Delivery service DoorDash is making a play for higher-end restaurants, acquiring Square-owned Caviar for $410 million in cash and DoorDash preferred stock, the companies announced today.
“We have long admired Caviar, which has a coveted brand, an exceptional portfolio of premium restaurants and leading technology,” Tony Xu, CEO of DoorDash, said in a statement.
Food delivery is an increasingly crowded market, with market leaders DoorDash and Grubhub fighting off challengers like Uber Eats and Postmates. Margins are slim in the restaurant business, and margins in delivery are just as competitive. Amazon Restaurants, which never held more than 1% of U.S. market share, shuttered in May.
DoorDash and Square previously collaborated on a DoorDash integration within Square for Restaurants, a point-of-sale system that the payments company launched in 2018. Square also offers DoorDash rewards to its Cash Card customers.
Privately held DoorDash, which raised an additional $400 million in funding in February, was last valued at $7.1 billion. Its investors include the SoftBank Vision Fund, Sequoia Capital, DST Global, and Temasek Holdings.
DoorDash has previously come under fire for a tipping policy that critics said amounted to wage theft. (One Brooklyn man even filed a class-action suit, alleging that the policy was misleading.) Last month, the company revised its policy.
Square shares were down over 6% following the company’s earnings release and the announcement of the deal. Caviar lead Gokul Rajaram has agreed to join DoorDash after the acquisition closes.