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How Does DoorDash Make Money (Business and Revenue Model)

The DoorDash business model

How Does DoorDash Make Money?
Here’s what you should know:
  • What is DoorDash, and how does DoorDash work?
  • How does DoorDash make money?
  • DashPass (Subscription)
  • Fees (delivery fees, service fees, and small order fees)
  • DoorDash Storefront
  • DashMart
  • Restaurant Partners (commission)
  • Growth through acquisitions
  • Gift Cards
  • DoorDash brick-and-mortar store
  • Selling products (e-commerce store)
  • DoorDash Catering
  • DoorDash’s profit and revenue
  • What is the DoorDash business and revenue model?
  • DoorDash’s funding and valuation

How does DoorDash make money? Here is a full, in-depth, breakdown of their ten (10) revenue streams and the different products and services they offer, as well as the DoorDash business model, their year-over-year revenue, and how DoorDash works.

What is DoorDash, and how does DoorDash work?

DoorDash is an online food delivery and ordering service that connects restaurants and convenience stores with customers.

Founded in 2013 by Tony Xu, Stanley Tang, Andy Fang, and Evan Moore, DoorDash held its initial public offering on December 9, 2020.

With a 50 percent market share in the U.S, DoorDash has the largest food delivery market share in the U.S with more than 20 million active customers using the service. Beating out the of their competitors like Uber Eats, Grubhub, and Postmates.

Some of DoorDash’s competitors include PostmatesUber EatsGrubhub, Gopuff, Instacart, and other food delivery services.

DoorDash App in Apple App Store | DoorDash Business Model | How Does DoorDash Make Money?
Source: Apple App Store | DoorDash

How does DoorDash make money?

So, how much money does a 50 percent market share in the U.S. look like?

Well, DoorDash has an estimated 20 million active users and is partnering with more than 310,000+ businesses nationwide across 4,000 U.S. cities.

DoorDash also does business in Canada and Australia. Operating in 150 cities throughout Canada and also in Australian cities Melbourne, Sydney, Geelong, and Brisbane.

Below is a breakdown of the 10 ways DoorDash makes its money and they make from each service they offer.

Here are the 10 ways of how DoorDash makes money (in 2021):

DoorDash has a revenue model that makes money in ten (10) ways.

#1. DashPass (Subscription)

In August 2018, DashPass launched a subscription service option that provides unlimited deliveries with $0 delivery fees on orders over $15 to paying members.

  • $9.99 per month
DashPass | How Does DoorDash Make Money?
Source: DoorDash

Note: Their are more than 1.5 million DashPass subscribers.

#2. Fees (delivery fees, service fees, and small order fees)

DoorDash tacks on three (3) fees to each order including delivery fees, service fees, and small order fees.

  • Delivery Fee: $1.99 – $4.99
  • Small Order Fee: ~ $2.50
  • Service Fee: ~ 9% – 11% of the subtotal

* DoorDash notes on their website that fees will vary based on location and demand, etc.

#3. DoorDash Storefront

DoorDash Storefront is software for websites to integrate simple online ordering, pickup, and delivery experiences for restaurants and their customers – basically what Shopify is for product companies.

Though DoorDash says it’s commission-free, forever. Merchants will still pay a fixed monthly subscription fee after the promotional period ends* – which includes:

  • Monthly software fee for every location
  • One time set-up fee for every location
  • Merchant delivery fee per transaction
  • Credit card processing fee per transaction
DoorDash Storefront | DoorDash Revenue Model
Source: DoorDash

* The promotional period lasts until April 1, 2021, after that all accounts will revert to standard product pricing.

#4. DashMart

DoorDash expanded its delivery service into retail – a convenience store delivery service. Now delivering more than just prepped food, DoorDash now delivers household essentials and more with DashMart.

The DashMart service has more than 2,500 convenience stores across more than 1,100 cities nationwide – including retail giants like CVS, Walgreens, 7-Eleven, Wawa, and more.

#5. Restaurant Partners (commission)

DoorDash partners with over 310,000+ businesses across the U.S, Canada, and Australia.

The way it works is, every time a transaction is complete on their marketplace, DoorDash gets a percentage of the order subtotal, called a commission.

Commission:

  • up to 15% of the order subtotal
DoorDash Partners | DoorDash Business Model

#6. Growth through acquisitions

Doordash is the parent company to 4 companies: Caviar, Scotty Labs, lvl5, and Rickshaw.

  • Scotty Labs, a teleoperations company focused on self-driving vehicle technology, was acquired by DoorDash in 2019 for an undisclosed amount.
  • Caviar, acquired by DoorDash in 2019 for $410 million, is a food-ordering and delivery service.
  • lvl5, acquired in 2019, is a computer software company that provides mapping to autonomous vehicles and robots using computer vision.
  • Rickshaw, acquired in 2017 by DoorDash, is a delivery network that partners with courier companies for delivery to customers.

Caviar made up roughly 19%, $190 million, of DoorDash’s $1 billion revenue in 2019.

Note: Two of their acquisitions are companies that specialize in autonomous vehicles, suggesting DoorDash is headed toward self-delivery food service using self-driving vehicles in the future.

#7. Gift Cards

DoorDash also sells gift cards that customers can purchase for friends, family, colleagues, etc.

Pricing:

  • Solo gift cards: $25, $50, $75, $100, $200, 500
  • Bulk gift cards: minimum unknown
Source: DoorDash

#8. DoorDash brick-and-mortar store

DoorDash recently partnered with Burma Superstar, a San Fransisco restaurant, to open their first brick-and-mortar restaurant, Burma Bites located in Oakland, CA.

Built to be, what they call, a “quick-service restaurant” experience. Burma Bites is takeout and delivery only using DoorDash’s online and delivery infrastructure.

  • Menu prices range from $2.95 to $20

#9. Selling products (e-commerce store)

DoorDash also sells its own merchandise as an option to its partners – Dashers, and merchants. They partner with Overture to handle and sell all DoorDash-branded products from their e-commerce store. Revenue splits are not known.

Source: DoorDash

Dashers can purchase anything from apparel to delivery bags to accessories. Offering things like lanyards, car stickers, and baseball caps all the way to more expensive items like hoodies and biker bags.

  • Prices range from $5 to $44.99

Merchants can purchase everything from marketing materials to PPE to apparel. Selling things like sidewalk chalkboards to patio heaters.

  • Prices range from $0.24 to $2,307.60

* DoorDash makes it clear that they do not require Dashers to purchase equipment to be a Dasher.

#10. DoorDash Catering

DoorDash also taps into the business-to-business (B2B) side by offering catering to corporate clients.

It’s the same as resturant-to-customers. All a partnering merchant needs to do is sign up to accept orders from corporate clients as well.

DoorDash’s profit and revenue

So what does revenue look like for a company that has 50 percent of the market share of food delivery?

DoorDash closed out 2020 with $1.92 billion USD in revenue.

Note: Because DoorDash is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the SEC. You can find all of DoorDash’s publicly released financial reports through their annual report.

What is the DoorDash business and revenue model?

DoorDash makes money through a few revenue models that they combine within their company, they are:

  • Software as a service (SaaS) business model
  • Fee-for-service (FFS) business model
  • Commission based business model
  • B2B2C (partnerships) business model
  • Marketplace business model
  • Transaction-based business model
  • Mergers & acquisitions (M&A) business model

DoorDash’s funding and valuation

According to DoorDash’s crunchbase profile, DoorDash has raised a total of $2.5 billion over 11 rounds.

DoorDash held its initial public offering on December 9, 2020, and is valued at $12.6 billion, as of 2019.