Dennis's Blog

Food Delivery Teardown

It works against you as an individual person. Consider, if you will, the cost of a large delivered pizza. Enough to feed three roommates, after delivery and tax, cost $30. Not too shabby split between three people for dinner.

The rub is in the clause "split between three people". Economics of food delivery aren't terrible (in fact, they're a steal) when considered for buying for a group. The $4 delivery charge and $5 tip break out nicely to $3/person when ordering for three.

Now, think of ordering for one. You're now paying the $4 delivery fee, and probably a $3 or $4 tip. You're now, at best, paying $7 - more than double what you paid when you split the bill - just for services rendered.

What happened? You're ordering presumably 1/3 the food. If we break the initial services fees off the first order, we can assume it costs $21 dollars. So if you're ordering $7 , let's say $8 dollars worth of food, and then need to pay $7 for delivery/tip, you're still going to pay $15 dollars to feed yourself, vs the $10 that you paid when ordering as a group.

How did that happen? You've paid 50% more to feed one person alone instead of one person as part of three.

The bottom line here is this: If the time/expense of getting the food yourself outweighs, in your mind, $7-$8, AND you're of able mind and body to go get the food yourself (read: you're not intoxicated), you really should. For me, $8 equates to 20 minutes of my time.

If $8 == 20 minutes, then paying $8 for delivery and waiting for 40 minutes for the pizza to arrive comes out to $24 dollars, or a total hour of my time. Ergo, if I can get to and from the pizza joint in less than an hour, AND if the remaining time equates to more than I'd spend in gas (e.g. 25 minutes trip, (35/60) * $24 == $14), then I come out ahead. Now, I could be doing something with that 40 minutes, but in earnest, if I've ordered a pizza, you can bet that I'm hungry and not in the mood to do a whole lot else.

tl;dr: Delivery services (and, in part, the whole service industry) are a massive tax (about 88% in the example above) on lazy individuals. I say this, because sometimes, I'm a lazy individual.