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The Spoon

Daily news and analysis about the food tech revolution

DoorDash

DoorDash Expands to Japan

DoorDash today announced the official launch of its delivery service in Japan. This is the San Francisco-based company’s first foray into the Asia market, and its third international expansion after Canada and Australia. 

Service begins today in Sendai, a city with just over 1 million inhabitants in the northeastern part of Japan. The choice of location is in keeping with DoorDash’s strategy elsewhere, which is to focus on smaller cities and suburban markets over major metropolises. Historically, this has helped DoorDash reach customers normally outside most restaurants’ delivery ranges, and it’s arguably a factor that has kept DoorDash in the top spot for marketshare, at least here in the U.S.

Whether the company can repeat that success in Japan remains to be seen. Japan is a restaurant-dense country, which means plenty of prospective DoorDash merchants and customers. However, the country is also home to a lot of competition in the delivery space, including major services like Uber Eats and Delivery Hero.

DoorDash, meanwhile, has recently added services like grocery and convenience store delivery as a way of reaching new customer types and also standing out from the competition. (Uber also offers grocery delivery in some U.S. locations.) The company has not yet said if these services will be immediately part of its expansion to Japan. 

DoorDash went public at the end of 2020. Last month, the company reported revenues of $1.08 billion for the first quarter of 2021, up from $362 million in the previous year and beating out Wall Street estimates.

Restaurants in Sendai will also be able to use DoorDash’s Storefront feature, which lets businesses process orders and payments directly, rather than going through the marketplace. 

DoorDash Now Delivering Groceries and Other Goods from Rite Aid

DoorDash today announced a partnership with drug store giant Rite Aid to offer same-day delivery for a wide range of home and food essential items. Delivery is available starting today through the DoorDash app from more than 2,100 Rite Aid locations across 17 states.

Customers will be able to order more than 24,000 items for delivery from Rite Aid, including health and beauty supplies, non-perishable and perishable groceries like milk and ice cream, as well as over-the-counter medicine. DoorDash says the average delivery time is less than an hour.

For Rite Aid, offering DoorDash as a delivery partner makes a lot of sense. Drug stores are where people pick up, well, the drugs they need to feel better when they are sick. Given the world’s new sensitivities to viruses and how they spread, it’s a good thing for sick people to stay at home and out of a store when they need Nyquill and a pint of Ben & Jerry’s to feel better.

DoorDash is also under pressure as competitors on multiple fronts ramp up their deliveries. Grocery retailers, like Walmart and Albertsons, which also offer over-the-counter medications and health and beauty items, have expanded their delivery options thanks to the pandemic. But a new category of delivery-only stores like goPuff are on the rise, offering 24-hour delivery of food and home essentials in as little as a half hour.

In fact, DoorDash operates its own growing chain of delivery-only convenience stores. One has to wonder how this new delivery data from Rite Aid could inform DoorDash’s decisions as it ramps up expansion of its own stores.

DoorDash Launches Tiered Commission Fees for Restaurants

DoorDash announced today that is has launched a new pricing structure to deal with its historically controversial restaurant commission fees. Via these “Partnership Plans,” as the service calls them, U.S. restaurants can now choose between three different commission price points.

Plans are priced according to how much area a restaurant wants its delivery radius to cover and how much marketing it needs from DoorDash. 

The DoorDash Basic plan has the smallest delivery radius and the highest cost for customers, since most of the delivery costs are shifted to them. The commission fee for restaurants with this plan is 15 percent. It does not include in-app marketing.

DoorDash Plus has a 25 percent commission fee, offers a bigger delivery radius, and includes the DashPass loyalty program. DoorDash Premier has the biggest delivery radius and, in addition to DashPass, also offers what it calls a “growth guarantee.” Via this feature, restaurants will be reimbursed their full commission for the month if they receive fewer than 20 orders for delivery, pickup, or DoorDash subsidiary Caviar.

DoorDash also announced a new and reduced commission fee for pickup orders, which is 6 percent across all plans. 

The new tiered pricing structure is very clearly a response to the commission fee caps dozens of U.S. cities implemented last year. With dining rooms closed because of the COVID-19 pandemic, restaurants were forced to rely more heavily on third-party delivery services like DoorDash. We weren’t too many months into restaurant restrictions before many across the restaurant industry started to decry commission fees, which often go as high as 30 percent per transaction, as detrimental to restaurants’ bottom lines. 

DoorDash and others oppose fee caps, saying they hurt order volumes and result in the service having to raise prices for customers. 

