonde without the tits or blonde hair, but I don't know what the hell happened after reading that.
Posted on 5/18/20 at 1:59 pm to supadave3
quote:
I'll concede I can be dingy as a big tittied blonde without the tits or blonde hair
You may not have blonde hair but at least own up to the man tits bro
Posted on 5/18/20 at 2:00 pm to Bamboozles
(no message)
This post was edited on 1/11/21 at 1:21 pm
Posted on 5/18/20 at 2:02 pm to supadave3
quote:
I don't understand.
Me either fully. His out the door price is $24 regardless of whether Doordash got it or I walked in and paid for it. It isn't like he can repurpose the ingredients or something so I don't understand it other than creating fictitious customers which he could do either way whether DoorDash charged $16 or $24.
Posted on 5/18/20 at 2:05 pm to Bamboozles
fine piece of fiction OP found here
Posted on 5/18/20 at 2:05 pm to Bamboozles
quote:
Grubhub just lost $33 million on $360 million of revenue in Q1.
Doordash reportedly lost an insane $450 million off $900 million in revenue in 2019 (which does make me wonder if my dream of a decentralized network of pizza arbitrageurs does exist).
Uber Eats is Uber's "most profitable division” ????. Uber Eats lost $461 million in Q4 2019 off of revenue of $734 million. Sometimes I need to write this out to remind myself. Uber Eats spent $1.2 billion to make $734 million. In one quarter.
More from the original source. It's crazy how unprofitable the food delivery business is.
Posted on 5/18/20 at 2:06 pm to Bamboozles
I don't get what's going on here.
The customer is paying $16 and the driver $24? So the pizzeria is still getting the $24?
None of this makes sense. Customer pays with credit card. Doordash sends money every week to your account less fees and taxes.
Most restaurants charge more for their items when it comes to delivery. So in house menu says $24, delivery menu has it at $26 to make up the cost.
The customer is paying $16 and the driver $24? So the pizzeria is still getting the $24?
None of this makes sense. Customer pays with credit card. Doordash sends money every week to your account less fees and taxes.
Most restaurants charge more for their items when it comes to delivery. So in house menu says $24, delivery menu has it at $26 to make up the cost.
This post was edited on 5/18/20 at 2:16 pm
Posted on 5/18/20 at 2:06 pm to Bamboozles
Does Bernie madoff own doordash?
This post was edited on 5/18/20 at 2:08 pm
Posted on 5/18/20 at 2:08 pm to musick
quote:
He is doordash making any money on the pizza? In guessing they get them for cheaper than the $24 he charges?
They are losing $8 per pizza. Doordash scanned the restaurant menu and mistakenly grabbed the price for a cheese pizza ($16) and applied to all pizzas. The driver paid the store $24 per pizza.
Posted on 5/18/20 at 2:10 pm to MikeD
Xactly. And to expand. The trader in OP is wanting to make a dough pizza (min raw materials) to max profits.
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