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posted by martyb on Tuesday May 19 2020, @03:37AM   Printer-friendly
from the ...we'll-make-it-up-in-volume dept.

Doordash and Pizza Arbitrage:

In March 2019 a good friend who owns a few pizza restaurants messaged me [...]. For over a decade, he resisted adding delivery as an option for his restaurants. He felt it would detract from focusing on the dine-in experience and result in trying to compete with Domino's.

But he had suddenly started getting customers calling in with complaints about their deliveries.

Customers called in saying their pizza was delivered cold. Or the wrong pizza was delivered and they wanted a new pizza.

[...] He realized that a delivery option had mysteriously appeared on their company's Google Listing. The delivery option was created by Doordash.

[...] Doordash was causing him real problems. The most common was, Doordash delivery drivers didn't have the proper bags for pizza so it inevitably would arrive cold. It led to his employees wasting time responding to complaints and even some bad Yelp reviews.

But he brought up another problem - the prices were off. He was frustrated that customers were seeing incorrectly low prices. A pizza that he charged $24 for was listed as $16 by Doordash.

[...] He called in and placed an order for 10 pizzas to a friend's house and charged $160 to his personal credit card. A Doordash call center then called into his restaurant and put in the order for those 10 pizzas. A Doordash driver showed up with a credit card and paid $240 for the pizzas.

We went over the actual costs. Each pizza cost him approximately $7 ($6.50 in ingredients, $0.50 for the box). So if he paid $160 out of pocket plus $70 in expenses to net $240 from Doordash, he just made $10 in pure arbitrage profit. For all that trouble, it wasn't really worth it, but that first experiment did work.

[...] But we did realize, if you removed the food costs this could get more interesting.

[...] The order was put in for another 10 pizzas. But this time, he just put in the dough with no toppings (he indicated at the time dough was essentially costless at that scale, though pandemic baking may have changed things).

[...] Note 1: We found out afterward that was all the result of a "demand test" by Doordash. They have a test period where they scrape the restaurant's website and don't charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform. If we had to pay a customer fee on the order, it would've further cut into our arbitrage profits (though maybe we could've incorporated DashPass as part of the calculation).


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  • (Score: 2) by gtomorrow on Wednesday May 20 2020, @01:53PM

    by gtomorrow (2230) on Wednesday May 20 2020, @01:53PM (#996877)

    Yeah, anonymous coward, just as I thought. I ask for citations and you just make more things up and purport them as "facts" peppered with insults.

    Yawn...we're so done here.

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