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Daily news and analysis about the food tech revolution

DoorDash

DoorDash Now Delivers Food to All 50 U.S. States

DoorDash just announced services in three new states, and with that it reached a new milestone: becoming the first third-party delivery service officially operating in all 50 states. According to a press release sent out today, that makes DoorDash available to roughly 80 percent of Americans. As is pretty much customary at this point, DoorDash will offer a deal in honor of today’s news: for today, customers will only pay a 50-cent delivery fee for all orders over $10.

The milestone comes with the addition of DoorDash service to Montana (Billings, Bozeman, Missoula), Alaska (Anchorage), and South Dakota (Sioux Falls), and brings the total number of cities where DoorDash delivers to over 3,300. By comparison, Grubhub says it currently serves 1,700 U.S. cities (plus London). Uber Eats, meanwhile, serves only a few hundred in the U.S. but is expanding all over the map, including to the Middle East and Asia. However, number of cities doesn’t necessarily equal the most marketshare, and DoorDash is still third behind Grubhub and Uber Eats in terms of customers.

It should also be noted that expanding into these new cities (as well as a few in North Dakota and West Virginia) doesn’t mean DoorDash gets a break from the competition, be it Uber Eats and Grubhub or the slew of other services who’ve long operated in small- and mid-sized U.S. cities.

Back in December, we wrote that these places are a new battleground for third-party delivery, now that major metropolises like LA and NYC are (mostly) saturated. To that end, Bite Squad, who was acquired by Waitr in December, is already in Sioux Falls, as is a small company called Zip Dish. BringMeThat operates in Alaska, and CafeCourier is in Missoula, MT.

The U.S. is a big place, but it seems our appetites for delivery are even bigger. I wouldn’t be surprised if we see DoorDash or any of the other top three look to acquire some of these smaller companies at some point in the near future. Stay tuned: the winning battleground could wind up being where we least expect.

Postmates Grabs $100M in New Funding Ahead of IPO

As first reported by Recode, food-delivery heavyweight Postmates has raised another $100 million in equity funding ahead of its IPO. The round includes participation from Tiger Global and other current shareholders, as well as a new investor to Postmates, BlackRock.

The new round comes on the heels of Postmates’ $300 million funding round from September 2018, which gave the company unicorn status and a $1.2 billion valuation. The new round kicks that valuation up to $1.85 billion, according to Recode sources. The funding is also just ahead of a projected IPO, which Postmates hired JP Morgan to advise on.

Postmates, which currently serves 550 U.S. cities, says it’s now available in 60 percent of U.S. households and does about 3.5 million deliveries per month. But in the $3.5 billion food-delivery industry, competitors are just as aggressive.

DoorDash, historically Postmates’ most direct competitor, nearly tripled its valuation last year to $4 billion. Uber Eats, meanwhile, was on track to cover 70 percent of the U.S. by the end of 2018. Uber’s IPO was also slated for the first half of 2019, though that may be delayed thanks to a slowing down of the entire IPO market as a result of the partial government shutdown.

No word yet on whether Postmates’ forthcoming IPO will also be affected by the shutdown. In the meantime, the company can look forward to rolling out is delivery robot, Serve, onto the streets of Los Angeles this year.

DoorDash Is Testing Self-Driving Cars in San Francisco

Third-party delivery service DoorDash just announced it has partnered with General Motors’ Cruise Automation to test autonomous vehicles in San Francisco.

Cruise has been testing its autonomous vehicles in San Francisco over the last three years. Equipped with Lidar and radar sensors, as well as cameras that take pictures at 10 frames per second, the vehicles can see more of their surroundings at once than a human being would be able to, making it (theoretically) easier to navigate a crowded, complex metropolis like San Francisco. Cruise currently has DMV permits for testing 180 vehicles in the state of California. For the DoorDash partnership, cars will be based on the Chevy Bolt EV.

The pilot program starts in early 2019. Cruise’s vehicles will do the driving, but humans aren’t completely out of the equation: one DoorDash “dasher” will be in the car, to walk the order to the customer’s door. And though DoorDash hasn’t disclosed names of businesses who will participate, a report by Nation’s Restaurant News notes that the pilot will include restaurant meals and groceries.

