The delivery-app wars are seeing some consolidation as SF-based DoorDash announces the acquisition of rival Caviar for $410 million. That's a tidy return for Square, which was the last buyer of Caviar back in 2014, when the price was $90 million.
DoorDash CEO Tony Xu announced the deal in a blog post late Thursday, saying, "There is a strong kindred spirit between our two companies," and stressing the fact that DoorDash customers will benefit from having a wider selection of restaurants to choose from — DoorDash has focused more on chain restaurants and fast food, while Caviar's restaurant array has been more upscale and curated.
"The Caviar team has built a premium brand built on rich relationships with premium restaurants," Xu writes. "Adding these merchants to our platform will complement DoorDash's merchant selection, ensuring we can cater to everyone and every occasion."
As the SF Business Times reports, DoorDash closed a $600 million Series G funding round in May, and has raised $2 billion since its founding in 2013. And in March, the company reported $7.5 billion in sales, a 280 percent uptick over last year.
Competition in the delivery sphere has been tight, though Xu has said that it is still a wide open market, citing the fact that only 7 percent of "non-pizza" food currently gets delivered. As the New York Times notes, "Postmates, DoorDash, GrubHub and Uber Eats have been locked in an increasingly intense fight for customers, drivers and restaurant clients," and the whole industry and business model came under greater scrutiny this year due to the filing of Uber's IPO.
Per the Business Times, Xu and Square CEO Jack Dorsey saw the deal to acquire Caviar as a no-brainer, and when the offer to sell was made by Dorsey, it was a "short conversation," Xu says.
Just two weeks ago, the New York Times published a piece by a DoorDash/UberEats/Postmates delivery guy, describing his frantic workday in New York City dodging cabs and chasing tips. The piece revealed that DoorDash counted tips against delivery people's base pay, a practice that the company says it has now changed following an "uproar" from customers.