Can someone clarify why DoorDash and Uber can't turn a profit?
My guess is that paying enough for drivers on top of food delivery makes the food so expensive, there's no margin left to turn a profit from. If you charge enough to make a profit, no one will order food delivery since it's too expensive. Is that correct?
1) Delivery businesses only make sense in dense urban markets. Think vertical Asian cities. You can deliver on foot, bicycle, or moped to multiple customers at once.
2) Low prices to drive growth at all costs instead of a fair price and slow growth as they serviced a small set of niche customers.
1. Is spot on, these types of businesses really only make sense in a few North American markets, ie NYC.
The other issue is that to actually provision enough service to meet customer expectations on availability and speed, you need to economically over provision your workforce.
Cities used to restrict the supply of taxi drivers intentionally in order to maintain driver wages.
What are y'all talking about? There's been food delivery in the suburbs for pretty much as long as we've had phones and cars. It's perfectly viable as a business. It's just not a 100 billion dollar business.
It’s been a fairly limited enterprise to specific cuisines with limited competition. Flooding the market with supply and including restaurants who aren’t oriented directly towards a delivery model destroys margins.
My guess is that paying enough for drivers on top of food delivery makes the food so expensive, there's no margin left to turn a profit from. If you charge enough to make a profit, no one will order food delivery since it's too expensive. Is that correct?