DoorDash Dominates Delivery Market

Further flexing its dominance of the food delivery market, DoorDash, Inc. will acquire Wolt Enterprises OY in an all stock deal valued at approximately $8 billion. 

This acquisition comes on the heels of DoorDash’s successful IPO last December, when it raised $3.4 billion. Deemed one of the hottest IPOs of 2020, DoorDash’s entry into public markets concluded a year of explosive revenue growth for the company. 

While the COVID-19 pandemic hurt many industries, particularly restaurants, DoorDash and other food delivery companies benefited greatly from the shutdowns. With restaurants outright closed to in person dining – and even once they reopened, many former customers were hesitant to return – consumers turned to DoorDash and other providers to enable them to eat at home. This served as a lifeline for suffering eateries and enticed new clients onto the apps. 

According to McKinsey, the food delivery market doubled in 2020 alone and is valued at $150 billion as of Q3 2021. 50% all American consumers have ordered food from a food delivery app, which is up from 44% of Americans as of October 2020. And DoorDash has come to dominate this booming market: 57% of all such sales were via its app. This compares to Uber Eats’ 24% share of the market and Grubhub’s 15%. But even with all of its success, DoorDash continues to chase profitability, losing significant sums as it chases that market share. 

Source: Bloomberg Second Measure

This latest deal represents further consolidation in the acquisitive market. Rival Uber Technologies, Inc., which runs Uber Eats, acquired Postmates Inc. in July 2020. 

This latest acquisition expands DoorDash’s geographic scope. Based in Helsinki, Finland, Wolt delivers from restaurants and shops across 23 countries. While DoorDash has historically focused on the US and Canadian markets, it has recently expanded to Australia and Japan. Wolt’s focus on European markets with more recent expansion into Asia complements DoorDash’s global footprint. As the companies’ joint press release put it, “Joining forces with Wolt will deepen our pool of superb talent and allow us to accelerate our international growth, while elevating our focus on the U.S.”

According to Matterhorn’s M&A database, which harnesses both AI and attorneys to digest the granular deal points of publicly announced transactions, Wold was advised by law firms Skadden, Arps, Slate, Meagher & Flom LLP and Roschier Attorneys Ltd., and financial advisor Qatalyst Partners. DoorDash was advised by law firms Wilson Sonsini Goodrich & Rosati and Allen & Overy LLP, and financial advisor Goldman Sachs & Co. LLC. 

DoorDash has also faced its fair share of litigation in recent years. Battles over municipal fee restrictions and driver employment status threaten core tenets of its business model, and are sure to continue as the company grows.