The owner of a small Pizza restaurant made a profit by ordering his own pizzas through DoorDash app as the service mentioned the wrong price by mistake.
Owner of AJ’s NY Pizzerias in Kansas Adam Peyton discovered this mistake in 2019 when DoorDash app advertised delivery for his restaurants without consulting him.
His restaurants in Topeka and Manhattan were not offering delivery service at that time. However, Adam Peyton was surprised to get complaints that pizzas are being delivered cold, or the wrong pizzas were delivered.
He looked into the matter and mysteriously found a DoorDash delivery option on the company’s Google listing, even though he had never communicated with DoorDash.
He said, “It was a lot of frustrating problems we were having,” “We tried to remove the Google listing but couldn’t get it off.”
Meanwhile, he also noticed that DoorDash had mistakenly listed the wrong price of his specialty pie. The actual price was $24 whereas the wrong price was $16.
Adam Peyton shared the news with his friend Ranjan Roy, who realized its an earning opportunity.
Ranjan Roy said, “I knew Doordash scraped restaurant websites. After we discussed it more, it was clear that the way his menu was set up on his website, Doordash had mistakenly taken the price for a plain cheese pizza and applied it to a ‘specialty’ pizza with a bunch of toppings,”
‘Cue the Wall Street trader in me…..ARBITRAGE!!!!’
Peyton and Roy ordered 10 specialty pies on DoorDash, charging $160 for his personal credit card. The app delivery driver arrived and paid the restaurant $240 with a company card and delivered the pizzas.
‘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,’
Peyton then simply put dough with no toppings in the boxes, cutting his costs and netting $75 in profits for an order of 10 pies. He told the international news source, ‘It was more than I was in shock that this large company that supposedly has everything has figured out could operate that way,’
Roy wrote, ‘They have a test period where they scrape the restaurant’s website and don’t charge any fees to anyone, so they can ideally go to the restaurant with positive order data to then get the restaurant signed onto the platform,’
Peyton did partner with a delivery service to experiment with delivery options — but he eschewed DoorDash in favor of competitor EatStreet.