DoorDash

DoorDash, Inc. operates an online food ordering and food delivery platform. It is based in San Francisco. With a 56% market share, it is the largest food delivery company in the United States. It also has a 60% market share in the convenience delivery category. As of December 31, 2020, the platform served 450,000 merchants, 20,000,000 consumers, and 1 million deliverers.
History.
In the fall of 2012, Stanford University students Tony Xu, Stanley Tang, Andy Fang and Evan Moore (now a partner at Khosla Ventures) were getting feedback on a mobile app for small business owners when a macaroon store owner asked for help using technology for deliveries.
In January 2013, they launched PaloAltoDelivery.com in Palo Alto, California. Early customers were mostly students at Stanford University. In the summer of 2013, it received $120,000 in seed money from Y Combinator in exchange for a 7% stake. It incorporated as DoorDash in June 2013.
In October 2017, CFO Mike Dinsdale left DoorDash less than a year after he started working for the company.
In December 2018, DoorDash overtook Uber Eats to hold the second position in total US food delivery sales, behind GrubHub. By March 2019, it had exceeded GrubHub in total sales, at 27.6% of the on-demand delivery market. By early 2019, DoorDash was the largest food delivery provider in the U.S., as measured by consumer spending. It maintained that market position in 2019.
In October 2019, DoorDash opened its first ghost kitchen, DoorDash Kitchen, in Redwood City, California, with 4 restaurants operating at the location.
By June 2020, DoorDash had raised more than $2.5 billion over several financing rounds from investors including Y Combinator, Charles River Ventures, SV Angel, Khosla Ventures, Sequoia Capital, SoftBank Group, GIC, and Kleiner Perkins.
In April 2020, during the COVID-19 pandemic, DoorDash announced it had "stockpiled tens of thousands of gloves and bottles of hand sanitizer" and was offering them to delivery drivers for free. The company also said it had changed the default drop-off option to contactless delivery. That month, DoorDash became the fastest growing food delivery service.
In October 2020, the company launched its "Reopen for Delivery" program to have brick-and-mortar restaurants that have closed due to the COVID-19 pandemic partner with local ghost kitchen operators to offer food delivery- and pick-up-only service.
In November 2020, DoorDash announced the opening of its first physical restaurant location, partnering up with Bay Area restaurant Burma Bites to offer delivery and pick-up orders.
On December 9, 2020, the company became a public company via an initial public offering, raising $3.37 billion.
Controversies and criticism.
Withholding of tips.
In July 2019, the company's tipping policy was criticized by "The New York Times", and later "The Verge" and "Vox" and "Gothamist". Drivers receive a guaranteed minimum per order, which is paid by DoorDash by default. When a customer added a tip, instead of going directly to the driver, it first went to the company to cover the guaranteed minimum. Drivers then only directly received the part of the tip that exceeded the minimum. A DoorDash customer filed a class action lawsuit against the company for its "materially false and misleading" tipping policy. The case was referred to arbitration in August 2020. Under pressure, the company revised its policy. The company settled a lawsuit with District of Columbia Attorney General Karl Racine for $2.5 million, with funds going to deliverers, the government, and to charity.
Antitrust litigation.
In April 2020, in the case of "Davitashvili v. GrubHub Inc." DoorDash, Grubhub, Postmates, and Uber Eats were accused of monopolistic power 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 stated 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 treble 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. Although several preliminary documents in the case have now been filed, a trial date has not yet been set.
Data security.
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.