How DoorDash Makes Money: Business and Revenue Model Explained

Quick Summary: The food delivery industry has become a global phenomenon, and these apps are present across all countries. Among these, DoorDash has emerged as a dominant player that has captured the largest market share in the USA. This blog will discuss the DoorDash business model and how it makes so much money.

There must not be any country in the world that does not have on-demand food delivery apps. People all around the globe are food lovers, and businesses are doing their best to provide top solutions to keep food lovers engaged. 

One such super successful and biggest food delivery market is in the USA. With multiple food delivery apps, this country has pulled in billions of users along with revenue. From easy access to local restaurants to personalized solutions and quick food delivery, these business models have clearly solved food lovers’ pain points.

Talking about food delivery apps in the USA, DoorDash is the biggest name that comes to mind. Did you know that DoorDash has a 65% market share in the USA? Further, it also has a gross order volume of higher than $53 billion. 

Surprised to know this? To learn about its business and revenue model, keep scrolling and get all the necessary information about DoorDash. Also, find out how you can build an app like DoorDash.

There must not be any country in the world that does not have on-demand food delivery apps. People all around the globe are food lovers, and businesses are doing their best to provide top solutions to keep food lovers engaged. 

One such super successful and biggest food delivery market is in the USA. With multiple food delivery apps, this country has pulled in billions of users along with revenue. From easy access to local restaurants to personalized solutions and quick food delivery, these business models have clearly solved food lovers’ pain points.

Talking about food delivery apps in the USA, DoorDash is the biggest name that comes to mind. Did you know that DoorDash has a 65% market share in the USA? Further, it also has a gross order volume of higher than $53 billion. 

Surprised to know this? To learn about its business and revenue model, keep scrolling and get all the necessary information about DoorDash. Also, find out how you can build an app like DoorDash.

What is the DoorDash Business Model and How it Started?

DoorDash was founded by four Stanford University students, Tony Xu, Stanley Tang, Andy Fang, and Evan Moore, in 2013. Formerly known as Palo Alto Delivery, it was renamed to DoorDash in June 2013. The company is based in San Francisco and serves in several countries like the USA, Australia, Canada, Germany, New Zealand, and much more. 

With a decade in the online food industry, DoorDash’s business model has gained the largest share in the USA, leaving behind Uber Eats and Grubhub. In its first year of operations, the company further expanded to 70 restaurants in the Bay Area and received funding of $2.4 million. 

💡 Must check: Uber Eats Vs DoorDash-Which Business Model To Follow.

It aims at empowering local economies. Other than food, DoorDash’s business model also delivers groceries, flowers, alcohol, and many more conveniences. Its easy process and strong connections make it possible to provide each order well on time to enhance user experience. 

• 2013: DoorDash is founded by Tony Xu, Stanley Tang, Andy Fang, and Evan Moore.
• 2014: DoorDash expands to San Francisco and Los Angeles.
• 2015: DoorDash expands to Chicago, New York City, and Seattle.
• 2016: DoorDash raises $100 million in Series D funding.
• 2017: DoorDash expands to over 1,000 cities.
• 2018: DoorDash raises $600 million in Series E funding.
• 2019: DoorDash expands to Canada.
• 2020: DoorDash raises $3.3 billion in its IPO.
• 2021: DoorDash expands to Australia, Japan, and Germany.

DoorDash Popular Stats and Facts

Before we get started with the DoorDash business model and revenue model, let us first look at its market size, stats, and facts to see what makes it so popular. 

• In 2022, DoorDash generated a revenue of $6.58 billion, increasing 34% from 2021.
• As of 2023, DoorDash has 20 million monthly active users on its app. The majority of these are from the USA. 
• The number of merchants on the app has increased to 450 thousand. 
• DoorDash has about 2 million delivery drivers to make its food delivery process faster and more reliable. 

How Does DoorDash Work—The Business Model Explained 

DoorDash-a popular food delivery app, operates as a three-side business model. But what are the three sides of DoorDash’s business? It includes customers, restaurants, and delivery partners.

Customers

Customers can download and use the DoorDash app or website to order their favorite food from a restaurant of their choice. DoorDash charges an average delivery fee of $5-$8, depending on the order. Further, customers can subscribe to DashPass and enjoy free delivery on orders above $12. 

Restaurants

Restaurants and other eateries can register on the DoorDash platform to connect with food lovers. They get a space to showcase their menu, images, and other necessary information to help users know more about them. For every order, DoorDash charges a commission based on the restaurant location and the order volume. 

