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A DoorDash delivery person in New York City in March. Photo by Shutterstock
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Uber/Lyft Policy E-commerce

Reality Check: Are Food Delivery Apps Actually Awful Businesses?

Photo: A DoorDash delivery person in New York City in March. Photo by Shutterstock

In the past week, Uber’s attempt to buy Grubhub and a memorable story about DoorDash’s money-losing tactics have sparked a wave of critical press and social media dunks on the U.S. restaurant delivery industry.

It’s easy to understand why. Countless mom-and-pop restaurants fighting to survive amid the Covid-19 downturn are complaining about the commissions they pay to DoorDash and its ilk. The delivery apps also sell food from some restaurants without their permission, leading to a poor experience for some customers when the food arrives cold. And the delivery businesses themselves don’t have much to brag about yet: On average, they lose a lot of money on each delivery they handle.

But investors who back the leading players will have the last laugh. One can look at the online restaurant delivery business in China, led by now-profitable Meituan, and to some extent in Europe to come to that conclusion. Or look at Uber’s ride-hailing business, which after years of heavy losses and skepticism from the business community turned a net operating profit in each of the last three quarters before the coronavirus crisis. (And with a sudden Covid-19–related surge in volume, grocery-delivery leader Instacart in a matter of weeks went from burning through tens of millions of dollars a month to turning a monthly net profit.)

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