The Future of Food Delivery Just Got Flatter

DoorDash, the delivery service that’s probably brought McDonald’s, Wendy’s and Chipotle to your door, has acquired Caviar, the delivery app that sold itself as the bougier option — where upscale restaurants like i Sodi in NYC, Destroyer in LA, and Duck Duck Goat in Chicago deigned to sell their wares. The sale, worth $410 million in cash and DoorDash stock, represents a merging of the extreme high and low ends of modern-day food delivery. More broadly, the sale represents another step in the consolidation of the delivery market, a space where platforms once clamored to get into but where few have discovered a way to actually make money at it. And that’s a bad thing for diners, restaurants, and workers.

Caviar, which launched six years ago with 30 restaurants in San Francisco before expanding to other major cities like New York and Seattle, has always marketed itself as a premium alternative in a saturated marketplace (just look at its name). The app boasted a sleek design, pickier offerings that gave off a sense of curation (in the beginning, there was generally only one vendor for each type of cuisine), its own delivery fleet of “food messengers,” and an exclusive selection of restaurants that otherwise didn’t offer delivery. In 2014, Caviar was acquired by mobile payment company Square in a deal reportedly worth about $90 million in stock, likely as a way to bridge the gap between Square’s ordering app and actual delivery.

DoorDash’s purchase of Caviar opens the door for its platform to offer customers a full range of dining choices, from the lower-end options like McDonald’s that make up DoorDash’s existing offerings (and tend to be present on multiple delivery platforms), to the higher-end — and more expensive — restaurants that have been exclusive to Caviar. “Adding these merchants to our platform will complement DoorDash’s merchant selection, ensuring we can cater to everyone and every occasion,” DoorDash CEO and co-founder Tony Xu said in a press release, though it’s ambiguous if Caviar will retain its name and separate branding. Should Caviar’s restaurants get rolled fully into DoorDash, it’ll be interesting to see if the Momofuku Nishis of the world stick with a platform where a diner can add a McFlurry to their order for dessert. (If not, if not, it’ll be a bummer for those nights when you’re having a “treat yourself” or “fuck it” moment large enough to look past Caviar’s exorbitant delivery fees.)

The acquisition aligns DoorDash and Caviar as one of the Big Four that now exist in the delivery space, joining Postmates, UberEats, and GrubHub/Seamless (Amazon’s foray into restaurant delivery, Amazon Restaurants, folded in June 2019 after a four-year run). According to data from analytics platform Second Measure, which analyzes debit and credit card transactions, in 2018, Grubhub/Seamless had the largest delivery market share in the U.S. with over 50 percent; it was the sole delivery service to report a positive operating income last year. UberEats, with its massive fleet of Uber drivers, calls itself the largest delivery company outside of China, but stakes that claim while operating with an eye-raising $7.9 billion deficit (and with just under 20 percent of the U.S. market). Postmates, meanwhile, is prepping for an IPO that values its business at $1.85 billion. DoorDash, which most recently made headlines for a controversial tipping policy that drew public outrage, is also not yet profitable as a business, though a new round of investment funding in June valued its business at $12.6 billion.

With those major players drawing millions, if not billions, of investment dollars — and in the case of Uber, are able to stomach yearly operating losses larger than the GDP of some countries — it’s the probably end of the line for new players or attempts to further disrupt the delivery space, at least among U.S.-grown companies. The past decade has seen the rise of these delivery services that rely on gig labor and inflated valuations bolstered by venture capital, but it’s only a matter of time before investors come calling, wanting nothing less than an exponential return on the millions they pumped into these tenuously built apps that changed how consumers dine.

So. It’s the beginning of the end; it’s the contraction of the ecosystem. Once there’s no more disruption, what are we left with? A system that exploits both restaurants and the workers who deliver their food, shaving away profit margins and pay stubs for the benefit of middlemen CEOs whose very business models are predicated on that exploitation. And, apparently, a one-stop shop where Via Carota’s perfectly draped pasta exists alongside a Chipotle burrito bowl, double meat.

• DoorDash is buying Caviar from Square in a deal worth $410 million [TechCrunch]
• DoorDash to acquire Caviar [DoorDash]
• Delivery Apps Aren’t Getting Any Better [E]
• All delivery coverage on Eater [E]