The restaurant industry has been hurting in the wake of the coronavirus pandemic. More than half the restaurants that had to close down earlier in the year subsequently have shuttered on a permanent basis, and more could be in line for a similar fate.
The struggle restaurants are going through should have real estate investors very worried. If dining establishments continue to close, commercial landlords could have unprecedented vacancies on their hands, and shopping centers and malls, often located close by, could suffer as well.
It's clear restaurants need some sort of lifeline right now, especially in the absence of government aid for small businesses since earlier this year. But could that aid come in the form of a DoorDash IPO?
What's happening with DoorDash?
DoorDash, the leading food delivery app in the country, filed its IPO prospectus with the Securities and Exchange Commission (SEC) on Nov. 13. The company plans to list its shares on the New York Stock Exchange under the symbol DASH.
DoorDash reported $1.9 billion in revenue for the nine-month period ended Sept. 30, up from $587 million during the same time frame last year. The company has 1 million delivery workers and over 18 million customers, including more than 5 million customers on its monthly DashPass service, as of Sept. 30.
A break for investors?
Companies go public and issue stock to raise capital. By going this route, DoorDash may be able to secure its future and better partner with restaurants to deliver meals to hungry customers. That, in turn, could save more restaurants from ruin.
Right now, restaurants across the country must limit their seating capacity, and with cold weather approaching or already here, outdoor dining will pretty much be off the table in some parts of the U.S. But while takeout and delivery service have helped some restaurants stay afloat to date, many aren't equipped to deal with a surge of these orders on their own. Partnering with DoorDash could help restaurants better distribute their food and increase their revenue at a time when that's so important.
Furthermore, DoorDash says it has big plans to work with restaurants to help them maximize revenue and improve and grow their own operations. If going public helps DoorDash reach more restaurants, it could lead to fewer closures -- and less headache and loss for landlords who rent to them.
Of course, a DoorDash IPO brings up some legal questions: What happens to the delivery workers who are currently making it thrive? Right now, DoorDash gets to benefit from being part of the gig economy, which means it can hire workers as independent contractors. But the company will be subject to much further scrutiny once it goes public, and if it's forced to classify delivery workers as employees, it could cost DoorDash a lot of money.
Either way, there's a good chance meal delivery sales will stay strong as we close out 2020 and head into 2021. With many customers staying away from indoor dining and being bored out of their minds at home, food delivery is a hot commodity and will likely remain one in the near term. If DoorDash is able to expand its reach to better partner with dining establishments, that, combined with consumers' desire to have food delivered to their doorsteps, could help save restaurants -- and ensure commercial landlords retain a very important income stream.