Interest in and use of delivery services has never been higher. Merger, acquisition, or not, Postmates still has a chance to capture a larger slice of the delivery pie. But now's the time to act.
— Kristen Hawley
DoorDash and Postmates have discussed a possible merger, according to a new report from Recode. The talks took place over the past year, although Recode notes that there isn’t a deal firming up at this point — in part, because the companies’ CEOs (Tony Xu and Bastian Lehmann, respectively) couldn’t decide how to handle one person reporting to the other. DoorDash’s SoftBank-led $535 million investment round in March 2018 also changed the nature of the potential deal, according to the report.
As competition in third-party delivery heats up, Grubhub and Uber Eats have emerged as top players, largely thanks to exclusive deals with large national brands. UberEats’ McDonald’s partnership includes 10,000 restaurants. In Grubhub’s most recent earnings call, CEO and founder Matt Maloney said the company would expand to 100 new markets this year, largely thanks to saturation of Yum Brands’ KFC and Taco Bell.
DoorDash works with several large national brands, though doesn’t yet operate under any exclusive contracts of the same size. It does, however, offer delivery for about a fifth of Wendy’s locations. While Wendy’s CEO Todd Penegor said in February that the company would also expand its delivery test to include other providers, he seems happy with the company’s current arrangement with DoorDash. “The overall satisfaction for our delivery is even higher than the satisfaction in the restaurant,” he told investors, citing DoorDash’s method of deploying one courier per order.
Postmates recently inked a deal with Jack int the Box to offer delivery from 1,000 restaurants in 28 markets. Its couriers deliver more than restaurant meals; users can order groceries, beer and wine, or drug store sundries for delivery. It also pushes an unlimited delivery model for $9.99 per month.
In a statement, a Postmates spokesperson declined to comment on rumors of a sale or merger, but shared that “the first quarter of 2018 yielded record-breaking, sales, revenues and margins.” Postmates currently works with 25,000 merchants in 300 U.S. cities and Mexico.
According to Recode, Postmates also explored a sale to Grubhub, which currently works with 80,000 restaurants, mainly in the U.S.
If the companies were to merge, they would hold 23 percent of the food delivery marketshare, according to data from Second Measure, Recode reports. In comparison, Uber Eats holds 20 percent of the marketshare and Grubhub dominates the competition with 52 percent of the marketshare after its acquisitions of Seamless and Eat24.
A spokesperson for DoorDash did not immediately respond to request for comment.