Square is doubling down on food delivery with its purchase of a Philadelphia startup (SQ)

Caviar

Square's latest acquisition proves the company's food delivery business isn't going anywhere. 

The mobile payment company has acquired Main Line Delivery, an 8-year-old startup that delivers food to the Main Line region of Philadelphia. Square's own food delivery company, Caviar, operates in Philadelphia and the addition of Main Line is meant to enhance its offerings in the region, the company told Business Insider. 

Terms of the deal were not disclosed. One of Main Line's founders, Dan Ritterman, will be joining Caviar's team in Philadelphia. 

While the food delivery space is crowded — Caviar competes with UberEats, GrubHub and Seamless nationally — the company says its focus on restaurant partnerships sets it apart from the competition. That focus also led to the purchase of Main Line. 

"We've been watching Main Line — and the Philadelphia team knows them well — for their presence in [the Main Line region], their commitment to making delivery easy, and for their restaurant relationships," Gokul Rajaram, Caviar lead at Square, told Business Insider. "We believe they have relationships with the best restaurants in Main Line, so it really nicely dovetails with our strategy of partnering with the best restaurants in every metro."

Caviar entered the Philadelphia market two years ago, a few months after being acquired by Square. At the time, the company had 40 restaurants signed on in the region. Now, it has 300 on the app. 

Earlier this year, reports surfaced that Square had discussions to sell Caviar to Uber and GrubHub. The talks took place in late 2015 and early 2016 after Square received inbound interest from the companies about Caviar. But after receiving a "lowball" offer for Caviar, the talks ended. 

Rajaram says the acquisition of Main Line and Caviar's recent performance prove food delivery is a valuable part of Square's business: Rajaram says the Caviar is currently making money on every order, meaning the company is gross profit positive.

"Caviar has shown very strong growth," he said. "One of the things we announced in our Q3 earnings was that Caviar has grown 11x in weekly order volume since Square acquired Caviar. So this acquisition is a demonstration that Square is not just continuing to invest in but actually doubling down on Caviar."

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