If a customer orders a basket of groceries on DoorDash, its platform can nudge the customer to make an order from a restaurant on the drivers' path for a discount.
It also adds complementary benefits for DoorDash. Adding new categories is a step in the right direction for profitability in the long run. Moreover, customers who order convenience or groceries tend to order meals more often as well. If DoorDash can capture even 5% of the convenience and grocery market in the next few years, it could mean revenue increases by more than 500%. DoorDash generally makes its revenue by taking between 10% and 13% of an overall order's value (its take rate). Still, DoorDash is the market leader in convenience delivery, a market it entered only a year ago. As of right now, DoorDash has tiny shares of both of those markets. The two are huge market opportunities, estimated by DoorDash CFO Prabir Adarkar to be $225 billion and $900 billion at the midpoints, respectively. The influx of business allowed it to invest in new delivery categories, like convenience and grocery. And because of the pandemic, DoorDash achieved several years' worth of revenue growth in just one year. So this huge jump in revenue is significant. That was up from just $362 million in the same quarter a year ago (the pandemic didn't close many restaurants until the final two to three weeks of 2020's Q1). Revenue increased to $1.1 billion in the most recent quarter. That isn't to say that it won't eventually happen, just that consumer behavior has not changed all that much yet.
That's certainly good news for shareholders concerned that folks would significantly reduce ordering meal deliveries as restaurants reopened. Here is what CEO Tony Xu had to say in the company's first-quarter conference call:Īnd what I'll say is that the impact of reopening really has been more muted than we expected, certainly, when we were looking at this last fall and even as we're starting to prepare for this toward even last summer. Interestingly, as economies reopen and states ease restrictions on restaurants, consumers are maintaining many of the habits they acquired during the pandemic.
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