Last week, food delivery start-up DoorDash agreed to buy competitor Caviar from Square for $410 million in cash and DoorDash stock. The acquisition will expand the number of premium restaurants that DoorDash currently works with and deepen the companys relationship with Square, who powers in-person and online transactions between restaurants and DoorDash customers. The deal is expected to close this year, following regulatory approval.

Today’s announcement is another important step forward on our mission to empower local economies. We have long-admired Caviar, which has a coveted brand, an exceptional portfolio of premium restaurants and leading technology. The acquisition further enhances the breadth of our merchant selection, enabling us to offer customers even more choice when they order through DoorDash, said Tony Xu, DoorDash CEO, in an August 1 news release. We look forward to welcoming the Caviar team to DoorDash and expanding our partnership with Square in the future.

Gokul Rajaram, Caviar lead, also commented on the acquisition.

Caviar has built a trusted brand with customers and many of the best restaurants. DoorDash has national scale, complementary restaurant selection, a tremendous logistics platform and a team that shares our passion and commitment to better serve restaurants, couriers, and customers. I’m incredibly excited to be joining, with the rest of the Caviar team, to help build the future of local commerce, said Rajaram.

We are increasing our focus on and investment in our two large, growing ecosystems-one for businesses and one for individuals. This transaction furthers that effort, and we believe partnering with DoorDash provides valuable and strategic opportunities for Square, said Square CEO Jack Dorsey.

Founded by Stanford students in 2013, DoorDash serves more than 4,000 cities in all 50 states and Canada. DoorDash uses an online, data-driven platform and last-mile delivery through contracted couriers to deliver food from participating restaurants to individuals and businesses.

Caviar currently operates in 28 markets including Boston, Chicago, Dallas, New York, Philadelphia, Sacramento, San Diego, Seattle and Washington, D.C. Caviar was founded in 2012 and acquired by Square in 2014.

DoorDash has had a very busy year, raising $400 million in a Series F funding round in February, followed by a $600 million Series G funding round in May. To date, the company has raised $2 billion in funding, and after the latest funding round, it was valued at $12 billion, according to Crunchbase.

Insider Take:

This acquisition will help DoorDash compete with similar companies like UberEats, Postmates and GrubHub, who use a similar model. Several of the companies, including DoorDash, offer a subscription program for frequent customers. DoorDashs program, DashPass, was launched in 2018. For $9.99 a month, subscribers receive free delivery on orders over $12 at participating restaurants. DoorDash estimates that subscribers save an average of $20 a month.