Dive Brief:

• Postmates on Tuesday said it has expanded to 100 additional cities, making delivery available in 385 U.S. cities, as well as Mexico, from more than 250,000 merchants, according to a company statement.

• The company has also expanded its national partnership with Chipotle Mexican Grill, adding 300 of those locations and reducing delivery fees to $3.99, according to a company press release. To celebrate, Postmates is waiving delivery fees on all Chipotle orders through Sunday, July 15.

• The delivery startup is just one in number of last-mile services providers and is rumored to be mulling a merger with rival DoorDash, according to ReCode. Both provide grocery delivery services to Walmart, but neither has reached profitability. 

Dive Insight:

This huge expansion makes Postmates delivery services available to almost half of the U.S. population — a big step in its efforts to scale. The company says it makes millions of deliveries a month and generates over $1 billion in gross merchandise value annually.

Along with its Walmart tie-up, this expansion puts pressure on Instacart, which last year dominated grocery fulfillment. There’s plenty of scrambling among last-mile delivery providers which includes not just those three, but also efforts from Uber, GrubHub, Deliv, Amazon and Target’s Shipt, which the mass merchant acquired late last year for $550 million in cash, just four months after buying same-day transportation technology company Grand Junction for an undisclosed amount.

The strengthening of Postmates ties to Chipotle provides a high-profile association with a popular nationwide brand. But the heated competition is also driving down fees. Ahead of the holidays last year for example, the delivery startup cut delivery fees for orders above $20. That way Postmates Unlimited subscribers didn't have to pay more than their $9.99 per month subscription fee, a move during the busy shopping season to garner more subscribers, who purchase 50% more per month than non-subscribers.