That said, DoorDash already had a good bit of competition. Domino’s and Ford Motors were testing delivery via autonomous vehicles last year in South Beach, Miami. Postmates was in on that pilot, too. Self-driving car startup AutoX, meanwhile, is piloting autonomous grocery delivery around the Bay Area, and Farmstead has also been running a grocery delivery pilot with Undelv’s autonomous vehicles.

Still, DoorDash raised a total of $785 million in 2018, and gave a call to hire for so-called “moonshot initiatives” like drones, bots, and self-driving cars. All of which is to say, DoorDash clearly has big plans for tech-driven delivery in 2019.

$3.5 Billion Invested in Food Delivery Startups This Year

Investors have a big appetite for food delivery companies this year. The Wall Street Journal reports on Pitchbook data revealing that $3.5 billion has been invested in food and grocery delivery startups so far in 2018.

If you follow The Spoon, then this news shouldn’t come as any real shock. We’ve been covering big money deals in this sector all year long. Here’s just a sampling:

And those are just pure play delivery services. We aren’t sure exactly how Pitchbook is defining a food delivery company, but there’s also been plenty of investment in services that boost delivery:

  • Ordermark, which provides software and hardware to streamline delivery orders to restaurants raised $3.1 million in March, followed by another $9.5 million in September.
  • Starship and Marble, two companies building delivery robots, raised $25 million and $10 million, respectively.
  • Though never confirmed, it was rumored that Softbank was looking to invest $750 million in data-driven pizza delivery startup Zume back in August.

These types of venture investments also don’t take into consideration the money existing delivery and grocery players are spending to bulk up. Uber Eats will cover 70 percent of the U.S. population by year’s end. Grubhub just bought Tapingo to capture the college food delivery market. Walmart is building out its own delivery service, Amazon has its in-home and in-trunk delivery service, and Kroger is experimenting with self-driving cars for delivery.

And all of the delivery-related investments and moves in this story are just for North America. That doesn’t even take into consideration Europe, where nearly half of the €6.5 billion (~$7.5 billion) invested in food tech since 2013 has gone to food delivery startups.

The WSJ article raises the issue of whether this frothy investment puts delivery in overhyped bubble territory. The paper likens all the excitement to that of the meal kit investment craze a few years back. Meal kits are still around, but they are moving into retail, and it’s probably best if you don’t look at Blue Apron’s stock price.

To be sure, valuations are sky-high for these companies: Uber Eats is valued at $20 billion, Instacart $7.6 billion, DoorDash $4 billion and Postmates at $1.2 billion. That’s a lotta billions.

But the counter-argument to the bubble talk is that there are a lot of hungry people in this country. Even more to the point, there are a lot of hungry busy/lazy people in this country who would love to have their lunch or dinner magically appear, ready-to-eat, multiple nights a week. As the CEO of Ordermark told me, “Convenience is not a trend.”

In other words, investors’ eyes may not be bigger than their stomachs in this case.

Black Bear Diner and DoorDash Team Up, Offer Free Delivery

Family-style dining chain Black Bear Diner just jumped into the delivery race, partnering with DoorDash in 66 of its 118 locations (via Food Newsfeed).

It was only a matter of time before the chain started offering delivery, a move most people in the restaurant industry now feel is necessary and not a trend. But the DoorDash partnership is only one piece of the chain’s overall expansion, which includes new locations further east (Oklahoma City and Houston), and a goal to have 126 units total by the end of 2018. It was also named one of 2018’s fastest-growing chains by Nation’s Restaurant News.

Black Bear Diner is also known for its absolutely enormous menu, all of which looks to be available through DoorDash.

For DoorDash, the partnership is one more small step in a race whose outcome, at this point, is really uncertain. As one panelist noted at The Spoon’s recent Smart Kitchen Summit (SKS), delivery may be changing the restaurant industry, but right now everything is up for grabs and no one knows who will ultimately win. Black Bear Diner hasn’t signed an exclusive partnership with DoorDash, so we’ll likely see the chain’s famous burgers available via Grubhub and Uber Eats, too.

