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re: Doordash charges $16 for a $24 pizza, so the pizzeria bought its own pizzas
Posted on 5/18/20 at 2:12 pm to Tortious
Posted on 5/18/20 at 2:12 pm to Tortious
quote:
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.
By creating fake customers, it hides any trails. Essentially, Doordash (the driver) is paying $24 per pizza, but DoorDash is only charging the fake customer, $16. If he simply ships dough in a box at a cost of $1 for dough+box, he is profiting $7 per order and gets to show a topline rev of $24 per pizza as well, inflating his business for loan and financial purposes.
1
Posted on 5/18/20 at 2:13 pm to Bamboozles
quote:
Delivery services like GrubHub, UberEats, and DoorDash may be racking up orders, but the restaurants actually making the food are feeling the squeeze. As middlemen, those delivery services charge fees and commissions to the restaurants they work with, sometimes as high as 30 percent in cities or states that haven't regulated them, according to the Los Angeles Times. One especially notorious example: Chicago pizzeria owner Giuseppe Badalamenti shared his March invoice from GrubHub, and after commissions, fees, adjustments, and promotions, he was left with a mere $376.54 of his restaurant's $1,042.63 sales.
At least one restaurant has been able to strike back, though. In the tech industry newsletter Margins, Ranjan Roy writes about getting contacted by a friend, who owns a pizza shop, for help. Despite never agreeing to work with DoorDash, Roy's friend discovered that there was a DoorDash-linked "order delivery" button on the restaurant's Google listing. And it was causing him headaches:
DoorDash was causing him real problems. The most common was, DoorDash delivery drivers didn't have the proper bags for pizza so it inevitably would arrive cold. It led to his employees wasting time responding to complaints and even some bad Yelp reviews. But he brought up another problem—the prices were off. He was frustrated that customers were seeing incorrectly low prices. A pizza that he charged $24 for was listed as $16 by DoorDash.
That price discrepancy is the result of DoorDash scraping data from the restaurant's website—because of the layout, DoorDash was pricing a specialty pizza ($24) the same as a basic cheese one ($16). If a customer ordered the specialty pizza, they only paid $16 to DoorDash, while DoorDash had to pay the full $24 to the restaurant when they picked up the pizza. In other words, it's the perfect recipe for a short grift.
Roy crunched some numbers and found that if his friend ordered 10 pizzas himself, he'd make about $10 in profit after the cost of ingredients. But if he just put topping-less dough in the boxes—after all, he's not going to complain since he's the one receiving the delivery—the profit jumps to $75 for every order of 10 pizzas. Roy's friend reportedly tried this for several nights, partly because they were both curious to see how long it would take DoorDash to notice. Apparently, they never did.
this explains it a little better
Posted on 5/18/20 at 2:16 pm to footballdude
quote:
Doordash makes money in the following manner:
Commission on each order
DoorDash serves by delivering from the restaurant to doorstep of customers who place food orders online through DoorDash. For the same, DoorDash charges a commission percentage out of each and every order delivered. Usually, the percentage of commission from restaurants is 20%.
Delivery Fees
DoorDash hires its own drivers, who are called Dashers. The delivery rate depends upon the distance of travel and DoorDash’s tie-up with the restaurant in consideration, but on an average the delivery fee is $5 to $8 per order.
Edit #1, Also most people on DoorDash would tip the driver, so probably a few bucks per pizza for that.
Edit #2, I don't think the drivers pay for the food. The restaurants should get paid via the app, not the driver.
Also from source article...
quote:
We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform. If we had to pay a customer fee on the order, it would’ve further cut into our arbitrage profits (though maybe we could’ve incorporated DashPass as part of the calculation).
Posted on 5/18/20 at 2:18 pm to BilJ
Ok so the owner is saying he can frick over doordash because they priced his product wrong.
This post was edited on 5/18/20 at 2:19 pm
Posted on 5/18/20 at 2:19 pm to dgnx6
Price arbitrage FTW
Posted on 5/18/20 at 2:21 pm to Bamboozles
Yeah the pizza itself doesn’t cost anywhere near 6 bucks. Trust me on this one.
