Margins is a newsletter by Matt Levine-like finance writing, covering tech business models, venture funding, and market events such as FTX and SVB.
HN commenters call its DoorDash pizza arbitrage piece a great read and praise its explanation of the SoftBank business model.
> Why can't the takeaways just go rogue and offer independent deliveries?
Because many of these delivery 'ad-hoc contractors'[0], sometimes even eating cost [1].
Pre-covid, you were often best off as a business either doing something that was 'known' to be delivery offered (i.e. pizza) or your next best option was to aggressively advertise it and have an extra staffer on hand willing to do the deed.
Then, you've also got the other form of arbitrage (or perhaps a cost thereof), of smaller independent restaurants/chains being unwilling or unable to handle the costs of properly covering drivers [2] and their pay when not driving [3].
Some restaurants started doing delivery during covid and kept it going. However most around here dropped because the volume wasn't worth it to them, on top of the 'streamlined flow' (don't need to give a route, the app the person picking up the 'pick-up' order is handling, does that for them.)
I'm not saying I like it but I get how it got here.
[0] - Remember that in the early days some of these companies would do all sorts of weird things like just have someone order on behalf.
[1] - There's an article about this involving 'pizza arbitrage' here https://www.readmargins.com/p/doordash-and-pizza-arbitrage
[2] - To be clear, both the startups as well as locals have a checkered history when it comes to proper coverage...
[3] - One can argue that such a person can be made 'useful' during the waiting time, however it becomes a complicated…
> The restaurant voluntarily entered a relationship with that food delivery company though??
In many cases, no.
https://www.eater.com/21537215/restaurants-sue-third-party-delivery-service-grubhub-for-listing-businesses-without-permission
> Grubhub has explicitly made this false partnership part of their business strategy. Last October, CEO Matt Maloney said the company would be piloting a new initiative of adding more restaurants to its searchable database without entering into an official partnership with them, so customers would believe they had more delivery options with Grubhub, and wouldn’t switch to competitors.
Re: your edit...
> To be charged a 30% fee...
If you don't have a deal with them, they can raise prices to get their cut. Shitty customer experience; they'll likely blame the restaurant for gouging them. Same if they list items not available from an old menu; restaurant gets blamed.
There are some funny arbitrage opportunities with the non-consensual listings: https://www.readmargins.com/p/doordash-and-pizza-arbitrage
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This is the best write-up of the Softbank business model:
https://www.readmargins.com/p/softbank-robinhood-and-a-margins?s=r
In short, the background of Softbank founders is in plumbing of the financial system. They intentionally bid up dubious companies into obviously unsustainable valuations, with the aim to make them highly illiquid. Faced with illiquid stocks, many of the assumptions behind trading models break down, and obscurities of the financial plumbing come to fore - the water Softbank knows really well. Eventually, index funds include a portion of the bid-up companies on their balance sheets, FOMO investors roll in - that's when Softbank unloads their bags
The original post that BBC links to has more interesting details. https://www.readmargins.com/p/doordash-and-pizza-arbitrage
Is this actually legal or is it a gray area that nobody has challenged at all? All I'm seeing is the restaurants themselves suffering the most, or left holding the bag - and it even seems Yelp is knowingly aiding the deceivers.
DoorDash also sets prices independently of the restaurant menu. In some cases this means DD prices are higher than the store, in others DD prices it lower than the restaurant, and takes a loss in hopes of gaining market share.
This results in fun opportunities like Pizza Arbitrage
https://www.readmargins.com/p/doordash-and-pizza-arbitrage