Online delivery platform Waitr has announced plans to acquire third-party delivery service Bite Squad for $321.3 million. The purchase price is a mix of cash and shares of common stock of Waitr.

Both companies serve small- to mid-sized U.S. markets. Waitr is a full platform from online order and delivery. Restaurants partnering with the company have access to Waitr’s software, which facilitates online ordering, real-time analytics, menu management, and marketing. The Bite Squad acquisition gives Waitr, who is mainly in the Southeast, a wider pool of potential customers, as Bite Squad serves 300-plus cities across Middle America, smaller coastal markets (e.g., Virginia, Florida), and even Hawaii. Bite Squad will maintain its own operations, technology, and brand for the time being.

When we talked to Bite Squad CMO Craig Key in September, he noted that the company is intentionally focused on areas outside major metropolises ruled by the Grubhubs, Uber Eats, and DoorDashes of the world. Rather than duke it out for dominance in near-saturated markets, Key explained his company wants to keep “reinventing the economies of [smaller] towns.” To that end, Bite Squad has thus far focused on expansion in small- to mid-sized markets, acquiring a total of 18 companies in places like Gainsville, FL, Lawton, TX, and Honolulu. Bite Squad’s funding up to now is undisclosed.

Since Waitr takes a similar approach by going after the so-called secondary markets, there’s potential for this deal to give food delivery an enormous presence in markets that tend to get overlooked or may not make economic sense for bigger companies to serve.

Of course the big question is, will these two forces combined unseat bigger services? Grubhub is currently the leader and reportedly plans to enter smaller markets in future, some of which will inevitably overlap with Waitr-Bite Squad territory.

One thing that separates Waitr and Bite Squad from the others is how they employ people: rather than contract out drivers, both companies have their own fleet. While that sounds expensive, it also keeps them out of the endless series of lawsuits companies like Uber face as they try to manage a gig economy model.

It’s probably just wishful thinking on my part that a W-2 employee model will be enough to keep Waitr-Bite Squad ahead of the pack in their markets. In reality, this new partnership will face some pretty stiff — possibly unbeatable — competition as we head into 2019.

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Jenn is a writer and editor for The Spoon who covers restaurant tech and food delivery, developments in agriculture and indoor farming, and startup accelerators and incubators. On the side, she moonlights as a ghostwriter for tech industry executives and spends a lot of time on the road exploring food developments in more remote parts of the country. Previously, she was managing editor of Gigaom’s market research department and was once a competitive pinball player. Jenn splits her time between NYC and Nashville, TN.

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