On-demand food delivery service DoorDash has purchased higher-end competitor, Caviar, from its current owner, payments company Square. The deal, for $410 million in cash and stock, was announced yesterday and is expected to close sometime this year.
Founded in San Francisco in 2012, Caviar has differentiated itself in the online food delivery space with its premium restaurant offerings, as its name implies. Trendy restaurants like Hayes Valley Spanish spot Barcino and Del Popolo’s wood-fired pizza truck deliver only through Caviar.
In 2014, Square bought the whole Caviar package for about $90 million in stock. The mobile payments company, run by Twitter CEO Jack Dorsey, has operated Caviar since then, but now it’s getting out of the rapidly consolidating mobile delivery market with its sale to DoorDash.
Founded in 2013, DoorDash is much larger in scale and scope than Caviar. The business, which operates in all 50 states and 4,000 cities, is backed by $2 billion in funding — and it’s more than happy to deliver food and drinks to customers from Starbucks and McDonalds.
“Adding these [Caviar] merchants to our platform will complement DoorDash’s merchant selection, ensuring we can cater to everyone and every occasion,” DoorDash CEO Tony Xu said according to a press release yesterday.
In recent weeks, Xu has faced mounting criticism over DoorDash’s tipping policy. Independent contractors who deliver DoorDash orders haven’t received the full tip amount left by customers, a practice intended to help couriers meet delivery minimums. Last week, amid blowback, Xu announced plans to change that system.
What the DooorDash acquisition of Caviar will mean for customers and restaurants remains to be seen. But the move represents further consolidation in fast-tightening market. Going forward, competitors UberEats, GrubHub/Seamless, and Postmates, which could soon go public, will duke it out for delivery couriers, restaurant clients, and customers.