It’s been a rough first half of 2019 for Waitr

Photo by Allison DeHart

The gist: Waitr started the year on a high, buying up equal-sized competitor Bite Squad and hitting $14 a share in March. Since then, the nascent public company hit the rocks, facing lawsuits, potential restaurant strikes and a stock that’s fallen below $7.

The first lawsuits came in March from disgruntled drivers. They argued Waitr hasn’t been paying minimum wage once the drivers factored the cost of gas and car maintenance. 

The second lawsuit hit in May from disgruntled restaurants. They argued Waitr was breaking its contract by illegally raising the services fees it charges restaurants.

Waitr has denied wrongdoing and has brushed aside concern about the suits. 

Earlier this month Waitr laid off dozens of employees. Cuts landed at the company’s offices in Lake Charles and Lafayette. Waitr says the layoffs were necessary to clear up redundancies after the Bite Squad acquisition. But the suddenness of the move rippled through social media channels with accusations that it was a cold-hearted corporate move at odds with Waitr’s friendly startup image.

A few days later Waitr made waves again by announcing changes to its contracts with restaurants. For smaller restaurants, service fees could increase from 15% to 25%. And restaurants will no longer be able to charge higher-than-menu prices on Waitr’s platform to cover fees. Waitr is also now prohibiting restaurants from using photos taken by the company for other promotional materials. 

Restaurants are fighting back. Some Baton Rouge restaurants are threatening to leave Waitr, and a number of Lafayette restaurants are planning a blackout day to protest Waitr’s new terms.

BUT: Waitr’s fees are still lower than its competitors, which can be 30-35%. Even the lower performing restaurants in Waitr’s sliding model will pay lower rates than on GrubHub and others. 

The combination of lawsuits, layoffs and angry restaurants has turned some on social media against Waitr. Many of the comment threads about these stories have included calls to delete Waitr’s app and stop supporting its business. There’s a sense that Waitr’s no longer the scrappy startup focused on supporting small mom-and-pop restaurants but rather has sold its soul to corporate greed.

And Waitr has also been getting beat up in the stock market. In the last four months, Waitr’s stock price has fallen by more than 50%. In March the company was worth more than $900 million. Now it’s almost down to $400 million.

What to watch for: Whether all these developments are just speed bumps we should expect on the fast track to success, or if instead they represent cracks in the foundation of what once appeared to be an endlessly bright future for Lafayette’s preeminent startup star.

About the Author

Geoff Daily created FiberCorps and helped launch the Lafayette General Foundation. He now works as a launch strategist.

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