DoorDash

DoorDash Inc. is an American on-demand prepared food delivery service[3] founded in 2013 by Stanford students Tony Xu, Stanley Tang, Andy Fang and Evan Moore.[4] A Y Combinator–backed company, DoorDash is one of several technology companies that uses logistics services to offer food delivery from restaurants on-demand.[5] DoorDash launched in Palo Alto and, as of May 2019, had expanded to more than 4,000 cities and offers a selection of 340,000 stores across the U.S., Canada and Australia. [6] The company is currently worth more than $13 billion and is the largest third-party delivery service in the USA, surpassing Grubhub in 2019.[7][8]

DoorDash Inc.
Privately held company
IndustryLogistics
FoundedJuly 2013 (2013-07)
Palo Alto, California, U.S.
FoundersTony Xu
Evan Moore
Stanley Tang
Andy Fang
Headquarters
303 2nd St
San Francisco, California, U.S.
Key people
  • Andy Fang
  • (CTO)
  • Tony Xu
  • (CEO)
  • Prabir Adarkar
  • (CFO)
  • Christopher Payne
  • (COO)
Revenue$900 million (Dec 2019)[1]
Number of employees
7,549 (2019)[2]
Websitedoordash.com/en-US/

History

DoorDash has raised more than $700 million[9] over several financing rounds from investors including Charles River Ventures, SV Angel, Khosla Ventures, Sequoia Capital, SoftBank, GIC,[10] and Kleiner Perkins.[11] As of May 2019, DoorDash's post-money valuation is $12.6 billion.[12] In October 2017, CFO Mike Dinsdale left DoorDash less than a year after he started working for the company.[13]

In March 2018, DoorDash raised $535 million in a Series D round led by the SoftBank Group with participation from existing investors Sequoia Capital, GIC and Wellcome Trust.[14] In April 2018, DoorDash ventured into grocery delivery through a partnership with Walmart.[15]

It was reported in December 2018 that DoorDash overtook Uber Eats to hold the second position in total US food delivery sales, behind only GrubHub.[16] By March 2019, it had exceeded GrubHub in total sales, at 27.6% of the on-demand delivery market.[17]

In February 2019, DoorDash raised $400 million, bringing the company's total funding to $1.4 billon and reached a total valuation of $7.1 billion.[18] As of May 2019 DoorDash is said to be raising an additional $600 million in funding.[18] As of June 2019 DoorDash remains the leading food delivery service in the United States.[19]

On August 1, 2019, DoorDash announced the acquisition of Caviar[20], 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.[21] 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.[22][23]

As of August 2019, DoorDash announced it will be partnering with Mercato, an e-commerce platform, to help expand its business and reach independent grocers and specialty stores.[24] This partnership allowed the company to make same-day deliveries, servicing 750 independent grocers across 22 states.[25]

On February 27, 2020, DoorDash announced that it confidentially filed to go public.[26] In July, DoorDash and Walgreens announced a partnership to have drivers deliver over-the-counter medications and other products from Walgreens.[27][28]

By mid 2020, in the middle of the coronavirus 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.[29]

Criticism and lawsuits

On November 6, 2015, In-N-Out Burger filed a lawsuit against DoorDash claiming trademark infringement and unfair competition.[30] Two months later the lawsuit was dismissed. DoorDash no longer delivers food from In-N-Out Burger.[31]

Burger Antics has filed a lawsuit to get DoorDash to stop delivering their food after receiving complaints from their customers.[31]

DoorDash delivery workers filed a class action lawsuit for being misclassified as independent contractors. DoorDash agreed to pay $5 million.[32]

On July 7, 2018, CBC reported that DoorDash added a restaurant to its service without the restaurant owner's knowledge or consent. Sharif Virani, the restaurant consultant who was interviewed by CBC, stated that several of his clients experienced similar issues and had difficulty in contacting and asking DoorDash to remove their establishments from the delivery list.[33] In May 2020, it was reported that the owner of a pizza restaurant in the US discovered the same situation when he received complaints about deliveries, although his outlets did not deliver. After finding his restaurant added to DoorDash without his permission, he was able to make money buying his restaurant's own pizzas due to the significantly lower price of an item in the restaurant's DoorDash listing coupled with the restaurant still being paid the full amount.[34]

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.[35]

Tipped wage controversy

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."[36][37][38][39] 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.[40] 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.[39][41] On August 20, 2019, Vox released an article titled "DoorDash is still pocketing workers' tips, almost a month after it promised to stop".[42] 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).[43]

Allegations of monopolistic behavior

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.[44][45][46][47] 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.[44][45][46][47] The lawsuit seeks triple 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.[44][45][46][47] The case is filed in the federal U.S. District Court, Southern District of New York as Davitashvili v GrubHub Inc., 20-cv-3000.[48][44][45][46][47] Although a number of preliminary documents in the case have now been filed, a trial date has not yet been set.[49]

