Blog / On-Demand App Development / Revealed: The Working, Business Model, and Revenue Sources of DoorDash

Revealed: The Working, Business Model, and Revenue Sources of DoorDash

Doordash Business Model

DoorDash, the startup founded by Evan Charles Moore, Stanley Tang, Andy Fang, and Tony Xu in 2013, has taken the On-demand world by storm. It has not been solely made its services available from 600 to 4,000 cities but also gained the limelight of the market by undergoing into partnership with nearly 80% of U.S. restaurants, popular food chains like Chipotle, Cheesecake Factory, Denny’s, and non-restaurant brands like Walmart. The brand, in just 6 years, has created a bottleneck competition for other players like GrubHub, Zomato, UberEats, and Swiggy, and has gained net worth of $7.1 billion (much nearer to that of GrubHub which is $7.2B) – making it nearly impossible for anyone in the business or mobile app developer to stop thinking about DoorDash’s business model, revenue sources, funding raised, and so on.

So, considering the same, here we will dig deeper into the On-demand market and dig out answers for all such questions related to DoorDash food delivery startup.

But, firstly, let’s go through a few facts and figures about the brand.

DoorDash – A Brief Introduction

  • Founded in: 2013
  • Founded by: Evan Charles Moore, Andy Fang, Stanley Tang, and Tony Xu
  • CEO: Tony Xu
  • Headquarter:
  • Net Worth: $7.1B
  • Number of Cities Available in: 4,000
  • Numbers of Restaurants available on DoorDash: 310,000

When it comes to what is DoorDash, it is a tech company that has streamlined the process of how we get food by cutting down the hassle of last-mile logistics in various cities in the USA and Canada, and facilitating better interactions between local business and customers. DoorDash, on one side, has given local businesses an escape from finding a delivery option, while, on the other side, has offered customers with an advantage to satisfy their taste buds with a vast range of food items from different restaurants and food outlets.

The On-demand delivery brand has gained a huge attention in the market by the constant funding – a glance of which is covered below.

Revenue Growth of Doordash

Now as we have gone through the basics introduction of DoorDash and have taken a glimpse of how it generates revenue, it is likely that you would be looking forward to determining how to create a successful On-demand food delivery app like DoorDash.

But, hold on!

To relish the level of success and revenue DoorDash makes, it is necessary that you first have an idea of what it’s business structure is, how it works, and what business model it follows.

So, taking the same thought forward, let’s begin with the former, i.e, exploring the different segments of DoorDash business.

Business Canvas of DoorDash App – Different Segments It Encloses

DoorDash food delivery app follows a Y- structure business model. It caters to the needs of three different entities – users, drivers (dashers), and partnered restaurants such that it offers users the opportunity to order delicious food from any local store without delivery service, while it provides more business opportunities to restaurants and give job satisfaction to dishers.

Business Model canvas of Doordash

In simpler words, the DoorDash business model works in this way for the three segments:-

For Users

This segment belongs to set of people who don’t know how to cook, have no time or facility for cooking their supper, or are professionals who can’t go out for lunch. The DoorDash offers the following benefits to users:-

  1. Offers the option to choose across a vast number of restaurants across the city.
  2. Avail service 24 x 7.
  3. Provides the feature to track the order placed.
  4. Enjoy exclusive cost-effective and time-saving solutions.
For Dashers

The On-demand food delivery application provides dashers with a chance to earn some money, both as a part-time or full-time job. It avails the following perks to the drivers:-

  1. Good source of income (up to $5 per order).
  2. Get more money based on the size of order, driving distance, wait time, etc. [Read more about DoorDash payment model here: How Dasher Pay Works]
  3. Chance of getting tips from users for quality service.
For Restaurants

Doordash for restaurants has come up as a medium to extend their service in terms of on-demand delivery, run business effectively even when they are in a distant location or have poor sitting arrangements. The app provides them with benefits, such as:-

  1. Reach to a wider audience
  2. Cost-effective and profitable customer engagement mechanism
  3. Get a delivery guy from DoorDash itself.
  4. Effective Branding and marketing, especially when using the advertising on DoorDash platform.

And to interact with all these three segments and reap better benefits, Doordash has worked extensively in building robust customer relationships. They have utilized the power of social media platforms like Facebook and Twitter, and opened the facility of good customer support via different modes, such as email, mobile app feedback page, etc. – giving a new goal to companies investing in mobile app development offering On-demand delivery services.

