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DoorDash Diversifies with Chowbotics Acquisition

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DoorDash Diversifies with Chowbotics Acquisition

After raising an eye-opening $3.4 billion in its IPO, DoorDash is spending its funds strategically. For starters, the delivery company is acquiring meal preparation startup Chowbotics.

DoorDash’s revenue rose 226% year-over-year, to $1.92 billion, in the first nine months of 2020 and it has continued to see gains as the pandemic rages on. As the pandemic is still affecting restaurants across the U.S., DoorDash is likely to profit more.

However, the company may also profit in new ways, as the Chowbotics acquisition signals DoorDash could be broadening its business to more than just restaurant delivery.

DIVERSIFYING TO NEW TERRITORY

Chowbotics’ robotic technology can make meals such as salads and poke bowls, and DoorDash is looking into how to deploy it across restaurants, reported The Wall Street Journal (Feb. 8). The company has come up with several ideas, such as using the technology to help restaurants expand their menus.

“We’re working on solutions to help merchants grow in an ever-challenging and changing landscape,” DoorDash said in a blog post.

Though terms of the deal were not disclosed, Chowbotics was valued at $46 million in 2018, according to data firm Pitchbook. DoorDash noted that the robots have been installed in hundreds of locations including universities, hospitals, and grocery stores.

Another way DoorDash diversified within the last year is by trying its hand at convenience stores. Last summer, the company announced the launch of a chain of virtual convenience stores called DashMart that exist solely on the DoorDash app. The stores sell snacks, groceries, and other food-related products from partner restaurants.

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WHATS NEXT?

Analysts expect DoorDash’s revenue to rise 222%, to $2.85 billion, for the full year when it posts its fourth-quarter earnings on Feb. 25, according to The Motley Fool. Next year, they expect its revenue to rise about 30% as the pandemic passes. But, if the pandemic continues to be severe throughout 2021, DoorDash could surpass those estimates.

DoorDash controlled 50% of the food delivery market as of October, according to Edison Trends, while Uber Eats held 33% and Grubhub held 16%. However, DoorDash could face more competition this year if more players get involved and those already in the market make new efforts to freshen up operations, such as Uber’s reported acquisition of Drizly.

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The Food Institute