DoorDash, meanwhile, continues to make moves. The company almost tripled its valuation when it raised $250 million in August. And just yesterday, it announced a partnership with Bringg, whose delivery logistics platform is already used not just in the restaurant space but across grocery stores, healthcare services, and retail. The integration with DoorDash will make it easier for restaurants to process, manage, and track delivery orders.

That latter point may be the key to success among all these delivery developments. At SKS, I heard numerous times from people about the frustrations of accommodating delivery orders in a restaurant. Either there’s not enough space for all those extra tablets or not enough manpower to get delivery tickets into the kitchen fast enough (among other issues). So far, no one technology or company has cracked the code yet on how to fix all this, though we’re seeing more partnerships between delivery providers and platforms like Bringg and orderTalk (who was acquired by Uber Eats this year). There are also companies like Ordermark, who unifies all a restaurant’s online orders. My guess is that whichever delivery service figures out how to unify all these different approaches will ultimately be the winner.

In the meantime, if you happen to be in the Black Bear Diner-DoorDash delivery radius, you can get free food now through October 14 by ordering via the chain’s app or website.

SoftBank and Toyota Team up for Autonomous Meal Delivery Vehicles

SoftBank and Toyota today announced that they will be forming a joint venture to create autonomous vehicles that can provide a variety of smart mobility services, including self-driving vehicles which deliver robot-made meals.

The new venture will be called MONET (a portmanteau of the words “mobility network”) and will combine Toyota’s infrastructure for connected vehicles with data collected from SoftBank’s Internet of Things platform.

The result, according to the press release, will be:

“By the second half of the 2020s, MONET plans to roll out Autono-MaaS (autonomous mobility as a service) businesses using e-Palette, Toyota’s dedicated battery electric vehicle for mobility services that can be used for various purposes, including mobility, logistics, and sales. Possibilities include demand-focused just-in-time mobility services, such as meal deliveries vehicle where food is prepared while on the move, hospital shuttles where onboard medical examinations can be performed, mobile offices, and many more. MONET also intends to roll out these businesses in Japan with an eye to future expansion on the global market.”

Toyota announced its e-Palette autonomous vehicle platform at CES earlier this year. The idea behind e-Palette is to create a customizeable, self-driving vehicle that can be anything from a mobile pizza oven to shoe store on-the-go.

As The Wall Street Journal writes, MONET could provide mobile meals and medical services to Japan’s aging population, though it would by no means be limited to strictly that. In fact, SoftBank may already have the building blocks in place for much of what MONET wants to do.

This past summer, SoftBank was rumored to be investing $750 million in Zume, the Bay Area company that uses massive amounts of data to accurately predict pizza deliveries. Zume also happens to have a fleet of oven-equipped vans which ensure piping hot pizza on delivery. (Something that could come in handy for e-Palettes as well.)

SoftBank also led the $535 million Series D funding round in DoorDash, which uses a combination of humans and robots for food delivery (and has plans for last mile delivery of, well, anything).

DoorDash Wants to do Last-Mile Logistics for Everything, Not Just Food

To say that the food delivery market is heating up would be an understatement. It’s already red-hot, and competitors are using every tool in their toolbox — self-driving robots, drones, cloud kitchens, and beyond — to stake their claim in the growing market.

One such company is DoorDash. The food delivery startup has been on fire lately: they recently raised another $250 million, have been experimenting with “moonshot” initiatives (such as drones and robots), and even expanded into grocery delivery.

Next week, DoorDash’s COO Christopher Payne will take the Smart Kitchen Summit stage to speak about how delivery is reshaping the meal journey — and how he’s leveraging tech to help DoorDash stay competitive. Until then, we’re delivering you this piping-hot Q&A, in which Payne discusses the convenience economy, the last-mile logistics problem, and DoorDash’s plans for the future.

Read the full Q&A below.

The Spoon: Food delivery is drastically changing the way that people discover, source, and consume food. How do you see DoorDash, and other food delivery players, disrupting the meal-planning journey?

DoorDash: The convenience economy has already transformed how we consume food, which will in turn affect the food supply chain, merchants’ brick-and-mortar strategy, and restaurants’ operational demands. According to UBS, by 2030 online delivery could make up to 10 percent of the total food market, commanding $365 billion in market share.

