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Consumer thirst for food delivery led to fierce competition among the top third-party players in 2019, where DoorDash emerged as the leader, surpassing Grubhub.
Led by CEO Tony Xu, DoorDash took the lead from its biggest rival by making strategic moves this year including buying Caviar from Square; going after national chains like McDonald’s; and offering restaurants irresistible services such as sharing of consumer data, group ordering, POS integration and native delivery.
Brian Niccol, CEO of Chipotle Mexican Grill, recently told investors that the chain made DoorDash its main delivery provider in 2018 because it offered the chain the freedom to accept delivery orders without dealing with the clutter and confusion of third-party tablets.
DoorDash technology also allows Chipotle customers to order delivery directly through the chain’s branded app, an emerging trend among restaurants looking for ways to make delivery profitable. DoorDash makes the last-mile delivery, while Chipotle pockets a larger profit because the delivery order is generated directly through Chipotle’s app.
The partnership with Chipotle underscores Xu’s mission to use DoorDash to help grow local economies.
“If local businesses thrive, the communities around them do too,” he said when the company acquired Caviar in August 2019.
The $410 million purchase of its San Francisco-based delivery rival expanded DoorDash’s reach among higher-end restaurants. But the biggest coup for Xu came July when DoorDash won the business of McDonald’s after the burger chain severed its exclusive partnership with Uber Eats.
The company’s latest venture is DoorDash Kitchens. The rent-a-kitchen facility, which debuted in October, was developed for restaurants looking to expand their off-premise sales without opening a physical restaurant in pricey Silicon Valley.
Innovators learn from trial, and Xu is no different.
The facility is the brand’s second attempt at a so-called virtual kitchen. The company tested a single kitchen commissary in 2017 but it eventually closed. The rebooted idea is a facility that houses multiple concepts including popular brands Chick-fil-A and Halal Guys.
Pivoting is part of Xu’s story.
When facing criticism in July over the company’s tipping model for drivers, Xu announced changes to ensure transparency. Xu co-founded DoorDash in a Stanford dorm room in 2013. Delivery was intended for various types of consumer goods. That quickly changed once he saw consumers embrace restaurant meal delivery.
Today, DoorDash logs a 35% share of the meal delivery market, ahead of Grubhub’s 30%, according to Second Measure, a firm that analyzes U.S. consumer spending.
The company serves more than 310,000 restaurants across 4,000 cities in the U.S. and Canada.
Contact Nancy Luna at [email protected]
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