Posted on 5/18/20 at 2:21 pm to IT_Dawg
quote:
By creating fake customers, it hides any trails. Essentially, Doordash (the driver) is paying $24 per pizza, but DoorDash is only charging the fake customer, $16. If he simply ships dough in a box at a cost of $1 for dough+box, he is profiting $7 per order and gets to show a topline rev of $24 per pizza as well, inflating his business for loan and financial purposes.
I suppose, but he could do that right now with his buddy and friends. Heck he could have them order for delivery and never even send anything and really maximize profit.
Posted on 5/18/20 at 2:26 pm to usc6158
quote:
Price arbitrage FTW
Doesn't that only work when selling in another market? He isn't reselling anything and wanting to short the ingredients. He could do the same by putting plastic pepperonis on a pizza if they were cheaper and passing it of as real - couldn't he?
Posted on 5/18/20 at 2:26 pm to fr33manator
quote:
fr33manator
Posted on 5/18/20 at 2:27 pm to Koach K
quote:
Yeah the pizza itself doesn’t cost anywhere near 6 bucks. Trust me on this one.
Maybe if you factor in employee costs and restaurant overhead.
Posted on 5/18/20 at 2:38 pm to DomincDecoco
What’s wrong with freshly cooked pizzas? Sounds like this Business is getting the one up on someone
Posted on 5/18/20 at 2:48 pm to Tortious
quote:
I suppose, but he could do that right now with his buddy and friends. Heck he could have them order for delivery and never even send anything and really maximize profit.
Not really. Maybe on paper, but now you're getting much more into fraud.
The story in the OP has him receiving actual money for his fake pizzas via DD.
Posted on 5/18/20 at 2:53 pm to LSUBoo
I've read like 20 anti-DoorDash articles during the shutdown and I still don't understand why I'm supposed to hate them.
I admit I may be missing something, but the theme of most of the articles seems to be "Doordash takes most of the profit from these restaurants" and my reaction is...well yeah.
I admit I may be missing something, but the theme of most of the articles seems to be "Doordash takes most of the profit from these restaurants" and my reaction is...well yeah.
Posted on 5/18/20 at 2:59 pm to footballdude
quote:
footballdude
Should have read the OG article.
quote:
Note 1: We found out afterward that was all the result of a “demand test” by Doordash. They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform. If we had to pay a customer fee on the order, it would’ve further cut into our arbitrage profits (though maybe we could’ve incorporated DashPass as part of the calculation).
Posted on 5/18/20 at 3:00 pm to Pettifogger
quote:
I've read like 20 anti-DoorDash articles during the shutdown and I still don't understand why I'm supposed to hate them.
Because it's not sustainable, but with all of the VC money funding them it's really fricking established industries.
“Third-party delivery platforms, as they’ve been built, just seem like the wrong model, but instead of testing, failing, and evolving, they’ve been subsidized into market dominance.”
Posted on 5/18/20 at 3:10 pm to Bamboozles
quote:
This is just too damn clever and funny until the delivery driver opens the box to grab a bite
I have a crazy friend that is a chef and used to work in Hotel restaurants. Every time a pizza went out for room service they would take half of one slice, push the pieces together and sent it up.
Nice caper and never got caught.
Posted on 5/18/20 at 3:23 pm to colorchangintiger
quote:
Because it's not sustainable, but with all of the VC money funding them it's really fricking established industries.
Thanks.
A generally unprofitable model being propped up by VC and to the detriment of more sustainable businesses in a more necessary/valuable (to society) sector?
Posted on 5/18/20 at 3:25 pm to AUCE05
Either that, or they're willing to lose money to provide the product at a lower price to encourage clients to buy from them... This happens all the time when companies are trying to gain market share. It's called a loss leader
Posted on 5/18/20 at 3:37 pm to jrobic4
usually in that instance there is the opportunity to make back profits by having the customer purchase other things. That doesn't seem like the case in this instance.
Posted on 5/18/20 at 3:37 pm to fr33manator
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