Waitr, a Louisiana-based third-party delivery provider that focuses on smaller markets, has struggled mightily since acquiring Minnesota-based Bite Squad in January. In the seven months since that deal was big news in the delivery space, Waitr’s share price has cratered and Bite Squad shareholders who received approximately 10 million Waitr shares have seen a diminution of value of more than $100 million.
With the benefit of hindsight, it looks as if businessman and TV personality Tilman Fertitta made a big mistake getting into the delivery business. Needless to say, the Houston Rockets and Landry’s Restaurants owner’s investment in Waiter Incorporated hasn’t gone according to plan.
When Fertitta used his special purpose acquisition company with $300 million in cash, Landcadia Holdings, to acquire the delivery company last year, the sky was the limit. Now, investors are reassessing the company’s prospects after a second quarter loss that was larger than expected and reports of intense competition with DoorDash and Postmates.
The company has also had trouble integrating the Bite Squad acquisition. And, now it is suffering restaurant defections after it implemented a performance-based rate structure that raised costs on lower-volume restaurants.
Since April, Waitr has lost 85% of its share value with shares now trading at less than $2. The company also reported $22 million of cash burn in the recent quarter. Waitr’s CEO Chris Meuax has stepped out of the day-to-day and the company announced it has hired banking firms Evercore and Jefferies to find a buyer.