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McDonald’s joins forces with DoorDash, ending its exclusive deal with Uber Eats

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Starting first in Houston, Texas

Image: DoorDash

McDonald’s said Tuesday it would be teaming up with food delivery startup DoorDash, the first deal for the fast-food giant since it was reported to be considering ending its exclusive deal with Uber Eats earlier this year.

Starting July 29th, DoorDash will start delivering for McDonald’s in Houston, Texas, serving the city’s 200-plus locations. McDonald’s will also join DoorDash’s subscription service, Dash Pass, which offers its 1 million members unlimited $0 delivery fees on orders of $12 dollars or more to select restaurants.

DoorDash, based in San Francisco, recently outpaced GrubHub to become the largest food delivery service in America, according to new credit transaction data from research firm Second Measure. DoorDash claimed 32 percent of sales in May 2019 among the food delivery companies Second Measure tracks, compared to 31.7 percent for Grubhub. Uber Eats trailed in third with 19.7 percent of sales.

In April, Bloomberg reported that McDonald’s was chaffing under Uber Eats’ high fees and was thinking of turning to other delivery partners. Citing an internal memo, the burger chain’s senior leadership and franchisees met with Uber Eats to negotiate lower fees. That emboldened other restaurant chains, including Applebee’s and Cousins Submarines, to negotiate lower commissions while asking their delivery partners to spend more on marketing and promotional discounts, according to a Wall Street Journal article last month.

It was a big deal when Uber Eats and McDonalds’s first announced their partnership in early 2017. The fast food chain featured prominently in Uber’s S-1 filing with the Securities and Exchange Commission prior to its IPO. The filing contained a full two pages devoted to its partnership with McDonald’s. It said Uber Eats accounts for as much as 10 percent of food sales at some of the hamburger chain’s restaurants.

For DoorDash, McDonald’s represents its biggest restaurant chain yet. The delivery company has been flying high since raking $2 billion in financing from investors including Softbank. It was last valued at $12.6 billion, nearly double the $6.6 billion market cap of publicly traded Grubhub. DoorDash and Uber Eats aren’t profitable, while Grubhub is.

“McDonald’s is a customer favorite and a leader in its craft, and it’s an honor to offer their loyal fan base more ways to enjoy McDelivery through DoorDash,” said Christopher Payne, Chief Operating Officer of DoorDash

A spokesperson for Uber did not immediately respond to a request for comment.