Tony Xu, CEO of DoorDash, said the acquisition will allow customers even more choice.
Topline: DoorDash will acquire food delivery rival Caviar for $410 million in cash and preferred stock, DoorDash announced Thursday, further consolidating the competitive delivery market as DoorDash goes up against GrubHub, UberEats and Postmates.
- DoorDash is purchasing Caviar from payments company Square, which bought the company in 2014 for $90 million.
- Gokul Rajaram, Caviar's head, will join DoorDash along with the startup's employees when the deal closes.
- Square shares fell more than 5% in after hours trading.
“We have long-admired Caviar, which has a coveted brand, an exceptional portfolio of premium restaurants and leading technology,” DoorDash CEO Tony Xu said in a release. “The acquisition further enhances the breadth of our merchant selection, enabling us to offer customers even more choice when they order through DoorDash.”
Market Share: Even before the acquisition, DoorDash has been gaining ground on the biggest food delivery incumbents. According to analytics company Second Measure, more people used DoorDash last month than any other food delivery company, earning 34% of all U.S. meal delivery sales. Close behind, GrubHub, which owns Eat24 and Seamless, saw 33% of sales. UberEats had 17% and Postmates had 11%, according to Second Measure.
Key Background: DoorDash has come under fire for how it handles tips for its delivery drivers. But amid public pressure, the company changed its controversial tipping policy last week, which formerly used tips to subsidize a driver’s base wage.
