to be missing something with the Deliveroo / Just Eat business model

[chomalungma]

Seen lots of the drivers on their mopeds so thought I would take a look.

I can get a takeaway, often with no minimum order, for £1.50 delivery.

So how does that work from a business point of view?
Minimum wage is £8.42 per hour .
If they have lots of takeaways to deliver, then it must take a long time to arrive.

What am I missing? I can see they are very popular - so how does the business make money - with enough to pay the driver?

From what I’ve noticed ordering on deliveroo etc compared to direct, the prices seem to be higher

The answers are
a) that the platforms are startups haemorrhaging investor money in an attempt to carve out market share
b) they get kickbacks from the restaurants out of the restaurant’s profit margin - it might not be enough to pay the driver on a small order but they’re prepared to accept that in return for the larger shares of big family orders (and see a))
c) they’re probably exploiting the drivers but I’m not quite sure of the details

I suppose it depends on the area but my local deliveroo has delivery costs up to £4.99. And some of them have a ‘small order’ fee.
But yes they don’t pay the drivers super well, and I’m not sure if it’s still the case but they were originally set up as self employed so they didn’t have to provide any benefits etc.

You can order online and pay by card
A significant chunk of the places you can order from don’t usually deliver.
You can order from several places at once.

They are why I believe it stands out from just getting a standard takeaway delivery direct from the business.

It does seem that the prices seem higher - but that's just based on me looking at KFC

The restaurant pays the driver too. Deliveroo drivers get about 3.50 min per delivery in London.

Both charge between 20 and 30 percent, up from 10 when they started. There are new players in the market such as Eat Direct but the restaurant faces the choice of lower commissions vs lower order volumes (in the interests of disclosure all 3 of the above are clients).

Restaurants have to pay to sign up to deliveroo or just eat, and then pay a fee for each order. So for the website it makes a lot of sense.

It's better for the restaurant if you place your order direct.

Being on just eat as a food business they take 20% of the total order just for being ordered through them, every single order.

I think that ease just brings in enough extra business to justify the fees to the company.

I believe the restaurants pay a % of each order to the companies on top of the deliver/order fee.

They take a proportion from the restaurant too, from memory it’s around 15% but it’s a while since I had dealings with them.

The food costs more.

It is easier to spot this if its a place you can collect from or who has orders that come in direct to the shop AND via Just Eat/Hungry House etc...

Food ordered direct or collected is cheaper, so the place my sister works at if you order off the flyer over the phone or go get it, their 9" margherita is 9.59. Order it via just eat, its £10.59.

Some places have a min order, some don't thats down to the individual restaurants choice.

Lots of drivers are working for places that pay a wage if they are delivering for Just Eat or Hungry house .. again my sister is paid a wage plus a per delivery, plus tips because she works for one place that has Just Eat and their own phone system as well.

I don't know how Uber Eats and Deliveroo work as they are delivering from multiple restaurants so aren't paid a wage from one specific employer but are self employed, though i suspect it is similar in that you pay more for the food.

From what I've seen, on the Internet, some delivery operatives make up their income by pilfering their meals from the food they are delivering...