'It's much bigger than DoorDash': CEO Tony Xu on the need for food delivery now
Here's how DoorDash is trying to support restaurants and keep drivers and customers safe in challenging times.
Restaurant workers across the U.S. are suffering from the economic impact of coronavirus. By some estimates, the industry will lose $225 billion and shed between 5 million and 7 million jobs over the next three months alone.
As many municipalities limit restaurants to takeout and delivery, DoorDash CEO Tony Xu sees his company as one of the crucial lifelines for an industry in turmoil and a nation locked inside. Over the last several weeks, the popular food delivery service, which confidentially filed for an IPO in February, has rolled out initiatives to help restaurants stay afloat, including waiving commission fees for 30 days for restaurants that sign up for DoorDash and Caviar (which DoorDash purchased in 2019) by the end of April. It's also adding for free 100,000 independent restaurants to DashPass, its customer subscription that waives delivery fees, and discounting commissions for existing restaurants on DashPass. DoorDash also set aside $20 million for marketing efforts to help shore up restaurant sales.
"It's just the beginning of what we're trying to do that's really in the spirit of offering restaurants immediate relief," Xu said.
Lawmakers and gig workers have been vocal that such relief can't come at the expense of driver or customer health. To protect people, DoorDash deliveries have gone contact-free, and the company is giving out 1 million sets of hand sanitizer and gloves to delivery drivers — some drivers must pay $5 for shipping — and offering up to two weeks of financial assistance to drivers who provide a letter from a medical professional advising them to self-quarantine after showing COVID-19-like symptoms. (On Friday, workers for grocery delivery startup Instacart announced a plan to strike nationwide in order to get those and other protections.)
Xu spoke to Protocol earlier this week to discuss what he's hearing from restaurants on the platform, why he's taking a platform-agnostic approach in a new marketing campaign to support local businesses, how DoorDash is keeping Dashers safe, and what a government bailout for restaurants should look like. The terms of DoorDash's confidential IPO, Xu said, precluded him from speaking about certain financials.
This conversation has been edited for length and clarity.
We're in the midst of a global health and financial crisis, and restaurants are suffering. What are you hearing from businesses as they navigate a harsher reality where takeout and delivery are more of the norm?
I think a lot of us and restaurant owners are very fearful right now. This is as if the economy is coming to a stop in a very halting and jolting manner. I think that's what everyone's feeling right now, and things are obviously very dynamic.
We're seeing a big uptick in that customers are figuring out their way of supporting their own local communities.
A week ago, we announced our programs to support restaurants around the country by offering a merchant relief package of commission and marketing support. It's just the beginning of what we're trying to do. We know that obviously there's a big impact to their workers — having been a dishwasher in my mom's restaurant, I definitely recognize what a lot of those folks are going through right now — so one other thing we're doing is we're helping them get the opportunity to sign up as Dashers so that they can supplement income as they may need.
Are you already seeing some restaurant employees transition into Dasher positions?
I think it's pretty early right now. The good news is, I think we're starting to transition very quickly, not just as an industry, but also with the local community and even the federal government, into a movement from fear to immediate action.
I think that it's going to be tough to get through this period; I have no idea how long this will go on for. But I think everyone from consumers to companies like ourselves to the government are putting all their weight and financial resources to make sure that local businesses make it.
Last week, DoorDash announced #OpenForDelivery. I noticed the marketing campaign advocates for diners to support restaurants by ordering on DoorDash but also order from competitors like Uber Eats, Postmates and Grubhub. That's pretty unusual.
This is a global health crisis, and so from that perspective, you know we're trying to make sure everyone is safe and healthy. This isn't about us. This is not a moment about business. It's much bigger than DoorDash or any company.
I think crises have a way of sometimes bringing the worst out of people in terms of fear and then maybe panic, but I think it can also bring out the best in people and reminds us somehow we're all part of the same system. Together we can make sure that the businesses on the streets will make it. They've been there for all of our moments, whether they were "high" moments for celebrations or "low" moments when we needed a shoulder to cry on — and now it's our time to be there.
How is DoorDash otherwise adapting? Have you had to change or streamline the way it processes deliveries and the way that Dashers deliver to meet current demand?
Yes, mostly from a health and safety perspective. Right now we're still in the process, but we're pretty close to offering 1 million sets of health kits, which include hand sanitizers and gloves, to Dashers and couriers on the Caviar and DoorDash platforms. We're the first platform to make sure to do this on a nationwide basis for all orders and keep them safe. The other thing we've done on the consumer side is we are defaulting all deliveries — and we did this a few days ago — to "no-contact" deliveries so the drop-off will just be left at the door.
Those 1 million health kits, are Dashers taking you up on that? How concerned are they about their health and safety given they're potentially in contact with a lot of customers?
I think in moments where there's lots of uncertainty and there's fear and also lots of dynamics, and things are changing very quickly, the most important thing is to communicate frequently, to over communicate.
Dashers feel like they're doing a great service, but, of course, they're concerned about their own personal health. I think they really are to me — obviously, alongside health care workers and other professionals who are attending to the medical needs of the community — they really are the frontline heroes. They and the restaurant workers who are still keeping their kitchens open for delivery. They are truly the sustenance, if you will, of the cities that we live in.
Many people in the food and restaurant industry have advocated for the need for a restaurant bailout. I'm curious to hear your thoughts on that: Do you support a bailout for the industry, and, if so, what would you like the bailout to look like to help the businesses and 15.6 million restaurant employees who are struggling?
I do think that there's a big role in which the federal government, local governments and state governments can play in making sure that businesses can be solvent in this time. I believe people will go back and eat at restaurants and again celebrate all of the moments that they love going to restaurants for. But what these restaurants and local businesses need is almost a bridge.
The average small business or local business holds about 30 to 60 days in cash. For restaurants that might be closer to 20 to 30 days of cash on hand. That's why help needs to come big, and it needs to come fast, and speed is kind of the number one thing right now, because of the kind of cash runway a lot of these businesses have.
How would you ideally like to see that bailout deployed? Do you think it's enough to financially bail out business owners and hope that money trickles down to their staff?
I'm not an economist, and I haven't worked out the exact numbers myself. But yes, first and foremost — and I think local business owners get this the most — I do think that business owners will make sure that whatever money is allocated will go to the workers. You already see some of them handing out the last paycheck to their staff and effectively taking a long hiatus. I think you should have the confidence that business owners will give the money to keep the staff. And I think the government, and the role they play in conjunction with this in giving some cash to restaurants to make sure they can bridge this period of time, will help solve this crisis.
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How do you foresee the restaurant industry evolving in the medium to long term because of coronavirus?
I think that there are going to be changes in consumer behavior. I don't know the exact time that it will take before people start getting comfortable going out again. But I guess what I'll say is, if you looked at every decade, starting when the Census Bureau began taking measurements — maybe the '30s and '40s — local businesses have always been 60%-plus of GDP. And in any decade, that's never changed. So what I'm confident about is, regardless of the timeframe in which it would take to get through this and get to the other side — and we will get to the other side — businesses are going to come back, because they always have.
That's what gives me optimism, and I think if we remind ourselves of that, then we can all be optimistic.