Food delivery giant DoorDash is doubling down on its global ambitions, even as the delivery space faces steep declines from its pandemic highs.
In an interview with Yahoo Finance at the Collision Conference, Co-Founder and CTO Andy Fang explained what the company’s recent $3.5 billion acquisition of Finnish delivery company Wolt meant for them down the road.
"With the partnership with Wolt, I think we're going to be able to fast forward those ambitions," Fang said, adding: “People ask us, should I focus on growth or should I focus on profitability? What we always tell people is the best companies figure out how to do both,” Fang said (video above). “That’s been a really good focusing principle that’s really helped educate the teams and figure out how to think creatively.”
DoorDash was able to expand from four international markets to 27 overnight. The expansion comes as delivery startups, once pandemic darlings, see signs of a correction. While the firm saw its revenue increase by more than 200% between 2019 and 2020, the company’s stock is down 75% from its 52-week high, amid increased scrutiny about its ability to sustain its momentum.
Earlier this year, CEO Tony Xu announced it would dramatically slow hiring in an internal meeting, with an expected 10 to 15% growth in headcount this year.
Fang brushed off those growth concerns, citing the stickiness of its user base. In its most recent quarter, DoorDash posted revenue growth of 35%, though that rate was significantly slower than the same period last year, when net sales nearly tripled. The platform added the largest number of new customers since Q1 of 2021.
“We’re operating from a position of strength, even though the macro economy might be pretty volatile right now,” Fang said. “We don’t really want to lose focus and attention on what’s gotten us to this point.”
U.S. success 'doesn't necessarily translate' to success outside the country
The Wolt deal marks a new chapter for DoorDash as it looks to rapidly expand beyond its core restaurant and food delivery service into new verticals while capturing additional international markets.
Earlier this year, the company launched a new 30-minute grocery delivery service, putting the platform in direct competition with Instacart and startup GoPuff. That followed the launch of convenience store deliveries at the height of the pandemic in 2020. In a recent earnings call, Xu said the two businesses combined represented a “$1 trillion opportunity globally.”
Fang said he planned to replicate that success internationally with attention to the “hyperlocal” nature of the delivery space.
“Our success in the U.S. doesn’t necessarily translate to success outside of the U.S.,” he said. “In these other countries, [we need to] figure out ways in which we can partner with merchants to figure out ways in which we can deliver anything in your city to you.”
Inflationary pressures and regulation are expected to be continued headwinds for DoorDash, even as it eyes expansion. Record high gas prices prompted the company to launch its Gas Rewards program this spring, offering delivery workers 10% cash back on their gas purchases.
Meanwhile, cities across the U.S. continue to craft sweeping legislation targeting third-party delivery apps, to protect workers. Just last month, the Seattle City Council passed legislation requiring companies like DoorDash and Uber Eats to pay workers a per-mile and per-minute to dramatically increase their pay, a first in the country.
“For us, it’s actually about really talking to government officials to get them to understand what the delivery workers are asking for,” Fang said. “On average, people dash less than three hours a week in the U.S. [We want] to figure out where we can meet where they are. And I think we want to make sure the local governments can understand what the benefits are.”
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita