DoorDash buys food delivery service Caviar for $410 million

SAN FRANCISCO – On-demand food delivery startup DoorDash has agreed to acquire rival Caviar for $410 million. Caviar, the premium restaurant …

SAN FRANCISCO – On-demand food delivery startup DoorDash has agreed to acquire rival Caviar for $410 million.

Caviar, the premium restaurant delivery service, was most recently owned by payments-services company Square, which bought the firm in 2014 for about $90 million when it was just an early-stage startup.

“We have long-admired Caviar, which has a coveted brand, an exceptional portfolio of premium restaurants and leading technology,” said DoorDash CEO Tony Xu in a statement. Xu notes that the deal “enhances the breadth of our merchant selection,” giving customers more choices.

DoorDash raised $600 million in new financing in May, valuing the company at $12.6 billion, Xu has said. The on-demand food delivery space is fiercely competitive and DoorDash has emerged as the US leader when it comes to sales, surpassing Grubhub for the first time in May, according to analytics firm Second Measure.

According to Square’s release, the cash-and-stock deal — which is expected to close later this year — builds on the existing partnership between DoorDash and Square for Restaurants. Square for Restaurants is a software platform designed to help small businesses integrate online delivery orders with in-restaurant operations. The product was introduced last year.

To many observers, the launch of Square for Restaurants helped justify Square’s acquisition of Caviar, which perplexed some when it was announced.

The acquisition should help DoorDash fend off competition from other delivery services such as Postmates, which filed initial paperwork to go public in February, as well as Uber Eats.

According to a DoorDash spokesperson, the services will remain as individual brands for the time being and the company will ultimately do the best for each brand, whether that’s combining them or keeping them separate.

DoorDash has faced scrutiny in recent months over its controversial tipping policy for delivery workers, where some tips contributed to their base pay. Just last week, Xu said it would revisit its tipping policies following a New York Times report that put the issue once again in the spotlight.

Caviar no longer applies tips towards worker payments, but settled a class-action suit for $2.2 million in 2018 for not passing on tips from customers to its workers.

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Data Shows Regionalized Delivery Share

Grubhub has NYC on lockdown, while DoorDash leads in San Francisco, Dallas and San Antonio. Postmates is far ahead in Los Angeles, with Uber …

There are plenty of reports showing national market share among U.S. delivery providers, but the industry is highly fragmented with some providers far outperforming others in the largest American cities. Grubhub has NYC on lockdown, while DoorDash leads in San Francisco, Dallas and San Antonio. Postmates is far ahead in Los Angeles, with Uber Eats eclipsing the others in Miami.

These findings come from Second Measure, a Bay Area-based technology company that analyzes billions of transactions to glean intelligence in partnership with some of the largest U.S. investment firms.

In aggregate, DoorDash has been growing faster than any other U.S. delivery brands this year, reaching 34 percent of total U.S. meal delivery sales last month. Formerly the leader, Grubhub slipped to second including its Seamless and Eat24 subsidiaries—a combined share of 33 percent.

“Sales at nearly all the delivery companies in our analysis are growing, but DoorDash’s growth stands out,” the report read. “In June, the company saw a staggering 175-percent year-over-year jump.”

Looking at 12 of the largest U.S. cities, Second Measure shows DoorDash far ahead in Houston, DFW and San Francisco with 62, 55 and 47 percent of the market, respectively. Grub captures 71 percent of the market in New York City, and is on top in Boston and Philadelphia. The Chicago-based provider has 41 percent of the market in its hometown.

Uber Eats, which has a third of the U.S. market, is far and away the leader in Miami with 48 percent of the market. The brand’s next highest cities are Atlanta at 38 percent and DFW, where it has 27 percent of the market according to the report.

Postmates is even more provincial with a massive 38 percent of share in LA. Its next largest markets are Phoenix (26 percent) and Miami (23 percent).

Why is this important? With more restaurants using multiple delivery providers, some brands offer better coverage and customer service (for restaurant partners) in different cities. In addition, delivery consumers are highly loyal, using only one or two services on average, meaning that what’s best in one city could fall flat in another.

Click HERE for the full report.

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Man said DoorDash delivery driver ate half his food

Man said DoorDash delivery driver ate half his food … (CNN) – A man who ordered food using DoorDash, a food delivery app, said a delivery driver ate …

YORK COUNTY, Pa. (CNN) – A man who ordered food using DoorDash, a food delivery app, said a delivery driver ate half of his meal.

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Grubhub Loses #1 Spot in US Online Food Delivery Market

Reportedly, Grubhub GRUB has lost its top position in the U.S. online food delivery market to its nearest competitor, DoorDash. Per Quartz, which cited …

Reportedly, Grubhub GRUB has lost its top position in the U.S. online food delivery market to its nearest competitor, DoorDash.

Per Quartz, which cited a recent report by analytics firm Second Measure, the company’s monthly sales were lower than DoorDash in May. Notably, Second Measure’s data doesn’t include sales from Grubhub’s latest acquisitions — Tapingo and LevelUp.

Moreover, per the report, DoorDash outperformed the company in terms of market share.

Although Grubhub didn’t comment on the latest Second Measure report, it is known for snubbing third-party reports, citing incorrect data.

Nevertheless, the latest data do not paint a rosy picture for shares of the company, which have declined 1.2% on a year-to-date basis compared with 5.7% growth of the industry.

Year-to-date Performance

Can Grubhub Revive in the Second Half of 2019?

Competition in the U.S. online food delivery market is intensifying for the company, with expanding services from the likes of DoorDash, Uber UBER arm UBER Eats, Postmates and Waitr Holdings WTRH, among others.

However, Amazon’s AMZN decision to shut down Amazon Restaurants bodes well for Grubhub. Moreover, the partnership with Dunkin’ Brands Group DNKN is likely to boost its footprint across markets like Boston, Chicago and Philadelphia in the coming months.

Additionally, partnership with Smoothie King is expected to boost Grubhub’s user base. Notably, the company ended first-quarter 2019 with 19.3 million active diners.

Moreover, momentum in gross food sales is a key catalyst. Despite stiff competition, the company is well poised on the back of an efficient delivery network and new quality-focused restaurant partners that include renowned brands like Yelp, Groupon and Yum! Brands.

However, increasing expenses due to planned expansion into new delivery markets are likely to keep margins under pressure. Furthermore, as these markets will take some time to generate volumes, higher upfront costs will hurt profitability.

Zacks Rank

Currently, Grubhub has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Company of the week: DoorDash

Every Friday, we highlight a company that received funding that week. Some are pretty out there. Some might change the world. Take a look!
Every Friday, we highlight a company that received funding that week. Some are pretty out there. Some might change the world. Take a look!

About DoorDash

DoorDash is a VC-backed company whose app provides on-demand food-ordering and delivery services from a wide range of restaurants and menus. DoorDash allows customers schedule delivery and track orders in real-time so they can easily order food delivery at the time and place that works best for them.

Quick stats

Latest financing: $600M Series G on May 23, 2019

Capital raised to date: $1.97B

Investors: SoftBank Group, Dragoneer Investment Group, Sequoia Capital, DST Global, Temasek Holdings and 23 others.

For more information, check out our DoorDash profile preview.

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