DoorDash and the pizza conundrum

As fish’n’chips is to the Brits, so is pizza to the Americans – as in their favourite takeaway.

And as home delivery is hugely lossmaking for the Brits (and ex-Brits, as in Just Eat Takeaway – see JET and the Fish’n’Chips conundrum), so it is thus for the Americans.

US-based DoorDash is the world’s largest food delivery outfit as measured by market cap (currently some $28bn). And even they can’t make the numbers work, at least not the real numbers.

DoorDash took 426m orders in Q2 (to 30th June) with a value of $13.08bn – that’s an average of $30.71 per order, just 1% higher than a year ago despite seeing order volumes jump nearly 24%. Average revenue per order was $3.77, just over 5% up yoy.

However, DoorDash’s gross margin has been in decline for the past four quarters, now sitting at 42.7%. They earned just $1.61 of gross profit per order vs $1.90 a year ago.

Partly as a result, DoorDash’s ‘real’ (as in GAAP) operating losses ballooned from $99m a year ago to $273m.

Even with the miracle of creative accounting – ‘Adjusted EBITDA’ (i.e. fake profit) also fell yoy, from $113m to $103m. You really should read the reams of notes and tables that accompany their results to appreciate the alchemy that turns thumping losses into glorious profits. It’s a thing of beauty. They should win awards for this.

So I ask again. If even the biggest player in the world can’t square the profit circle for low value, ‘on demand’ delivery, what chance any start-up?


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