'Profitboss' Is Saving Restaurants From Heavy Delivery App Fees (vice.com) 27
An anonymous reader quotes a report from Motherboard: Bay-area based startup Profitboss is pitching itself as the "easiest, fastest, and most convenient system to get back your customers from third party [services]." Free to restaurants, the service (which launched in 2018) lets restaurants open their own digital storefront. Profitboss CEO Adam Guild likes to compare his service to Shopify and the terms of agreement thread the same point: Profitboss, or "Placebull" deems itself a "virtual marketplace" that connects users to local restaurants.
The way it breaks down is this: The service is free for restaurants for pickup orders, and users are charged a $1.50 fee which Profitboss takes as a cut. For delivery orders, Profitboss sends orders to the API of apps such as DoorDash and charges restaurants a $7 fee, which works out to be cheaper than delivery apps' usual fee and can be split with the customer. The idea is that both the restaurant and the customer end up saving money in fees. Uber Eats, for example, charges users at least $5 in fees (and sometimes more) on top of the food itself being charged at a premium to cover Uber's 30 percent commission.
Profitboss isn't a panacea for all the gig economy's ills, however. While it seeks to cut gig companies out of one part of the equation and help restaurants, it also uses gig workers from Postmates and Doordash to actually deliver orders, Guild said. "In the world of e-commerce, Shopify has millions of merchants but most orders are actually fulfilled by Amazon fulfillment centers," Guild told Motherboard. "In the same sense that Amazon fulfills Shopify orders, DoorDash fulfills our orders but it's just a flat fee so there's a higher profit margin there." Guild said Profitboss can reduce the amount of time drivers spend waiting for orders while increasing their tips and overall earnings because, he claims, "customers are more willing to be generous with a gratuity and we're able to pass that entire tip to the driver."
The way it breaks down is this: The service is free for restaurants for pickup orders, and users are charged a $1.50 fee which Profitboss takes as a cut. For delivery orders, Profitboss sends orders to the API of apps such as DoorDash and charges restaurants a $7 fee, which works out to be cheaper than delivery apps' usual fee and can be split with the customer. The idea is that both the restaurant and the customer end up saving money in fees. Uber Eats, for example, charges users at least $5 in fees (and sometimes more) on top of the food itself being charged at a premium to cover Uber's 30 percent commission.
Profitboss isn't a panacea for all the gig economy's ills, however. While it seeks to cut gig companies out of one part of the equation and help restaurants, it also uses gig workers from Postmates and Doordash to actually deliver orders, Guild said. "In the world of e-commerce, Shopify has millions of merchants but most orders are actually fulfilled by Amazon fulfillment centers," Guild told Motherboard. "In the same sense that Amazon fulfills Shopify orders, DoorDash fulfills our orders but it's just a flat fee so there's a higher profit margin there." Guild said Profitboss can reduce the amount of time drivers spend waiting for orders while increasing their tips and overall earnings because, he claims, "customers are more willing to be generous with a gratuity and we're able to pass that entire tip to the driver."
The cost of being lazy to go get your food.. (Score:3)
Re:The cost of being lazy to go get your food.. (Score:5, Insightful)
I'm surprised how expensive delivery food is getting. Back in the old days, restaurants used to give free delivery over a certain purchase amount. I'm actually surprised people can afford to use the delivery apps, and the costs must add up fast....
I's worse than that. Even in TFS it says that users are charged $1.50 to pick up their own order. When I'm getting food from a restaurant that I'm going to pick the food up from, I use this thing called a telephone and call the restaurant and order directly.
Then I go and pick it up and also hand over a hefty tip.
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and also hand over a hefty tip
Please don't. We should be working to eliminate tips, not expanding when we tip. And tipping a to go order is not currently customary.
Don't get me wrong, I tip the standard 20% on dine-in and delivery (which don't even get me started on how that keeps expanding. 10% used to be the standard). But for a to go order that I pick up myself? No, never. If tipping on to go ever becomes the norm, I'll just stop ordering to go (which I don't do very often now anyway, meaning it would be real easy to commit to)
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Makes you wonder how pizza places have been turning a profit with reasonable delivery fees for decades.
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Delivered pizza is consistently more expensive, at least where I am. Dominos here in Australia will sell you a basic pizza for $5 if you pick it up yourself, I imagine they make almost nothing from that. But if you want it delivered it's more like $15. You might get three pizzas delivered for $35. Those are big jumps in prices and I think it's always been that way. It can only be the same for any kind of food. So if you could pick up an Indian curry combo for $25 then you probably need to pay at least $35 t
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I'm actually surprised people can afford to use the delivery apps, and the costs must add up fast....
Not everyone pays for delivery or per delivery.
For example, if you have an AmEx Gold card, you get $10/mo to use for Grubhub deliveries [wallethub.com].
If you have a Chase Sapphire Reserve card, you get a complimentary Lyft Pink membership which has the added bonus of a free Grubhub+ membership [grubhub.com] which offers unlimited free delivery on orders of $12+
For those who have neither of those cards, they can subscribe to Grubhub+ for $9.99/mo to get unlimited free delivery on orders of $12+
Doordash offers a similar $9.99/mo membersh
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if you have an AmEx Gold card
If you have a Chase Sapphire Reserve card
Remind me again how much it costs per annum to get either of those cards?
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For that you get $300 in travel rebated, so $250. Then a bunch of other benefits.
I went and got it last year as a what can I buy that I would use; doing the math on the paybacks vs the card I currently used I found I would make back around $100 more with the chase and get all the benefits. In reality with the extra benefits they made because of covid they have already paid back to me enough cash rebates to pay my fees for the next three years(provided I use the $300 travel money)
Re: The cost of being lazy to go get your food.. (Score:2)
I just use a USAA card with 2.5% cash back on everything. No fees on anything at all, and over the span of a year I typically get about $600 back. Unlike those fee based cards, it's guaranteed to pay.
