Is Surge Pricing Coming to Your Favorite Food-Delivery Service?
Is your favorite food-delivery app about to go all Uber on you and charge you a higher price for bringing dinner to your door when the weather is cruddy or there’s a big convention of hungry eaters in town? That is precisely what one industry insider, Michael DiBenedetto, co-founder and CEO of food-delivery search engine Bootler, is predicting.
“Brace yourself: Surge pricing is coming to on-demand food delivery,” DiBenedetto warns in an article on VentureBeat. “The delivery companies cannot afford their driver fleets without making this change. It’s sheer economics and a trend that will shape the future of online food ordering.”
DiBenedetto says that the cost of recruiting and maintaining a fleet of drivers — paying them decent wages and possibly benefits — will drive up the cost of delivery.
“Food delivery companies need to somehow compensate for rising driver costs,” DiBenedetto reasons. “They can’t increase restaurant commissions. Most delivery companies take between 10 and 30 percent of each order depending on their model, and restaurants already operate on slim margins. Consumers will have to make up the difference by paying variable delivery prices.”
They may also launch premium services that will enable them to “monetize speed and demand with tiered delivery rates” — letting customers pay more for faster delivery, in addition to charging them more for delivery during busy, high-demand interludes, DiBenedetto suggests.
Though some companies have dipped their toes into a dynamic pricing model before, DiBenedetto notes that competition has prevented more companies from doing it. Basically, they’re afraid the customers will simply turn to another service. (GrubHub told Eater it has no plans to transition to a surge-pricing model.) But if and when enough companies do move toward dynamic pricing, that danger will be eliminated and, well, everyone will do it. Like charging you for checked bags on a flight. Ugh.
Another good reason to cook your own meal instead of ordering in, we guess.
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