Gulp! The secret economics of food delivery

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Some restaurateurs describe delivery apps as an addiction. They know the habit will harm them, but it provides a short-term fix

rtugrul Elmas reckoned that a career designing fabrics would be a safe bet. Trends come and go but people always need trousers. He failed to appreciate that clothes could be made anywhere. When his employer moved its factories from Turkey to China in 2000, Elmas emigrated to London and found work in the textile industry. For five years, he earned a good living overseeing a cloth manufacturer in Romania.

As he recounts this chapter of his story, Elmas’s smile falters for a second. He talks with the patient, weary air of someone seeking absolution for his choices. He had taken reasonable business decisions throughout, yet the maths no longer added up. With every ominous ping of the tablet collating online orders, with every buzz of a receipt printing, with each helmeted courier waiting outside the restaurant, he was losing money.

Grubhub first courted Wallace’s company for exclusive use of its technology, then bought it and appointed him head of innovation . But Grubhub’s actions soon started to irk Wallace. “The goals became more monetary and more predatory,” he said. He felt a responsibility towards small immigrant-run restaurants, but instead he saw them forced to swallow high commissions and hand over data about their customers. So he left.

Such practices have often drawn attention away from something less overt and more profound: food-delivery apps are disrupting the restaurant industry itself. Restaurants have had to question where to base themselves, what to cook and, in a few cases, whether they will ever serve customers in person again. The results will have implications for what, where and when we eat in the future.

Before the apps, the economics of traditional takeaways were simple: restaurants charged the customer more than the cost of a driver. The first wave of food-delivery platforms served this market. In London companies such as Just Eat and the now-defunct Hungryhouse connected customers to food outlets: restaurants handled the logistics of delivery. This model was simple, boring and yielded a healthy profit.

Delivery apps are not just a technological convenience, they are transforming dining culture. In Britain, Deliveroo best exemplifies this shift. “We think ‘food first’ not ‘logistics first’,” Will Shu, its founder, told me. “We view ourselves as a food company.” This attitude makes it stand out from its competitors: Uber Eats is a transportation company that realised it could make more money ferrying burgers than people; Just Eat has mainly stuck to predictable takeaway fare.

 

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nice

How are things with the capitol now?

maybe they said it because they couldn't keep up 🤨

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