There’s nothing quite like having your lunch delivered to your doorstep by Uber Eats — except having your lunch delivered to your doorstep by DoorDash. The two longtime food delivery rivals have been at each other’s throats for years, competing to cement themselves as the primary option for consumers in the U.S. and abroad.
So far, Uber Eats has won the global battle –– it’s available on six continents and is first or second in gross orders in just about every country in which it operates –– while DoorDash holds the domestic crown, leading the way in U.S. sales by a sizable margin.
In Q3, though, the companies traded places. Where DoorDash stagnated in terms of its U.S. growth, Uber Eats soared, with its U.S. business operating closer to breakeven than ever before. Meanwhile, where Uber Eats concentrated on bolstering its domestic presence, DoorDash grew faster internationally than in the U.S., doubling down on an international expansion with its $8.1 billion acquisition of European food delivery service Wolt.
Both Uber Eats and DoorDash faced strong headwinds during Q3, including food delivery commission caps and unhappy drivers, the latter of which has spurred spending to incentivize couriers to return to the apps.
“Several transitory headwinds continued to impact our business, including food delivery commission caps in the U.S. and Canada, incremental costs of worker classification in the U.K. and higher-than-normal driver incentive spend in some markets,” said Uber CFO Nelson Chai on the company’s Q3 earnings call. “For context, food delivery commission caps and U.K. worker costs together represented a $150 [million] to $200 million drag to Q3 EBITDA.”
DoorDash also noted the headwinds in its Q3 letter to investors: “We exited Q3 operating under price controls in 65 jurisdictions, down from a peak of 108. Price controls expired in 33 jurisdictions in Q3 and no jurisdictions implemented new price controls in the quarter,” the letter reads. “In Q3, we estimate price controls had a net negative impact on our revenue of $23 million. We expect the impact to decline slightly in Q4.”
Despite the obstacles, both companies managed to surprise analysts. For Uber Eats, that came on the domestic side, as it grew gross bookings in October by an astounding 44% year-over-year and 220% over October 2019. It also managed to assuage fears about its couriers leaving the platform –– active couriers in the U.S. for the quarter were up 80% since January and 25% since June, Uber CEO Dara Khosrowshahi told investors on the earnings call.
“We’ve continued to see sustained consumer engagement on Delivery, lending further support to our belief that increased demand for all types of fast delivery is structural and will grow for the foreseeable future,” he said.
In Q3, Uber Eats began combining its onboarding process for its delivery service with that for its rideshare service, allowing drivers to sign up for both options at the same time and begin delivering while waiting to drive. This led to a 20-40% increase in driver and courier activation rates, the company said, and it plans to roll the feature out more widely in the coming months.
Uber Eats’ U.S. and Canada delivery businesses both operated near breakeven for the quarter, and the company’s core restaurant delivery business was actually adjusted-EBITDA profitable.
“Although there will be some moderation compared to the last 18 months, we expect continued strong growth in the years ahead — from both our core restaurant delivery business and our emerging New Verticals business,” Khosrowshahi said.
DoorDash also caught analysts off guard when it reported that total orders were up 50% year-over-year and that memberships for DashPass, DoorDash’s monthly free delivery subscription service, and monthly active users both hit all-time highs. More surprising, though, is where those orders and members came from.
“In international markets, we have focused primarily on improving selection and promoting the value of DashPass in recent quarters. We believe this is having a positive impact,” DoorDash said in the letter to investors.
“International orders grew substantially faster than domestic orders on a y/y basis in Q3,” it added.
While Uber Eats is known for its larger international presence, DoorDash narrowed the gap between the two companies in Q3. Of particular significance is DoorDash’s $8.1 billion acquisition of Wolt, a European food delivery company, which it announced alongside its Q3 earnings release.
“We believe our strategic and cultural alignment make them the best team in the world to lead our international efforts,” said DoorDash CEO Tony Xu on the company’s Q3 earnings call. “From a market perspective, Wolt operates in 23 markets, of which 22 are new markets for DoorDash.”
For many, the Wolt acquisition came out of left field, but it wasn’t a bad surprise –– the company’s stock popped over 10% in post-market trading on the news, as the purchase seems to have renewed confidence in its investors. The move will add 700 million people to DoorDash’s total addressable market.
DoorDash has also begun catching up to Uber Eats in new verticals. In February, Uber Eats acquired alcohol delivery service Drizly, and in July, it entered into a partnership with Albertson’s to do grocery delivery. It also rolled out a white label fulfillment service, Uber Direct, to help retailers fulfill orders through their owned channels.
DoorDash, though, has matched those moves almost exactly. In September, it added alcohol delivery to its own white-label fulfillment service, DoorDash Drive, and it actually beat Uber Eats to the punch with its own Albertson’s partnership for grocery delivery in June.
The company says it now has over 40,000 non-restaurant stores active on its marketplace. Among those companies are Bed, Bath & Beyond and Ulta Beauty, both of which have delivery partnerships with the platform.
“In the first quarter, we announced single-digit percentages of our monthly active users having shopped in a non-restaurant category. That number is now up to 12% in the third quarter,” Xu said on the earnings call.
While Uber Eats and DoorDash had unusual quarters by their standards, one thing is for certain –– both companies want to deliver more than just food, and they want to do it all over the world.