Whenever people see old systems still in production (say things that are over 30 years old) the assumption is that management refused to fund the replacement. But if you look at replacement projects so many of them are such dismal failures that's management's reluctance to engage in fixing stuff is understandable.
From the outside, decline always looks like a choice, because the exact form the decline takes was chosen. The issue is that all the choices are bad.
I used to deliver pizzas in the early 2000s. I would get paid
$4/hour (later bumped to $5 per hour)
$1/delivery (pass through to customer)
+ tips
I had good days / times where I was pretty much always busy and made around $20/hour by the end.
So delivery cost the customer $1 + tip (usually ~$3), cost the business maybe $40 a night (~2.5 drivers for 3 hours), and I made out pretty well.
I can't compare exactly but I feel like today the business pays more, the customer pays more, the drivers get paid less and it's all subsidized by investors to boot. Am I totally wrong on this? But I feel like delivery got so much worse and I don't know where the money is going.
It is exactly that! Food delivery is an excellent example of 'things just got worse'.
In 2019, 'delivery' was a specialty a restaurant would have to focus on to offer. Pizza places (Papa Johns, Pizza Hut, etc) and other specific delivery-focused restaurants (such as Panera Bread, Jimmy Johns, or your local Chinese restaurant) would have actual W2 employees who did delivery driving, as part of their job. The restaurant would want deliveries to go well (for both the customer, as well as the driver), so would make sure their own staff had reasonable access to food, some light training, and would ensure they could deliver it somewhat well. (They would reject orders too far away, they wouldn't serve food that wouldn't survive a delivery trip well, etc)
In post-COVID 2025, "every" restaurant offers delivery, but almost no restaurant still employs their own delivery drivers (locally, Jimmy Johns might be the only one left). Everyone else just outsourced to DoorDash. DoorDash drivers are employees who are 'legally-not-employees' (1099 employees), so they no longer have any direct access to the restaurants, and they can't train well for any specific service, because they might have to visit any-of-50 restaurants on any given day, all of which have entirely different procedures (even if they are the same brand or chain). Restaurants have zero incentive to ensure deliveries go well (the drivers aren't their employees, so they no longer care about turnover, and customers have to use DoorDash or Uber Eats or equivalent, because almost every restaurant uses it, so there's no downside to a DoorDash delivery going bad).
Prices to consumers are double-to-higher than what they were in 2019, depending on the restaurant. Wages are down, employment security is entirely eliminated. Quality and service have tanked.
Presumably, investors make slightly more money off of all of this?
But since it's all investor and profit driven for the bigger company, costs get cut on every side.
These services basically don't work with Western level wages. The economics are just not there.
Cost of living from the fallout of '08 simply skyrocketed and most of the country didn't not increase compensation to make up for that. Despite that company simply charged more while cutting costs at the same time. So the driver and the customer lost out.
Edit: ooo someone's mad I don't like DoorDash
Back when I was doing food delivery before the pandemic, we would actively promote placing orders with our restaurant directly. I would tell repeat doordash customers that they can save 15% if they just call or use the website.
None of them converted. The convenience of the app is just too strong for people to care.
Also, it is a little odd that people are dining out more often if the experience is worse.
But, yeah, wages and employment being down is the most relevant change.
DoorDash adds upwards of a couple dollars to every item. They charge a 5-10% service fee depending on if you pay them monthly. The default tip options are pretty egregiously high - it's not uncommon to see double-digit tips in all three options. I once saw a $22 tip in the top option for a single bag of food with no drinks less than a 10 minute drive away but that's likely an outlier.
All in if you don't have DashPass you're easily looking at a 30-40% increase if you get cheaper items which are more likely to be marked up only $.5-1 but represent a larger percentage of the total.
Nobody in their right mind would tip a delivery driver 40% of their entire meal, why are you happy to give most of that to a corporation that is doing very little for the transactions?
Edit: I just did this for an example order for a nearby restaurant - 1 appetizer and 1 entree so probably good for two people not super hungry to share or one hungry person to eat.
$31.59 in food, $2 delivery fee and $5.50 in fees (I subtracted sales taxes manually). This restaurant is 5 miles away and it's 11:30 local time. Tip suggestions are $9.50 (30%), $11.50, and $13.50 (42%). So at the lowest suggested tip amount, which is offensively high, you're looking at $49 before sales tax.
The exact same order is $26.36 including an online order service fee but before sales tax. Even if you were going to get it delivered and tip the driver 30% you're still saving a ton of money and this is on one meal with enough food for 1-2 people.
The appetizer alone is $10 on their website and $14 on DoorDash. It's a crazy system and I can't believe how much money people burn on this every year.
Users want good fresh food delivered at a reasonable price. But they are willing to tolerate shitty cold food at an expensive price because it’s a tiny bit easier to do than picking up the phone.
We are lazy by nature to preserve energy and many many companies have just perfected finding the right ratio of how fucked we will allow our selves to be to tickle that lazy button.
Only because the service is disrupting the business model for those wages.
It worked well(ish) in 2019, it failed by 2022. It's not some kind of mystery around wages or inflation, the introduction of these services (and their popularity and growth, due to COVID closing in-person restaurants for a while) is the thing that killed the economics around delivery, for much of the US.
If you order food directly, you won't have the delivery tracking on the map. Even within the app, if the restaurant provides their own couriers, you lose the visibility and arrival ETA info.
And 15% might look impressive, but if you are getting your food from a delivery app, you probably don't care that much about food price in the first place.
I know much of the answer is a mix of private equityb and an overload of debt taken from insane evaluations.
1. Pizza travels very very very well
2. Pizza is pretty cheap to make
3. Wages (and costs of transportation) were lower 20 years ago.
More generally, delivery as a model can work, but not when you have an organisation of really expensive engineers/salespeople working on a frontend to it.
Consider the example of Amazon marketplace. You still have one payment button and you can still shop for things from different vendors. Yet the order fulfillment can be done by Amazon or the seller directly.
If such an arrangement is possible on Amazon, it must mean that there are shops that trust their own fulfillment more than they do Amazon's. It is entirely possible that some restaurants will want to own that delivery experience as well.