Anyone working on a delivery business like Seamless?

[Boo Blizzi]

I was talking to my brother on the phone today and somehow we started talking about Sushi. After a few moments, he made a barely audible comment like "F*ck it, im gonna order some sushi".

So its like 15 min later and we started talking about our parents, and right in the middle of our argument about who is gonna take mommy to the foot doctor, I hear him say, "I hope you're not looking for a tip, I paid it already on Seamless".

Now Im thinking to myself "WTF" cuz im not looking for a tip, then he explains every time he orders from this Japanese place, the delivery dude looks at his hand for a tip when he already paid it online.

So now Im interested because my brother is a cheapskate and if a business can get money outta him, then they have to be providing a great value. I probe a bit more and he says he loves Seamless cuz he can order from mad different restaurants while he's at work and because they already have his CC info it feels like he just clicks a button and a few minutes later food arrives.

He said he feels like a mouse in one of those experiments where they push the button and a cheese pellet falls out of the hole. Anyway, my question is: Is anyone working on something similar and how does the math work out?

Are you getting a discount from the store? Are you marking up the price? How are you paying the delivery dude/restaurant?

I dont know if Seamless has made its way to every nook and cranny of the country, but I think it would be cool to provide a similar service in smaller areas where you have to drive everywhere if the math works out.

 

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[jason91]

Market is pretty saturated.. seamless isn't the only food delivery service. There's grubhub, delivery.com, eat24.com and much more.

Those 4 are the big players. How do they get my business? Discounts - Promo codes, whichever one has a code I order from.

On the other hand - as of right now I don't think they have delivery drivers yet - but I think they will be implementing it soon.

There's a local business that operates as a food delivery service in my area - they have a website similar to seamless but only for my local area.

They markup the prices - they collect a fee, but no tip necessary. Why do I order from them sometimes?

They have more variety because they offer the delivery service - restaurants like this because they don't need to hire a delivery guy(which I'm sure the restaurants pay them more for), where seamless and grubhub only offer restaurants the customer.(restaurants also pay a percentage)

Good luck

 

[Boo Blizzi]

This is very helpful. @jason91 can you provide a link to the local example for me to check out?

 

[jason91]

Sure thing -

Their website is
Flushingfood.com

They've monetized it in multiple ways - restaurant pays them, menu markup, online processing fee (15 or 18%ish) but they say "NO TIP NEEDED", ads, blog, even a map which I'm sure they offer advertising space on.

Not sure if your location has the same potential, but hope you can make something of it.

Good luck!

 

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[Boo Blizzi]

Dude, this is exactly what I was looking for. How much you think they make per order after paying the delivery dude? I was thinking a biz could charge
$5 flat fee for delivery but I could never work that math out in my head.

 

[jason91]

Dude, this is exactly what I was looking for. How much you think they make per order after paying the delivery dude? I was thinking a biz could charge
$5 flat fee for delivery but I could never work that math out in my head.

Haha that's awesome - you can probably duplicate their business model if your area has enough population / traffic / restaurants / demand.

I'm not exactly sure how much they pay their driver per order- also they may have company vehicles or have employees use their own. I've seen them deliver with bikes, and vans, so it may be their own. They also drive around with a sticker on the car (flushingfood. com)

This is my assumption and I could be wrong, but they probably hire the delivery people on a hourly pay, and compensate them for gas or etc (or no gas compensation if the employee is willing).

OR if its a company vehicle - they just have the people work on a hourly pay without giving them any compensation based on # of deliveries.

Obviously how you model your business would depend on how much demand you have and how many deliveries in an hour. Maybe paying per delivery is a better choice for you to start?

Anyway lets get down to the numbers. I'm going to examine flushingfood. com's model solely on numbers and fees.

MENU MARKUP - This will work amazing if the restaurant does not offer delivery from any other source.
It won't work as well if the select restaurant offers delivery with seamless, grubhub, eat24, and delivery.com. (The restaurant will have their own delivery guy) On the other hand, some customers may still order from you.
General markup is $0.50 per item.

Processing Fee - They advertise "We do not accept any tips, thank you" which likely makes more people want to order.

MINIMUM order value: $15 subtotal
+Tax: Depends on your location
+Processing Fee: 15%-18% basically a tip. I'll reconfirm exact % next time I order
MINIMUM TOTAL: $20~

Potential Profit: Let's say the credit card processor charges 3%, you basically have 12% of the order left in profit from processing fee.

If the order is above the minimum - say someone orders $30 or even $60 - you would probably pay the delivery guy the same - but you keep the additional dollars.

Restaurant Pay and Partnership - You help them offer delivery service, they'll put a sticker on their door for you. Good way to advertise.

What the restaurant pays them - I believe more than 15-20% (grubhub, delivery.com, seamless all charge around that range) each order, maybe you can charge more because you offer delivery.

You're looking at at least $6 profit per order. 30%+ of order as order total goes up.
Let's break it down.
15$ subtotal order:
+$1 from markups (something you can play around with also)
+$2.25 = 15% of $15 (play around with the %, I know they started their company a low % charge to customers and eventually made it higher)
+ $3 = 20% of $15 (this one might depend on the restaurant, but don't accept anything less than 15%, unless you think you can raise it after your company is more recognized. Basically you want to provide your customers as much value as possible, which means all the best restaurants in your area. SO sometimes you may need to lower the %, but I personally wouldn't go lower than 15%.)
=$6.25 total MINIMUM ORDER profits.

Remember a % based fee might be better for you. The restaurants probably like it more because they will only pay more as their order value increases - and you get more profit as the order increases. But this depends on you and how you want to structure your business.

I might as well just write out your whole business model.. Good luck!

 

[Boo Blizzi]

^^THIS has been enormously helpful. Thank you for the biz model.
Im from NY (Brooklyn), but I have since moved out to the burbs. I miss the convenience of running out the front door and having my pick of almost anything I could want to eat. You have to drive everywhere out here, and there are plenty of times that I just wish I could order Micky D's or Burger King for the kids and have it delivered. That's what gave me the seed of the idea a few years ago and when my brother ordered from Seamless the other day, it made me realize somebody figured out the math.
I thought about a model where it's a % of the total or a flat fee of $5 (which ever is more).
I didn't want to get into CC arbitrage because I think alot of people will want to pay cash. Also I didn't think companies like Mickey D's and Burger King would "give me the order now and let me settle up later". I want to start off with those restaurants because they get a ton of people all day everyday and the value prop is obvious.

Thanx for all your input.

 

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