Louisiana-based food delivery company Waitr will cease operations in 38 “clearly unprofitable” markets over the coming months as the company’s leadership tries to find a “trajectory for a sustainable business,” CEO Adam Price told investors Thursday.
The third quarter of 2019 — Price’s first quarter as CEO after founder Chris Meaux resigned and took a position on the board in August — saw the company lose $220.1 million, or $2.89 per share, after only losing $6.5 million in the third quarter of 2018. In the second quarter, Waitr reported a loss of $24.9 million, after reporting a profit in the same period of 2018.
Price emphasized the company’s efforts to streamline the business and reduce overhead costs, such as the market closures and a 50% reduction in Waitr’s sales staff.
“There was not a clear path to profitability,” Price said of the 38 markets. “We just didn’t see a way to get there with the resources we have.”
Price didn’t offer much information on the markets slated for elimination, but did say they had been launched relatively recently. A spokesperson said Tuesday that no Louisiana markets are going to be impacted. The closures are expected to come in the next 30 days.
Waitr seems to be moving away from the idea of selling, according to its third quarter financial report released Thursday, though it “remains open to potential value creating opportunities.”
In August, the company’s board began a “strategic alternative review process” to determine ways the company could increase value for shareholders. Among the potential options were selling assets, merging with another company or selling the business.
But the board concluded Waitr “will best serve the interests of its stockholders at this time by focusing on executing its strategic plan as an independent public company,” according to the report. Price said that, despite recent turnover with the company’s leadership, the management team is united behind the plan to streamline the business.
The company’s stock price closed at $0.45 a share Thursday, down 3.6% and well below its heady 52-week high of more than $15.
The company’s revenue saw a 153% increase from the third quarter of 2018, to $49.2 million from $19.4. Revenue from the Bite Squad merger totaled $24 million for the third quarter.
The number of active diners on the app largely stayed the same from the second quarter of 2019 at 2.4 million, but it is an increase from the 843,000 users in the third quarter of 2018.
“We made progress in the third quarter streamlining our operations and making improvements that consistently create a better customer and restaurant partner experience, while also setting us up to reduce expenses now and in the future,” Price said. “During the quarter, we started implementing changes that are expected to result in an incremental $25 million to $30 million of annual savings in FY 2020. We remain dedicated to stabilizing the business in terms of cash flow and charting a clear path towards profitability.”
The company announced Tuesday it would be scaling back its workforce and closing “a subset of low-performing markets,” according to a company spokesperson.
“Eliminating jobs is the last thing a business ever wants to have to do,” Price said. “Actions taken this week were done to best position Waitr for the future and enable the company to continue providing a consistent, reliable experience to our customers, and valuable relationships to our restaurant partners.”
The company will be providing separation packages, and is “committed to supporting them,” the spokesperson said.
On Thursday’s investor call, Price also addressed the new restaurant agreement the company released in July that drew criticism from Waitr’s restaurant partners. He said about 75% of the restaurants that left the platform because of the change have returned and there has been an overall increase in active restaurants.
The new agreement did not impact Bite Squad markets or national chains.
In October, the company announced the resignations of two board members — Sue Collyns and Scott Fletcher — and the chief financial officer, Jeff Yurecko. The company said the resignations “were not related to a disagreement with the Company over any of its operations, policies or practices.”
In September, Waitr President Joseph Stough announced his resignation. On Sept. 6, days before Stough’s resignation, former Louisiana Attorney General Charles C. Foti Jr. announced that his law firm was investigating whether Waitr “made materially false statements in connection with its going public transaction, its Secondary Offering and in connection with the partial stock based acquisition of Bite Squad.”