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an agent for agents? (Score:3)
Wait ... so they're acting as an agent for services that act as agents between customers and service providers?
Seriously?
I'm all for reducing the costs charged to restaurants for contracting out delivery (the overheads charged are insane), but this sounds like there's just more overhead being inserted along the chain.
Someone, please, explain how this isn't going to just end up more expensive for customers and/or restaurant owners in the long run, when there are, as stated, more companies than before in the chain between you and your food?
Re: an agent for agents? (Score:2)
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Those middlemen will compete with each other on margins, while the restaurant focuses on their core competencies of sourcing ingredients, developing recipes, and preparing and serving food rather than getting interrupted to take dictation for (during COVID) every order. I mean, that's one way.
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This is more for restaurants who have no online presence - which includes the vast majority of restaurants out there. The rest usually have a Facebook page if you're lucky and an even tinier fraction has a usable website that lets you browse the menu, book a table or order takeout.
This company aims to basically let the little mom and pop restaurant have an online presence - there's a reason why these restaurants don't have one, and it's not just cost, but time and maintenance. So if this company can handle
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I get takeout from a local Thai restaurant. They have a simple website with a copy of their menu. I call them up, order and go pick up the order and pay. No middleman. Minimal web skills for the restaurant. Why would they pay a middleman?
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Wait ... so they're acting as an agent for services that act as agents between customers and service providers?
Seriously?
I'm all for reducing the costs charged to restaurants for contracting out delivery (the overheads charged are insane), but this sounds like there's just more overhead being inserted along the chain.
Someone, please, explain how this isn't going to just end up more expensive for customers and/or restaurant owners in the long run, when there are, as stated, more companies than before in the chain between you and your food?
They are essentially acting as a union or co-op for small businesses. By combining enough small businesses they can negotiate a better deal for the small business than if they tried doing it on their own.
Broken business model (Score:1)
So another business model that is based upon people working for tips rather than real wages?
In other words (Score:4, Insightful)
They want to be the middleman for the middleman.
These platforms cannot make money (Score:5, Interesting)
The business model is broken, fundamentally so. The existing margins for restaurants and delivery services were razor thin before the like of Uber and Doordash started taking significant cuts. Then they turn up and have all of their own costs and expect to somehow take a cut. It's technologically clever but again and again we're seeing that this is not profitable. Someone has to lose out and in practice everyone is losing out. Restaurants have a lower margin than before, delivery drivers work on low wages with zero benefits and in an increasingly competitive environment, the platforms themselves only exist because of hefty VC funding and will almost never become profitable. It's just not viable. Either the user pays significantly more for these services or one of the third parties needs to be taken out of the equation.
Profitboss seems to be on the right track by taking a very small cut but in truth all they are doing is adding themselves into the mix. The platforms themselves cannot be significantly profitable. Taking 30% from an order is a joke, it will never work. Even 10% is too much. For me they need to be operating at cost OR maybe someone starts a non-profit to coordinate an open-source platform. PAAS and SAAS is ubiquitous these days and deploying instances of an online portal is almost trivial. Restaurants can pay for the hosting while drivers would likely need to pay a small fee to be registered in some kind of open database. It could still be centralised to some degree but it doesn't have to be. Maybe a coalition of restaurant brands pool their resources together to setup a shared solution. Dare I mention "blockchain" ... could this be an application where it is actually helpful?
Uber Eats, Doordash, Menulog ... they can call themselves disruptors or innovators but if the only way you can survive is with a ton of VC cash and aggressive marketing and competitive tactics then something is very wrong. Their tech stack is no longer impressive, the ideas are no longer new and I think the public is starting to see the truth behind how they operate. It's not good.
I did a lot of deliveries for DoorDash and ... (Score:5, Interesting)
The growing problem I'm seeing with the service, from a driver's perspective, is they're eager to partner with as many people as possible. Instead of ensuring quality relationships that benefit all parties, they're happy to work deals with almost anyone.
For example, our local Pizza Huts are using DoorDash to deliver a lot of their pizzas, while still maintaining a crew of delivery drivers of their own. That makes for a strange dynamic when you show up to pick up a pizza for DoorDash delivery and their own drivers are coming back in the door. You can see by the look on their faces that you're not really welcome there.... They tolerate it because their boss wants it to work that way. But you're cutting into how much money they can make at their job and it feels like it's at least an experiment to see if Pizza Hut can eventually eliminate its own delivery people completely.
I also get a lot of "third party" orders that never identify where they came from. They tend to pay less than you'd make on a normal DoorDash order, but they'll often throw one in when you're already picking up another at the same restaurant, or offer it for one right across the street to make it tempting to accept anyway. I dislike those because they don't usually even have the full name of who ordered it, nor do they have details of exactly what should be in the order. You have to just grab the order for "Smith" and hope it's all right.
Wouldn't be surprised if ProfitBoss is one of them that just shows up to drivers as "Third party order" like that?
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eliminate its own delivery people completely. when you can pay the sub min wage and make them do in shop work + drive orders
more of the same (Score:3)
The solution to gig exploitation is not yet another middle-man sticking their fucking snout in the trough.
The solution is a proper job (i.e. not being deliberately misclassified as an "independent contractor") with a decent wage and decent working conditions.
And fuck tipping as a substitute for wages. All workers should be paid a decent wage, and not have to rely on begging for the majority of their income - and customers should not be forced to be complicit in tipping-based exploitation (tipping is mandatory unless you want to fuck over the workers).
Here's a tip: unionise and strike for real wages.