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Patrick Mathieson's avatar

A few aspects of this article seem one-sided.

First is the point that Steven Moody made, which is that Dan's P&L doesn't account for any increased in revenue driven by the restaurant discovery marketplaces, which seems unfair and unrealistic. Second is the "insects" comment; I clicked into the article this referenced, and the quote actually comes from a delivery worker saying that the *restaurants* treat his compatriots like insects, not the delivery networks. Dan didn't explicitly say otherwise but the thrust of this section of the piece was all about mistreatment by Eats/Grubhub/etc. Third is that Dan has invested in various businesses on one side of this debate, which is fine, but I'm glad he disclosed it. Fourth is that Dan may feel that the treatment of delivery workers is a national embarrassment, but the California voters seem to not agree, as Prop 22 passed by a very significant margin (59-41).

Still, I enjoyed this article & comments a whole lot. Very thought-provoking. At the end of the day this feels like more of a battle for competing interests in a low-profits sector than a battle of Davids vs Goliath. If DoorDash/Eats kill their golden geese (or not-so-golden geese) by abusing their restaurant-partners, then they will fail, and they will have deserved to have failed.

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Steven Moody's avatar

The P&L assumptions keep fixed costs for labor and rent, while assuming sales are flat. Of course it looks bad, when have you seen a company keep sales flat, expenses fixed, and hand over variable expenses to a third party without any benefit? Unbundling 3PL doesn't solve this.

30% has been an industry norm for 3PL delivery going back to 2003, and the arguments have been the same: if 3PL adds customers, it is a good deal at 30%, and if it takes customers, it is probably not a good deal. Covid simply gave everyone a glimpse of an extreme future.

The author fails to note that cloud kitchens are going to replace restaurants, and the real threat isn't from 3PL but from the commoditization of their product in a globalized media environment where offering delivery of premium mediocre is easy and growing on the intangibles of a family-owned restaurant experience is difficult.

If/when we return to the old normal, delivery demand will collapse in the short term as people clamor for connection and third places. Restaurants that use delivery to reinforce the feeling that can only be found in their space will thrive, and those that use delivery to deliver warm food will struggle.

Software is eating commoditized food services, and whether it is bundled or not is a red herring.

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