DoorDash Inc. is an American on-demand prepared food delivery service founded in 2013 by Stanford students Tony Xu, Stanley Tang, Andy Fang and Evan Moore. A Y Combinator–backed company, DoorDash is one of several technology companies that uses logistics services to offer food delivery from restaurants on-demand. DoorDash launched in Palo Alto and, as of May 2019, had expanded to more than 4,000 cities and offers a selection of 340,000 stores across the U.S., Canada and Australia. The company is currently worth more than $13 billion and is the largest third-party delivery service in the USA, surpassing Grubhub in 2019.
History
DoorDash has raised more than $700 million over several financing rounds from investors including Charles River Ventures, SV Angel, Khosla Ventures, Sequoia Capital, SoftBank, GIC, and Kleiner Perkins. As of May 2019, DoorDash's post-money valuation is $12.6 billion. In October 2017, CFO Mike Dinsdale left DoorDash less than a year after he started working for the company. In March 2018, DoorDash raised $535 million in a Series D round led by the SoftBank Group with participation from existing investors Sequoia Capital, GIC and Wellcome Trust. In April 2018, DoorDash ventured into grocery delivery through a partnership with Walmart. It was reported in December 2018 that DoorDash overtook Uber Eats to hold the second position in total US food delivery sales, behind only GrubHub. By March 2019, it had exceeded GrubHub in total sales, at 27.6% of the on-demand delivery market. In February 2019, DoorDash raised $400 million, bringing the company's total funding to $1.4 billon and reached a total valuation of $7.1 billion. As of May 2019 DoorDash is said to be raising an additional $600 million in funding. As of June 2019 DoorDash remains the leading food delivery service in the United States. On August 1, 2019, DoorDash announced the acquisition of Caviar, a service specializing in food delivery from upscale urban-area restaurants that typically do not offer delivery, from Square, Inc. The purchase price was $410 million. The company announced later in August 2019 that it had acquired Scotty Labs, a tele-operations startup company that focuses on self-driving and remote-controlled vehicle technology. The financial details of the acquisition were not publicly disclosed. As of August 2019, DoorDash announced it will be partnering with Mercato, an e-commerce platform, to help expand its business and reach independent grocers and specialty stores. This partnership allowed the company to make same-day deliveries, servicing 750 independent grocers across 22 states. On February 27, 2020, DoorDash announced that it confidentially filed to go public. In July, DoorDash and Walgreens announced a partnership to have drivers deliver over-the-counter medications and other products from Walgreens.
Criticism and lawsuits
On November 6, 2015, In-N-Out Burger filed a lawsuit against DoorDash claiming trademark infringement and unfair competition. Two months later the lawsuit was dismissed. DoorDash no longer delivers food from In-N-Out Burger. Burger Antics has filed a lawsuit to get DoorDash to stop delivering their food after receiving complaints from their customers. DoorDash delivery workers filed a class action lawsuit for being misclassified as independent contractors. DoorDash agreed to pay $5 million. On July 7, 2018, CBC reported that DoorDash added a restaurant to its service without the restaurant owner's knowledge or consent. Sharif Virani, the restaurant consultant who was interviewed by CBC, stated that several of his clients experienced similar issues and had difficulty in contacting and asking DoorDash to remove their establishments from the delivery list. In May 2020, it was reported that the owner of a pizza restaurant in the US discovered the same situation when he received complaints about deliveries, although his outlets did not deliver. After finding his restaurant added to DoorDash without his permission, he was able to make money buying his restaurant's own pizzas due to the significantly lower price of an item in the restaurant's DoorDash listing coupled with the restaurant still being paid the full amount. On May 4, 2019, DoorDash confirmed 4.9 million customers, delivery workers and merchants had sensitive information stolen via a data breach. Those who joined the platform after April 5, 2018 were unaffected by the breach.
Tipped wage controversy
In July 2019, DoorDash attracted criticism from several publications, including The New York Times, and later The Verge and Vox, for its tipping policy, which, according to Gothamist "really looks, feels, and smells like a swindle." Drivers receive a guaranteed minimum per order, which is paid by DoorDash by default. When a customer adds a tip, instead of going to the driver, it first goes to the company up to the point that the company no longer has to pay the driver the guaranteed minimum. Drivers then only receive the part of the tip that exceeds the minimum. DoorDash announced plans to change its pay model shortly after the New York Times story. A week after the Times article, a DoorDash customer filed a class action lawsuit against the company for its "materially false and misleading" tipping policy. On August 20, 2019, Vox released an article titled "DoorDash is still pocketing workers' tips, almost a month after it promised to stop". On August 22, 2019, DoorDash announced an update to the tipping policy and promised to "roll it out to all Dashers next month".
Allegations of monopolistic behavior
In April 2020, a group of New Yorkers sued DoorDash, GrubHub, Postmates, and Uber Eats, accusing them of using their market power monopolistically by only listing restaurants on their apps if the restaurant owners signed contracts which include clauses that require prices be the same for dine-in customers as for customers receiving delivery. The plaintiffs state that this arrangement increases the cost for dine-in customers, as they are required to subsidize the cost of delivery; and that the apps charge “exorbitant” fees, which range from 13% to 40% of revenue, while the average restaurant’s profit ranges from 3% to 9% of revenue. The lawsuit seeks triple damages, including for overcharges, since April 14, 2016 for dine-in and delivery customers in the United States at restaurants using the defendants’ delivery apps. The case is filed in the federal U.S. District Court, Southern District of New York as Davitashvili v GrubHub Inc., 20-cv-3000. Although a number of preliminary documents in the case have now been filed, a trial date has not yet been set.
