DoorDash adds monthly subscription service for food delivery
- DoorDash, the on-demand food delivery service, introduced a subscription service, according to a blog post. DashPass costs $9.99 a month for customers to receive unlimited, no-fee deliveries on orders of $15 or more, and is currently available in California, Texas and the Midwest, per Adweek.
- Wendy's, The Cheesecake Factory, California Pizza Kitchen and White Castle are among the restaurants that offers DashPass delivery, which is indicated by a checkmark in the mobile app. The company also added a free pickup service, but did not disclose which or how many restaurants were participating.
- DoorDash said its tests of the service found that the average DashPass subscriber boosted their order frequency by 50% and saved more than $20 a month on delivery fees after the monthly subscription cost.
DashPass is the latest effort in the company's efforts to distinguish itself from competitors as the space grows more crowded. As DoorDash's early test demonstrates, subscribers order food more frequently when they know there is no delivery fee — aside from the monthly membership cost. This could help DoorDash drive sales and repeat purchases while bolstering longer-term loyalty among customers.
DoorDash's efforts to build a subscriber base with DashPass may provide the food-delivery service with another source of steady revenue while strengthening its bonds with repeat customers. The company is seeking to build a business amid competition from rivals like GrubHub and Uber Eats. DoorDash has had informal merger discussions with Postmates and this year raised $535 million from investors including tech giant SoftBank. The deal valued DoorDash at $1.4 billion, a fraction of publicly traded GrubHub’s market value of $11.3 billion.
Food delivery continues to grow as restaurant customers continue to shy away from dining in. Off-premise sales have increased 0.5% this year from to-go and delivery services, according to a report by marketing agency Acosta and restaurant consulting firm Technomic. Their annual survey found that 51% of total U.S. diners and 77% of millennials have ordered food for delivery in the prior few months. Those trends appear to bode well for the food delivery industry.