The parent company of Bite Squad plans to lay off the food-delivery service’s employee drivers within the next six weeks, intending to convert them into independent contractors.
Based in Minneapolis, Bite Squad was purchased in 2019 for $321 million by Waitr Holdings Inc. (Nasdaq: WTRH) of Lafayette, La. The company previously announced plans to lay off about 2,300 drivers in Louisiana in an effort to convert those employees to independent contractors, and Waitr spokesperson Dean Turcol confirmed Tuesday that the company is planning to do the same with its Bite Squad drivers in Minnesota.
The plan is to complete the conversion by April, Turcol wrote in an email. Waitr had eliminated most of its operations and dispatch staff in the Twin Cities altogether last fall.
Shifting to a contract-worker model could lower labor costs for Waitr, though it also means the company may have less control over driver dress and behavior. The Acadiana Advocate of Lafayette has details on the potential pros and cons.
Turcol said some Bite Squad drivers were already operating as independent contractors, although he couldn’t give a percentage. Bite Squad has more than 700 drivers in Minneapolis and St. Paul, Turcol said.
Bite Squad also delivers in Edina, Eden Prairie and St. Louis Park. As of September, Waitr and Bite Squad together were active in 700 cities, mostly small- and medium-sized markets.
The Wall Street Journal reports today that Waitr employee drivers in Texas and Alabama are also facing layoffs as the company transitions them to independent contractors.
The Journal notes that Waitr’s moves are another sign of turmoil in the fast-growing food-delivery sector, in which several providers are considering mergers or public listings. Customers in many markets now have multiple options for third-party food delivery, and are willing to switch back and forth between delivery services in search of a deal.
Waitr reported a net loss of $220.1 million for the third quarter of 2019, compared to a loss of $6.5 million for the same quarter a year earlier. Revenue for the quarter totaled $49.2 million. A significant portion of the loss was due to the Bite Squad acquisition.