Oh no you’re perfectly right about the “stolen demand”. I just think it’s a feature and not a bug.
The “stolen” demand is a function of the fact that other restaurants refuse to stop using the platform, ostensibly because they also see value in continuing to use it. Consumers will only use the app if there is sufficient supply on the other end. Some restaurants have seen more value than others since the inception of these platforms. There is a spectrum of outcomes, which you would expect in a competitive market.
The “structural change” here is that restaurants have become commoditized and are now competing with each other. There will be some restaurants that emerge as winners, and some as losers. I don’t personally care about the losers if, in the aggregate, the restaurant industry is made more efficient, and consumers are better off.
other restaurants refuse to stop using the platform
But there is a useful feedback loop here.
1. Courageous Restaurant bans GrubHub, Doordash et al. Delivery-insistent demand shifts to Competitors 1-4, meaning they get substantially more of these revenue-neutral (or worse) delivery orders.
2. Competitor 1 gets sick of this is and likewise bans GrubHub, Doordash et al. Delivery-insistent demand shifts to Competitors 2-4, meaning they get an even higher percentage of their orders being these revenue-neutral (or worse) delivery orders.
By now, both benefit by word of mouth regarding ordering and traffic becoming more streamlined by the absence of the delivery service-specific retail point of sale system foibles, less traffic at entry and pick-up, and consistent quality. Also, some drivers abandon the services to do direct delivery as restaurant employees, at least during peak hours, and the saved 35% can be split between restaurant and employee.
3. Competitor 2 gets sick of this is and likewise bans GrubHub, Doordash et al. Delivery-insistent demand shifts to Competitors 3-4, meaning they get an even higher yet percentage of their orders being these revenue-neutral (or worse) delivery orders.
4. Competitors 3-4 are now drowning in low-profit delivery orders and the traffic impact (foot and vehicle) alienates what's left of first-hand customers. Every negative delivery experience costs both the delivery service and the restaurant another customer. One abandons delivery services, the other folds altogether.
The “stolen” demand is a function of the fact that other restaurants refuse to stop using the platform, ostensibly because they also see value in continuing to use it. Consumers will only use the app if there is sufficient supply on the other end. Some restaurants have seen more value than others since the inception of these platforms. There is a spectrum of outcomes, which you would expect in a competitive market.
The “structural change” here is that restaurants have become commoditized and are now competing with each other. There will be some restaurants that emerge as winners, and some as losers. I don’t personally care about the losers if, in the aggregate, the restaurant industry is made more efficient, and consumers are better off.
I’m not being disingenuous, I’m being rhetorical.