Granted, with a plan like DoorDash Basic, customers will still pay more for their meals to be delivered. From the looks of it, bringing those costs down will mean hiking commission fees for restaurants back up, so it remains to be seen if this new pricing structure is truly beneficial for businesses or if it’s more of the same old story.

DoorDash Exceeded Revenue Estimates but More Than Doubled its Losses in Q4 2020

DoorDash exceeded analyst estimates with its 2020 fourth-quarter revenues. However, the third-party delivery service also more than doubled its losses during that time period, and DoorDash stock took a dip this afternoon, after trading. Total revenue for the quarter represented a 226 percent year-over-year growth. 

The company went public in December 2020 after experiencing a boom fueled largely by the COVID-19 pandemic and the restaurant industry’s shift to off-premises formats like delivery. In its first financial report since that time, DoorDash said its sales increased 225 percent from 2019 during the fourth quarter 2020. Sales for Q4 totaled $970 million, beating analyst expectations of $926.7 million. However, the company also posted a net loss of $312 million, up from $134 million the previous year. 

DoorDash told shareholders it expects “declines in consumer engagement and average order values” as markets open back up and restaurants are able to open their dining rooms once more. How sharp that decline is remains unclear, the company said. 

The pandemic forced pretty much every restaurant that managed to stay open to adjust their focus towards delivery and takeout orders. Needless to say, this created a lot of business for companies like DoorDash, Uber Eats, and Grubhub as homebound customers ordered in. 

Off-premises orders are likely to remain popular for the foreseeable future. At the same time, third-party delivery services remain steeped in controversies (hello, Prop. 22) and many restaurants are fed up with them. There has of late been a push to bring more of the digital ordering process back under restaurants’ own roofs, promote pickup orders, and, in some cases, build native delivery platforms that cut out the need for a third-party aggregator like DoorDash.

That might be one reason DoorDash has in the last year expanded its services to include grocery and convenience store delivery. By diversifying the types of goods it can get to customers’ doorsteps, the company may have a better chance of staying relevant long term, regardless of what happens in the restaurant biz.

DoorDash Acquires Salad Robot Maker Chowbotics

Third party delivery service DoorDash has acquired Chowbotics, the company behind salad-making robot Sally. Terms of the deal were not disclosed. Chowbotics had raised nearly $21 million in funding since its founding in 2014.

The first question that pops to mind is, Why? Chowbotics’ technology is decidely stationary. Its robot is installed at a location and makes salads, yogurt bowls and more for people that come to it. DoorDash is a company built on mobility, getting food and other goods from other places to you.

Representatives from neither company were made available to comment.

The Wall Street Journal, which appears to have scooped the announcement earlier today wrote how a DoorDash+Chowbotics combo could work:

Ideas include using the technology to help restaurants expand their menu—such as enabling a pizzeria to offer salads—or to allow a salad bar to try out new locations—a kiosk at an airport, for instance—without the need for more manpower.

One of the big selling points of modern, automated vending machines is that they create, essentially, a restaurant in a box that can be placed anywhere. Chowbotics has co-branded machines with regional restaurant chain Saladworks, for example. DoorDash, with its vast marketplace of restaurants, could leverage those relationships to get co-branded Chowbotics machines in airports, hospitals and other high-traffic locations. Sally itself is versatile, holding 22 ingredients, so it could be easily adapted to different menus.

It’s not too hard to think DoorDash could also install Sallys at their own DashMart delivery-only chain of convenience stores to offer fresh food for delivery along with snacks and sundries.

But the new relationship could work in the other direction. Since the pandemic shut down salad bars, Chowbotics has seen increased interest from grocery retailers. DoorDash could use this as a wedge to get co-branded restaurant Sallys into retail and expand DoorDash’s grocery delivery ambitions.

Or, and this is a little more out there, DoorDash could be working on an autonomous mobile vending unit similar to what Yo-Kai Express is launching soon. A self-driving vending machine could travel around college and corporate campuses being hailed by hungry students and workers.

At the end of the day, the one thing DoorDash does give Chowbotics is scale. DoorDash is a publicly traded company with deep pockets and the largest marketshare of third-party delivery in the U.S. This means Chowbotics can focus on its technology and less on business development.

As they get more technologically advanced, we’re seeing more applications for vending machines. They are selling hot ramen, fresh made pizza, and even fresh dairy on farms. You can learn all about the industry in my Spoon+ market report The Great Vending Reinvention: The Spoon’s Smart Vending Machine Market Report (subscription required).

