Square is getting out of the food delivery business.
The payments company is selling its on-demand delivery service Caviar to DoorDash for $410 million, Square announced during second-quarter earnings Thursday.
The acquisition will be a combination of cash and DoorDash preferred stock, and is expected to close at the end of this year. According a securities filing, Square bought Caviar for $44.3 million in 2014.
Square CEO Jack Dorsey, who also runs Twitter, said in the move will allow Square to double down on investments and focus in its core payments businesses.
“We have seen a lot of opportunity to strengthen both these ecosystems but those opportunities require more focus and more investment,” Dorsey said on a call with analysts after Square’s second-quarter earnings. “To increase our focus, we decided to sell our Caviar business to DoorDash.”
Shares of Square dropped as much as 8% Thursday after the payments company issued weaker-than-expected third-quarter earnings guidance. The company still beat analysts’ earnings and revenue expectations for the quarter.
Caviar was the second largest component of Square’s subscription and services revenue stream during the three-month period. Cash App was the largest of that category. Overall, Square brought in $251 million in subscription and services revenue for the quarter.
Dorsey said DoorDash was “an obvious choice” for the sale because of an existing relationship through orders in Cash App. Square will still focus on restaurants and food sellers — just through a payment platform approach, instead of offering delivery.
This isn’t the first time Square has tried to sell Caviar, which has focused on higher-end restaurants with higher prices than most delivery platforms. Bloomberg reported in 2016 that Square was looking to sell the delivery business and was reportedly in talks with Uber, Yelp and GrubHub.
DoorDash has been under fire for how it pays delivery workers. Tips were going to the company instead of the contract drivers, but the CEO announced last week it would update its tipping policies. DoorDash CEO Tony Xu said in Thursday’s press release that he had “long-admired Caviar, which has a coveted brand, an exceptional portfolio of premium restaurants and leading technology.”
CFO Amrita Ahuja said on a call with reporters that Square’s Caviar lead Gokul Rajaram and a handful of other Caviar employees would join DoorDash when the deal closes.