Epistemic Status: Public service announcement. Confident and not sponsored.

Today, I went to one of my favorite local restaurants to find it was closed.

This is not an uncommon occurrence. About a month prior, I lost perhaps my favorite place in the world to go for a nice meal, BLT Prime. Today, I learned I’d lost my favorite Indian place, Old Monk. The list goes on. This has become frequent enough that I’m going to work on a list of places I’m afraid will close, so I can encourage others to help them keep the lights on.

The best way to help keep everyone’s lights on is simple. If you like the restaurant and want those working there to earn a living, and the place to continue to exist, do not order via online services like SeamlessWeb, GrubHub, Delivery.com or Caviar, if there is another way to contact the restaurant. Period.

This is because they take mindbogglingly huge fees out of every order. We’re talking on the order of 20%. I am not one to begrudge a middle man or market creator their reasonable fee. This is not a reasonable fee.

But because customers don’t know, and the store is forced to eat the entire cost or lose the order since customers have been trained by small conveniences and bribes to use the apps and websites, the fees continue to be collected, and the cycle continues. The few places that pass the cost along look super greedy and lose business.

If you would cost your local place $5 to save the cost of a fifteen second phone call, make no mistake. You are defecting. You are playing zero-sum games with those who should be your allies. You are bad, and you should feel bad.

This is way, way, way worse than not tipping where tipping is expected. Not tipping is shirking on the price and pocketing the money. Here you don’t even get the money.

If you are super rich and your time is that valuable, you can tip them 50% (or 500%) and make up for it. In that case, go for it. For the rest of us, seek out the restaurant’s website or if necessary, at least once you know they’re legit, pick up the damn phone. Talking to a human is a small price to pay to support what you get value from.

That’s why the promotions they bombard me with are so rich. How can they give me such deep discounts on almost every order I make? Now I know. They aren’t even always losing money on those orders. The bastards.

In New York City, the pizza places are fighting back using an app called Slice. Slice is essentially the same as the other apps, except it is run by and for pizza places. Thus it only offers local pizza and not other cuisines, but it allows pizza places to avoid the giant fees. As a bonus, they exclude horrible chains from your delivery options. They once sent me a hilarious promotion accusing (very, very guilty) chain pizza stores of ‘crimes against pizza.’

If you can, use Slice. I hope there’s more of these for other types of places in the future. Or better yet, I hope they already exist, in which case tell me in the comments and I’ll update the post.

There are larger principles in play. They are important. But first, be concrete. Start here.


28 comments, sorted by Click to highlight new comments since: Today at 9:27 AM
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I can't tell if this post is referring to ordering online and picking up yourself (suggested by " If you would cost your local place $5 to save the cost of a fifteen second phone call...") or delivery (suggested by the 20% fee and the companies listed). If it is talking about delivery, it's incomplete without addressing the relative cost of delivery vs dining in.

This is a little messy because rent is an extremely fixed cost and labor is only adjustable on long time horizons, but back of the envelope:

  • According to the first article I found on Google, table service restaurants spend 30-40% of income on labor, and fast food can get as low as 25%. The service of fast food is about equivalent to what it takes to serve takeout or hand to a delivery service, so let's assume the labor costs of dining in are 5-15% (which is lower than I would have guessed).
  • There's also the physical building. This quora post (which places labor costs at 20-40%) says rent makes up 10-50% of cost. Of course some of that is covering the kitchen, which serves delivery orders as well. Call it 1/3.
  • If delivery services handle the credit card fees, that's another 2-3% they're saving the restaurant (grubhub passes on the credit card fee, but charges only 15%).
  • Then there are smaller costs they're saving- some utilities, diningware, reduced liability costs from the lack of physical proximity.

So take away/third party delivery costs the restaurant somewhere between 14 and 50 percent less than dining in. Given this, losing 20% to a delivery service doesn't seem inherently unjust, depending on the restaurant's cost structure. The real injustice is charging takeout customers dine-in prices.

I’ve now used Slice (their website, not the mobile app) to order lunch from a local pizza joint. In case anyone’s curious, here are notes on the experience:

  1. I found the website to be fairly well-designed, as these things go, and easy to use. I encountered no technical problems, and the user experience was, overall, at least up to par with the popular online delivery services, if not better. (The ability to “order as a guest”—without making an account—was particularly welcome. I was also offered an easy way to make an account, without having to re-fill-in my info; I declined, this time.)

