The food delivery and takeout business have been booming since pre-pandemic times and the pandemic has only made these options more attractive to diners looking for a fancy meal and a meal on a budget alike.
DoorDash is yet another platform offering food delivery and takeout services to US diners, offering no contact delivery since the social distancing norms were put into place.
Also Read: How does Instacart Make Money, How does duckduckgo make money, How Does Dollartree Make money, How does Klarna make money, How does coinbase make money on poker, how does Instacart make money, How does webull make money, How does venmo makes money, How does money make money
How does DoorDash make money?
What is DoorDash and how does it work?
A Brief History of DoorDash
What makes DoorDash’s business model so innovative?
DoorDash has made fast progress, overtaking competitors like UberEats and GrubHub with remarkable talent and speed, and it has hence become worthy to question how DoorDash’s business model has caused it to garner so much success so quickly.
One of the ways DoorDash has made strides is by using a strategy of audience segmentation.
Further, DoorDash is dedicated to solving logistical issues and developing a simple, easy-to-use tool that outperforms the competition.
In addition, the Drive app provides access to their huge "Dasher" fleet of drivers, configurable delivery options, and direct point-of-sale integration to Partner Restaurants.
DoorDash needed a strong and original marketing approach to compete against existing meal delivery service providers and win.
Future Growth Engine
DoorDash continued steady growth through 2021 and tripled its sales in the pandemic of 2020. DoorDash grew into an industry behemoth by partnering with restaurants that didn't previously offer delivery.
Grubhub, on the other hand, has traditionally solely dealt with eateries that deliver their food. The firm has also concentrated on suburbs and smaller cities.
DoorDash was positioned for success in 2020 since indoor dining was reduced or stopped in many areas as a result of these decisions.
In addition, the company provides convenience, alcohol, and food delivery services. It's pitching itself to investors as a delivery firm, not just a food delivery company, in an effort to break out of the restaurant delivery intermediary market.
DoorDash has many competitors in the market that are also in the food delivery and takeout business but may have vastly different marketing strategies when compared to DoorDash.
Some of these competitors are UberEats, GrubHub, Zomato, Deliveroo, Slice, Swiggy, Olo, and Postmates.
How Does DoorDash Make Money?
DoorDash makes money in a variety of different ways and it is with these multiple revenue streams that DoorDash has achieved the success it presently holds.
The multiple revenue streams come from varied consumers and users of the applications created by DoorDash. Here is a list of revenue making strategies employed by DoorDash to make money
1. Restaurant Commissions
2. Delivery Fees
Customers who buy food through DoorDash pay the firm's delivery and service costs, which typically range between $5 and $8 per order. This covers the delivery costs.
For a $100 order of food, the customer usually pays a total of $105-$108 on the app to cover the cost of delivering the food to them in addition to the cost paid for the food to the restaurant.
Restaurants can use DoorDash to increase their visibility. While the app lists every accessible eatery, user reviews determine which ones appear first.
Advertising increases a company's visibility on the app and can increase orders. Restaurants, in turn, pay DoorDash for advertising their products or goods on the app, hence creating revenue for the app.
DoorDash offers a membership service called DoorPass to its consumers. Subscribers pay $9.99 per month and receive free delivery and discounted service costs on restaurant purchases over $12 and grocery items over $25.
Customers save an average of $4 to $5 for every order as a result of this. DoorPass improves customer loyalty, which is a difficult task in the industry.
Such loyalty and membership services are common among food delivery apps nowadays and the customer loyalty facilitated by such programs is a fair bait for the minimal loss in revenue sustained on each order by the app as a result of the pass.
5. Corporate Catering
For businesses looking for a catering alternative, DoorDash offers corporate meals. They can place group orders, specify a budget, and have food delivered individually packaged to a central office site or employees' residences if they work from home.
DoorDash charges discounted rates to the businesses for providing these corporate meal plans and their corporate catering business, having shifted to the work from home model along with the employees during the pandemic, has helped DoorDash sustain itself and even make strides during the lockdowns.
6. DoorDash Drive
Rather than using the DoorDash app, DoorDash offers white label delivery services that are linked with a company's systems. DoorDash can work with restaurants or other businesses to handle delivery for orders placed on their website.
For this service, the enterprises pay a set delivery cost to the company which contributes towards the company’s revenue. This also helps DoorDash portray itself more as a technology behemoth to investors rather than just as a food delivery company.
DoorDash is a service that allows convenience stores to deliver retail and domestic items to clients via the DoorDash app. Convenience stores pay a commission of 20% of the service to the company.
This broadens DoorDash’s horizons to delivery of other domestic products also, apart from food from restaurants, hence setting it apart from competitors like GrubHub and UberEats that only focus on food delivery and takeaway.
8. Other Companies
DoorDash has several different businesses that generate money for the company. Caviar, Scotty Labs, and Chowbotics are among them. Caviar is a high-end delivery service that works similarly to DoorDash and is aimed at upmarket eateries.
Chowbotics is a company that offers robots that make custom bowls of cereal, yoghurt, and salad. Scotty Labs is developing self-driving cars.
DoorDash has risen to the top of the online meal delivery business in the United States by combining technology, improved value propositions, and a thorough grasp of the market.
DoorDash has approximately 390,000 Partner Restaurants and 18 million users as of 2021, with a 45 per cent market share. Their rise to dominance in meal delivery has been quick, though not without some setbacks.
DoorDash's track record isn't perfect, with complaints of withholding tips and a data breach in 2019.
However, it's evident that DoorDash has learnt from its past mistakes and will utilise them to improve its service, offers, and policies in the future — as well as to strengthen its brand image.
How do DoorDash drivers make money?
DoorDash drivers can take 100% of the delivery fee paid by the consumer on their order and are also able to make any additional tips or boosts that have been paid by the customer.
How much money does DoorDash get per order?
DoorDash gets 20% revenue from the restaurant with which the order has been placed and makes an additional $5-$8 per order from the customer.
Does DoorDash take money from restaurants?
DoorDash actively takes money from restaurants only for advertising them on the app. Otherwise, it takes a 20% restaurant commission on each order that has been placed with the restaurant via the DoorDash app.