The Covid-19 pandemic has upended the United States economy and wreaked havoc on businesses ranging from global shipping to cruise lines to restaurants. But food-delivery companies are thriving, with DoorDash looking to be the rare winner in its niche.
Since Covid-19 lockdown orders were issued across the U.S. in mid-March and consumers shifted to ordering delivery for dinner, DoorDash’s sales have surged, according to data from Edison Trends, which studies anonymized and aggregated e-receipts from millions of U.S. consumers.
The food-delivery service, which earned the No. 12 spot on the 2020 CNBC Disruptor 50 list, grabbed 45% of third-party delivery orders, followed by rivals UberEats at 28%, Grubhub at 17% and Postmates at 7%.
DoorDash on Thursday confirmed that it raised $400 million in equity capital, selling shares to mutual fund companies T. Rowe Price and Fidelity, along with other investors. This new funding round was led by led by Durable Capital Partners and Fidelity. It raises the company’s valuation to nearly $16 billion, up from the $13 billion value Bloomberg reported in November after the company raised $700 million in a Series G funding round.
This funding deal could push off the meal-delivery giant’s move to go public. In February, DoorDash confidentially submitted a draft S-1 filing in February, the first step toward an initial public offering, to join rivals Uber Eats and Grubhub on the public markets.
The race to become the top delivery provider — and then to maintain that position — has weighed on the SoftBank-backed company, which reportedly lost $450 million last year. In a bid for more market share, DoorDash bought Caviar from Square in 2019 in a $410 million deal.
But then came the pandemic, accelerating consumers’ shift to third-party delivery apps. The NPD Group found that delivery orders soared 67% in March, even as overall restaurant traffic fell 22%.
“For some restaurants, that was their only means of being in business,” said Douglass Miller, a lecturer at Cornell University’s School of Hotel Administration. “The only other option was to physically close.”
The company implemented a number of measures to help its delivery drivers and restaurants struggling with the pandemic. For example, eligible delivery drivers in the U.S., Australia, Canada and Puerto Rico who are quarantined or diagnosed with Covid-19 are receiving up to two weeks of financial assistance.
The company waived or reduced commission fees for local restaurants and added more than 100,000 independent eateries to its subscription program for free to generate sales. Monica Challingsworth, head of global relationships for Synergy Restaurant Consultants, said that DoorDash’s tech savvy has helped the company keep up as the restaurants responded to new conditions under lockdown.