Dive Brief:

• DoorDash launched DashPass for Students, a membership plan for college students for $4.99 a month, which is half of the cost of a standard DashPass membership, the company announced on Monday. Annual memberships are also available for $48. 
• DashPass for Students is available to all undergraduate and graduate students at accredited colleges and universities across the country.
• The subscription program already has over 10 million members globally and has been key to generating repeat business on the delivery platform. The program offers $0 delivery fees from restaurants, convenience stores and grocery stores after meeting minimum order requirements, 5% credit back on pickup orders and member-only promos, among other perks.

Dive Insight:

DashPass's continued expansion shows significant potential for growth and may help DoorDash in reaching profitability. The program has existed since 2018, and DoorDash has used its marketing across its own channels, along with partnerships with credit cards to boost membership, executives said during the company's 2021 year-end earnings call.

"DashPass is emblematic of our broader strategy to focus on maximizing long-term profit dollar production," the company said in its Q4 2021 shareholder letter. "While DashPass orders generate lower contribution margins than non-DashPass orders on average, DashPass members have higher retention and order frequency than non-members. This helps drive faster growth and higher profit dollar production."

This new offering holds a lot of potential for DoorDash, especially since it has significant brand recognition among Gen Z. A 2020 Thrive Analytics study revealed that over half of Gen Z consumers surveyed prefer DoorDash compared to 16% preferring to use Grubhub. As of fall 2020, there were 19.7 million college students in the U.S.

This focus on students also will pit DoorDash against Grubhub, which has a significant presence on college campuses. Grubhub has targeted college students for several years. Campuses became a key focus after Grubhub acquired Tapingo, a food delivery provider for college campuses, in 2018. When it launched its Grubhub+ membership in 2020, it provided free access to students enrolled in any of the 150-plus campuses that work with the company. The program has since expanded to about 250 campuses and universities, the company said in an emailed statement. Grubhub had also been expanding robotic delivery across colleges through a partnership with Yandex, but that relationship recently ended. 

Grubhub also allows students to pay for orders using credit cards or their campus card, allowing students to order from on-campus dining options. However, Grubhub only works with a select number of college campuses, which could put it at a disadvantage, compared to DoorDash providing access to all students. 

DoorDash has also launched a multi-platform campaign "So Worth It," to highlight the new offering. The marketing will span digital, social and on-campus activations, according to the press release. 

"With the launch of DashPass for Students, we're excited to change the game for students with a plan that's designed specifically for them and provides access to everything from late night study snacks and grocery items to school supplies and dorm essentials," Kofi Amoo-Gottfried, CMO at DoorDash, said in the press release.