DoorDash is buying Instacart. The company announced the deal Thursday, and the price tag is about $17 billion. Instacart’s board has already approved it, and shareholders will be paid a premium over where the stock traded before news of the talks leaked.
The deal brings together the app many people use for takeout and the app many people use for their weekly grocery run.
Nothing changes on your phone just yet. The deal is not expected to close until late 2027 or early 2028, and the two companies will keep operating separately until then. DoorDash has said it plans to keep the Instacart name, app, and technology once the deal is done.
DoorDash chief executive Tony Xu made the case for the purchase in simple terms. “Grocery is one of the hardest things to get right online,” he said. Anyone who has opened a bag and found the wrong brand of rice, or a missing item, knows what he means. Instacart has spent more than a decade building the systems that help grocery stores sell online, and DoorDash wants that know-how.
The move makes sense when you look at the two businesses. DoorDash built its name on restaurant orders, and it already controls about two-thirds of the food delivery market in the U.S. Grocery orders, though, are a different animal. An average Instacart order is more than three times the size of a typical DoorDash order, because people are stocking their kitchens, not grabbing a single meal. For DoorDash, that is a steady stream of repeat business.
For Instacart, the sale comes after a bumpy few years. The company was valued at far more during the pandemic, when everybody was ordering groceries to their doors. Since then, it has faced tougher competition. Amazon and Walmart have pushed hard into grocery delivery, and Instacart has struggled to find new ways to grow. Selling to a bigger player may be the safer road.
Still, plenty of questions hang over this deal. The biggest one is whether regulators will let it happen. The two companies reportedly talked about a deal in 2021, but those talks ended partly over concerns about antitrust rules. Those rules are meant to keep large companies from squeezing out competition. Analysts have said this deal could draw a close look because of how much the two companies overlap. The company says the deal will help stores of every size, but regulators will decide for themselves.
Then there are the people who feel these changes most. Delivery workers and in-store shoppers want to know whether their pay and tips will stay steady. Families in neighborhoods without a nearby full-service grocery store lean on these apps more than most, and they will be watching for any rise in fees. Neither company has made promises on pay or prices, and it is too early to say how things will play out.
For now, the story is a waiting game. A giant deal has been signed, a long review is ahead, and everyday customers will be the ones to see the results at checkout. Stay tuned, and keep an eye on the fine print.
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