Around this time last year, we predicted that small- to mid-sized U.S. cities would be key battlegrounds in the war to win food delivery, and that this expansion would give smaller services a chance to stand out.
We were half right. Restaurant food delivery has indeed made its way to every conceivable corner of the nation, and the majority of restaurant growth over the next 10 years is expected to come from off-premises sales. But it looks like instead of benefiting from this expansion, smaller services are getting edged out by the usual suspects (DoorDash, Grubhub, etc.).
Case in point: this week, Minneapolis-based food delivery company Bite Squad said it was ending service in three Minnesota cities: St. Cloud, Rochester, and Duluth. The announcement comes mere months after Bite Squad launched services in these cities.
“We were unable to grow the market fast enough to become profitable,” Bite Squad Media Relations Director Dean Turcol told the SC Times this week.
Bite Squad sent a bare-bones email to those partners in those cities saying only that the company is suspending service “indefinitely” and that its last day of operations will be December 5.
One year ago, Bite Squad was far more optimistic about food delivery and the company’s approach to the model, which has always been to focus on small and mid-sized cities in the U.S. rather than fight the competition in LA, NYC, and other major metropolises. At the time, Bite Squad’s Chief Marketing Office, Craig Key, said the company was “very bullish” on restaurant delivery across Middle America. “We’re confident in our position because we’re not haphazardly going into markets,” he told The Spoon.
Then Waitr acquired Bite Squad in December 2018 for $321 million, a deal that at the time seemed like a win for smaller delivery companies. Waitr has since written off much of that deal, laying off many of Bite Squad’s staff at the latter’s Minneapolis headquarters.
So who’s winning over Middle America and all the smaller cities in between the nation’s coasts? DoorDash. Despite recent controversies, the San Francisco-based company continues to seize the suburbs and lead the market for third-party restaurant food delivery. Unfortunately for companies like Bite Squad and Waitr, that doesn’t look likely to change anytime soon.