You’re definitely not lacking in choices regarding having food delivered to your doorstep in the US. On-demand food delivery is a somewhat crowded industry & particularly in the USA, with GrubHub and UberEats competing for business. To make it a goto meal delivery option for hundred & thousands of users, it takes bold & calculated moves to beat the competition.
From its earliest days as a logistics company to a renowned food delivery brand, DoorDash has expanded into delivering on-demand food to your doorstep. Since its launch in January 2013, this unicorn brand has acquired 4 companies, namely Rickshaw, lvl5, Caviar, and Scotty Labs & become a top player in this market.
In addition to generating interest in on-demand app development, this has encouraged entrepreneurs and investors to investigate the “DoorDash Business Model.” But before we dig into what are the reasons for Doordash’s success? or How does DoorDash make money? Or What is the DoorDash revenue model? First, let’s have a brief overview of What DoorDash is & how an entrepreneur can benefit from its revenue-earning method?
An Insight Into DoorDash
Starting the journey with a testing platform named “PaloAltoDelivery,” Four Standford graduates launched a disrupting food delivery service later known as DoorDash. Launched in 2013 & headquartered in San Francisco, the company holds a whopping 65% of the market share in the USA alone.
What Type of Business Is DoorDash?
It is an America-based prepared food delivery service connecting local cafes and restaurants with delivery made possible either by self-employed or independent contractors.
Probe through our best food delivery apps worldwide and see where DoorDash stands among other top players worldwide.
The Growth of DoorDash has been Phenomenal!
DoorDash has been expanded to more than 7000 cities, and more than 390K stores across America, Canada, Australia, & Japan.
Since its inception, this incredible on-demand food delivery service has been doing great
Surpassed GrubHub in 2019, & became the best delivery service for prepared food.
DoorDash was the employer for 2019.
More than 1 million DoorDash couriers or Dashers.
From a total of $900 million in revenue for 2019 to $1.6 billion in Q2 of 2022.
Networth of DoorDash as of January 30, 2023, is $21.96B.
DoorDash has raised a total of $2.5B in funding over 13 rounds. Their latest funding was raised with a total of $400M on Jun 18, 2020, from a Series H round. Here is the complete funding & growth timeline of the world’s largest on-demand food delivery giant.
As we move forward, let’s look at “How DoorDash Works” & factors that contribute to DoorDash’s strategy and business plan.
How DoorDash Works? A 4-Step Process
DoorDash is an online food delivery service that adopted a platform-to-customer model & allows its customers to order scrumptious food from its partner restaurants at their doorstep in a few clicks.
Well, customers can either get their food from a restaurant itself or through a dasher. Users can easily access the app through Android or iOS devices or a website. But, The question is, how does a DoorDash delivery service work? Let’s look at how your food gets from a restaurant to your doorstep:
First thing first, download the app to place an order & get your favorite food in minutes.
After giving access to their geographic location, users can choose from a vast range of cuisines from different restaurants, including Taco Bell, Pizza Hut, Subway, and KFC – to name a few.
And you are done with placing an order, but what’s next? of-course the payments!
DoorDash has made it easy for customers to enjoy their meals without the hassle of worrying about bank or cash payments. It comes with in-app payment options for prompt & easy payments.
However, the delivery charges vary on the distance between the pick-up & drop-off location.
Once the payment has been received, the order is directed to the restaurant, which starts preparing the meal as per client instructions.
Next important step after getting the food ready is to dispatch it to the customer. Dashers (a name for delivery personnel) will pick up the order from restaurants & will deliver it to the customer’s location.
Once your order is out, locate your rider with the in-app tracking feature available for DoorDash users. Not only that, but restaurants can also track the driver to calculate dispatch time.
Finally, your wait is over & the delicious food is at your door. Well, users can tip the delivery boy & he can retain 100% of it. But that’s not mandatory.
DoorDash Revenue Model: How Does It Work?
The journey of DoorDash may seem like a piece of cake to many, but it takes a lot of backstage effort to present something mesmerizing. Like any other startup, the early days of DoorDash were not without challenges. Despite all the difficulties this on-demand food delivery service faced, they have generated a healthy amount of funds for the business. However, generating funds is not a success, but making your business a profitable venture is a game.
The revenue generation model is vital to a company’s growth, whether a startup or a well-established business. To make money, this model should be quite strategic. Let’s have a look at how DoorDash has planned its revenue strategy and what are the ways through which they are making money every year without getting a hit.
In addition to maintenance costs, sales costs, Dasher’s salary, and staff retention, DoorDash’s revenue strategy also includes on-demand app development costs.
DoorDash Earning Sources: How They Make Money?
1. Commission-Based Earnings
DoorDash charges a percentage of your order total with every successful transaction. Give your restaurant an upgrade with one of our 3 plans:
Basic: Pay just 15% commission, with higher delivery fees for customers and limited delivery zones.
Plus: Enjoy 25% commission with lower delivery fees, a wider delivery area, and loyalty program perks.
Premier: Make the most with a 30% commission, the lowest fees, extensive delivery coverage, loyalty program benefits, and a guaranteed 20 monthly deliveries or a fee refund.
2. Advertisement-Based Earnings
Bringing more money to the table, DoorDash started a marketing program. Get noticed on DoorDash! It allows you to boost the restaurant’s visibility and attract more customers by paying for top placement on the app.
DoorDash’s ranking & marketing system helps your business stand out and grow.
3. Delivery fee Model
While you are making your taste buds dance, DoorDash is earning a handsome amount through delivery charges & FFS (Fee for Services like small orders). The delivery fee is calculated based on distance, with an average fee of $5 to $8. You can be charged in three ways including:
Delivery Fee ($1.99-$4.99).
Small Order Fee (~$2.50).
Service Fee (~9-11% of subtotal).
4. DashPass: A Subscription Model
It is one of the strongest revenue streams for DoorDash. With 1.5 million subscribers nowadays, the program offers loyalty to its customers & helps them score big savings with DashPass. You can either enjoy reduced service fees on all orders over $12 or even free deliveries for just $9.99 per month.
Less money, more happiness.
5. DoorDash’s Corporate Catering
Other than that, DoorDash is perfect for businesses looking to treat their employees to delicious meals at discounted prices. It offers unbeatable corporate order prices, attracting a greater customer base.
Going Beyond Food Delivery!
DoorDash Delivers More Than Just Food. It is a multi-revenue powerhouse bringing much more revenue than you expect. From company acquisitions to DashMart, gift cards, DoorDash store, and DoorDash for work, this food delivery platform is raking in big bucks!”
What Future Holds For DoorDash? Summing It Up
DoorDash is taking over the food delivery game! With the acquisition of Square’s Caviar and sponsored AR lenses, DoorDash is giving Snapchat users a virtual taste of top restaurant chains like Cheesecake Factory, Baskin Robbins, Chili’s, and Outback Steakhouse.
As DoorDash continues to grow and improve, entrepreneurs are taking notice and seeking ways to reduce app development costs while maximizing profits with DoorDash-style businesses.
What We Have For You!
In the start, DoorDash’s significant networking was done via a website, but with the increase in demand for mobile applications, they decided to have a mobile application for iOS first and later got one for Android users.
From searching nearby restaurants to how to use app guide. DoorDash has a feature-loaded app and knows how to target a wider audience. If you are inspired by DoorDash’s incredible success over the last years and have an idea, what are you waiting for?
Get a customized DoorDash Clone now and launch the next disrupting food delivery platform.
At CodesOrbit, we not only offer clone application development services but also offers services for native, cross-platform development, web & e-commerce application development & much more.
Contact us to get a quote for your next big application.