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The Spoon

Daily news and analysis about the food tech revolution

Caviar

Report: DoorDash In Talks to Secure $400M Ahead of IPO

DoorDash is in talks with banks to open a line of credit for $400 million ahead of a possible IPO, according to an article published on Bloomberg late Thursday.

As the article notes, securing a line of credit from Wall Street is common before an IPO. Sources for the Bloomberg article, who were not identified because the news isn’t yet officially public, said JPMorgan Chase & Co. is leading the potential financing. DoorDash could go public as early as next year, according to those sources.

Should that happen, the company will join rival third-party delivery companies Grubhub and Uber Eats on the public market.

Just last week, San Francisco-based DoorDash acquired food delivery service Caviar from Square for $410 million, and in 2019 alone DoorDash has raised $1 billion and become the first third-party delivery service with a presence in all 50 U.S. states.

The successes don’t come without controversies, though. DoorDash has also been under fire for its controversial tipping practices for workers and recently had to change its policies around tipping in the wake of a storm of bad press.

Nor is DoorDash the only third-party delivery service to be steeped in controversy of late. Grubhub’s summer has been chock-a-block with criticism around its fees for restaurant structures as well as accusations of cybersquatting and calls for an antitrust investigation into the company.

Uber Eats hasn’t recently had so many ethical thorns in its side, but parent company Uber just posted $5.2 billion in losses for the second quarter, and Uber CEO Dara Khosrowshahi said he didn’t expect Uber Eats “to be profitable in the next year or year after frankly.”

If DoorDash does move forward with an IPO next year, it will face the same struggles around profitability its rivals Uber Eats and Grubhub currently grapple with. Ultimately, that issue of profitability could have more sway over the long-term viability of these companies than any criticism over tipping policies or restaurant fee structures.

DoorDash Acquiring Caviar from Square for $410M

Food delivery startup DoorDash announced today that it has entered into an agreement to purchase Caviar from its parent company, Square, for $410 million dollars in a combination of cash and preferred stock.

The press release laid out the rationale for the deal, stating:

The acquisition underscores both DoorDash and Caviar’s strategic commitment to merchant selection. The addition of Caviar’s premium restaurants, with whom DoorDash will work closely to drive their growth, will enable the combined organization to cater to every food preference and occasion. Caviar’s complementary geographic footprint provides DoorDash with a significant number of new and unique customers, who will benefit from an even broader set of merchants.

Square acquired Caviar in 2014 for a reported $90 million, and reportedly tried to sell it just two years later but couldn’t find a buyer at the price the company wanted. A little more than a year ago Square acquired the assets of Zesty in a bid to bolster its corporate catering services.

But ultimately Square is in the business of transactions, not delivering the food itself, so offloading Caviar makes sense. Not having to deal with Caviar will help Square focus on the restaurant point of sale software platform that it launched last year that helped streamline orders from third-party services like DoorDash.

For its part, DoorDash has been making headlines all yearL raising a billion dollars in funding, becoming the first third-party food delivery startup to service all fifty states, and sticking by, and then ultimately caving in and changing a controversial tipping policy for its delivery drivers.

DoorDash’s deal to acquire Caviar is expected to close by the end of this year.

OpenTable Launches Delivery Program With Uber Eats, Grubhub

Restaurant reservations platform OpenTable announced it has partnered with Caviar, Grubhub, and Uber Eats to give its users access to delivery options within the OpenTable app.

“Our goal is to make OpenTable the go-to app for all dining occasions. Adding delivery is an important next step.” Joseph Essas, OpenTable’s CTO, said in a statement.

Moving forward, delivery via the OpenTable app will be available at 8,000 restaurants in 90 metropolitan areas in the U.S. It applies only to those areas where OpenTable and delivery services via the aforementioned third parties overlap.

When users access the OpenTable app, they’ll see options under restaurants to order food for delivery instead of making a reservation at the actual restaurant. If the the restaurant only works with one of the services, say, Uber Eats, the user will be directed to that specific service to complete the transaction. If a restaurant works with multiple delivery services, users can take their pick.

