Waitr changes force Lafayette restaurants to reevaluate partnership with delivery app

William Taylor Potter
The Daily Advertiser
A Waitr delivery driver picks up an order at local restaurant in Lafayette Wednesday. Waitr's new terms have restaurant owners looking at other options, but this problem isn't unique to Lafayette.

Lafayette restaurants are reconsidering their relationship with Louisiana-based food delivery service Waitr after the company notified restaurant partners of significant changes to the platform.

Restaurant owners have been speaking out after Waitr announced it would be moving to a sliding scale to charge 15% to 25% to deliver each order, depending on the restaurant’s monthly food sales. Waitr would get a higher commission for restaurants with lower sales.

The new terms also include a 3% fee for credit card transactions. Restaurants would be unable to pass these new costs onto the customer because the new agreement requires that restaurant partners set their Waitr prices the same across all delivery services.

“That’s the killer thing,” said Taylor Cooper, owner and general manager of Wing Fingers. “They’re forcing the cost onto the restaurant.”

Cooper said the new agreement shows that Waitr is out of touch with how restaurant profit margins work. A restaurant on the low end of Waitr’s scale would effectively be losing 28% of every order — 25% for the commission and 3% for the transaction fee. Cooper said not being able to pass some of that new cost onto customers might cause some restaurants to lose money.

“There’s not a restaurant in town that has a 30% profit margin,” Cooper said. “It hurts the smaller businesses the most. They’re the ones with the smallest margins.”

MORE:Waitr announces layoffs following Bite Squad acquisition

This isn't just a problem in Lafayette. Delivery services across the nation — like Grubhub, Uber Eats and Doordash — are cutting into restaurant profits. In June, The Wall Street Journal found that restaurants have a profit margin of up to 69% of an in-store sale. When they use a delivery app, that margin can fall to 39%.

The restaurant delivery app business is also extremely competitive. Amazon shuttered its delivery service, Amazon Restaurants, in June because of the fierce competition from other services. Fortune reported that Uber Eats, Grubhub, Postmates and Doordash make up 93% of the market, and all are available in Lafayette.

Cooper said he’s reluctant to leave Waitr behind. He said he makes about $10,000 a month from Waitr and only gets about five orders a month from some of the other delivery services.

Cooper said he can live with the transaction fee and the sliding scale, but he has to be able to pass the cost along to the customer. And Cooper said he’s heard that Waitr might be willing to negotiate with the restaurant partners.

“Waitr is an amazing thing for Lafayette,” Cooper said. “I think they’ve done great things for Lafayette. They just have to be better in touch with their partners.”

MORE:Waitr delivers 200 new jobs to Lafayette

But at least one Lafayette-area restaurant is backing out of its arrangement with Waitr. Southern Grill and Bar in Broussard announced its food would be off of Waitr's service starting Aug. 1 if Waitr goes ahead with these changes.

"This was a tough decision to make, but it would not be a smart business move on our part to keep using Waitr. We will begin looking into other delivery services, and promise to inform our customers of any changes," the restaurant posted on Facebook on July 6.

Dean Turcol, media relations director for Waitr, said in an emailed statement that the success of restaurants is still at the core of the company’s mission.

“From our founding, our mission has been to bring the value of food delivery to our restaurant partners with the lowest fees in the industry. As we move to a performance based rate model on August 1, we continue to provide restaurants with the lowest fees in the delivery industry, with those with the highest order volume receiving a rate half that of our national competitors, and those with lower volume still lower than our competition. The success of our restaurant partners is our first priority, and we will work closely with our partners to optimize their delivery success in order drive rates to the lower end of the scale across the board.”

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