Delivery partners

Delivery partners, also called Dasher, are the third pillar of DoorDash. They have their own vehicles and are responsible for delivering the order to the set address. Dashers are paid a base rate for each delivery and tips they receive from users. They also earn bonuses when they achieve a certain number of deliveries or when they work during peak hours. 

How does the whole model work, and how is it so easy for users to place and receive the order within the estimated time? DoorDash is an on-demand food delivery app that connects customers and local restaurants. 

Step 1- Customers download the app and register

To take advantage of the DoorDash app, firstly, customers download the app from Play Store or App Store and sign up by filling in some essential information. After they log in, they can easily find their favorite restaurants or search for a dish. 

Step 2- Users place the order

Once the users have found the dish or the restaurant from where they want to order, they can add all the items to the cart. DoorDash provides options for multiple cuisines and eatery places, making it simple for customers to order what they want. 

Step 3- Restaurants receive the order

After the order has been placed, it is received directly by the restaurant. Further, once the service provider accepts the order, a notification is sent to the user. Also, restaurants have complete flexibility to customize their menus and prices.

Step 4- Dashers deliver the order

The final step includes delivering the order to the buyers’ address. DoorDash business model uses a network of independent contractors who pick up and deliver the order. They are paid for each delivery along with tips from customers, incentives and bonuses. 

Throughout this process, the users get real-time updates about their food. Also, they can track the order and provide feedback to the restaurant and the Dasher. The easy and quick business model of DoorDash helps provide a seamless experience to its users.

💡 Want to build a food delivery app? Check out: A Quick Guide For Food Delivery App Development.

How Does DoorDash Make Money—The Revenue Model Explained 

As discussed in the above sections, DoorDash has been able to generate greater revenue, making it a highly profitable business. But how does it make money? DoorDash does not follow one revenue model. Its multiple models help it earn good money.

 

Revenue model 1- Commission from merchants

Every time a restaurant receives an order, DoorDash charges a commission over it. This commission rate varies based on factors like the type of merchant and the size of their order volume. 

Revenue model 2- Delivery fee from users

Another revenue model of DoorDash is the delivery fee. It charges a fee on every order that is placed through its platform. Though the fee depends upon the order amount, a typical delivery fee is around $6.

Revenue model 3- Service fee

A service fee is charged to customers. The fee starts at $0.60 but may increase based on the order subtotal.  

Revenue model 4- Small order fee

In some cases, where the order is placed below a certain amount, a fee of around $2.50 is charged. 

Revenue model 5- The subscription fee

DoorDash provides a premium subscription service known as DashPass. The pass costs $9.99 per month, allowing subscribers to get free deliveries on orders above $12.

Revenue model 6- Advertising

DoorDash also provides space for restaurants to get on the top of the list through marketing promotions. It offers three tiers of Partnership Plans based on the marketing support needed. Merchants can pick from commission rates of 15%, 25%, or 30% (based on various levels of built-in marketing) and get a 6% commission on Pickup orders across all plans. 

Want to Build an App Like DoorDash?

Isn’t the story of the DoorDash business model a lesson for entrepreneurs, startups, and small businesses who are either in the food industry or want to start their own businesses? If interested, you may have the question, “How to create an app like DoorDash?” 

To build an on-demand food delivery app like DoorDash, you need the help of professionals in this industry. ValueAppz is a pioneering food delivery app development company where we can help you with flexible app development solutions. 

Our ready made solutions will help you launch your food delivery business in just days. With DoorDash clone, you can design and build a food delivery app solution with all the customizations that you need as per your business requirements. 

Call our professionals and get all the details for your food delivery app now. 

Frequently Asked Questions

Q1. How does DoorDash make money?

DoorDash generates money through various revenue models like a commission from merchants, delivery Dee, DashPass subscription, advertising, service fee, small order fee, and other methods. 

Q2. What is DoorDash’s business model?

DoorDash is a food delivery company that brings together customers and local restaurants in a particular area. It lets the users place an order and get it delivered to their doorsteps within a few minutes. 

Q3. What are the three sides of the DoorDash business?

The three sides of DoorDash’s business include customers, restaurants, and delivery persons. Once the customers place the order, it is directly received by the restaurant, which is further delivered by the Dashers (delivery boys).

Q4. Do customers have to pay a delivery fee for every order?

Yes, for every order, DoorDash charges a delivery fee. It is calculated based on the order volume and distance to be covered by the Dasher. 

Q5. How do I create an app like DoorDash?

To make an app like DoorDash, you must first understand its business and revenue model. Next, you need the help of a food delivery app development company that has gained experience, skills, and resources in it.