The economics of food delivery platforms

These initiatives are certainly a feel-good way for customers to continue to support the hospitality industry – but it remains to be seen if they can provide enough of a boost for restaurant owners to continue partnering with them in the long term. External interventions on the hospitality industry don’t always go well, particularly where there’s a... See more

It's not clear that the food industry can sustain the delivery industry but if it does, it will be a winner-takes-all market. And you are a lot more likely to win if you have a positive EBITDA.

How did we get to a place where billions of dollars are exchanged in millions of business transactions but there are no winners? My co-host Can and my restaurant friend both defaulted to the notion “delivery is a shitty margin business” when discussing this post. But I don’t think that’s sufficient here. Delivery can work. Just look at a Domino’s s... See more

Yet, despite this new source of e-commerce demand, restaurants have struggled to keep up. The dominant reason is that restaurant demand is inherently “peaky.” It’s even more peaky now that delivery and pick up are turning restaurants into omni-channel retailers. Restaurants have fixed labor costs that do not scale up or down with volatile demand th... See more

The world of platform labor is in principle a net good: Platform marketplaces can substantially improve social welfare by enabling new or improved transactions. This leads to new forms of labor activity, expanding workers’ options. Those whose niche interests and skills would have made it challenging to make a living from local customers can now tu... See more