Matt Newberg is the founder of hngry.tv. We cover the unit economics of a DoorDash order.
If you look at tier 1 metros like New York, there's some very onerous legislation that's been passed there.
And in 2024, I believe that minimum wage for delivery drivers is set to be somewhere around $22 an hour, which is pretty insane if you think about what that's going to do for the cost of delivering what the customer is ultimately going to have to pay to make that all work. If you assume that on average, DoorDash's take rate is around 13%. I estimate that the consumers are going to have to get charged an additional $7 in delivery fees. So for a $31 average order that just becomes unsustainable at best.
Right now, the average order size being $31, it's just 1/3 of what Instacart is doing at best and you think about the profit that they're generating at 3% across all these different verticals, losing double-digit percentages on the grocery side and making about 5% or so on the restaurant side. I don't see really how this becomes a much better business than it is today, given all the rising costs and all the uncertainty when it comes to the regulation. Like I said before, it's going to get to $24 in New York City, that's actually the figure for minimum wage in 2024.
That's going to mean that the average driver that's going to spend 15 minutes delivering your food, then going back to another restaurant, doing another order, and then driving to the next or cycling to the next restaurant. That means they can do about 2 drops an hour. It's going to cost $12 per order for DoorDash to fulfill anything in New York City and other metropolitan cities are going to really take note of what's happening in New York and probably adopt similar legislation.
This is all going to mean, who's going to pay this check at the end of the day. And I think given where we are from a macro perspective, when it comes to restaurant delivery, it is going to be a really tough thing to continue. And it's going to force them further and further up the chain, which is not their core competency.
So you are really spin out your head and say, well, what does this mean from a consumer expenditure standpoint? Are consumers going to spend less money on restaurants versus grocery? Are they going to treat going out to restaurants more like a luxury and do less restaurant delivery on those nights where they would normally have done it and just cook at home? The jury is still really out on that.