We did a bunch of things differently last year in response to the pandemic. Some were good (daily runs) and others were necessary but not going to “stick” in terms of our post-pandemic set of routines.
One of them is food delivery. Sure we needed this and used it last year and Postmates Unlimited was a good deal and saved some on charges. It also made you more inclined to get delivery like Amazon Prime tends to nudge you buy everything you want delivered on Amazon.
As a matter of full disclosure I have been personally short DoorDash (DASH) since shortly after their IPO because I have as yet failed to appreciate the economics of the business - at least at the scale that public market investors seem to.
Spring is in the air here in Louisville and vaccines are making it possible for us and many of our friends to resume activities like going to watch a sporting event and dining out.
Most restaurants we like have also become very good at curbside service so saving quite a bit of money and picking up a meal is much more attractive than it was a year ago.
I don’t know how important the “Unlimited” model is to the long-run success of DoorDash but it seems like there will be some decline in that business in 2021.
Point to point delivery is difficult to do cheaply and food delivery seems like a business where there is price sensitivity. There are definitely niches in this business that could sustain a growing and profitable business but they are niches and not the broad consumer market, at least IMO- Think corporate catering, dinner parties, special event items.
It’s been pointed out to me that DoorDash and other companies in the food delivery business may find “other models” of making money on the back of what they do as a core service. If and when that happens I’ll give the stock another look.
I’d rather own Costco (COST) right here to play future consumption patterns.