Paytronix CEO Robbins Says DoorDash Still Has A Lot To Prove

DoorDash’s initial public offering (IPO) and sudden stock price surge has created no shortage of conversation in the dining landscape. Experts and analysts are rushing to figure out whether DoorDash’s big jump signals a permanently shifted dining landscape or if the sudden surge is destined to pull back once the COVID-19 vaccine is in wide circulation and consumers have the option to eat in dining rooms once again.

And, as Paytronix CEO Andrew Robbins told Karen Webster in a recent conversation, it is not an easy call to make. Delivery services have made some great gains in the last year, and DoorDash has managed to reach that brass ring with so much scale that it might even be approaching profitability in the not-too-distant future. If the company can actually bring all of those chain restaurants and independents into its platform and project them onto mobile phones, it has the potential to become “the biggest restaurant in the world.”

But, he said, that’s a very tall order for DoorDash to deliver on, no pun intended — and the power-up provided by COVID-19 isn’t going to last forever.

“It’s just like Zoom. They’ve benefited from a massive disruption to the system,” Robbins said. “The reality is that’s going to ease. People like to go back to their old behaviors, so that’ll happen. But some of what’s here will remain, and it will be interesting to see exactly how much and what they can do with it.”

What DoorDash Has Accomplished 

Some of DoorDash’s success, Robbins and Webster agreed, is the Robinhood effect at work. Consumers became intimately familiar with it right around the time of the IPO and decided to buy in. Something similar happened when Robbins’ father discovered Zoom earlier this year.

“We invited my parents to a Zoom meeting and my dad, who is 91, bought the stock within two days. He said, ‘yeah, this is going to be a thing.’ He enjoyed a 5x return on that stock.”

But there is more going on than “right time, right place.” DoorDash has built a lot of positive consumer sentiment over the last several months, and has settled its relationship with at least half of the restaurant world — specifically the large chains.

Those big-name chains, Robbins said, come to the platform to negotiate a much better deal than a 30 percent commission fee on meals sold, and with more fully developed digital offerings of their own. They leverage DoorDash as one channel of distribution among many, not as their sole connection to the digital dining space.

As Robbins pointed out, most chains have forged a reasonable and sustainable economic relationship with the marketplaces. The best evidence of this would be Jimmy John’s massive change of heart about teaming with the delivery marketplaces. Just a short time ago, the brand said it would never sign on with the aggregator platforms — because it didn’t have to. Jimmy John’s was better at actually delivering its sandwiches, and saw no reason to pay for someone else to do a worse job.

“Restaurant chains like that have enough clout that they bargained down the price,” Robbins explained. “They have multi-tiered strategies where they can own the majority of the customers, DoorDash can own some of the customers, or maybe they do their own deliveries and also add DoorDash to expand into new areas.”

And to the chains, stabilizing their relationships is a big deal, Robbins noted. It represents about half of their sales volume on the platform. But the challenging trick is the independents that signed on more out of necessity.

The Big Challenges To Overcome 

Independent restaurants, unlike their national chain counterparts, are paying that 30 percent commission — which, over the long term, isn’t sustainable to turn a profit. It’s a low-margin industry to start with, Robbins said, and a big bite more or less forces restaurants into becoming ghost kitchens.

But independents don’t have multi-tier operations, national name recognition or teams dedicated to dialing them into digital. Hence, DoorDash is their best option to access the digital consumer. But Robbins predicts that by summer, the math is going to look a lot different in terms of the importance of that digital pipeline.

“There’s a kind of love/hate relationship,” Robbins said. “And I think they’re just hoping to hang on. Right now, they need whatever orders they can get. But there’s a vaccine, and  sometime this summer in 2021, it’ll return to normal. A lot of independents are just focused on making it to summer.”

And summer is going to be a very different ballgame for dining. Consumers miss dining out and attending social gatherings. They will also have weddings, graduations, birthdays and anniversaries that didn’t happen in 2020. There is a lot of pent-up celebration pressure out there, Robbins said, and consumers are eager to release it just as soon as it’s safe.

Which means DoorDash — and its fellows in delivery — will have to prove that they’re not just able to handle a tide when it surges, but that they also have a plan for when that tide inevitably starts to ebb.