At DoorDash, we empower our merchant partners to expand their reach, revenue streams and off-premise dining offerings as consumers continue to shift to the convenience of digital ordering. For customers, we’re focused on offering the best selection and introducing new services to connect them with their favorite restaurants. For example, earlier this year, we debuted DashPass subscription service — offering unlimited access to hundreds of restaurants with free delivery — and Pickup, which allows customers to choose a convenient delivery option at no cost. Both of these services were designed to generate even greater value for our merchant partners, while driving stronger customer loyalty with lower prices.

Through offerings like these, plus expansion into areas such as grocery delivery (which DooDash launched with Walmart this spring) we’re introducing new levels of convenience and are transforming how customers dine and shop for their food.

How does DoorDash distinguish themselves from other services in the extremely competitive and crowded food delivery market?

We offer the best selection of restaurants at the highest quality of service.

In five years, we’ve partnered with 90 percent of the top 100 restaurants that offer delivery including brands like The Cheesecake Factory, Wendy’s, and Chipotle. Across our 1200+ cities in the US and Canada, customers can order from more than 100,000 merchants.

DoorDash has always led with a merchant-first approach, offering a suite of products to our restaurant partners, ensuring the highest quality delivery, every single time. With our products and integrations for merchants, we ensure faster and more accurate deliveries, and our in-house support system offers best-in-class service that solves customer problems in real-time.

We also built DoorDash Drive, a platform that helps merchants run their own private label delivery service through DoorDash, tapping our operational expertise and fleet of more than 200,000 Dashers across the US and Canada. By leveraging DoorDash insights and experience, these efforts have enabled businesses to grow their off-premise platforms and increase delivery sales by up to 300 percent.

Tech plays a huge role in food delivery, and some companies are experimenting with technology like automation in dark kitchens and delivery drones. How do you think that tech will shape the future of food delivery, specifically for DoorDash?

The last mile of delivery is the most expensive and time-consuming part of fulfillment for merchants and their logistics partners. The technology behind food delivery is the reason it has come so far today and it will only continue to grow as we continue to see a shift from in-store to digital ordering — a shift that’s expected to reach $200 billion.

At DoorDash, we look at on-demand delivery as operating at the intersection of a math problem and a human problem. The company was founded to solve the logistics problems of a three-sided marketplace — merchants, customers and Dashers — through technology.

In addition to using AI and machine learning (ML) technologies to improve last-mile delivery, we are always seeking to continue experimenting with innovative tech to make the food delivery supply chain a better experience our marketplace. For example, we’ve announced pilot programs with Starship Technologies and Marble to deliver food using robots. Robots bring a new option to the table for efficient delivery; tackling smaller, shorter distance orders that Dashers often avoid, but also freeing up Dashers to fulfill the bigger and more complex deliveries.

For DoorDash, the innovations we roll out will be focused on empowering merchants and providing an even better experience for both our Dashers and customers. It’s too soon to say if that will come from drones or self-driving vehicles, but building the entire ecosystem of products and working closely with city regulators to deploy a reliable and safe system will take some time.

Do you see DoorDash diversifying beyond food to become more of a general e-commerce company?

DoorDash was founded with the goal of being the last-mile logistics layer that empowers businesses to thrive in the digital and convenience economy. This spring, through the DoorDash Drive platform, we expanded beyond restaurant delivery with the launch of our first national grocery partnership with Walmart. Since announcing our partnership in Atlanta, we’ve scaled to more than 300 stores across 20 states in the United States, and will continue to roll out this proven model to power deliveries in new areas in retail and beyond.

As merchants look to meet consumer demand for convenience, DoorDash will support these businesses as they look to broaden their on-demand delivery offerings and update commerce strategies. We’re excited about enabling local businesses to compete.

How do you see the food delivery space evolving over the next 5 to 10 years?

If you think forward, the digital and convenience economy is only going to keep accelerating. We’re just at the beginning. DoorDash is at the forefront of becoming the technology and logistics partner to each of these businesses in every city to make this happen.

The democratization of convenience is more important than ever — people living away from urban hubs want the same advantages as people in major cities. This demand inevitably affects the supply chain, and food delivery companies are logistics agents that will see more and more shifts.

