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Doordash charges $16 for a $24 pizza, so the pizzeria bought its own pizzas and made money
In the latest edition of The Margins newsletter, Ranjan Roy tells the story of his friend who owns a pizzeria. He charges $24 for a deluxe pizza but, for one reason or another, Doordash lists the pizza for $16. As an experiment, he ordered 10 pizzas from his own pizzeria and had them delivered to a friend's house. Sure enough, a Doordash driver came to his pizzeria and paid $240 for the pizzas.
Read the restTrade 1
We went over the actual costs. Each pizza cost him approximately $7 ($6.50 in ingredients, $0.50 for the box). So if he paid $160 out of pocket plus $70 in expenses to net $240 from Doordash, he just made $10 in pure arbitrage profit. For all that trouble, it wasn't really worth it, but that first experiment did work.
My mind, as a combination trader and startup person, instantly had the thought - just run this arbitrage over and over. You could massively even grow your top-line revenue while netting riskless profit, and maybe even get acquired at an inflated valuation :) He told me to chill out. Maybe this is why he runs an "actual business" while I trade options while doing brand consulting and writing newsletters.
But we did realize, if you removed the food costs this could get more interesting.
Trade 2
The order was put in for another 10 pizzas. But this time, he just put in the dough with no toppings (he indicated at the time dough was essentially costless at that scale, though pandemic baking may have changed things).
Original Link: https://boingboing.net/2020/05/18/doordash-charges-16-for-a-24.html