With this attended to, we are familiar with what are the different segments of the DoorDash business. This implies, it would be the right time to look into how does DoorDash work and thus, make a better strategy for your On-demand food delivery application.

Working of DoorDash

DoorDash app acts as a bridge connecting users, delivery person, and local businesses who have been closely connected to each other in the food domain. The application follows a four step model to provide the best of services to both users, drivers, and local food businesses:-

Decide What Food Item to Order

DoorDash app provides users with an opportunity to place a customized order from 100+ restaurants using a search filter button. The application also provide them with an option to favorite (bookmark) the recently selected restaurant to ease the process of making an order for the next time.

Pay for Your Order

Once the order is placed, the next step that users need to consider is the payment process. In this step, one has to introduce the restaurant and delivery location. This is because the DoorDash algorithm will calculate the charges for the order based upon the distance between the pickup and drop off location.

The DoorDash application will share the charges fee, on which users can pay the bill via Google Pay, credit/debit card, or other available payment options.

Check the Status

When the payment process is executed successfully, the user will get a confirmation and the respective restaurant will begin to prepare the food. The food order will then be picked by the dasher to deliver at your doorstep.

To make this process transparent and far convenient, DoorDash app has also added the feature of tracking your food order and get a real-time status.

Enjoy Delivery

The last step of the working principle of DoorDash is to receive your order from the dasher. Now, here, the delivery fee has been paid already. But, you can still pay a tip to the Dasher as per your choice.

And finally, taste the best cuisines at your home while being lazy in the blanket and watching Netflix.

So, this was all about how Doordash works.

Wish to take a quick recap? Check this video:-

Now, while we have covered how this mobile application works and bring more revenue/options for users and local food businesses, let’s look into how the app itself makes money. Or better say, the business and revenue model of DoorDash mobile app.

DoorDash’s Business and Revenue Model

When talking about how Doordash make money, it follows three revenue strategies:-

Delivery Fees

One of the most prominent revenue sources of DoorDash is delivery fee. The startup usually takes around $5 to $8 per order. However, this value varies depending on different factors, such as time of day, distance between the pickup and dropoff location, relationship with the restaurant, and more. And, in return, they send their own hired team of drivers to deliver the order.

Commission

This On-demand food delivery startup, just like credit-card companies, considers a commission fee from restaurants for every sale as a part of its revenue generation model.

When looking into how much does Doordash charge restaurants, the general value is about 20% for every order. However, this varies depending on different factors like location, ratings, food festivals, promotions, etc.

Though the commission fee of DoorDash is quite high as compared to its competitors, aka, GrubHub which takes 13.5% on an average and Delivery Hero that asks for 10-11% per order, food businesses pick DoorDash as their delivery partner. And the reason behind this is that DoorDash has proven itself to be able to bring more sales, improve brand reputation, and make the customers satisfied – which, in the long run, is a win-win situation for the restaurants.

Advertising Pay

The option of advertising on DoorDash platform is the third source of revenue considered by the brand. The On-demand food delivery brand ask for some extra amount of money from the restaurants to show their names on the top of the search list and thus, encourage users to place an order from their outlets.

This advertisement fee again varies depending on several factors, such as restaurant’s location or the type of cuisine they serve.

Besides, the brand has also channelized their services via a website and mobile app. This has not been solely introduced a new mode of customer acquisition and engagement, but also contributed to the Doordash net worth and make various businesses take interest into the idea of designing their own such application and look into the how much does it cost to make an On-demand delivery app.

Future of DoorDash

Doordash, in its 6 years of journey, has stepped into retail delivery domain with a grocery partnership with Walmart. It has expanded its business to around 4,000 cities in the USA and Canada itself, and is expected to enter many new cities in the future.

The on-demand food delivery startup, with options like 30-minute delivery windows and a comprehensive insight into the customer data, has already surpassed UberEats and GrubHub (in sales), and is expected to become the ruler of the on-demand delivery economy in the coming years.

In short, the future of DoorDash is going to be brighter while following the same business and revenue model – making it difficult for anyone to overlook the glory of the brand and encouraging others to invest in On-demand app development.

Anand Prakash
Anand Prakash

Co-Founder and AVP Technology at Appventurez Mobitech. A tech enthusiast who has broad expertise in delivering end to end software solutions. He is an expert technocrat ho has in-depth knowledge and is highly experienced in delivering solutions for Android, Xamarin, Ethereum Smart Contracts, ASP.net.

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