Five companies now control over 90% of the restaurant food delivery market

There's a George Carlin bit about politicians. The punchline is "the problem isn't the politicians, it's the people." His point is that nothing emerges from a vaccuum.

Politicians are people just like everyone else, they're just responding to incentives created by a majority vote. Tech companies are just like any other company, except a lot more people are willing to pay for their goods and services. If Carlin were alive, he'd say that the problem isn't the tech companies, it's their customers.

I'm actually far from convinced that tech companies are a net negative for society. Amazon makes billions because everyone wants competitively priced goods delivered to their doorsteps. Google makes billions because they provide free access to a large portion of humanity's information.

My theory is that if you're extremely pessimistic about technology or politics, you probably won't like anything that happens when large groups of humans make collective decisions. There's an air of let's go back to the good old days when we were hunter gatherers to the whole thing. Personally, I've accepted that it's always going to be messy and chaotic, but a lot of good things are going to come out of it as well.

[delayed]

It’s the story of most mature industries. Food delivery also remains cutthroat enough that this is a strange place to launch this complaint from.

And long before that Warren Buffet talking about only backing companies who have built a competitive moat.

All mature markets eventually end up with 3-5 competitors dominating the market. I don't really see this as an issue.

I also disagree that it's a net negative. Technology adds convenience to these markets and as long as the government isn't price-fixing through strict regulations, we also end up with better prices.

We've seen some of the prices increase after the government decided to regulate the hotel markets. They forced many people to stop renting out their places through sites like Airbnb and now the hotels are free to increase prices accordingly.

If it weren't for Uber and Lyft, the Taxi cab unions would have gladly monopolized the industry charging workers $1,000,000+ for a medallion and not keeping up with technology (Taxis were still hailed in person or ordered on the phone before the tech companies decided to compete).

> Pre-Internet you would see the same dynamics, but usually on a much smaller regional scale.

At least in the US we had national monopolies that took serious regulation to solve. That regulation, strangely enough, is still in place. Perhaps early on there's fear to regulate a nascent industry and by the time regulators realize the problem they're too afraid of the power wielded by the monopolists.

In any case, it's never too late to break up these monopolies. The problem is that the Robber Barons are too far in the past to serve as a lesson for current generations. And some folks might remember AT&T but not understand why it was such a big deal.

> the story of tech companies across nearly every industry

I don’t think this is limited to tech companies.

Most industries are controlled by a few companies in those sectors.

Such as Steel, railwood, pharma, grocery, etc.

>This is essentially the story of tech companies across nearly every industry where they have come to dominate.

It is the only possible result of consumptive transactional organizations.

Conquest in all forms is accretion and consumption based, until the organization gets to large to sustain a consistent direction, then it collapses and the people get pulled into many smaller companies.

Those companies get accreted into a new superset monopolist/duoploist etc... and the bubble grows again and then explodes.

Wash rinse repeat forever at different abstraction levels.

I'm pretty sure the food supply sources are massively consolidated. I don't know about the delivery part or why that would matter more than the actual food production.

A quick search will lead to quotes like "Four companies now control more than half of the market in chicken processing (Tyson, JBS, Perdue, and Sanderson), close to 70 percent in pork (Smithfield, JBS, Tyson, and Hormel), and nearly three quarters in beef (JBS, Tyson, Cargill, and National Beef)"

The food service industry certainly has some major global players too. Names like Bidfood, Sysco, PFG, etc. In some cases, these same companies cater/supply everything from prison, school, and hospital kitchens through to fancy airline lounges and high-end restaurants!

restaurant food distribution is event more consolidated. For example in the Midwest there is really only 1-2 companies you can get your seafood from. It has its pros and cons. Source: I work in restaurants and I also supply these distributors

I built one of the trade promotion management (TPM) tools used in that space and had to deal with these companies daily for the last decade.

There are absolutely a bunch of acquisitions/ consolidation in that food distribution space, but there are still hundreds of different distributors just in the US. However, most volume does flow through the largest distributors.

For example, I had to build a specific feature to merge distributors after an acquisition happens in the industry, to make the product work properly because that's such a common occurrence. Had the same type of feature for manufacturers (my customers) also, because they kept buying each other.

Seeing how many Gen Z people use food delivery services on a weekly or even daily basis was mind blowing to me. I’ve had numerous conversations where I’ve had to bite my tongue when younger colleagues complained about finances after also explaining that they DoorDash dinner nearly every night. It’s bizarre.

