Arkansas restaurant sues Waitr for hiking fees in breach of contract

Photo by Allison DeHart

The gist: Bobby’s Country Cookin’ in Little Rock, Ark., filed suit in April, claiming the food delivery platform boosted its contracted take rate without notice in a bid to puff up revenues ahead of its 2018 IPO. The suit was filed in Lake Charles, Waitr’s home base.

The restaurant claims Waitr upped its take rate “unilaterally” from 10% to 15%, shortly after it was acquired by billionaire Tilman Fertitta but before the company went public in November. The take rate is the portion of food sales Waitr charges restaurants for providing delivery and ordering services. Waitr’s competitors like GrubHub, DoorDash and Uber Eats typically charge 30%.

“That Waitr imposed this unlawful price increase after announcing its acquisition by an investment fund, but shortly before its initial public offering,” the petition reads, “suggests an intent to maximize potential revenue with disregard for its contractual obligations to its customers.”  

The suit seeks class action for Waitr’s 8,000 restaurant partners. Class action suits, unlike the two collective action suits filed on the company by its drivers, are opt-out proceedings, meaning any restaurant affected by the fee increase would be eligible for a claim without needing sign on to the suit, if the class is certified by the court.

Meanwhile, in the driver suit, Waitr has pushed for arbitration. Approximately 140 drivers have opted into Halley and Gongaware v. Waitr Holdings Inc., a suit filed in New Orleans in March. Waitr has filed a motion to compel arbitration — settle the matter driver-by-driver, out of court — on Heather Gongaware, an independent contractor, and notes in the filing that 127 of the drivers joining the suit had signed arbitration agreements tucked into their employee manuals. A 2018 U.S. Supreme Court decision, landmark in gig economy employment law, has made arbitration clauses in employment contracts more or less ironclad. If successful, Waitr would essentially squash the suit, box in damage and prevent a potentially messy public proceeding.

Waitr CEO Chris Meaux has shrugged off the driver suits. Drivers, about 90% of which are employees, claim that because Waitr does not pay mileage expenses it fails to pay them minimum wage, a violation of federal labor law. So-called “kickback” cases have cost big name pizza delivery chains like Domino’s and Papa Johns million of dollars. Waitr insists it’s paying its drivers appropriately; Meaux told The Advocate that some drivers “didn’t understand” how they are compensated.

“We have built our business on having a true partnership with our restaurants, and we will continue to do so,” Waitr said in a statement about the April restaurant suit. “As a company policy, we do not comment on pending litigation.”

Why this matters: Waitr is a big deal to Lafayette. It opened a new headquarters Downtown this year with taxpayer assistance and to much fanfare. In recent weeks, its stock price has taken a beating, dipping below $10 a share from a one-time high north of $15. Short positions — stock buys that effectively bet against the company — have increased in April, but mainstream analysts remain bullish on the company. Waitr will release its Q1 earnings on May 8. Whether litigation will impact its health is unclear. On a March earnings call, Meaux did not disclose the driver suits, suggesting Waitr does not view them as dangerous to its bottom line or growth.

About the Author

Christiaan Mader founded The Current in 2018, reviving the brand from a short-lived culture magazine he created for Lafayette publisher INDMedia. An award-winning investigative and culture journalist, Christiaan’s work as a writer and reporter has appeared in The New York Times, Vice, Offbeat, The Gambit, and The Advocate.

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