Delivery parasites are eating their host

[cinghiale]

Pretty good overview of the current landscape in the current Atlantic:

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In a sense, what restaurants did during the early pandemic was take out a loan they didn’t know they wouldn’t be able to pay off. They were borrowing customers and got the immediate infusion of cash they needed, but at a rate that was excruciatingly high. Shannon Orr runs an eight-restaurant group on the West Coast. Recently, she opened her books to me, by way of illustration. In 2024, one of her restaurants made about half of its sales on delivery, for $1.7 million in gross receipts. Of that, $400,000—or 23 percent—went to delivery companies. “That’s somebody’s job, by the way, which is why I just laid off people,” she told me. “That’s two salaries.” The restaurant was previously one of her most profitable, but last year, she told me, it didn’t make any money. “Delivery saved us during the pandemic,” she said. “Now they are killing us.”

 

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Canavan is concerned—for restaurants, on a financial level, and for the food itself. “If a high percentage of any given restaurant’s sales is happening in delivery, that will inevitably shape menus to be more delivery friendly,” she told me. “What does that mean for culinary innovation and experimentation and creativity?”

It’s a great question, and it gets at the fundamental shift taking place before our eyes and under our feet. A restaurant that doesn’t serve people isn’t really a restaurant—it’s something else. “We opened up restaurants so you would come to them, not so we could go to you,” Phillip Foss told me. “Otherwise, we’re just a catering company.”

Foss is the chef and owner of EL Ideas, a Michelin-starred restaurant in Chicago. During the early pandemic, Foss, like so many of his peers, started doing delivery. Eventually, however, he had to stop; the math just didn’t work out. “My feeling at the time, especially during the pandemic, was, you know—this can destroy this entire restaurant industry, if we’re giving this much of our gross income to the services,” he said. At Foss’s restaurant, the prix fixe is $245, and the menu is over-the-top theatrical (for years, he served a course of dehydrated-coconut-and-lime powder, expressly designed to look like cocaine). His food is intended to be enjoyed in person, and after pandemic restrictions were lifted, enough people wanted to that he didn’t need delivery.

These days, what’s left on Uber Eats and DoorDash are the restaurants that can’t afford to do that. Those are the places laying off staff and rejiggering their menus. Some are passing the cost on to eaters, tacking a few extra dollarsonto the price of dishes when ordered for delivery—but as the economy hurtles toward a possible recession, $31 for spaghetti in a cardboard box starts to seem like a bad idea too. In what sure felt like an omen to me, earlier this year, DoorDash announced a partnership with the payment-by-installment company Klarna, thereby allowing customers to pay off an order of pad thai over several weeks.

 

[Wilfrid]

That is interesting, but long before the pandemic there were many restaurants -- especially Chinese and Indian -- which stood nearly empty night after night while filling take-out orders (not so much delivery back then). I always wondered how that model made sense, given the cost of the spaces they were occupying.

Same today, for example at my local Indian, which rarely has more than one table occupied. The difference is the six or seven delivery drivers waiting to collect orders.

[Orik]

There aren't really less expensive spaces to operate from - in nyc it's pretty much ground floor retail or bust. Even ghost kitchens operate from spaces that compete with restaurants.

I think the old chinese takeout model was simply extremely efficient and adaptive - the family sedan was expensed to the business and was indeed used to bring ingredients from the wholesalers to save on delivery. The marketing department - aka the delivery guy sticking menus under doors - offered great geo and socio-economic selectivity. They also sensed changes in market preferences - remember when many of them started having a mexican menu and sometimes a sushi menu?