There are an almost unlimited number of services out there that many people want but aren't willing to pay the true cost of providing. Food delivery (in whatever form) is one such in many cases.
It's fairly impressive how it isn't profitable to essentially act as a middleman between two resource centers that you do not need to directly pay for. I guess the unfortunate fact is that food service was always a low margin business and the compensation needed to survive in America never made food servicing itself viable. At least, not for the last 40 years or so.
It does make me curious what the costs are on the app side, though. We keep saying tech is scalable but many such apps have this same story. Is there a cost center I'm missing for such an app that makes it so hard to profit off of, or is it just reckless abandon of spending?
You introduce a middleman, and it eats into the already thin margin. And it's not just one middleman. It's two: the app and the delivery guy.
The average profit margin for a restaurant is 3-5%. Then you add the app that needs money. Then you add the delivery which needs money. The only way to keep the original restaurant price is to heavily subsidize the app and the delivery.
The "tech" is scalable but that 1.) Assumes scale and 2.) Is often being provided by developers and others that are being paid far in excess of what anyone else in the food service industry is making.
Just like most companies from ZIRP era it was held together by unlimited investor money that let it grow through price dumping.