When examining the unit economics of Doordash, a few things stand out:
Firstly, the benefit from their share of suburban markets is clear when comparing unit economics of peers. Higher basket size and lower courier payments (due to lower cost of living, less traffic, easier parking) drive strong revenue and basket size comps to Uber Eats (estimated around $2.90 and $23.00, respectively), who favored growth through partnerships for discounted fees with chains, like McDonald's, with lower order values .
Also, the impact of the repeat consumer behavior of their historical cohorts is encouraging for future contribution profit margins. Total spend increased 1.65x from year one to year two in the 2018 cohort, while at the same time becoming more profitable. Contribution profit as a percentage of GOV expanded from below zero in year 1 to 8% in year, as take rate increased and sales and marketing normalized lower.
Lastly, it's hard not to notice the transaction sizes here are small. This isn't necessarily a major problem if you buy into the growth opportunity to scale and cover central costs. However, the logistical complexity of what DoorDash is trying to accomplish cannot be understated and there are certainly risks to growth prospects for an expensive delivery service in a post-lockdown world. The question arises: just how sustainable is this business without the ample capitalization it's enjoyed to date.
Let's walk through an average transaction together
The average transaction on DoorDash is comprised of a $22 food order plus tax, a few dollar tip and consumer fee. The gross order value totals around $32, paid by the consumer.
Most of that gross order is then passed through to the restaurant and courier. The restaurant receives the cost of food plus tax, minus a separate merchant commission, which backs out to around $4 in this example. In addition to the $3 tip, the dasher earns an amount based on the estimated duration, distance, and desirability of the order. That total comes to roughly $8 (inclusive of tip). The total passthrough payment equals about $27.50, implying a platform take rate of close to 14%.
Cost of revenue includes things like payment processing, insurance, onboarding and customer supports. We pegged sales and marketing per order at 4% of GOV, which was a conservative estimate between reported year one cohorts of around 8% and year two and beyond of closer to 2%. That leaves contribution margin at roughly 22% of revenue or 2.5% of GOV.