DoorDash

DoorDash Inc. is an American food delivery service. It launched in Palo Alto, California in 2013. As of January 2020, it had the largest food delivery market share in the United States. DoorDash held its initial public offering on December 9, 2020.

DoorDash Inc.
TypePublic
NYSE: DASH
IndustryOnline food ordering
FoundedJanuary 2013 (2013-01)
Palo Alto, California, U.S.
FoundersTony Xu
Stanley Tang
Andy Fang
Evan Moore
Headquarters
303 2nd St
San Francisco, California, U.S
Area served
  • Australia
  • Canada
  • United States
Key people
ServicesFood delivery
Revenue$1.9 billion (Nov 2020)[1]
Number of employees
3,279 (2020)[2]
Websitedoordash.com

History

DoorDash was launched as PaloAltoDelivery.com in January 2013 when it made its first delivery.[3] By March, it had received $120,000 in seed capital from YCombinator. It incorporated as DoorDash in June that year.[3]

DoorDash was founded by Stanford students Tony Xu, Stanley Tang, Andy Fang and Evan Moore.[4] Moore departed and is now a partner at Khosla Ventures.[5][6]

It was reported in December 2018 that DoorDash overtook Uber Eats to hold the second position in total US food delivery sales, behind GrubHub.[7] By March 2019, it had exceeded GrubHub in total sales, at 27.6% of the on-demand delivery market.[8] By early 2019, DoorDash had become the largest third-party food delivery provider in the US, as measured by consumer spending.[9] It maintained that market position in 2020.[10]

Funding

DoorDash has raised more than $2.5 billion[11] over several financing rounds from investors including Y Combinator, Charles River Ventures, SV Angel, Khosla Ventures, Sequoia Capital, SoftBank[12], GIC,[13] and Kleiner Perkins.[14] As of June 2020, DoorDash's post-money valuation is slightly under $16 billion.[15] In October 2017, CFO Mike Dinsdale left DoorDash less than a year after he started working for the company.[16]

IPO

On February 27, 2020, DoorDash announced that it confidentially filed to go public.[17]

As of November 2020, the company planned to sell 33 million shares at $75 to $85 a share in an initial public offering (IPO) which was expected to bring the valuation as high as $38 billion.[18][19][20] The SEC filing, made public November 13, 2020, showed that the company had had its first profitable quarter (April–June); however, losses continued in the following quarter. The company has not recorded a full-year profit since its launch in 2013. Public trading began on December 9, 2020.[21][22][23]

Acquisitions
  • Caviar - On August 1, 2019, DoorDash announced the acquisition of Caviar,[24] a service specializing in food delivery from upscale urban-area restaurants that typically do not offer delivery, from Square, Inc. The purchase price was $410 million.[25]
  • Scotty Labs - The company announced later in August 2019 that it had acquired Scotty Labs, a tele-operations startup company that focuses on self-driving and remote-controlled vehicle technology. The financial details of the acquisition were not publicly disclosed.[26][27]
  • Chowbotics - On February 8, 2021, DoorDash announced its acquisition of Chowbotics, a robotics company known for its salad-making robot.[28][29] The companies didn’t disclose the terms of the deal, but Chowbotics was valued at $46 million in 2018. [30]

Operations

Physical locations and ghost kitchens

In October 2019, DoorDash opened its first ghost kitchen, DoorDash Kitchen, in Redwood City, California. Ghost kitchens, sometimes called "dark kitchens" or "commissary kitchens", are kitchen facilities that can be used by restaurants and caterers to prepare delivery- and pick-up-only meal orders. The Redwood City location has four restaurants renting out space.[31]

In November 2020, DoorDash announced the opening of its first physical restaurant location, partnering up with Bay Area restaurant Burma Bites to offer delivery and pick-up orders.[32][33]

Tipping policy

In July 2019, DoorDash attracted criticism from several publications, including The New York Times, and later The Verge and Vox, for its tipping policy, which, according to Gothamist "really looks, feels, and smells like a swindle."[34][35][36][37] Drivers receive a guaranteed minimum per order, which is paid by DoorDash by default. When a customer adds a tip, instead of going to the driver, it first goes to the company up to the point that the company no longer has to pay the driver the guaranteed minimum. Drivers then only receive the part of the tip that exceeds the minimum. DoorDash announced plans to change its pay model shortly after the New York Times story.[38] A week after the Times article, a DoorDash customer filed a class action lawsuit against the company for its "materially false and misleading" tipping policy.[37][39] On August 20, 2019, Vox released an article titled "DoorDash is still pocketing workers' tips, almost a month after it promised to stop".[40] On August 22, 2019, DoorDash announced an update to the tipping policy and promised to "roll it out to all Dashers next month" (that is, sometime in September 2019).[41]

