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

DoorDash has offered $17 billion to purchase Instacart, a move that would merge the two major players in American food delivery. If the deal closes, consumers who currently pay for separate subscriptions to both services would pay a single monthly fee. The acquisition aims to combine grocery shopping with restaurant meal delivery under one corporate roof.

The offer values the combined entity at a price point that reflects the growing importance of digital grocery channels. DoorDash stated that the Instacart name and application would remain available to users. The 600,000 independent contractors who shop for Instacart would continue their work without immediate changes to their roles.

Tony Xu, co-founder and CEO of DoorDash, explained that the merger is designed to help smaller retailers compete with large chains. According to market research firm Numerator, Walmart holds a 21% share of U.S. grocery spending. Costco and Amazon each hold an 8% share. Xu argued that larger companies have invested heavily in technology and fast delivery models, creating a high barrier for local stores to enter the digital market.

During a conference call with investors on Thursday, Xu noted that the combination would provide retailers with a better chance to compete in the modern era. He said, "That’s what this combination is really about, where DoorDash and Instacart can give every retailer a fighting chance at competing in the modern-day era." The deal would also allow grocers to choose which delivery platform they prefer for their online orders.

The consolidation comes as DoorDash expands its dominance in the delivery sector. The San Francisco based company, founded in 2013, completed more than 3 billion orders last year using 9 million independent delivery workers. Instacart, founded in 2012, fulfilled 338 million orders in the same period. DoorDash currently operates in 40 countries and has a market value of $73 billion.

DoorDash entered the grocery space in 2020 during a surge in pandemic demand. Initial partnerships were limited, with Kroger allowing the company to deliver only flowers and prepared meals from specific stores in 2022. That restriction was lifted last fall, and DoorDash now lists the full inventory of all 2,700 U.S. Kroger stores. Last month, the company added delivery services for Costco, further strengthening its grocery portfolio.

The shift in market dynamics has impacted Instacart’s standing. Consumer Edge, a market research firm, reported that Instacart’s share of U.S. delivery platform spending dropped from 26% to 18% over the last five years. In that same period, DoorDash’s share increased from 44% to 59%. Uber Eats maintained a share just under 20%.

Apoorva Mehta, who founded Instacart and left the company after its 2023 initial public offering, said he and Xu had discussed merging the firms for years. Mehta stated that customers need to manage 21 meals per week, and combining grocery and restaurant services addresses that need. He added, "Serving customers well means bringing together the best of both." Mehta said the merger would also create more earning opportunities for shoppers.

The deal is expected to be finalized by the end of 2027 or in early 2028, pending approval from Instacart shareholders and government regulators. DoorDash shares rose 6% in early trading on Thursday, while Instacart shares remained flat. The acquisition would position the combined company to counter rivals like Walmart, which has expanded into restaurant delivery by partnering with Subway, Dunkin’, and Papa Johns. Walmart now lists 2,400 restaurant locations on its delivery platform.