Food delivery via third parties like Uber Eats and Grubhub is a game everyone wants in on these days. Even amid a swirl of controversies, these apps are still predicted to have 44 million users by 2020. It’s not surprising, then, that non-restaurant entities are now positioning themselves in the landscape, too.

And clearly OpenTable wants to be the one customers go through to access those dining choices, even if the app can’t yet keep users within its own ecosystem for the entire order-pay-track process. And that last point will change as OpenTable said in a blog post that features for estimated delivery time and cost are slated for the future.

Along with the delivery program, OpenTable also launched a newly redesigned app that promises more personalized meal recommendations based on favorites, past bookings, and other factors.

Square Launches a Well-Rounded POS System for Restaurants

Square has long been the favorite of small businesses like hair salons and independent artisans. Now, the merchant-services company is hoping to make an impact in restaurants with its newly announced point-of-sale system (POS).

The software, which works for both sit-down and quick-service restaurants, is reportedly Square’s “most sophisticated software yet.” The system centralizes all a restaurant’s operations in a single place, from booking a table to placing orders and managing the check after the meal. Restaurant owners and operators can also do maintenance tasks, like changing table maps and updating menus on the fly, without the need of a service person.

Most important, Square’s new system promises to also solve an issue puzzling more and more restaurants nowadays: how to manage orders coming in from multiple different channels, both online and off.

Its POS system does so by integrating online and offline sales and centralizing them into one software system. In other words, sales from in-house diners as well as those ordering via Postmates, UberEats, and the growing number of other online services can all be viewed in the same place, giving restaurant owners and operators a better understanding of how each channel contributes to the overall sales picture.

As others have said, the acquisition of Caviar from four years ago makes more sense in light of this news. Add to that Square’s recent acquisition of “certain assets” of corporate catering service Zesty, which would help Square to further expand Caviar’s capabilities. Meanwhile, Caviar serves 18 different metro areas and counts Eataly, and Momofuku among its restaurant partners, presumably giving Square access to a whole new set of potential clients for this new POS platform.

Square isn’t alone in rethinking restaurant operations. Actually, that’s an understatement, because there are plenty of folks trying to centralize restaurant tasks, orders, and data into one place and also address the growing number of channels by which consumers order food. “Every restaurant is becoming an omnichannel business,” Gokul Rajaram, Caviar lead at Square, told Fast Company.

Toast is another big player in the space, offering similar features to Square, including the promise of integrating online orders with the rest of the operations. TouchBistro and Clover both offer “all-in-one” systems, and there are tons more options on the market, too.

Square puts a lot of emphasis on the online orders and delivery aspect of its system, even saying “delivery is in our DNA.” That’s a wise proclamation to make in this day and age, but it’s also only a matter of time before most restaurants will add the same thing to their DNA. Which means we can expect the battle for the omnichannel restaurant to get much bigger, sooner rather than later.

Square Gobbles up Zesty to Bolster Corporate Catering

Square, the merchant services company, announced today that it has acquired “certain assets” of the corporate catering startup, Zesty. This addition will help Square expand its food ordering service, Caviar. Terms of the deal were not disclosed.

Zesty is only available in the Bay Area, where it works with 150 restaurants to delivery corporate meals. The company had raised $20.7 million since launching in 2013, $17 million of that was in a Series A raised in 2015. Zesty will become part of the Caviar for Teams unit, which launched in 2016. The Zesty team will bring with it “full-fledged, white-glove corporate catering, allowing us to serve companies of all sizes,” Square said in a press announcement.

The acquisition comes at a time when the concept of corporate catering is going through its own evolution. It’s no longer just dumping food in a main room at 11:00 and having people scrum to get it while it’s still hot (and having the worst bits sit uneaten). New types of competitors are springing up with new approaches to feeding hungry employees.

Forkable uses smart recommendations to let employees order individual lunches rather than partake in large buffets. Allset flips the script entirely and makes it easier for employees to get out of the office and pre-order and pre-pay for meals at nearby restaurants. And Byte Foods sets up fridges with healthy snacks and food right inside the office.

But until those become more mainstream, Zesty will keep bringing in chafing dishes and, in the short term, continue operate independently.