How DoorDash is winning the race to scale food delivery | Economic news

DoorDash (NYSE: DASH) was notably one of the first food delivery services to achieve scale. However, the landscape remains competitive and challenging. In this clip from “IPO & SPAC Show” on Motley Fool Live, recorded on April 11Motley Fool contributors Jason Hall, Nicholas Rossolillo, and Jose Najarro discuss the crowded delivery platform space and address one of the top issues consumers are facing.

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Jason Hall: I am thinking of these platforms, these delivery platforms. You have Uber eats (NYSE: UBER) and DoorDash and many others. There are also the smaller players, the regional players, the ones that focus on maybe New York or San Francisco that have private equity funds, that sort of thing. I think the endgame here is where it hits scale and once we get through this race to scale, those are where these business models can really pay off for investors. Is this the right way to think about this?

Nicholas Rossolillo: I think so and obviously DoorDash is one of the first to reach this scale. That’s an important point you raise, Jason. Obviously they are profitable through free cash flow, but there are all these regional players. Then you have the Ubers of the world also entering this space and I put on the first slide there is a big risk here that DoorDash has been heavily criticized for the non-transparent and extremely high fees they charge on their platform -shape. Then you also have companies like Square (NYSE:SQ), Toast (NYSE:TOST), Olo (NYSE:OLO), these software publishers that offer integrations to restaurants to help them regain control of the customer relationship. It’s also a risk, I think, for DoorDash but you’re right. They were the first to scale and I think that’s remarkable. This is definitely a notable thing for investors to watch out for with this company.

Jose Najarro: I want to say that with the current risks that you mentioned with all these fees, it seems like everyone in the food delivery industry is making these hidden fees. At the moment, this isn’t just an issue for DoorDash. It’s just a global question for the global market, the industry as a whole. Hopefully, for consumers, this will be fixed very soon.

Jason Hall owns Block, Inc. Jose Najarro owns Block, Inc. Nicholas Rossolillo owns Block, Inc. The Motley Fool owns and recommends Block, Inc., DoorDash, Inc. and Olo Inc. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.