DoorDash pledges over $50 million in Q2 to ease gas burden for delivery drivers
DoorDash said Wednesday it expects to spend more than $50 million in the second quarter on gas price relief for its delivery drivers, a move that comes as the national average for a gallon of gas hit $4.53—up 44% from a year ago, according to AAA.
The San Francisco-based company initially rolled out the temporary compensation program in March for U.S. and Canadian drivers, citing the sharp increase in fuel costs tied to the ongoing conflict in Iran. The program is designed to offset some of the financial strain on drivers who rely on personal vehicles for deliveries.
Despite the higher gas prices, DoorDash reported that demand remained strong in the January-March period. Total orders rose 27% to 933 million, though that fell short of Wall Street’s forecast of 954 million, according to analysts polled by FactSet. The company attributed the miss to winter storms that closed businesses and dampened demand in certain regions.
Revenue also came in below expectations, climbing 33% to $4.0 billion—short of the $4.15 billion analysts had predicted.
To fund the gas relief program, DoorDash said it has adjusted investments in other areas. The company had previously announced plans to spend heavily on new products and services this year, including restaurant reservations and robot deliveries. “We did have to push out some investments … in order to make room for this,” CFO Ravi Inukonda told investors during a conference call. “If we do decide to extend the program, our goal is to find offsets.”
Net income for the quarter fell 5% to $184 million, or 42 cents per share, partly due to a 30% increase in research and development costs compared to the same period last year. Still, that beat analysts’ forecast of 36 cents per share, according to FactSet. Shares jumped more than 11% in after-hours trading Wednesday.
The earnings report comes a week after rival Uber announced a deal with Expedia Group that will allow users to book hotel reservations through the Uber app. When asked if DoorDash plans to add a similar service, co-founder and CEO Tony Xu said the company sees plenty of room to grow its core business. “We are a tiny fraction of what’s actually available and addressable,” Xu said. “Which in some sense means that there’s a large runway and opportunity for us to become even better in breed in terms of what it is that we can offer. And if we can keep doing that, I think we’re going to be just fine.”
Drivers and industry observers have mixed reactions. Maria Gonzalez, a DoorDash driver in Chicago, said the extra compensation helps but doesn’t go far enough. “Fifty million sounds like a lot, but when you divide it among thousands of drivers, it’s barely a few cents per mile. Meanwhile, gas is still over four bucks. It’s a band-aid on a bullet wound,” she said. “They’re spending millions on robot deliveries, but we’re the ones keeping the business running. Show us some real respect.”
In contrast, James Carter, a logistics analyst based in New York, sees the move as a strategic compromise. “DoorDash is walking a tightrope between driver retention and investor expectations. The gas relief is a necessary short-term fix, but the real test will be whether they can sustain it without hurting long-term growth. So far, the market seems to be giving them the benefit of the doubt.”
Meanwhile, Sarah Lin, a part-time driver in Austin, Texas, said she appreciates the effort but worries about the future. “I’m grateful for any help, but I wish they’d be more transparent about how long this will last. If gas prices stay high, what happens next? We’re all just hoping for some stability.”
As the summer driving season approaches, all eyes will be on DoorDash’s next move—and whether the company can balance driver needs with the bottom line.