  2. The selection of pizzerias available in my neighborhood was impressive; all of my favorites were there.

  3. Prices were (at a cursory skim) identical to those available via GrubHub. My pizzeria of choice had a 10% discount going (I have no idea if this is temporary, or what), which brought the price down. (I have never seen such a discount on GrubHub.)

  4. There were strange differences in availability of dishes. (Example: on GrubHub, I could get penne vodka, which was absent from Slice; but Slice let me order the restaurant’s pasta special with chicken, whereas on GrubHub the chicken option was not available.)

  5. My food was delivered with this pizzeria’s usual alacrity, and it was as delicious as always. From the moment I placed the order, no part of the experience further distinguished GrubHub from Slice.

I'm pretty uncomfortable with the tone of this article. The title is a command, and the "epistemic status" label is simply "confident", and yet the comments have many disagreements I feel are reasonable. Despite that its main point is reasonable as far as I can see, strong downvoted for what I perceive to be bad discourse.

Another way of evaluating the fairness of the delivery charges is how much profit the delivery services are making. The only data I could find was this chart. Eyeballing it, grubhub is making ~10% profit- good, but not obscenely so. They appear to be selling pretty close to cost.

I am somewhat confused by this. I personally much prefer delivery to going out to restaurants, and I don't see why we shouldn't expect a market of delivery food at equally sustainable prices to show up. It seems like on the margin a restaurant is not going to make a loss on delivery food (because if they would, why would they offer it), and I am not a counterfactual customer who would have ever visited their in-person location (except for the very few restaurants that are close-by enough to walk to in 5 minutes).

I would love for most restaurants to drastically reduce the number of their seats and all the other stuff that they can save by prioritizing delivery food, and it seems like I would be defecting on everyone who has similar preferences to me, by sustaining a market of overpriced food that is subsidizing people who go out to restaurants and need all the seating and decorations and stuff.

I think the point of the OP is not to encourage people to go to physical restaurants, but to discourage the use of online delivery services relative to other ways of placing orders . As they write (boldfaced added):

If you like the restaurant and want those working there to earn a living, and the place to continue to exist, do not order via online services like SeamlessWeb, GrubHub, Delivery.com or Caviar, if there is another way to contact the restaurant.

I do find the post confusing in certain ways; for example, the following quote expresses a view which I find hard to understand, let alone agree with:

If you would cost your local place $5 to save the cost of a fifteen second phone call, make no mistake. You are defecting. You are playing zero-sum games with those who should be your allies. You are bad, and you should feel bad.

Ah, I see. Yeah, I am also not a counterfactual customer who would have ever called them. Before the onset of "standard internet food delivery" I never ordered food, and in the absence of the convenience of that system, would just stop ordering food from any of the restaurants. As such, I am happy to subsidize and give a lot of money to food delivery companies, which seem to actually have created a highly valuable service to me (more so than any individual restaurant ever has for me).

I don't find that view hard to understand or hard to agree with. I wonder whether we're interpreting that passage differently from one another. Here's what I take it to mean:

"To value 15 seconds of _your_ time more than $5 of _the local pizza place's_ money is to be excessively selfish. If you cost them $5 to save yourself 15s, then you are making the world a substantially worse place on net for a trifling benefit to yourself. Decent people do not do that, and if you do it you should feel bad about it."

I can totally understand how someone might disagree with that (way 1: "yes, I really do care that much more about myself than about random other people, and I don't see any reason why I should be ashamed of that"; way 2: "in this situation the local restaurant has clearly decided that they don't mind getting $5 less in order to save their customer a phone call and hence make it more likely that they get that customer at all, and if they're OK with that decision I don't see why I shouldn't be") but it seems clearly reasonable to me.

The view you articulate is perfectly intelligible. I'm just not sure it corresponds to the view expressed in the OP. Why invoke notions like defection, if all you want to say is that you should not impose a great cost on others when you can do so at a small cost to yourself?

Why invoke notions like defection, if all you want to say is that you should not impose a great cost on others when you can do so at a small cost to yourself?

I do observe that this is actually what defection is in the canonical game theory sense.

(No comment on whether or how that should apply to the current discussion)

In game theory, the costs and benefits in terms of which defection is defined occur in a well-defined context of strategic interaction. My objection was to the use of defection in a way that implied that the situation described in the post had a particular game-theoretic structure, when in fact no clear account was given of what that structure was supposed to be.

