DoorDash's $1 Billion Valuation Highlights Growing Food Delivery Industry

Nov 24, 2015 06:18 AM EST | By Juliano Dario

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The food delivery business continues to boom. Bloomberg reports that DoorDash, a San Francisco based start-up that ferries meals from restaurants to customers, is in talks with investors to raise additional capital at a valuation of $1 billion.

The news comes just eight months after the company successfully raised $40 million in venture capital at a valuation of $600 million.

Food Delivery is expected to be one of the biggest battle grounds in the industry in the coming months with DoorDash and similar players like PostMates, InstaCart, and Grub Hub duking it out with tech giants like Amazon, Uber, and Google.

In their analysis of the hottest food trends of 2016, food and beverage consultants Baum & Whiteman named food delivery as the biggest thing to look out for in the New Year.

"Tech-driven delivery is 2015-2016's Big Disrupter of food retailing and food service. Aimed at the ultimate consumer convenience, food brought quickly to homes, offices and (why not?) hotel guests. Delivery affects everyone from McDonald's to your favorite white tablecloth emporium." Reads their analysis.

"Smartphoners, latching onto the ease of locating a restaurant, ordering, paying, and getting loyalty points without ever speaking to a human being, are driving this revolution."

However, Bloomberg warns that the bubble may soon burst; citing research firm CB Insights who described the market as, 'overcrowded.'

"Many investors, undeterred by the crowds, are racing to separate the winners from also-rans. Some are drawn by the prospect that their picks will gain the attention of a buyer." Says Bloomberg.

The Baum & Whiteman report shares a similar sentiment, saying:

"An already over-crowded field is ripe for consolidation. Look at Seattle, where Amazon, BiteSquad, uberEats, DoorDash, Lish, Munchery, Square-owned Caviar, Postmates, Seamless, GrubHub, Yelp-owned Eat 24, Peached and others might clog the streets. They're scrambling for scale. Who one knows whether any will be profitable?"

That's certainly a question to ponder going into 2016.

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