McDonald's Strikes Delivery Deal with DoorDash -- 2nd Update
July 16 2019 - 3:06PM
Dow Jones News
By Heather Haddon
DoorDash Inc. will start making deliveries from McDonald's Corp.
restaurants in Houston later this month, a blow to Uber
Technologies Inc. relationship with the burger giant, as the only
company currently ferrying its food to customers in the U.S.
The move comes as companies jockey for share in the fast-growing
business to deliver food to customers' homes and offices. Investors
have poured money into startups including DoorDash and PostMates
Inc., a rival service that filed earlier this year to list its
shares publicly.
DoorDash, most recently valued at $13 billion after a $600
million funding round in May, has vastly increased its deals with
restaurants in the past year.
DoorDash and McDonald's said Tuesday that the delivery company
will pick up orders from 200 Houston-area restaurants beginning
July 29. McDonald's will also be added to DoorDash's subscription
service, which has nearly a million members who pay a $9.99 monthly
fee for free delivery and lower services fees on orders of at least
$12.
The partnership will likely expand nationally later this year if
it succeeds in Houston, executives from both companies said. Both
companies declined to discuss terms of the deal.
DoorDash's fleet of contract workers within delivery distance of
around 80% of U.S. households helped it win the burger giant's
business, said McDonald's Senior Vice President of Operations Bill
Garrett.
"It was the reach that was really appealing to us," Mr. Garrett
said in an interview.
Some restaurants have also pushed back recently against high
fees and other terms of delivery deals that they say can make those
orders unprofitable. McDonald's last year negotiated down the
commission it paid to Uber to handle its orders. Uber also agreed
to spend more on marketing and promotions for the partnership as
part of new terms the two companies reached recently.
McDonald's was one of the first big restaurant companies to sign
up with Uber Eats when the company added meal delivery to its U.S.
services in 2017. Uber Eats offers delivery from over 9,000
McDonald's restaurants in the U.S., more than half of the company's
domestic locations.
McDonald's had more recently opened up discussions with other
delivery providers, including Grubhub Inc. in addition to DoorDash,
according to people familiar with the discussions. Grubhub's stock
fell more than 2% Tuesday, while fellow delivery company Waitr
Holdings Inc. was down nearly 6%.
Mr. Garrett said McDonald's wasn't closing the door on
partnerships with other delivery services.
"We know customers are very loyal to particular apps. We want to
provide that level of convenience," he said.
McDonald's and Uber executives said they believed DoorDash's
deliveries of McDonald's food would be profitable for both
companies.
"We are excited to make that entire equation work," DoorDash
Chief Operating Officer Christopher Payne said.
Write to Heather Haddon at heather.haddon@wsj.com
(END) Dow Jones Newswires
July 16, 2019 14:51 ET (18:51 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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