To say that it has been an eventful summer for DoorDash is an understatement. Continuing that trend, the company just announced that it will acquire competitor Caviar for $410 million.
The acquisition is a high note for DoorDash in a news cycle that it has otherwise been tumbling downward in recently.
“Today’s announcement is another important step forward on our mission to empower local economies,” DoorDash CEO Tony Xu said in a statement. “We have long-admired Caviar, which has a coveted brand, an exceptional portfolio of premium restaurants and leading technology.”
A rival platform to DoorDash, Caviar facilitates food delivery, pick-up, and catering services for individuals with higher-end restaurants. They also focus on services for businesses.
“The addition of Caviar’s premium restaurants, with whom DoorDash will work closely to drive their growth, will enable the combined organization to cater to every food preference and occasion,” DoorDash said in a statement. “Caviar’s complementary geographic footprint provides DoorDash with a significant number of new and unique customers, who will benefit from an even broader set of merchants.”
Big Silicon Valley Players
DoorDash’s acquisition of Caviar is a unique shuffling of interests for some of Silicon Valley’s most influential, innovative, and competitive enterprises. Caviar is owned by Square, the payment company that is quickly becoming standard for small businesses and individuals. Square is headed by Twitter founder Jack Dorsey.
“We are increasing our focus on and investment in our two large, growing ecosystems—one for businesses and one for individuals,” Dorsey said in response to the announcement. “This transaction furthers that effort, and we believe partnering with DoorDash provides valuable and strategic opportunities for Square.”
Square has become a mainstay service and product for small businesses and entrepreneurs in need of credit card payment processing. The company has also developed a focus on individual payments with its subsidiary Cash App.
Cash App is a Venmo competitor developed in 2013 after some trial and error. Last year, it was reported that Cash App had as many as seven million monthly users.
Given the success of both of those properties, Dorsey wanted to make sure that the company’s focus is on payments, which is why he was eager to sell Caviar. According to The New York Times, Dorsey made a call to Xu about possibly purchasing Caviar. Xu said that it was a “short conversation.”
A Timely Boost For DoorDash
The acquisition undoubtedly gives DoorDash a necessary boost in a competitive landscape of food delivery apps. For consumers, Postmates, GrubHub, Uber Eats, and DoorDash are mainly interchangeable platforms in terms of the services and pricing they offer.
If there are reasons for consumers to use one over the other, lately they have been negative ones for DoorDash.
The company came under fire last month for its payment policy toward the delivery people who work for them as independent contractors. DoorDash’s policy was calculating tips that deliverers receive into its minimum guaranteed payment, effectively making it so that tips went to the company as revenue instead of to delivery people. The company has around 400,000 delivery people across the country.
The company’s practice became a vehicle for the ongoing broader conversation of how convenience apps treat the independent contractors that make their businesses work. Although initially sticking by the policy, mounting pressures pushed DoorDash to revise it just last week.
The news of DoorDash’s acquisition of Caviar is thus timely in burying that negative publicity and moving forward.
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