When I go out to a restaurant rather than getting a takeaway (whether I pick it up or someone else delivers it) I'm not (in my mind, at least) primarily choosing "the seating and decorations and stuff". Rather, I prefer (1) freshly prepared food rather than food that's been sat in takeaway containers for the last half hour, (2) food that hasn't had to be optimized for coping well with sitting in takeaway containers for half an hour, and (3) not having to put up with any of the hassle of preparing a meal and clearing up afterwards.

To elaborate a little: 1. Many kinds of food will just not taste as good if they've been kept warm for half an hour after preparation. 2. Some kinds suffer badly enough that they just aren't available for takeaway. 3. After a takeaway/delivery meal it's still necessary to clean up dishes and cutlery and dispose of the containers and any leftover food (which may involve cleaning up the containers too, if they're of a kind you feel you ought to recycle). If you go and sit down at the restaurant you get food that's tastier because it's freshly prepared, you have the option of having a meal of a sort that wouldn't survive transporting from where it's prepared to where you live, and you don't have to do any cleanup at all.

Of course you may not care about those things, or may not think them worth the hassle of going out to eat, but it seems clear to me that they are genuine benefits (as you might think "seating and decorations and stuff" aren't) that a person might reasonably be willing to pay for in time or money or both.

I bought a service at an excessive price, so I'm defecting? What?

If the delivery services are taking too much, they'll be outcompeted. Given your description, Slice is not some sort of hero, it's a vertically integrated competitor doing exactly what the free market would expect to happen.

In any case, I reject the notion that "giving a company too much money" could in any sense be mapped to the game theoretic notion of defection. That's not how game theory works, and it's not how markets work.

If GrubHub was misadvertising their costs or declaring that 90% of the price went to the restaurant, and it didn't, then sure. But that's not my impression.

GrubHub offers a service for a price. In the back, it negotiates with the restaurant to push down prices. This is good and proper. The free market drives margins to zero; the point of it is to drive margins to zero. If you don't want that, then don't sell on GrubHub?

"But all my competitors are on GrubHub and I can't compete!" Yes? Were you under the impression that you were owed a business model? A business is either profitable or it isn't. If it is not profitable, then it morally shouldn't ought to exist; the market is indicating that the business is a waste of society's limited resources. Propping up a business that is unprofitable is more defection to me than anything GrubHub does.

I agree the OP didn't do a very good job of explaining why what's happening isn't just the free market doing what it's supposed to do. But the 20% fee seems to be a strong clue that there's some kind of market failure happening. This Quora answer suggests that the culprit is economy of scale due to network effects, which gives the online intermediaries market power. This seems pretty plausible to me.

(I don't have an opinion on the OP's suggestion of people independently refraining from using these services, but it seems worth pointing out there's at least a large justifiable suspicion that what's happening isn't good and proper.)

If it is not profitable, then it morally shouldn't ought to exist; the market is indicating that the business is a waste of society's limited resources.

This seems much too strong: it e.g. suggests that no non-profits should exist. Profitability and overall benefit to society are two very different things.

Non-profits are "profitable" in the limit sense of a profit of zero. Non-profits with negative profit cannot exist and, in fact, generally quickly cease to.

There are problems with the equation "profit=worth", but it holds to a first approximation. The free market is vulnerable to collusion, fraud and outright value hijacking, but those are all manipulations and divergences of the baseline, which is "1 money = 1 unit of caring."

I usually tend to assume that the markets, being the dominant optimization power in society, are the "authority" on value, because they generally function to model society's revealed preferences. A thought that often comes to mind is "If you didn't want X, why did you allow your markets to fall into an X attractor?" I suspect people tend to model markets as cosmic laws, whereas I think of them more as highly powerful mechanical contraptions that require maintenance. Or maybe as a dev I just model everything as software.

I'd like to see more citations and details of your calculations. I order a fair bit of delivery, from "standard internet services", and would gladly call instead if it actually worked. But none of the restaurants I frequent actually deliver, except through one of the apps.

If a restaurant wants to offer a cheaper, better, or even comparable-but-more-money-for-the-owner delivery, I'd be happy to use it. Just say on your website "call directly for delivery".

Until then, I'll assume they've made the calculation that my marginal delivery (which wouldn't happen otherwise - I'd make something at home rather than going to the restaurant in person) is a net benefit to them, even with the fees they've chosen to pay.

At the risk of appearing defective, isn't this the sort of action one would only want to take in a coordinated manner? If it turns out that use of such delivery services tends to force restaurants out of business, then certainly one would prefer a world where we don't use those services and still have the restaurants-you can't order take out from a place that doesn't exist anymore! But deciding unilaterally to boycott delivery imposes a cost without any benefit-whether I choose to use delivery or not will not make the difference. This looks like a classic tragedy of the commons, where it is best to coordinate cooperation, but cooperating without that coordination is a pure loss.

