DoorDash's Grocery Gambit: Can Strategic Acquisitions Overcome Margin Pressures?

DoorDash's Q2 2025 earnings report underscores a pivotal moment for the company as it balances aggressive expansion into grocery and global markets with the persistent challenge of improving unit economics. While the company faces near-term margin pressures from costly acquisitions and competitive dynamics, its strategic moves—particularly the integration of Deliveroo and SevenRooms—position it to dominate new verticals like grocery, convenience, and alcohol delivery. For investors, the question remains: Can DoorDash's long-term vision outweigh short-term headwinds?

Grocery Growth: A Strategic Priority, But Margins Lag

DoorDash's Q2 results highlighted its progress in diversifying beyond its core restaurant delivery business. 25% of its 50 million monthly active users (MAUs) now order from non-restaurant verticals, including grocery, alcohol, and convenience stores. This shift is critical to capturing a larger share of consumer spending: grocery delivery alone represents a $150 billion U.S. market, with DoorDash aiming to lead in order volume by 2026.

However, the grocery segment's unit economics remain a hurdle. While core delivery margins hover around 25%, grocery's margins are “lower” (per management), due to higher delivery costs and razor-thin retail profit margins. The bull case hinges on DoorDash's ability to improve efficiency through autonomous delivery trials, DashMart's AI-driven meal recommendations, and SevenRooms' CRM tools, which could boost basket sizes and reduce churn.

The company's Q2 EBITDA guidance of $600–$650 million reflects this tension. While ahead of Q1's $590 million, it trails the high end of consensus expectations, signaling that margin pressures from integration costs and global expansion remain unresolved.

Deliveroo: A Double-Edged Sword for Global Dominance

The acquisition of Deliveroo for £2.9 billion expanded DoorDash's reach to 40+ countries, including high-growth markets like the UAE and France. This geographic diversification is a strategic win: Deliveroo's 10 million MAUs and 40% share of the UK food delivery market provide a springboard for DoorDash to challenge Uber Eats and Just Eat.

Yet the integration has its downsides. Deliveroo's gig-worker model clashes with DoorDash's U.S. labor practices, and $150 million in integration costs (per Q1 disclosures) have weighed on margins. Regulatory scrutiny in the EU—particularly over labor rights—could delay synergies.

Despite these challenges, the acquisition's long-term value is undeniable. By combining DoorDash's scale with Deliveroo's local expertise, the company aims to replicate its U.S. dominance globally. A telling sign: DoorDash's Q2 guidance included a 18-20% YoY GOV growth target, driven in part by Deliveroo's international expansion.

SevenRooms: The Hidden Gem in DoorDash's Playbook

The $1.2 billion acquisition of SevenRooms, a hospitality CRM platform, is often overlooked but equally vital. SevenRooms' tools allow restaurants to manage guest reservations, marketing campaigns, and loyalty programs—a critical advantage as DoorDash pushes into in-store sales and subscription services like DashPass.

The integration has already borne fruit: 150,000+ advertisers now use DoorDash's platform, with SevenRooms' data analytics driving retention rates above 85%. This synergy is key to unlocking advertising revenue, which reached a $1 billion annual run rate in 2024. Analysts estimate this could grow to $1.5 billion by 2026, fueled by SevenRooms' ability to monetize hospitality partnerships.

The Bull Case: Why DoorDash's Strategy Will Pay Off

Bulls argue that DoorDash's moves are classic “play for scale” bets, with execution risks outweighed by long-term rewards. Key pillars of confidence include:

1. Market Share Momentum: DoorDash's 25% MAU penetration in new verticals suggests strong consumer adoption. Its DashMart grocery service, with 82% YoY growth in non-alcoholic beverage orders, signals a winning formula.
2. Margin Leverage: Autonomous delivery trials in 10 U.S. markets could reduce delivery costs by 15% over time. SevenRooms' data integration also allows for dynamic pricing and higher take rates.
3. Insider Confidence: Executives have increased their stock holdings by 15% since Q1, while institutional investors like BlackRock added stakes—a bullish signal.

Analyst price targets reflect this optimism. The consensus $216 price target (vs. current $183) implies 18% upside, with bulls citing $240+ targets if margins stabilize.

Risks and the Bear Argument

The skeptics, however, point to three key risks:
- Margin Slippage: Q2's missed EBITDA guidance hints at execution challenges. Competitors like Instacart (with OTT ad spending) and Walmart (leveraging its stores) could erode DoorDash's pricing power.
- Regulatory Headwinds: Deliveroo's EU operations face labor law hurdles, while the FTC scrutinizes DoorDash's data practices.
- Saturation in Core Markets: U.S. food delivery growth has slowed to 8% YoY, forcing DoorDash to rely on grocery and global markets for growth.

Investment Thesis: Hold for the Long Game

DoorDash's Q2 results are a mixed bag, but the strategic logic is clear: grocery and global expansion are the keys to long-term dominance. While short-term margin pressures and integration costs will test investors' patience, the company's scale, technology, and data assets give it an edge in a fragmented market.

For now, hold DoorDash unless you're willing to ride volatility. Look for Q3 updates on Deliveroo's EBITDA contribution and SevenRooms' ad revenue synergies. If margins stabilize near the high end of guidance ($650M+), the stock could retest its 2024 highs.

In a sector where winners take all, DoorDash's aggressive bets on verticals and geographies could solidify its position as the Amazon of local commerce—but only if execution meets ambition.