COVID-19 initiative

By mid-2020, in the middle of the COVID-19 pandemic where demand for services delivering items surged, DoorDash announced it had "stockpiled tens of thousands of gloves and bottles of hand sanitizer" and was offering them to delivery drivers for free. The company also said it had changed the default drop-off option to contactless delivery.[42] DoorDash became the fastest growing meal delivery service during the course of the pandemic.[43]

The company's Reopen for Delivery[44] program launched in October 2020, with the stated aim of bringing together brick-and-mortar restaurants that have closed due to the COVID-19 pandemic, with local ghost kitchen operators to offer delivery- and pick-up-only service.

Antitrust litigation

In April 2020, a group of New Yorkers sued DoorDash, GrubHub, Postmates, and Uber Eats, accusing them of using their market power monopolistically by only listing restaurants on their apps if the restaurant owners signed contracts which include clauses that require prices be the same for dine-in customers as for customers receiving delivery.[45][46][47][48] The plaintiffs state that this arrangement increases the cost for dine-in customers, as they are required to subsidize the cost of delivery; and that the apps charge “exorbitant” fees, which range from 13% to 40% of revenue, while the average restaurant's profit ranges from 3% to 9% of revenue.[45][46][47][48] The lawsuit seeks treble damages, including for overcharges, since April 14, 2016 for dine-in and delivery customers in the United States at restaurants using the defendants’ delivery apps.[45][46][47][48] The case is filed in the federal U.S. District Court, Southern District of New York as Davitashvili v. GrubHub Inc., 20-cv-3000.[49][45][46][47][48] Although a number of preliminary documents in the case have now been filed, a trial date has not yet been set.[50]

Data security

On May 4, 2019, DoorDash confirmed 4.9 million customers, delivery workers and merchants had sensitive information stolen via a data breach. Those who joined the platform after April 5, 2018 were unaffected by the breach.[51]