Ordrslip Announces Integration With DoorDash for Restaurant Delivery

Restaurant tech company Ordrslip this week announced a partnership with DoorDash’s white label fulfillment platform, DoorDash Drive. Through the partnership, restaurants with mobile-order platforms powered by Ordrslip’s technology can use the DoorDash network to fulfill delivery orders.

Ordrslip’s pitch to restaurants is that the company’s technology allows businesses to create their own branded mobile apps without having to invest the millions of dollars and countless hours typically required to create sophisticated order-and-pay apps from scratch.

From the restaurant customer’s perspective, the app looks and functions as if it were completely owned and powered by the restaurant. On the back end, the Ordrslip SaaS system powers each transaction, and provides features such as order-ahead and payment capabilities, POS integration (with Clover or Square), order tracking, and, of course, delivery integration.

Ordrslip announced a similar partnership with Postmates (now a part of Uber) in 2020.

Giving restaurants the ability to process transactions in-house has become an increasingly important topic since the start of the industry-wide shift to digital. Doing so lets businesses pay less in commission fees to third-party delivery services. It should be noted, however, that some commission fee is still required on orders that utilize DoorDash or Postmates for the last mile of delivery. Other systems, such as those of Toast and Ritual, offer similar packages. For a restaurant to entirely bypass a commission fee on delivery orders, they would have to conduct delivery via a service like ShiftPixy, which provides drivers in addition to powering restaurants’ digital properties.

Restaurants that do large volumes of takeout orders would benefit from a technology like Ordrslip’s, since a third-party service like DoorDash is not involved in the process. However, said third-party services appear to be getting hip to this idea: just this week, Uber Eats announced it is waiving the commission fee for pickup orders through June 30, 2021. Doubtless the battle over who owns the takeout/pickup order process is just heating up.

Ordrslip licenses its tech to restaurants for a flat $100/month fee and is available to restaurants across the entire U.S. 

Uber Eats Launches Campaign to Support Independent Restaurants

Uber today announced Eat Local, a campaign the company says will support independent restaurants financially impacted by the COVID-19 pandemic. 

As part of the Eat Local package, Uber will donate $4.5 million to the Local Initiatives Support Corporation (LISC), which will in turn distribute financial assistance to U.S. restaurants facing COVID-19-related challenges. Restaurants must be on the Uber Eats and/or Postmates platforms to be eligible. 

According to the LISC website, the applications process for grants opens on Feb. 16. The grant program will offer to help restaurants meet certain expenses, such as payroll, rent, utilities, outstanding debts to vendors, and upgrading technology systems. 

Restaurants must have been active on Uber Eats or Postmates since Jan. 1, 2021 in order to be eligible for the grant. Businesses must also have less than five locations and not be affiliated with a national brand. (The full list of eligibility requirements is on LISC’s site.)

In keeping with earlier relief efforts from 2020, Uber’s Eat Local package also includes waived and reduced fees for restaurants around restaurant pickup orders and for orders placed via a restaurant’s own website but delivered by Uber Eats. Restaurants can get daily payouts instead of the standard weekly ones, and Uber will also continue matching donations made by customers via the Eats app’s Restaurant Contribution feature.

Uber (and newly acquired Postmates) along with Grubhub and DoorDash first began offering relief packages for restaurants back in March 2020, when shelter-in-place mandates first went into effect in the U.S. Since then, these services have launched various grant programs and assistance efforts, including Grubhub’s Winterization Grant and DoorDash’s ongoing Main Street Strong program.

All of these efforts go some ways towards helping small and independent restaurants, which have been most damaged by the pandemic. What remains unclear is how much grants and relief efforts help when stacked up against the high commission fees third-party delivery service continue to charge these smaller restaurants. That factor remains likely to be a point of heated debate long after the worst parts of the pandemic have subsided.

Glovo Lands Real Estate Deal to Expand Its Ghost Convenience Stores

Barcelona, Spain-based food delivery service Glovo has inked a deal with Switzerland-based real estate firm Stoneweg. The latter will invest €100 million (~$121 million USD) to help Glovo expand its network of ghost convenience stores. 

As part of the deal, Glovo will occupy the Stoneweg real estate locations for an unspecified period of time. Stoneweg will build and refurbish these real estate locations in key Glovo markets to help the delivery service expand its reach with these delivery-only convenience stores. Right now include Spain, Italy, Portugal, and Romania, with other European countries planned for the future. Glovo intends to have 100 different locations by the end of 2021. It has just 18 right now.

