Which company is winning the food delivery war?

Delivering America’s meals has become very big business. Sales across the industry have exploded in the past year, and DoorDash continues to hold its market-share lead, even before factoring in sales from Caviar, the smaller rival DoorDash announced plans to acquire in August.

DoorDash earned 34 percent of U.S. consumers’ meal delivery sales last month, while Grubhub and its subsidiaries, which include Seamless and Eat24, took in 30 percent. (Purchases made through Tapingo and LevelUp, which Grubhub acquired in late 2018, are not included in our analysis.) 

DoorDash’s sales overtook Uber Eats’ in October 2018, and Uber Eats earned 20 percent of U.S. meal delivery spending in September 2019. (From May through August 2019, some Uber Eats purchases became indistinguishable from Uber rides purchases, so Uber Eats’ sales and market share appeared artificially low during that time.)

Meal delivery has long been a crowded field in the United States, and this summer proved there’s not enough room for everyone. Amazon Restaurants, which had around half a percent of U.S. market share in May, announced in June that it was shutting its doors for good. And Caviar earned just 3 percent of U.S. sales in July, its final month before the DoorDash acquisition announcement.

Another big player in the industry, Postmates, confidentially filed for an IPO in February. Rumors swirled that it may become public in September after raising $225 million, but CEO Bastian Lehmann recently declined to say when the company would move forward with its IPO, citing “choppy” market conditions. Postmates currently earns 10 percent of the U.S. meal delivery market.

Sales across this industry are growing, but DoorDash’s growth stands out. In September, the company saw a staggering 114-percent year-over-year jump. Besides diners, the company also brings investors to the table. In May, DoorDash announced raising $600 million in its fourth funding round in 14 months, and IPO rumors are flying. 

In September, sales for the industry as a whole rose 40 percent year-over-year, as more Americans realize how much they like eating restaurant meals at home. In fact, 25 percent of Americans have ever ordered from one of the services in our analysis, up from 19 percent a year ago.

Grubhub and DoorDash control different parts of the country

The top two food delivery services may be close in U.S. market share, but their strongholds are in different regions. Grubhub is the most popular service in many Northeastern metro areas, including New York, Boston, and Philadelphia. DoorDash rakes in more than half the sales in the two biggest Texas metros, Dallas-Fort Worth and Houston.

Subscription meals have appeal

As meal delivery services look for new ways to grow in cities big and small, one emerging answer is subscriptions. In 2016, Postmates launched Postmates Unlimited, which grants members free delivery for a membership fee of $9.99 a month or $99.99 a year. DoorDash followed suit in 2018 with DashPass, and Uber Eats is reportedly testing a combined subscription plan for food, rides, bikes, and scooters.

In September, 16 percent of Postmates customers were subscribers, a count that’s held relatively steady for the past year. DashPass, which has existed just over a year, attracted 10 percent of DoorDash’s customers.

Restaurant delivery partnerships pay off (for the restaurants)

Another very popular growth strategy for meal delivery companies has been forming partnerships with the nation’s top chain restaurants. In late 2017, DoorDash struck a deal with Wendy’s, and Uber Eats inked a contract with the biggest fast food chain in the country: McDonald’s. (The exclusivity ended this summer when McDonald’s announced it would also be working with DoorDash.)

Uber Eats also added Starbucks to its partners. DoorDash now boasts the likes of Chick-fil-A, Chipotle, and Chili’s, while Postmates has Pei Wei and Popeyes. Grubhub teamed up with Yum Brands restaurants Taco Bell and KFC, and it also integrated with Yelp’s platform, allowing users to order from Grubhub’s network of restaurants directly on Yelp.

As Uber Eats and Grubhub public filings show, these partnerships don’t always lead to revenue. Often, partners pay the delivery services lower fees, decreasing their take rates or even causing them to lose money. But the partners often have huge customer pools, many thousand locations and impressive advertising reach, all of which have delivery services betting that joining forces will pay off in the long term.

The partnerships are paying off for many of the restaurants. The Cheesecake Factory and Chipotle have publicly credited DoorDash with boosting their revenue. In September 2019, Second Measure data shows 8 percent of The Cheesecake Factory’s sales came through DoorDash (before subtracting DoorDash’s cut or the delivery tip). The delivery service accounted for 6 percent of September sales at Buffalo Wild Wings, and 7 percent at Chipotle.

Fewer customers are loyal to a single service

Whether by forming partnerships with restaurants or expanding into new cities, companies are proving there’s room for this market to keep growing. But the battle for customers is likely to intensify. That’s because fewer of today’s diners are loyal to just one service. For example, in the third quarter of 2017, 83 percent of Grubhub’s customers didn’t use other meal delivery services. Two years later, it’s fallen to 61 percent, as competing services woo customers with different restaurant offerings and promotional prices.

Caviar, which does a lot of its business in Grubhub territory, has the lowest percentage of exclusive customers (35 percent). DoorDash just edges out Waitr for the highest percentage of exclusive customers (63 percent). All the services in our analysis have a lower percentage of exclusive customers than they did two years ago.

Not surprisingly, the biggest meal delivery services are also the most likely to share customers. At least 21 percent of diners from every company also ordered food from top competitor DoorDash in the third quarter of 2019.

As more restaurants form exclusive delivery partnerships, more diners are going to have to hop between apps to cover all their favorite takeout spots. The least loyal customers, it seems, will also be the most well fed.

Check back monthly for the latest updates in the meal delivery wars, or request a product demo to see the data for yourself.

Don’t forget: We’re hiring.