References
  1. DoorDash, Inc. Form S-1 (Report). United States Securities and Exchange Commission. p. 3. Retrieved November 16, 2020.
  2. DoorDash, Inc. Form S-1 (Report). United States Securities and Exchange Commission. p. 193. Retrieved November 16, 2020.
  3. Loeb, Steve (January 4, 2019). "When DoorDash Was Young: The Early Years -- DoorDash started as Palo Alto Delivery in 2013, delivering food around the Stanford campus". Vator. VatorNews. Retrieved November 12, 2020.
  4. Ekiel, Erika (November 30, 2015). "DoorDash CEO: Solving Problems of Time-Starved People". GSB.Stanford.edu (Stanford Graduate School of Business). Stanford University. Retrieved November 11, 2020.
  5. Levy, Steven (November 9, 2015). "DoorDash Wants to Own the Last Mile". Wired. Retrieved May 25, 2019.
  6. "To fund Y Combinator's top startups, VCs scoop them before Demo Day". TechCrunch. Retrieved September 14, 2020.
  7. Griswold, Alison (February 14, 2019). "DoorDash has overtaken Uber Eats in US online food delivery". Quartz. Retrieved July 16, 2019.
  8. Abril, Danielle (March 11, 2019). "DoorDash Has Pulled Ahead of GrubHub, Uber Eats in the On-Demand Food Delivery Race". Fortune. Retrieved December 9, 2020.
  9. Littman, Julie (March 13, 2019). "DoorDash overtakes Grubhub in delivery market share". Restaurant Dive. Industry Dive. Retrieved November 12, 2020.
  10. Holland, Frank; Reed, J.R. (January 17, 2020). "DoorDash takes the lead in the food delivery wars as the landscape dramatically shifts in 2019". CNBC.com. Retrieved November 12, 2020. DoorDash captured 33% of the U.S. market, Grubhub 32%
  11. Sophia Kunthara (June 18, 2020). "DoorDash Reaches For $16B Valuation With Latest Funding Round". Crunchbase.
  12. Dvorak, Phred (February 8, 2021). "SoftBank Turns $11 Billion Profit, Helped by DoorDash". Wall Street Journal. ISSN 0099-9660. Retrieved February 9, 2021.
  13. "Data Sheet—What DoorDash Plans to Do With Another Half a Billion Dollars of Capital". fortune.com. Retrieved April 26, 2018.
  14. "DoorDash Crunchbase". Crunchbase. Retrieved June 20, 2015.
  15. "DoorDash confirms $400M raise, IPO timing unclear". TechCrunch. Retrieved September 14, 2020.
  16. Dickey, Megan Rose (October 25, 2017). "DoorDash CFO leaves less than one year after joining". TechCrunch. Retrieved October 26, 2017.
  17. "DoorDash, the $13B on-demand food delivery startup, says it has confidentially filed for an IPO". TechCrunch. Retrieved May 29, 2020.
  18. Farrell, Maureen (November 29, 2020). "Airbnb, DoorDash Aim for Higher-Than-Expected Valuations Ahead of Debuts". The Wall Street Journal. ISSN 0099-9660. Retrieved November 30, 2020.
  19. Kellaher, Colin (November 30, 2020). "DoorDash Sets IPO Terms Pushing Valuation as High as $32 Billion". The Wall Street Journal. ISSN 0099-9660. Retrieved November 30, 2020.
  20. "Should You Buy DoorDash After its $38 Billion IPO Valuation?". Bloomberg.com. December 8, 2020. Retrieved December 9, 2020.
  21. Rana, Preetika; Farrell, Maureen (November 13, 2020). "DoorDash IPO Filing Shows Big Revenue Growth, Profitable Quarter". The Wall Street Journal. Retrieved November 13, 2020.
  22. "DoorDash sells shares at $102 in IPO, pricing above range". CNBC. December 8, 2020. Retrieved December 9, 2020.
  23. Griffith, Erin (December 9, 2020). "DoorDash Soars in First Day of Trading". The New York Times. ISSN 0362-4331. Retrieved December 9, 2020.
  24. Zhang, Jenny G. (August 1, 2019). "The Great Flattening: What a Giant Delivery Merger Means for Your Dinner". Eater. Retrieved February 26, 2020.
  25. Griffith, Erin. "DoorDash Buys Rival, Caviar, for $410 Million". The New York Times Company. pp. B8. Retrieved August 2, 2019.
  26. "DoorDash acquires autonomous driving startup Scotty Labs". TechCrunch. Retrieved August 22, 2019.
  27. Porter, Jon (August 21, 2019). "DoorDash takes another step toward automated food delivery". The Verge. Retrieved August 22, 2019.
  28. Rana, Preetika (February 8, 2021). "WSJ News Exclusive | DoorDash Adds Startup Chowbotics for Meal Preparation". Wall Street Journal. ISSN 0099-9660. Retrieved February 8, 2021.
  29. "DoorDash acquires salad-making robotics startup, Chowbotics". TechCrunch. Retrieved February 8, 2021.
  30. "DoorDash Adds Startup Chowbotics for Meal Preparation".
  31. Guerrero, Susana (October 14, 2019). "DoorDash is ready to deliver with new Redwood City commissary kitchen debut". SFGate.com. Hearst Publishing. Retrieved November 10, 2020.
  32. Lyons, Kim (October 24, 2020). "DoorDash partners with California restaurant to build new brick-and-mortar location". The Verge. Vox Media. Retrieved November 10, 2020.
  33. DoorDash. "DoorDash just opened its first physical location as the pandemic fuels a ghost kitchen boom". www.businessinsider.com. Retrieved November 6, 2020.
  34. Newman, Andy (July 21, 2019). "My Frantic Life as a Cab-Dodging, Tip-Chasing Food App Deliveryman". The New York Times. ISSN 0362-4331. Retrieved July 23, 2019.
  35. Vincent, James (July 22, 2019). "Delivery apps like DoorDash are using your tips to pay workers' wages". The Verge. Retrieved July 23, 2019.
