The secret to DoorDash’s delivery dominance? The ’burbs, baybeee

DoorDash rose to delivery dominance by investing in the less-sexy suburbs, but the expansion-minded business model came at a steep cost.


November 12, 2019

Over the past few years, big businesses from Uber Eats to GrubHub have competed to be the one to cook up the most massive food delivery system.

But despite backlash related to its tipping policy, DoorDash surpassed both GrubHHub and Uber Eats over the past year to become the dominant deliverer. 

And now DoorDash is the delivery dynamo to eat beat 

As of September 2019, D-Dash commands roughly 35% of online food delivery sales, well more than GrubHub (~30% market share) and Uber Eats (~20% market share).

Launched in 2013, DoorDash hasn’t been around as long as competitors GrubHub (launched 2004) and Postmates (launched 2011) — although it does predate Uber Eats, which was launched in 2014. 

What it lacks in experience, though, it makes up for in cold hard cash: The delivery dynamo has around $2B in funding since it launched, including a $535m round in 2018 led by controversial Japanese investment giant SoftBank.

But the Big Bucks from SoftBank are only half the story…

DoorDash was only able to hit a growth grand slam by swinging for the fences — the picket fences, to be precise.

Other delivery businesses focused on expanding their services in major cities, but DoorDash instead doubled down on suburbs in an effort to cater to different demographics.

According to Bloomberg, DoorDash operates in 4k towns; Uber Eats, on the other hand, only operates in 500 cities. And, to better serve the ’burbs, DoorDash partnered with almost 90% of the top 100 US restaurant brands, including brands like Chili’s, which operates 80% of its locations in the suburbs.

The suburbs were good for growth…

But they weren’t necessarily good for the business’s bottom line. 

That’s right: Before you start salivating over DoorDash’s delicious business model, be warned: The company’s still not profitable.

Like many other companies that have been turbocharged by investment from SoftBank, DoorDash prioritized growth over profitability — a move that frustrated investors to the point that one even suggested a sale to rival Uber.

It’s a good reminder to investors: Growth comes in many different flavors… but not all of them taste so sweet.

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