—

Thanks, Chris! If you want to see him speak more about the competitive world of food delivery, snag your tickets to the Smart Kitchen Summit on October 8-9th in Seattle.

DoorDash Raises Another $250 Million

DoorDash, the restaurant delivery startup, announced yesterday that it has raised another $250 million in a “growth round” co-led by Coatue Management and DST Global. This new funds come just months after the company raised $535 million in March. This brings the total amount raised by DoorDash to $971.8 million and the company valuation to $4 billion.

In a press announcement, DoorDash said that since January it has doubled its geographic footprint to more than 1,000 cities across the U.S. and Canada, and will double that number by the end of this year. As we’ve reported, DoorDash has also been on a tear signing delivery partnerships with White Castle, Red Lobster, Chipotle, and more. The company said it has expanded its nascent grocery delivery for Walmart to nearly 300 stores in 20 states over the last four months.

Sales at restaurants have been booming in general and hit $61.6 billion in July. While delivery orders account for just 3 percent of all restaurant orders, research from NPD Group shows that delivery visits are up 10 percent and sales have grown by 20 percent since 2012.

With a market this big and growing, it’s not hard to see why DoorDash wanted to bulk up its war chest while it can as it battles the likes of Uber Eats and GrubHub for market share. Personally, I just hope they spend most of this new money on moonshots like robot or drone delivery.

We’ll be sure to ask DoorDash COO, Christopher Payne what the company is spending money on while he’s up here speaking at our Smart Kitchen Summit in October. (Or buy a ticket and ask him yourself!)

Food Tech News Roundup: Mushrooms, Corporate Catering, and Delivery Fee Wars

You head to the Spoon every week for the big, juicy food tech stories — ones that cover behind the scenes visits to the Beyond Meat headquarters, fundraises for robot baristas, and next-generation smart ovens.

For the other cool news bits around the web, the ones we don’t write a full post on, there’s the food tech news roundup! Grab yourself some lemonade and read up before you head to your local swimming hole for some weekend adventures.

Catering company Hungry expands into Philadelphia
Hungry, a service which connects chefs with corporate catering clients, announced this week that they had acquired Philadelphia company LocalStove (which offers a similar service) for an undisclosed amount. Hungry already works with 300 companies in the Washington, D.C. area, and will continue with LocalStove’s chef and office clients. This news comes a few weeks after the Virginia-based startup raised $1.5 million — I guess we’re seeing some of the promised expansion efforts already.

 

Chinova Bioworks raises $2 million for its natural food preservatives
This week food tech company Chinova Bioworks raised a $2 million seed round with participation by AgFunder, DSM Venturing, Rhapsody Venture Partners, and Natural Products Canada. The Canadian startup uses chitosan, a component found in mushrooms, as a natural food preservation agent in an attempt to fight food waste without artificial preservatives. They will use their new funding to scale up production and grow their team.

 

Doordash launches subscription service for restaurant deliveries
If you live in California, Texas, or the Midwest, you might be able to try out Doordash’s brand new subscription delivery service. Dubbed ‘Dashpass,’ customers in those locations can pay $9.99 to receive free delivery from restaurants in their area — as long as their order is over $15. According to Christopher Payne, COO at DoorDash (catch him at the Smart Kitchen Summit!), the subscription will pay for itself in three orders.

Interestingly, this move came around the same time that UberEats did away with its flat $4.99 delivery fee in favor of a sliding scale based on delivery distance. Which goes to show that the economics of restaurant delivery are clearly changing as demand grows and companies are experimenting to find the pricing sweet spot.

Did we miss any food tech news stories? Don’t keep it to yourself! Tweet us @TheSpoonTech.

Wendy’s Just Aggressively Expanded Delivery in North America

This week Wendy’s announced it has expanded third-party delivery options in North America in what’s clearly a move to better compete with McDonald’s and other fast-food restaurants as consumers demand more and more delivery.

Among other announcements during the company’s latest earnings call, Wendy’s CEO Todd A. Penegor noted that roughly 40 percent of the company’s restaurants in the U.S. and Canada now offer delivery, up from 25 percent at the end of the first quarter.

“The consumer has an appetite for convenience and we have seen this through our delivery economics,” he said, adding that check sizes have been “1.5 to 2 times higher on delivery orders.”

