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Waitr Takes a Bite Out of the Third-Party Delivery Market, One Small City at a Time

by Jennifer Marston
March 5, 2019March 5, 2019Filed under:
  • Business of Food
  • Delivery & Commerce
  • Restaurant Tech
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A brief history lesson: When Walmart first became successful enough to expand outside its home state of Arkansas in the 1960s, the company didn’t immediately barrel into heavily populated coastal cities like New York or Los Angeles. Instead, it opened locations Missouri and Oklahoma — neighboring states but not exactly the epicenter of commerce. Walmart didn’t actually make it to California until the ‘80s and New York until the ‘90s.

Chris Meaux, CEO of delivery service Waitr, argues that this focus on smaller markets is how Walmart built the mega-popular status it enjoys today. And if he has his way, Waitr will eventually be able to tell a similar story.

“[They] had such brand equity that they eventually got pulled into [major] cities,” he says of the big-box retailer’s eventual coast-to-coast expansion. “And I think the same thing could happen to Waitr over time. We’re building a very strong brand in the markets we serve. If the demand for that brand requires we get pulled into major markets, we’ll do it.”

To the consumer, Waitr looks much like any third-party delivery service: You download an app, order food, and wait for someone to deliver it. The company operates in many of the same markets as — and many markets where those bigger players aren’t.

To be clear, Waitr isn’t trying to be the next Walmart. It is, however, following the retail giant’s strategy of expanding from its smallish hometown — in this case, Lake Charles, Louisiana — into other smallish cities before heading to the mid-sized markets a la Minneapolis or Amarillo, Texas. Major metropolises aren’t even on the wish list right now.

Even its website emphasizes this localish approach, pushing the image of a hometown food service rather than a faceless entity that’s in every other American city. As Meaux explained over the phone recently, these places are perfect markets for Waitr’s business “because they haven’t gotten attention from some of the larger companies.”

Waitr’s current territory includes much of the Southeast and two dozen cities in Texas. And with its recent acquisition of Bite Squad for $321.3 million, that reach expands to smaller coastal markets like Virginia and Hawaii.

“It was almost exactly the same business model as Waitr,” Meaux says of Bite Squad, adding that larger companies tend to be more focused on demand for consumers, whereas Waitr/Bit Squad puts a lot of emphasis on partnerships with restaurants and drivers, too.

How to employ drivers was a key area on which Waitr and Bite Squad agreed, and it’s the other thing setting Waitr apart from the larger delivery companies. Waitr has, according to Meaux, around 18,000 W2 employees as drivers on its payroll. And he’s aware of how absurdly expensive that sounds to most people.

“It’s really a policy that employees are more expensive,” he says. “Efficient employees are much less expensive.” Because Bite Squad can schedule employees to work when they actually need them, they can more easily accommodate busier periods of the day (dinnertime) and cut back when it’s slow (2 p.m.). Meaux says drivers are reimbursed for personal vehicle and cellphone use. “If you manage the driver flee right and you schedule the drivers when you need them, [you] can do it with a fraction of the drivers that [competitors] require. And as long as employees stay busy, the company profits, because its fees are hourly, rather than a flat rate. Bit Squad, who still maintains its own operations, uses an almost identical approach when it comes to drivers.

It’s impossible to now right now whether this is a sustainable model for the long term. But Meaux, along with Bite Squad CMO Craig Key, are optimistic. “We’re excited about the future about Wiater and Bite Squad, we’re deep into the integration,” says Meaux. “We have a lot of opportunity for growth and expansion. We believe in the next five to seven years or so, we have a chance to be a significant leader in the space.”

He says there will also be room in that future to continue exploring a subscription-based model, something other delivery companies are currently experimenting with, too. Bite Squad’s Unlimited service costs $5.99/month, and users can order from participating restaurants within a four-mile radius. Meaux says there’s “tremendous opportunity” for the unlimited model, though it won’t be as significant as, say Amazon Prime was for e-commerce. “Products or services are oftentimes options. Food is not an option.”

One could argue that delivery is optional, but at this point, it’s so widely and cheaply available it’s become commonplace. In fact, Waitr’s heaviest users, Meaux tells me, are “moms with kids” who “have no time.” Paying a five dollar fee to not throw kids in the car and drive to the restaurant or grocery store seems a small investment when looked at in that light, especially when it comes to smaller cities and longer distances between any two places.


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Tagged:
  • Bite Squad
  • DoorDash
  • GrubHub
  • Postmates
  • third-party deliver
  • Uber Eats
  • Waitr

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