Not all Gen Z, of course. Most of the younger people I’ve worked with have been generally smart about finances. It’s a subset who fall into the normalization of luxury services as a standard cost.

It didn't used to be. I delivered pizza in the early 2000s, and the fee was $1 and tip, which was usually $2-3. It was pretty normal people ordering the stuff.

And the funny thing is I made about $20 an hour (unadjusted for inflation, ~4 deliveries per hour + $5 an hour). Today the drivers still around that amount, the restaurants pay more and the companies operating are often operating at a loss.

Something very strange happened in the last 20 years.

Restaurant delivery... I tend to agree.

'nonperishable food' or 'properly packed short travel' (i.e. dairy/frozen) IMO is a fairer niche of 'could be non-luxury with better societal outcomes', except for the 'as close to JIT as possible'. There's ways to optimize the process to where something on the scale of 10-20 homes could get their main groceries delivered two or 3 times a week and the overall cost would be lower than all of them doing so. Yeah you'd need a reefer van or an otherwise replenishable source of cold for dairy/frozen but at that scale the cost of such makes a lot more sense. Biggest problem is getting the right buy-in and mindset from consumers.

no it is not. meituan in china is very very cheap.

I thought the headline was implying something else. When I read the article, I thought, “Is it a monopoly to worry about if you can just do it yourself?” Feels like complaining there is a monopoly on services to pour you a glass of water from the tap.

It wasn’t priced in for the first 5-10 years. There’s no way I would use an app like that (I even work for one) these days now that the VC subsidy is gone and the service costs 5x as much as a few years ago

> Lina Khan and the US government in general blocked all kinds of tech acquisition and merger to the point that companies got creative and as a result many Windsurf employees got screwed. On the other hand, it's totally normal that a handful companies control our food supply chain.

Lina Khan's FTC also successfully sued to block the Kroger-Albertsons merger...

Great question! And a great example of why the central question in any antitrust issue is defining the market.

Define it narrowly enough, and Firm A buying Firm B might create a monopoly - the regulator cannot approve that.

Define it broadly, and Firm A buying Firm B takes the market from 21 firms to 20 - the regulator is unlikely to stand in the way.

(In practice the market definition question in the US will often happen in front of a judge and the two sides are the merging parties vs. the regulator (FTC or DOJ).)

In this case, is the relevant market “restaurant delivery service via an app” ?

In that case five firms is (likely) moderately concentrated at last. (If you have the market shares of the five firms, you can compute an index called the HHI to get a rough sense of how much more concentrated the market will be before and after a merger.)

However… “app based food delivery” doesn’t seem like a credible market to me. The firms are unlikely to have pricing power either over restaurants or customers.

Candidate competing markets:

- going to the restaurant directly

- making food at home

- delivery provided by the restaurant

Any one of the five firms currently in the market who wanted to buy another would argue to include all three as the “relevant market” in which case their share (both before and after) is tiny.

The regulator will argue for a narrower definition.

When you see commentary on this website about “X is a monopolist” or strong claims like that (which are made frequently!), almost never is there any appeal to a market definition!

Fortunately judges get better input than HN commentators.

Worked years ago at a restaurant that had its own website and app ordering...

Ubereats and the like still dominated the orders even with the 15% upcharge and even after notifying repeat customers that they can save money ordering direct

The convenience of having one centralized app with one account that can summon any food from any restaurant in a 10 mile area is just way too strong.

Stuff like this already exists (AFAIK not open source but cheap enough that restaurants would prefer to use it if they could). The problem is modifying user behaviour: people used to go directly to the restaurant to order food but are now very used to opening the food delivery app, browsing it, and ordering.

You could have the slickest ordering experience in the world and it won’t help you if no one sees it.s

The target audience for consolidated food delivery apps isn’t the person who wants to manage the fine details of ordering from 10-20 different local restaurants.

The majority of people using these apps just want to scroll some restaurants and order something quickly. Saving 10% by going through extra steps, installing extra apps, going to a company’s website, and doing custom orders isn’t what most of their repeat customers want to do.

It’s a convenience thing.

These certainly exist. My local favourite Thai restaurant has its own ordering website and has its own staff deliver the order, with no markup over the in-restaurant menu prices.

The company that operates their ordering platform is mobihq.com (I have no affiliation with them)

What about users? Will they install one app for each restaurant they order from on their phone or will they prefer to do everything in the same app?

Do you mean the App Stores rather than the phone market? That is soon to be 3, as Harmony OS takes hold in China and other markets.

Schooling

Chinese food restaurant? Lawn service

If I spent more than 2 seconds I could probably think of others