There were some key developments this week in the “food-tech” space — that category that, according to PitchBook, includes everything from the Impossible Burger to cloud kitchens (or ghost kitchens if you prefer) to delivery apps like DoorDash, UberEats, GrubHub and more. The events highlight the volatility of the food delivery space. Heavy losses are creating pressure to turn around results, and find new sources of capital.
Key Development No 1: UberEats Changes Leadership
Uber’s VP in charge of UberEast has stepped down. Jason Droege led the initiative from its inception as UberFRESH in 2014.
Uber CEO Dara Khosrowshahi put a friendly face on the transition in a statement announcing the change. “Eats is a huge part of Uber’s future, and I don’t believe any of it would have been possible without Jason,” he said.
Praise for Droege aside, it seems pretty clear this was a move designed to apply a new set of eyes to a growing challenge for Uber. How to make money. On something. Anything.
While Uber Eats may be a big part of Uber’s future, at present it’s a money-sucking monster. During the fourth quarter of 2019, Uber Eats lost $461 million. By comparison, compared with Uber’s overall losses $1.2 billion for the quarter.
Pierre-Dimitri Gore-Coty is replacing Droege. Gore-Coty moves over from VP of International Rides.
Droege’s departure also points to the heated competition in the food delivery space, where multiple competitors are competing fiercely for market share. And by most accounts, all face massive losses. It’s a space that’s just begging for consolidated. Which brings us to our next item.
Key Development No 2: DoorDash Files Papers
DoorDash has taken initial steps toward filing an IPO. According to TechCrunch, the company has filed a draft S-1 with the Securities and Exchange Commission. It’s unclear when the S-1 will be filed publicly.
Based on its last funding round in November 2019, DoorDash is valued at $13 billion. Also according to TechCrunch, DoorDash appears to have the plurality of U.S. food delivery market share at 38%.
An IPO could give DoorDash the capital it needs to consolidate its leadership position.
Notably, the IPO also comes at a time where VCs are starting to lose faith in the food delivery model. Perhaps the public markets are its only chance to keep the spigot open and the capital flowing.