On the call, Wendy’s also reiterated its commitment to technology, including its new Digital Experience organization, which works on leadership changes, agile software development, and, of course, further developing the company’s mobile strategy. Current CIO David Trimm will retire in early 2019, which Wendy’s says will provide a chance to “refocus [their] leadership structure” to leverage more tech.

Wendy’s kickstarted delivery services at the end of 2017 by partnering with DoorDash in the U.S. and SkipTheDishes in Canada. On the aforementioned post-quarter earnings call, Wendy’s also reported that delivery is the number one area of business in terms of customer satisfaction. That’s huge, considering fast food isn’t inherently designed (cooked?) for travel, and a lot of fast food chains still struggle to keep food high-quality.

Take McDonald’s. The daddy of all fast food chains expanded its Uber Eats-powered delivery operations to about 5,000 stores in the U.S. in less than two years. They may be the most aggressive in terms of expansion right now (Wendy’s currently operates about 2,500 locations with delivery), but food quality remains an issue, most notably with soggy fries.

Not to be forgotten, Burger King is also ramping up efforts in both digital and delivery. While BK has experimented with delivery in the past, the company has been slower than its competitors to adopt it on a large scale. Even so, there are some who approve of BK’s slower ramp up, noting that a steady speed can “show what some of the potential pitfalls are.” Said pitfalls include losing some control of one’s brand to third-party services, as well as the food quality issue.

Delivery still represents only about 3 percent of all restaurant orders, fast food or otherwise. Most days it seems like more, given all the news we read about the market. But it’s still hard to tell if this trend towards getting fast food delivered to your home is a fad or an actual long-term strategy. For now, the question seems more about who can strike the best balance of timing, quality, and strategy to, erm, deliver what customers want most.

White Castle and DoorDash Partner, Offer Free Delivery

Ever since UberEats and McDonalds teamed up at the end of 2016, fast food chains big and small have made a charge towards delivery services in an attempt to keep up.

White Castle is the latest such chain; today they announced, via an email release, a partnership with DoorDash to offer delivery at almost 300 locations in the U.S. This is in addition to White Castle’s existing delivery services (see below). And in what’s also becoming a typical move for such releases, there will be a limited free delivery deal.

The majority of the White Castle menu is now available on DoorDash, from the iconic slider to those Crave Cases that have fed many a Superbowl party over the years. To celebrate this new partnership, DoorDash is offering free delivery on White Castle orders of $10 or more between today (July 30) and August 5, in selected areas. The company didn’t specify which areas, so check DoorDash’s list of locations for more info.

If said deal isn’t near you, fear not. You can still likely get White Castle delivered to your doorstep via Grubhub (though there’s no deal involved), as White Castle teamed with the service earlier this year.

Many food chains partner with multiple third-party services in order to grab the biggest slice that they can of the $43 billion food delivery market (predicted to hit $76 billion in 2022). That said, we’re seeing a small rise in exclusive partnerships — à la McDonalds-UberEats. DoorDash and Wendy’s also unrolled an exclusive partnership at the end of 2017. And earlier this year, Grubhub became the “official online ordering partner” of Yum Brands (Taco Bell, KFC, etc.) when the latter invested $200,000 million in Grubhub common stock.

No word yet on whether White Castle will partner with anyone else — Uber Eats, for example — in the future. White Castle has already embraced alterna-burgers and attempted to deliver Crave Cases via drones. So it’s safe to say the company is open to new ways in which to reinvent its business (digitized drive-thru strategy, maybe?), and new partners that can help that process.

DoorDash and Red Lobster to Expand Delivery Locations

If you’ve got a hankering for seafood, but don’t want to leave your house — you’re in luck! Red Lobster announced today that it is expanding its partnership with DoorDash to offer delivery from more than 300 Red Lobster locations throughout U.S. and Canada by mid-July.

DoorDash raised $535 million back in March with an eye towards expanding from 600 cities to 1,600, and the company has struck partnerships with a number of national restaurant chains including Jack in the Box, Wendy’s, Dunkin’ Donuts and more recently Chipotle.

The research firm NPD wrote earlier this year that with a 20 percent increase in delivery sales over the last five years, delivery is a need-to-have for restaurants.