Glovo launched convenience store delivery in 2019 as a way to stand out from other Europe-based competitors (e.g., Delivery Hero). The company’s promise is to deliver goods one might find at a convenience store in 30 minutes or less to customers’ doorsteps. To do that, the Glovo operates these dark convenience stores from which customers can only order online.

The company’s increased focus on quick convenience store delivery — what it calls “Q-Commerce” — is at least partly in response to the pandemic’s impact on how consumers get food items and household goods. Certain countries, such as Spain and Italy, have had far stricter lockdowns during the pandemic than many U.S. states. Those restrictions around leaving one’s house have in turn created an environment where it makes more sense to order groceries, snacks, and household goods for delivery, rather than venture out oneself. 

That said, Europe isn’t alone in this shift towards ghost convenience stores. Most Notably, DoorDash began operating its own version of the concept in the U.S. in 2020. In South Korea, customers can even get convenience store goods delivered by robots courtesy of LG. 

For its part, Glovo believes these dark stores are the future of retail, hence the company’s new deal with Stoneweg. According to Bloomberg, Glovo’s Q-commerce orders have grown 300 percent from one year ago, and the company plans to hire 500 people for the Q-commerce business by the end of the year. 

DoorDash Stock Pops Upon IPO

DoorDash’s stock got the much sought after pop after the startup IPOd on the New York Stock Exchange today. DoorDash shares were priced at $102, and started trading at $182 today, giving the third-party delivery company a market cap of $57.8 million.

Founded in 2013, DoorDash had raised $2.5 billion in funding prior to going public. Today’s IPO puts a bow on what has been a busy year for the third-party delivery service. The COVID-19 pandemic forced closures of dining rooms at restaurants, pushing those businesses to offer more takeout and delivery options. That plus stay-at-home orders earlier in the year had more people order delivery around the country and translated into a lot more business for DoorDash. As CNBC writes:

DoorDash reported $1.9 billion in revenue for the nine months ended Sept. 30, according to its IPO filing. That’s up from $587 million during the same period last year. As its revenue grew, DoorDash also narrowed its net loss to $149 million over the same period in 2020. In 2019, DoorDash had a net loss of $533 million over the nine-month period.

In addition to coronavirus-driven business, DoorDash also expanded into new categories beyond its core delivery business. As the restaurant industry cratered, DoorDash added delivery from drug stores, convenience stores (it’s even building its own brand of delivery only convenience stores) as well as on-demand grocery delivery.

DoorDash’s road to IPO hasn’t been without its controversy, however. The high commissions that DoorDash and other third-party delivery services charge restaurants came under even closer scrutiny earlier this year as restaurants just tried to survive the initial fallout from the pandemic. Some cities even implemented fee caps to help restaurants stay afloat. DoorDash was also a backer of Prop 22, a California ballot measure that sought to get gig-economy services exempted from Assembly Bill 5, which requires companies to reclassify contract workers as employees (thereby giving them benefits and more protections). That measure passed. And just last month, DoorDash agreed to pay a $2.5 million to the Washington D.C. attorney general’s office as a settlement over its tipping policies.

DoorDash now joins other publicly traded third-party delivery services such as Uber and GrubHub.

Jimmy John’s Deal With DoorDash Boosts the In-House Delivery Concept

In a major about-face, sandwich chain Jimmy John’s this week announced a nationwide partnership with DoorDash to use the latter’s new Self-Delivery service. 

Through that service, Jimmy John’s will use DoorDash’s marketplace to process orders and reach new customers while still maintaining its own driver fleet and control of the last mile of delivery. The nationwide expansion follows a six-month pilot of 100 restaurants. DoorDash has also built a direct integration with Jimmy John’s POS system, so that delivery and pickup orders go straight to the main system rather than to an external tablet.

At one point, Jimmy John’s was famous for its refusal to use third-party delivery services, flatly stating in 2019, “We will never use third party delivery services.”

Two big things have happened since that statement, though: Inspire Brands acquired Jimmy John’s and the COVID-19 pandemic hit, decimating the restaurant experience as we know it.

Inspire, which also owns Arby’s, Sonic, and Buffalo Wild Wings, completed its acquisition of Jimmy John’s in September of 2019. At the time, Jimmy John’s successful in-house delivery program was seen as an attractive asset few other brands could offer. (Domino’s is the other notable example here.)

Then along came COVID-19, and even quick-service brands — which have fared much better overall than other restaurant formats — were forced to shift the majority of their focus to improving the off-premises experience, including delivery. 

