DoorDash Just Expanded Into an Entirely New Business
DoorDash is going beyond online delivery and has opened its first brick-and-mortar shop: A shared kitchen for four of its restaurant partners.
The company’s first DoorDash Kitchens location in Redwood City, Calif., provides cooking space for Nations Giant Hamburgers, Rooster & Rice, Humphry Slocombe, and The Halal Guys. The kitchen also allows the restaurants the ability to offer food delivery to seven Bay Area cities and, pickup to 13 cities.
“To date, DoorDash has been primarily focused on helping partners grow existing restaurants,” said Fuad Hannon, head of new business verticals at DoorDash. “So this is a really natural extension of what we built our business on.”
The move comes as DoorDash continues to face heated competition from rivals Uber Eats, Grubhub, and Postmates, many of which are rolling out new programs and promotions to try to top each other. DoorDash, the only private company of the four that hasn’t gone public or announced plans to do so, has the lion’s share of online food delivery sales, according to the latest data from market research firms Second Measure and Edison Trends. The company is also the first of the online delivery services to roll out shared commissary kitchen.
The new kitchen also creates new competition for CloudKitchens, the latest brainchild of ousted Uber CEO Travis Kalanick, who has reportedly been working with restaurant companies including Humphry Slocombe in Los Angeles. CloudKitchens allows any delivery service to pick up at its locations. DoorDash Kitchens are exclusive to DoorDash’s delivery service.
At DoorDash Kitchens, up to five restaurants 400 to 600 square-feet of kitchen space, plus shared storage room. DoorDash collects monthly rent from its tenant restaurants, while the restaurants expand without the overhead of opening their own kitchens. DoorDash handles the infrastructure, maintenance, marketing, and delivery from each its kitchens.
Hannon said the kitchen strengthens DoorDash’s portfolio of services, which includes a software product for delivery called DoorDash Drive, data crunching for restaurants, as well as its core food delivery services.
DoorDash, valued at $12.6 billion after its most recent round of funding in May, has been one of the fastest-growing and most financed players since its inception in 2013. To date, the company has raised $1.97 billion and provided service to more than 310,000 restaurants across 4,000 cities in the U.S., Canada, and Australia.
In August, DoorDash acquired Caviar, formerly owned by Square, for $410 million, in a deal that helped it increase its presence in the urban core of major cities.
DoorDash said it will be closely watching the results from the Redwood City kitchen, which opens on Monday, before considering whether to open other locations. The company plans to hire up to 50 employees to handle the logistics and meal prep from the location.
“We’re still in the early innings of understanding what future of delivery looks like,” Hannon said. “We’re still early in our evolution.”
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