With any delivery company, hidden fees or marked-up products can take a toll on customers. In this video clip from "The Virtual Opportunities Show" on Motley Fool Live, recorded on March 22, Fool.com contributors Travis Hoium and Demetri Kalogeropolous discuss how companies should consider doing a better job of pricing transparency or end up with a lot of dissatisfied shoppers.
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Travis Hoium: Yeah, I was just going to add, I was trying to look up the company that I go to that I've noticed this with DoorDash (DASH 1.06%) specifically is Bruegger's Bagels, which is part of the Panera SPAC deal. I just wanted [laughs] to flag that for investors. But what I've known as I used to drive by them after I'd drop off my kids, if I want to pick up some breakfast, that's a great option for us. I would just do DoorDash when I leave the house and it'll be ready for pick up, and it was super simple.
I noticed over the last few months that instead of a bagel being $6, now a bagel is $8.50 and then you add on, I don't have a problem paying a fee of a dollar or two for like the convenience of it being ready when I show up. But if you're going to be 5, 6, 7, $8 more, now I am going to walk into the store and just there's no lines at this one.
I think it is interesting that companies have figured out, specifically restaurants have figured out that if DoorDash is going to take 15, 20%, or GrubHub (JTKWY -0.67%) for example, take 15-20% of your food costs, all you got to do is just raise your food cost 20-25% to cover that cost, and that's what they're going to end up doing at the end of the day. The convenience is great, but just like Amazon (AMZN -1.65%), Amazon is not the cheapest place to buy things, Amazon is the most convenient place to buy things.
That's I think what we're going to see with some of these delivery services and customers are just going to have to balance, do I want to pay a little extra to have the food ready when I drive up to the door? Maybe at a bagel place, the answer is no, but if something takes 20, 30 minutes to get ready, maybe the answer is yes. That'll be something to bounce for all these companies.
Chipotle (CMG 6.33%) has done something similar where they charge a little bit more for delivery or pick up through their app, which is run through DoorDash at least around here anyways, versus just walking into the store. This will be a dynamic that is going to have to play out over time, just like Airbnb. We'll see how these play out.
We know that over time, customers are going to end up paying for the convenience technology answers questions, but if you're asking the provider to pay for all of the technology and the margin that these technology companies are going to get, they're just be able to do at the long term.
Demitri Kalogeropoulos: I know even for myself I'm a little penny pincher on a lot of things and I shop at Costco (COST -0.12%) a lot. I know one of the things I love about shopping there, is I know they are a price leader, so basically everything I pick up is going to be the cheapest. I'm going to be able to find it anywhere.
But when I look on their app and I try to order something online, and it has a little thing at the bottom that just says prices may be different than in the warehouse, and even that it doesn't tell me exactly how different or maybe all that just removes that comfort that I have. I'm like, I don't know what you're going to be charging now and I don't have that, so I guess that's something that a lot of companies that just going to have to solve. That price transparency is going to have to be there.
