Just days after laying off an undisclosed number of employees, Waitr announced a new “performance-based rate structure” for its partner restaurants that could mean slimmer profit margins — or even losses — for those that agree to the new terms.
The new agreement has restaurant owners consulting attorneys and terminating their agreements with Waitr.
“It’s bad,” said Zee Baloch, who owns Hot Food Express. “They’re killing the small people like me and other mom-and-pop shops. I think they’re really taking advantage of us.”
The new pay model uses a sliding scale: Waitr will take a higher commission for restaurants that have a smaller volume of sales and a lower commission for those that have a larger volume.
Restaurants with monthly food sales from the Waitr platform that exceed $20,000 will be charged a 15% commission from Waitr for every transaction, according to the new Master Services Agreement sent to restaurants. The commission increases in brackets, reaching a cap at 25% for restaurants with monthly food sales at or below $1,000, the agreement says.
It’s especially jarring for those who still remember Waitr as a small tech company known for helping local restaurants instead of the publicly traded company that sold for $308 million.
Tim Metcalf, who owns Deano’s Pizza, was the first to sign up with Waitr when it launched in Lafayette in 2015.
“Everybody is upset,” Metcalf said. “I’ve talked to 20 restaurants, and they’ve said, ‘If this is it, we’re out.’ And these are all heavy hitters in Lafayette.”
Both locations of Deano’s would be charged the 15% commission rate based on the new agreement because of high sales through Waitr, according to Metcalf.
But it’s not just changes to the pay model that concern Metcalf and other restaurant owners. The terms — and even the tone of the document — bother them.
The new agreement was sent by Waitr to restaurants — at least to some — on the Fourth of July with headers such as “Exhibit A” that are normally reserved for legal documents, such as those found in lawsuits.
The new terms prohibit restaurants from charging a higher price for food ordered through Waitr than regular, in-restaurant transactions and passes along the fees charged by credit card companies to the restaurants. It also prohibits restaurants from using photos taken by Waitr for any purpose.
Before, restaurant owners were free to pass on some of the expense to customers by increasing their menu prices on the Waitr platform. Restaurants didn’t have to pay the credit card fees, and they were also free to use Waitr’s images of their food for their own promotional purposes.
“That’s brand-new,” Baloch said. “They took the picture, but I paid them $1,400 to come in and do it. They’re making you pay for photos they own the rights to. This is so bad that people are at a point where they want to get an attorney.”
Metcalf said he’s fine with the 15% commission fee in the new agreement. But he’s not OK with the credit card fee, which increases that to 18%, or the fact that he can’t increase the prices of his pizzas ordered through Waitr to compensate for the added expenses.
“That’s the deal breaker,” Metcalf said. “That’s my problem. I just can’t lose money. I can’t allow that.”
Like Metcalf, Baloch was also one of the first restaurant owners to partner with Waitr in 2015. He said Waitr originally charged 3% commission and 55 cents per transaction. That eventually increased to 15%, he said, but that was still manageable.
His new rate would range between 15% and 20% based on average monthly sales.
“My sales are high,” Baloch said. “I’m OK with it, but I’m not OK with it for the people who are not making a lot of money. It’s going to kill them. You should be charging me a little more and them a little less. They should be giving me a break like (Waitr CEO) Chris Meaux did in the beginning.”
Paul Ayo, whose restaurant Avec Bacon Cafe, has been on Waitr for more than a year, was stunned by the new terms. His rate started at 15% per transaction last year and would now be about 24% based on the new terms, he said.
“I’m furious,” Ayo said. “It’s going to really hurt smaller restaurants for sure. Restaurants don’t have huge margins, especially restaurants like ours. Almost all of our items are under $10. We try to make our food very affordable for our customers.”
Ayo said he doesn’t plan to sign the agreement at all and is looking into partnering with other delivery companies. Baloch said he won’t be signing the new agreement until he has an attorney review it. Metcalf said he feels confident he can negotiate new terms with the company.
If not, Metcalf said, “All things come to an end.”
Waitr emailed a statement to The Acadiana Advocate on Friday afternoon in response to a request for comment.
“To stand out in the competitive food delivery landscape, Waitr has adopted a performance based rate model where the more our restaurant partners deliver, the lower their rate will be,” the statement said. “Our partners will discover this is a far more attractive option than those offered by our competitors. Waitr constantly strives to be the most valuable partner to our restaurants and this structure is reflective of the quality and service we provide.”
The new terms seem to affect all Waitr markets, according to restaurant owners who have taken to social media to voice their frustrations.
“Any of my fellow restaurant owners read the new Waitr agreement?” wrote Anthony Donze, of Blackened Brew in Hammond. “They provide the service, but there is 0 money to be made. You might actually lose money.”
Smokin’ R BBQ in West Columbia, Texas, announced on its Facebook page that it will no longer offer Waitr delivery beginning Aug. 1, when the new terms go into effect.
“They have decided to increase their service fees to a point where it is not profitable for us to use,” the post said. “We are sorry for this inconvenience.”
Restaurants received a digital letter from Waitr CEO Chris Meaux this week ahead of the one containing the new terms.
“As part of this roll-out, Waitr will be terminating the current partnership agreement between your restaurant and Waitr, effective July 31, 2019,” a line from the first letter said.
“If you do not accept, all services to your restaurant will be discontinued effective August 1, 2019. Waitr is committed to our mission of being the most valued partner with our restaurants. We appreciate your business and look forward to continued growth.”
Meaux did not return a call for comment on Friday.
The new terms come just days after Waitr laid off an undisclosed number of employees the company said would streamline redundancies that resulted from the acquisition of Minneapolis-based Bite Squad earlier this year. An online blogger named Eric Murnane wrote that 80 employees were laid off, including his wife.
“They got too rich too fast and turned corporate,” Baloch said. “I bet you somebody else is going to come in the market. The customers aren’t going to support this. Cajuns here love their community. They’re not going to stand for this.”