DoorDash made money last year!
CEO Tony Xu eyes 'centicorn' status for the U.S. restaurant business... someday: "We have a long runway to continue improving."
The last edition of this newsletter was about Uber Eats’ relative… tedium.
Less than a week later, I’m about to tell you the same thing about the U.S. delivery market leader. It’s not that DoorDash (nor Uber, for the record) is settling into some ho-hum existence; it’s that it’s methodically doing everything it says it’s going to do, slowly ticking the boxes on its to-do list, its success sprinkled with just the tiniest hint of ‘we-told-you-so.’ Its latest financial results are no exception.
DoorDash reported its latest fourth quarter and full year results on Tuesday, posting a profitable quarter (and year) as the company settles firmly into its next phase: convincing even more merchants and consumers to get onboard. DoorDash added 100,000 stores to its marketplace this year, but only about 12 percent of DoorDash’s current potential customer base ordered on the service last year.
In the last three months of 2024, orders on DoorDash increased 19 percent to 685 million. Marketplace gross order value — the total value of orders, including taxes and fees, completed on the platform — are up 21 percent to $21.3 billion. It posted a 2024 profit of $141 million.
It’s fair to say the company has us hooked. DoorDash uses the term “cohorts” to describe its users, grouped (usually by month) based on when they placed their first order.
“When we review our most recent 2024 cohorts we see new cohorts with significantly higher engagement than our pre-Covid cohorts, and their engagement level has stayed consistent for the past couple of years,” Xu wrote in an annual shareholder letter accompanying the results. “In addition, each of our more mature cohorts grew their order rate through the year.” A cohort is mature, in DoorDash’s view, after about six months, according to its analysis of previously released finances.
That’s good news for a business that relies on consumer loyalty to grow. It spent its pricey Super Bowl ad time promoting DashPass, its subscription offering with 22 million members1, with a spot starring comedian Nate Bargatze. DashPass memberships provide DoorDash with valuable recurring revenue, but also encourage loyalty since members get free delivery and other perks.
“We have a large fraction of our customer base within our own ecosystem that are not subscribers,” he said, noting the obvious need to explain why joining as a subscriber is better than not joining as a subscriber,” Xu said on Tuesday’s call.
DoorDash is also succeeding in convincing its users to look beyond restaurants. About a quarter of the company’s active users in December placed a non-restaurant order; the company says nearly half of U.S. consumers new to ordering grocery, convenience, or alcohol for delivery in 2024 placed their first order on DoorDash.
Still, it’s the restaurant business that keeps DoorDash going. “This might be our closest category on its way to reaching ‘centicorn’ status in scale,” Xu said in his letter.
But even if it does hit this ridiculously named goal of $100 billion in restaurant order values, “...we’ll be only 10 percent of the US restaurant industry in sales.”
It is probably inevitable. Eventually.
What else?
Prices rose unexpectedly last month, including a .2 percent increase at restaurants — or 3.4 percent over the last year. But inflation in restaurant prices in January was less than grocery stores. — Consumer Price Index report
Free food (or in this case, coffee) still slaps! Starbucks offered free coffee to existing and new rewards members on Monday; you had to use the mobile app to get the deal. This tactic will always work. — People
The U.S. beer industry isn’t built to handle Trump’s tariffs. The U.S. imports a lot of beer from Mexico. “Passing along a 25 percent hike to Modelo drinkers would be begging them to trade over to faux Mexican lagers.” — VinePair
The Michelin Guide seems to be clinging to relevance. I don’t think it’s working? — Australian Financial Review
Taco Bell’s parent company has its own tech stack now. Byte by Yum is a collection of proprietary saas products for Taco Bell and sibling companies KFC, Pizza Hut, and Habit Burger & Grill. The press release announcing the tech used the term “AI” four times (plus an additional “artificial intelligence” thrown in for clarity.) — release
Amazon-owned Whole Foods is asking the National Labor Relations Board to overturn a union victory at a Philadelphia store. Employees at the store voted 130-100 in favor of joining a union in January; President Trump recently fired half of the NLRB’s board members, leaving just two sitting members. — CNBC
This figure includes subscribers to Wolt+, a similar service available in overseas markets; DoorDash acquired Wolt in 2022.