TOP COMPETITORS

• Uber Technologies Inc.'s
• UberEats
• Postmates
• Grubhub Inc.

GROWTH STRATEGY

Another very popular growth strategy for meal delivery companies has been forming partnerships with the nation’s top chain restaurants. (Though many services have also recently been in the news for listing restaurants that do not want partnerships.) In January, DoorDash officially teamed up with Little Caesars Pizza, a brand that has never previously offered delivery. DoorDash has other deals with Wendy’s, Chick-fil-A, and McDonald’s, the biggest fast food chain in the country, which also offers delivery with Uber Eats. Starbucks has a contract with Uber Eats, Popeyes with Postmates, and Taco Bell and KFC with Grubhub. Yet, as Uber Eats and Grubhub public filings show, partnerships don’t always lead to revenue. Often, partners pay the delivery services lower fees, decreasing their take rates or even causing them to lose money. But the partners often have huge customer pools, many locations and impressive advertising reach, all of which have delivery services betting that joining forces will pay off in the long term. The partnerships are paying off for many of the restaurants. The Cheesecake Factory and Chipotle have publicly credited DoorDash with boosting their revenue. In August, Second Measure data shows 23 percent of The Cheesecake Factory’s sales came through DoorDash (before subtracting DoorDash’s cut or the delivery tip), dropping from 25 percent a month ago. The delivery service accounted for 10 percent of August sales at Buffalo Wild Wings, and 13 percent at Chipotle.

LOCATIONS & REACH

The top two food delivery services may be close in U.S. market share, but their strongholds are in different regions. Grubhub is the most popular service in many Northeastern metro areas, including Boston and New York. DoorDash rakes in more than half the sales in the two biggest Texas metro areas, Dallas-Fort Worth and Houston, and it’s approaching two-thirds of the market share in its Bay Area home turf.

BUSINESS MODEL

DoorDash is an online food delivery service, which partners up with local restaurants to deliver meals to customers in close proximity. Deliveries are executed by contractual drivers (so-called Dashers) that operate on an on-demand basis. The business model of DoorDash is based on charging restaurants a percentage fee (around 20 percent) for every order made on its platform. Other sources of income include a service and delivery fee as well DashPass, a monthly subscription service for consumers. People can order through the company’s website or their Android and iOS apps respectively. In some instances, DoorDash will provide kitchen space for the restaurant to focus solely on preparing delivery food (a concept referred to as cloud or ghost kitchens). The process of food delivery is then executed by so-called Dashers, the company’s riders that it hires on a contractual basis. As contract workers, Dashers are not employees of the company. Instead, they only get paid whenever actively delivering.

ACQUISITIONS

DoorDash overtook GrubHub last year to become the U.S. food delivery leader. The startup continued to expand its grasp on the market, reaching a 45% share in May, according to data from analytics firm Second Measure. Covid-19 has buoyed meal delivery sales—the same data shows that U.S. sales across all delivery platforms has roughly doubled since the start of the year.