  36. Ghaffary, Shirin (August 20, 2019). "DoorDash is still pocketing workers' tips, almost a month after it promised to stop". Vox. Retrieved August 23, 2019.
  37. Lampen, Claire (July 30, 2019). "Brooklyn Man Sues DoorDash Over Grifty, Misleading Tip Policy". Gothamist. Archived from the original on August 5, 2019. Retrieved August 5, 2019.
  38. Newman, Andy (July 24, 2019). "DoorDash Changes Tipping Model After Uproar From Customers". The New York Times. ISSN 0362-4331. Retrieved May 29, 2020.
  39. Wayt, Theo (July 29, 1029). "Brooklyn man sues DoorDash for 'misleading' tipping policy". New York Post.
  40. Ghaffary, Shirin (August 20, 2019). "DoorDash is still pocketing workers' tips, almost a month after it promised to stop". Vox. Retrieved August 21, 2019.
  41. Statt, Nick (August 22, 2019). "DoorDash breaks silence on driver tips, says it'll start paying them next month". The Verge. Retrieved August 23, 2019.
  42. Askinasi, Rachel (April 18, 2020). "Here's how delivery services like Grubhub, Postmates, and Uber Eats are adapting to the coronavirus restrictions and safety precautions". Insider.
  43. Williams, Chris A. "DoorDash is the fastest growing meal delivery business during coronavirus lock down". inquirer.com. Retrieved October 18, 2020.
  44. Luna, Nancy (October 26, 2020). "DoorDash launches program to revive closed restaurants using local ghost kitchens". NRN.com. Informa Connect NY. Retrieved November 10, 2020.
  45. Allyn, Bobby (May 14, 2020). "Restaurants Are Desperate — But You May Not Be Helping When You Use Delivery Apps". NPR. Archived from the original on May 17, 2020. Retrieved May 20, 2020. Frank points to a clause in the contracts restaurants and the food delivery apps agree to that prohibits owners from charging delivery customers more than people who dine in, even though delivery costs more. "By not forcing those purchasing on apps to bear the whole amount of the fees, instead forcing all menu prices to rise together, in-restaurant diners are effectively subsidizing Grubhub's high rates," said Frank, who argues such an arrangement is anti-competitive and illegal.
  46. Baron, Ethan (April 14, 2020). "DoorDash, Uber Eats, Grubhub and Postmates make restaurant meals cost more: lawsuit - Four firms' rise has 'come at great cost to American society,' suit claims". Mercury News. Archived from the original on April 20, 2020. Retrieved May 19, 2020. Each of the firms uses “monopoly power” to prevent competition, limit consumer choice and force restaurants to agree to illegal contracts that have “the purpose and effect of fixing prices,” the suit claimed. ... The four companies give restaurants a “devil’s choice” that requires them to keep dine-in prices the same as delivery prices if they want to be on the app-based delivery platforms, the suit claimed. And restaurants must pay commissions to the delivery firms ranging from 13.5% to 40%, the suit alleged. ... Establishments are forced to “calibrate their prices to the more costly meals served through the delivery apps,” the suit alleged.
  47. Stempel, Jonathon (April 13, 2020). "Grubhub, DoorDash, Postmates, Uber Eats are sued over restaurant prices amid pandemic". Reuters. Archived from the original on April 17, 2020. Retrieved May 19, 2020. GrubHub, DoorDash, Postmates and Uber Eats were sued on Monday for allegedly exploiting their dominance in restaurant meal deliveries to impose fees that consumers ultimately bear through higher menu prices, including during the coronavirus pandemic. In a proposed class action filed in Manhattan federal court, three consumers said the defendants violated U.S. antitrust law by requiring that restaurants charge delivery customers and dine-in customers the same price, while imposing “exorbitant” fees of 10% to 40% of revenue to process delivery orders. The consumers, all from New York, said this sticks restaurants with a “devil’s choice” of charging everyone higher prices as a condition of using the defendants’ services.
  48. Dolmetsch, Chris (April 13, 2020). "GrubHub, Doordash Accused in Suit of Pushing Prices Higher". Bloomberg News. Archived from the original on April 19, 2020. Retrieved May 19, 2020. The New York customers, who seek class-action status, say the delivery services charge “exorbitant fees” that range from 13% to 40% of revenue, while the average restaurant’s profit ranges from 3% to 9% of revenue, making delivery meals more expensive for eateries. “Restaurants could offer consumers lower prices for direct sales, because direct consumers are more profitable,” the plaintiffs said. “This is particularly true of dine-in consumers, who purchase drinks and additional items, tip staff, and generate good will.”
  49. Davitashvili v GrubHub Inc., Link from NPR article (2020).
  50. "Court Listener". July 28, 2020. Retrieved July 28, 2020.
  51. "DoorDash confirms data breach affected 4.9 million customers, workers and merchants". TechCrunch. Retrieved October 24, 2019.

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