… [delivery services] take mindbogglingly huge fees out of every order. We’re talking on the order of 20%.

Do you have a citation for this?

In fact for some services it's 30%: https://get.chownow.com/blog/restaurant-delivery-killing-restaurants

I only learned about this a few days ago, and (bizarrely) thought it was only UberEats that had such a high fee schedule.

Reading this article (which, to be clear, absolutely does support the claims I asked for a citation of [but see end of comment]—my comments below are about a different aspect of the issue), I was slightly taken aback by this bit:

These delivery companies charge restaurants exorbitant commissions off of every customer order, when the only real the value they bring is helping new customers find your restaurant for the first time. When a customer orders again and again, it’s because your staff was friendly, the food was delicious and they had a great experience. Why should you pay Grubhub a 30% commission every time a customer orders?

This does not even begin to match my own experience.

  1. When I use GrubHub, I order almost exclusively from places I have physically been to.

  2. By far the greatest value I get out of using GrubHub is convenience—and that’s huge. At least half of all the times when I’ve used the service, if I instead had to telephone the restaurant, I just… wouldn’t. Nine times out of ten, I would, quite literally, rather go hungry than place a phone order. (Of course, in reality, I’d simply eat leftovers, or cook something quickly, or go out for a bagel, etc. It would be an inferior meal, but I’d gladly pay that price, in order to avoid having to make an order over the phone.)

  3. If I order again from the same restaurant, using GrubHub, it has exactly nothing to do with the staff being friendly. I don’t interact with their staff in that situation—that’s the point! The only thing I’m interested in is (a) food quality, (b) delivery speed, and (c) price.

Then there was this rather appalling bit:

Furthermore, third-party marketplaces like Grubhub and Postmates don’t give restaurants access to their own customers’ email addresses, which makes marketing directly to your own customers virtually impossible. There’s so much value in owning your own customer’s information, so that you can encourage them to order directly from you and not pay marketplace fees time and time again for the same customer.

This is an excellent reason to use a service like GrubHub. If a restaurant wants my email address so that they can market directly to me, they can go to hell. I would avoid patronizing a restaurant like that, on general principle.

… then again, maybe all of this is a moot point. After all, the linked article is, in fact, an advertisement in disguise—an advertisement for ChowNow, which seems to be a company that’s selling a competing product to GrubHub, etc. Can we trust that what they tell us about how online delivery services work, their pros and cons, etc.? We absolutely cannot! Even the true facts they tell us will be framed so as to make their offering look good. The author of this article started with their bottom line.

Does anyone have any citations that come from a neutral source?

Here is a neutral (from the perspective of potential competition) source, that quotes industry insiders: https://nypost.com/2016/02/06/tech-giants-start-getting-serious-about-food-delivery/

I agree that delivery services provide significant value to the consumer for the reasons you describe. I suspect that in the situation where a specific class of restaurant (pizza places) already have their own delivery network in place (fixed costs already paid, domain-specific efficiencies already captured), a bare-bones online order system could easily beat out a full-service middleman like UberEats or Grubhub.

The thing I don't understand is how the market got (and stays) this way. Slice successfully created a new (much lower margin) service for this. Why is everyone else putting up with 30% fees on something that's trivial to replace? For example, why aren't all of the businesses using ChowNow?

Presumably part of this is that some ordering systems get top billing in places like Google Maps, but given that Google Maps seems to show every order system under the sun, it can't be *that* hard to get a new one in there.

Also that article seems to equivocate between services like UberEats that provide their own delivery drivers and are plausibly worth paying a large fee to and services like GrubHub that are just online order systems and could presumably be trivially replaced.

Grubhub also exclusively uses its own drivers. See my response to Said: https://www.lesswrong.com/posts/z9hqPS6NNdNYLYunT/minimize-use-of-standard-internet-food-delivery#XRNiX7GgZ7pF6HD5Y

That's 30% for delivery, not just taking the order. OP is a little unclear, but a phone call is only a substitute for ordering online, not for delivery.

I think the post suffers for not being clear about the distinction between delievery and order taking. It would be helpful to be explicit to what extent it factors in.

I just opened up UberEats, and the search bar's prompt is the phrase "What Are You Craving?". This is a bad decision-procedure for food on a regular basis. It seems to me that the attention-economy is even attempting to get me to make impulse food decisions, and never longer-term, considered decisions.