Inspire Brands has long had an existing relationship with DoorDash, so given the state of the restaurant biz, it’s not terribly surprising Jimmy John’s would eventually get linked to the third-party delivery service. Reaching new customers via digital channels is a must nowadays, and Inspire acknowledged as much this week in its press release: “As part of a broader brand evolution, Jimmy John’s has been focused on continuing to reach new guests and refining its channels and operations to meet customers where they are while maintaining the unique Jimmy John’s delivery experience.”

The twist, of course, is the Self-Delivery program. Through it, Jimmy John’s can gain access to more customers via digital channels while still keeping high commission fees down by using its own drivers. Keeping the fleet in-house also gives the brand more control over the quality of its orders as they travel from kitchen to customer.

Jimmy John’s is in a unique position in that it has kept an in-house delivery fleet for years and can afford to continue that, even as the fallout from the pandemic continues. Other brands can’t necessarily afford that luxury, so it isn’t certain this deal will motivate other chains to adopt similar delivery strategies. A more common route to hybrid delivery will likely be restaurants processing orders and payments through their own digital properties and letting a third party handle the last mile.   

DoorDash Launches Initial Public Offering

DoorDash announced today it has launched the roadshow for its initial public offering (IPO). The company is offering 33,000,000 shares of its Class A common stock, with the initial public offering price expected to be between $75 and $85 per share, according to a company press release.

The San Francisco-based food delivery service confidentially filed for an IPO in February of this year and unveiled the public S-1 filing in November. The S-1 filing revealed that the company reported a profit for the first time in its history during the second quarter of 2020 — which coincided with the rise of the COVID-19 pandemic. It’s a noteworthy milestone in an industry that thrives on promising a profitability it hasn’t, for the most part, achieved yet.

For DoorDash, part of that trek towards profitability appears to be expanding its service to other areas of food delivery besides restaurants. In April, the company announced partnerships with major convenience stores, including Wawa and 7-Eleven, and in August, it launched a grocery delivery service. It even went as far as to open its own “ghost convenience store,” called DashMart, which is basically a virtual convenience store owned and operated by DoorDash.  

Those new sales channels may be necessary at a time when the restaurant industry faces new restrictions to help curb the spread of the pandemic. It is difficult to say at this point how many restaurants will shutter permanently when all is said and done, and delivery services may need to branch out further to keep on the road to profitability. 

According to the Wall Street Journal, DoorDash is aiming for a valuation of $25 billion to $38 billion. The company garnered $675 million in revenue and a profit of $23 million for Q2 2020. For Q3, it posted a net loss of $43 million for Q3, but still reported revenue growth of $879 million. The company has said in the past that COVID-19-related lockdowns have played a significant role in its growth. That could be the case for a long time yet.

Food Tech News: Food Waste For Solar Energy, DoorDash Announces New Gifting Feature

Food waste used to produce solar energy

A recent winner of the Sustainability 2020 James Dyson Award, Carvey Maigue (a student at Mapúa University in the Philippines) created a technology that converts food waste into UV light-capturing windows and walls. The system, called AuReus, traps luminescent particles from certain fruits and vegetables (which would otherwise be wasted) in a resin substrate. The particles then absorb and reflect the light, and PV cells along the side of the walls and windows absorb this light. Lastly, the captured light is converted to DC electricity.

DoorDash announces new gifting feature

This week, DoorDash announced its new gifting feature for the holiday season. Users can now send favorite food items to friends and family located anywhere in the country through the app. To send a food gift, a user simply needs to enter the recipient’s address on the app, and then customize the order with a digital card. Not sure what to send? According to DoorDash, the most popular requests include french fries, burrito bowls, and cookies.

Ikea pledges to make 50% of menu items vegan

By 2025, Ikea’s goal is to make half of its menu items and 80 percent of its packaged meals vegan. The multinational chain already carries vegan items like meatballs, soft-serve, and hot dogs. After reading scientific reports and consumer research studies, the company aims to do its part in reducing global greenhouse gas emissions through providing foods with a lower carbon footprint.

UK Pizza Huts adds Christmas Pizza

Do you think that pineapple on a pizza is a weird topping? I personally think traditional Christmas dishes as pizza toppings might triumph over pineapple for being even stranger. Pizza Hut locations in the UK are now carrying a Christmas pizza, which includes shredded chicken, bacon, sage & onion stuffing, and a red wine gravy. The pizza is available now and until supplies last.