See also

References
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  2. "Revolut Company Profile". Craft. Retrieved 15 November 2019.
  3. "DoorDash About Page". DoorDash. Retrieved June 20, 2015.
  4. Steven Levy (November 9, 2015). "DOORDASH WANTS TO OWN THE LAST MILE". Wired. Retrieved May 25, 2019.
  5. Anna Roth (June 26, 2013). "Filler App: How Tech Companies Are Disrupting Restaurant Delivery". SF Weekly. Retrieved February 26, 2014.
  6. DoorDash (2019-05-24). "Fueling the Last Mile". Medium. Retrieved 2019-10-25.
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  8. Quast, Jon (2019-11-16). "Why Chuy's Is Fighting to Control Food Delivery Data". The Motley Fool. Retrieved 2019-11-18.
  9. Richard Waters (March 1, 2018). "SoftBank leads $535m investment in food delivery start-up". Financial Times.
  10. "Data Sheet—What DoorDash Plans to Do With Another Half a Billion Dollars of Capital". fortune.com. Retrieved 2018-04-26.
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  13. Dickey, Megan Rose (2017-10-25). "DoorDash CFO leaves less than one year after joining". TechCrunch. Retrieved 2017-10-26.
  14. Carson, Biz. "DoorDash Raises $535 Million To Fuel Food Delivery War". Forbes.
  15. Gartenberg, Chaim (24 April 2018). "Walmart tests grocery deliveries via DoorDash". The Verge. Retrieved 24 April 2018.
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  17. "DoorDash Has Pulled Ahead of GrubHub, Uber Eats in the On-Demand Food Delivery Race". Fortune. Retrieved Jul 16, 2019.
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  20. Zhang, Jenny G. (2019-08-01). "The Great Flattening: What a Giant Delivery Merger Means for Your Dinner". Eater. Retrieved 2020-02-26.
  21. Griffith, Erin. "DoorDash Buys Rival, Caviar, for $410 Million". The New York Times Company. pp. B8. Retrieved 2 August 2019.
  22. "DoorDash acquires autonomous driving startup Scotty Labs". TechCrunch. Retrieved 2019-08-22.
  23. Porter, Jon (2019-08-21). "DoorDash takes another step toward automated food delivery". The Verge. Retrieved 2019-08-22.
  24. "DoorDash makes another move toward grocery with". Grocery Dive. Retrieved 2019-08-29.
  25. Kang, Heather Haddon and Jaewon. "Postmates, DoorDash Want to Deliver Your Groceries, Too". WSJ. Retrieved 2019-10-04.
  26. "DoorDash, the $13B on-demand food delivery startup, says it has confidentially filed for an IPO". TechCrunch. Retrieved 2020-05-29.
  27. Stankiewicz, Kevin (2020-07-16). "DoorDash partners with Walgreens to deliver over-the-counter drugs and other health products". CNBC. Retrieved 2020-07-22.
  28. Lyles, Taylor (2020-07-16). "DoorDash inks deal with Walgreens to provide over-the-counter medicine and snack deliveries". The Verge. Retrieved 2020-07-22.
  29. Askinasi, Rachel (18 April 2020). "Here's how delivery services like Grubhub, Postmates, and Uber Eats are adapting to the coronavirus restrictions and safety precautions". Insider.
  30. "Complaint" (PDF). PacerMonitor. Retrieved November 13, 2015.
  31. Channick, Robert. "Suburban restaurant in DoorDash lawsuit: Stop delivering our food". chicagotribune.com.
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  33. Carlucci, Mario (2018-07-07). "Ottawa restaurant consultant concerned about DoorDash delivery app". CBC. Retrieved 2020-04-16.
  34. Kleinman, Zoe (2020-05-20). "Man makes money buying his own pizza on DoorDash app". BBC. Retrieved 2020-05-20.
  35. "DoorDash confirms data breach affected 4.9 million customers, workers and merchants". TechCrunch. Retrieved 2019-10-24.
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  37. Vincent, James (2019-07-22). "Delivery apps like DoorDash are using your tips to pay workers' wages". The Verge. Retrieved 2019-07-23.
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  39. 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.
  40. Newman, Andy (2019-07-24). "DoorDash Changes Tipping Model After Uproar From Customers". The New York Times. ISSN 0362-4331. Retrieved 2020-05-29.
  41. Wayt, Theo (July 29, 1029). "Brooklyn man sues DoorDash for 'misleading' tipping policy". New York Post.
  42. Ghaffary, Shirin (2019-08-20). "DoorDash is still pocketing workers' tips, almost a month after it promised to stop". Vox. Retrieved 2019-08-21.
  43. Statt, Nick (2019-08-22). "DoorDash breaks silence on driver tips, says it'll start paying them next month". The Verge. Retrieved 2019-08-23.
  44. Allyn, Bobby (2020-05-14). "Restaurants Are Desperate — But You May Not Be Helping When You Use Delivery Apps". NPR. Archived from the original on 2020-05-17. Retrieved 2020-05-20. 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.
  45. Baron, Ethan (2020-04-14). "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 2020-04-20. Retrieved 2020-05-19. 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.
  46. Stempel, Jonathon (2020-04-13). "Grubhub, DoorDash, Postmates, Uber Eats are sued over restaurant prices amid pandemic". Reuters. Archived from the original on 2020-04-17. Retrieved 2020-05-19. 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.
  47. Dolmetsch, Chris (2020-04-13). "GrubHub, Doordash Accused in Suit of Pushing Prices Higher". Bloomberg News. Archived from the original on 2020-04-19. Retrieved 2020-05-19. 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.”
  48. Davitashvili v GrubHub Inc., Link from NPR article (2020).
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