Pizza Arbitrage

Sometimes I have to post a link just so that people will stop sending it to me:

Which brings us to the question - what is the point of all this? These platforms are all losing money. Just think of all the meetings and lines of code and phone calls to make all of these nefarious things happen which just continue to bleed money. Why go through all this trouble?

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.

Amazon just bailed on restaurant delivery in the U.S.

What is it about the food delivery platform business? Restaurants are hurt. The primary labor is treated poorly. And the businesses themselves are terrible. [...] How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners? [...]

You have insanely large pools of capital creating an incredibly inefficient money-losing business model. It's used to subsidize an untenable customer expectation. You leverage a broken workforce to minimize your genuine labor expenses. The companies unload their capital cannons on customer acquisition, while this week's Uber-Grubhub news reminds us, the only viable endgame is a promise of monopoly concentration and increased prices. But is that even viable?

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.

Previously, previously, previously.

Tags: , , ,

12 Responses:

  1. Big says:

    You’ve gotta admit, at least from your public persona, there is a hole exactly the shape of that article very obviously gaping empty in your wheelhouse...

  2. Karellen says:

    First comment:

    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.

    Holy fuckballs. How about not adding order links unless the business reports that they are organised? The process could still work as being initiated by the delivery company, all you'd need to do would be to send the business an email with a "click this one-time link to authorise this action" doodad in it. Heck, it sounds like Google aren't even notifying businesses when these options are added to their listings.

    The only possible reason I can think of they don't do it this way round is that they're more concerned with making bank from the shady delivery companies than they are at preventing fraud against small businesses that don't want to be part of our glorious disruptive, employeeless independent-conctractor-based, gig-economy future.

    • Peter Huesken says:

      Initially that first Danny Sullivan comment had a purrfect reply :
      https://twitter.com/nph/status/1262737271708663808

    • Nick Lamb says:

      Requiring more jumping through hoops would result in the opposite complaint, probably from our host, I can more or less imagine how it goes

      "Finding where they've sent this stupid confirmation link each time we update is a huge pain. What are they worried about, that someone will make a fake order page where you can order DNA Pizza? Why?"

      And it turns out the answer was billions of dollars of VC money chasing bad ideas, but who knew?

      You can build a robust, secure solution to lots of problems, but often there actually was no cause to bother. Soon after SSH arrived on the scene a certain type of pundit noticed the TOFU behavior ("Trust On First Use" = real users just press Yes when asked to confirm a server's public key when they first connect to it) and opined that "obviously" bad guys would soon have things back how they were before and all this cryptography was pointless. In reality TOFU has worked surprisingly well in that domain.

      Anyway, to address your actual purported solution, you can't safely do that particularly when addressing corporate email rather than someone's personal address. In the name of "Anti-virus" a lot of outfits have a robot automatically fetch every single URL sent to their employees and scan it, so when you send a "one time confirmation" link to their email addresses it "confirms" automatically before any humans even see it.

      Yes there are real systems that rely on this, but they don't actually provide confirmation of anything, so you'd just be back saying "obviously" Google should do more.

      • Karellen says:

        "Finding where they've sent this stupid confirmation link each time we update is a huge pain. What are they worried about, that someone will make a fake order page where you can order DNA Pizza? Why?"

        Sorry, I didn't explicitly point out that you'd only need to do this if the person requesting the change wasn't the owner of the business.

        I thought it would be obvious that if the business owner requests the change to the business records, then the business is implicitly reporting that the relationship is authorised.

        you can't safely do that particularly when addressing corporate email rather than someone's personal address. In the name of "Anti-virus" a lot of outfits have a robot automatically fetch every single URL sent to their employees and scan it, so when you send a "one time confirmation" link to their email addresses it "confirms" automatically before any humans even see it.

        Oh no. If only Google had a way of Telling Computers and Humans Apart. Such a pity that they never found a way to Completely Automate that in a Public way.

        • Nick Lamb says:

          Sorry, I didn't explicitly point out that you'd only need to do this if the person requesting the change wasn't the owner of the business.

          This feels intuitively easy. But what makes you think Google is sure you are the "owner of the business" ? People often have this sense that surely their government knows exactly who everybody is and who owns which businesses but nope. Both the US and UK historically found it was easier to turn a blind eye, if you don't have accurate and complete records then when awkward facts are revealed you just say you didn't know.

          (My favourite fact in this space is that Companies House, which is the executive agency that registers all businesses in the UK, has claimed it doesn't have funding to pursue any of the obviously bogus and fraudulent filings. Crooks soon learn they can just write obvious lies on the paperwork and it'll be rubber stamped. But when somebody decided to illustrate how useless this is by writing in the names of famous British politicians as the directors on paperwork for a bogus business suddenly Companies House discovered it had enough money for exactly one criminal prosecution)

          I expect what would have happened in your hypothetical is that Doordash would convince themselves that they're acting on behalf of the owner, and so it's fine to do whatever it takes to convince Google they are the legitimate owner.

          • jwz says:

            But what makes you think Google is sure you are the "owner of the business" ?

            Because everybody who has a storefront business has jumped through the stupid hoops that Google makes you go through to verify it, via a phone call, or a postcard, or a copy of the business license. Anyone who hasn't done that has no control of their listing on Google Maps, or analytics. So basically it's everybody. But regardless, the verification process exists and is widely used.

  3. Pinback says:

    We operate at a loss, but we make it up in volume.

    • Big says:

      It's all about the eyeballs.

      Delicious tasty eyeballs and mushrooms with garlic and chilli sauce pizza...

  4. T says:

    It's a war of attrition. The last one standing gets to rule the toxic wasteland they've created, and set prices accordingly.

    Either that or it's a big fucking ponzi scheme and nobody has blinked yet.

  • Previously