Retail

Food Delivery Companies Mull Mergers, Public Listings

Food Delivery Companies Mull Mergers, IPOs

With the potential help of stock listings or mergers, the largest food delivery firms in the country are aiming to bolster their finances. Postmates, DoorDash and Uber Eats have each talked about merging in different combinations in 2019, but none brought about a deal, The Wall Street Journal reported, citing unnamed sources.

Food delivery has always been a costly endeavor and has recently become more difficult in the United States. Firms that once had distinctive, strong areas of focus now overlap in many places. Diner loyalty has also fallen, as competing firms have offered deals and promotions to entice customers to try new offerings.

DoorDash, in one case, is mulling a public listing and is receptive to bringing in more funds from private investors, per an unnamed source. Postmates is also once again reportedly considering going public after privately filing early in 2019. The firm decided not to go public following less-than-stellar Lyft and Uber offerings as well as WeWork’s blundered listing.

Food delivery has quickly grown in the United States over the past five years due to an influx of venture capital. Firms with food delivery operations brought in almost $16 billion from 2016 to 2019, per PitchBook, as cited by the report. Delivery firms used the cash to grow throughout the country and compete with one another.

Uber Eats, Grubhub, Postmates and DoorDash all claim that they can deliver to roughly 75 percent of the United States population. Delivery has expanded to some 5 percent of the approximately $600 billion U.S. restaurant market, per Morgan Stanley.

In January, news surfaced that DoorDash has come out ahead of Grubhub as the No. 1 food delivery service in the country. DoorDash received 33 percent of all food delivery sales in the country last year, while Grubhub only took in 32 percent. Uber Eats took 20 percent and Postmates received 10 percent. DoorDash sales rose 143 percent year over year, which transformed the delivery landscape from 2018, when Grubhub had 43 percent of the market.

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