Soon Square will deliver your gourmet pizza as well as charge it to your card

Square lately has cast a much wider net, expanding from its core point-of-sale payments business into e-commerce, business financing and even peer-to-peer payments. But its next move might sound a bit more puzzling: It’s acquiring tony food delivery service Caviar.
Confirming reports over the weekend in The New York Times and Re/Code, Square announced this acquisition on Monday. It didn’t reveal any financial details, though the Times reported it negotiated a $90 million all-stock deal.

Photo: Caviar

Photo: Caviar

So why on earth would Square want a food delivery startup? The answer lies in Square’s recently intensified focus on its restaurant and dining merchants. Square has always been present in the food service industry, with restaurants and cafes using its reader to process credit card payment and handle point-of-delivery sales. According to the company, Square already has 50,000 restaurants using its payment services.
But last year’s introduction of Square Stand was clearly designed to move Square into more and busier brick-and-mortar businesses like restaurants and bars that process lots of card transactions. In May, Square began to shut down its down its consumer mobile payments app, Square Wallet, replacing it with a new app called Order that centered on Wallet’s most compelling use case: ordering and paying for food.
Order and a new feature in Square Market called Pickup are really the precursors to a food delivery service because they separate the transaction from the location. You can chose your meal selection and settle your bill from anywhere, but the app still requires your to show up the restaurant to eat or pick up your food. With a delivery component, Square would have that final link in that chain.
Square's Pickup interface (source: Square)

Square’s Pickup interface (source: Square)

Square has already made it clear that it wants to compete against GrubHub(s grub) and other big menu-aggregating meal pick-up and delivery sites. It claims Order already undercuts those big sites in processing fees. Buying Caviar might let Square distinguish itself with high-end meal delivery, rather than slug it out with GrubHub for the business of every mom-and-pop pizza joint and Thai noodle shop. Caviar primarily works with swishier restaurants that wouldn’t normally deliver, like Momofuku in New York or Publican Quality Meats in Chicago.