DoorDash Puts $17 Billion Bid on Instacart to Merge Grocery and Meal Delivery

DoorDash is offering $17 billion to acquire Instacart in a move that would unify the two dominant forces in American food delivery. The proposal aims to consolidate grocery and restaurant delivery services under one corporate umbrella, creating a single entity that controls a massive share of the local delivery market.

The two companies have been competitors for years, but their paths have converged recently. DoorDash entered the grocery sector in 2020, a move that initially met resistance from major retailers. Kroger, for example, began partnering with DoorDash in 2022 but restricted the service to flowers, sushi, and prepared meals from a limited number of locations. By last fall, that restriction was lifted, and DoorDash now lists the full inventory of all 2,700 U.S. Kroger stores. Last month, the company added Costco to its platform.

These expansions have eroded Instacart's market position. Five years ago, Instacart held 26% of spending on U.S. delivery platforms, according to Consumer Edge. That share has dropped to 18%. In the same period, DoorDash increased its share from 44% to 59%. Uber Eats has remained steady at just under 20%.

The deal includes specific terms for customers and workers. DoorDash stated that the Instacart brand name and app would remain active. The 600,000 independent contractors who work for Instacart would continue fulfilling orders as they do now. Customers who currently pay for both DashPass and Instacart+ memberships at $9.99 each would pay a single fee. Instacart users would also gain access to 50,000 additional stores on the DoorDash platform.

Tony Xu, co-founder and CEO of DoorDash, argued that the merger allows smaller retailers to compete with industry giants. He noted that Walmart holds 21% of U.S. grocery spending, while Costco and Amazon each hold 8%. Xu said on a conference call with investors that the combined entity would give every retailer a fighting chance in the modern era. He emphasized that the deal helps fend off rivals like Walmart, which has expanded its own delivery network to include 2,400 restaurant locations.

Apoorva Mehta, who founded Instacart before leaving following its 2023 IPO, said he and Xu had discussed a merger for years. Mehta stated that customers have 21 meals a week to plan, and combining grocery and restaurant delivery solves part of that problem. He added that the combination would provide shoppers with more opportunities to earn money.

If approved by shareholders and regulators, the deal is expected to close by the end of 2027 or in early 2028. DoorDash shares rose 6% in early trading Thursday, while Instacart shares remained flat. DoorDash completed more than 3 billion orders last year using 9 million independent workers, a volume that dwarfs Instacart's 338 million orders.