Following Waitr’s implementation of performance-based rates, several Baton Rouge restaurateurs have dropped the service, citing concerns about whether the rates are actually profitable for area restaurants.
Russell Davis, owner of Eliza and JED’s Local Po’boys on Jefferson Highway, joined Waitr in February upon opening the po’boy shop. At the time, he agreed to a 15% fee rate, but he says the updated fee structure would kick the rate to 24%.
“Just like any business, especially in restaurants, you have to manage really well to get 5 percent or 10 percent profit,” Davis says. “But there’s no way we could make those numbers work at 24 percent. We’d be losing money.”
Davis has stayed in communication with the company, but doesn’t expect that they’re going to renegotiate the terms. He hasn’t considered adding the restaurant to another platform—which tend to charge higher rates than Waitr—but says it doesn’t mean the eatery won’t add another service or try delivery themselves in the future.
Ozzie Fernandez, founder and CEO of Izzo’s Illegal Burrito and Lit Pizza, is continuing to negotiate with Waitr on terms, but until a deal is struck has pulled his 14 stores from the platform. Not only is he uncomfortable with the revised fee structure, Fernandez objects to multi-unit stores being treated as individual restaurants.
“We don’t want to paint them in a negative light, and we hope to have this resolved, but both sides needs to be profitable for this to work,” Fernandez says, adding he thinks guests should be cast with the cost of delivery. “We like to support local business and Waitr is one of these.”
Despite the fee change, Joshua Duke, owner of Olive or Twist, has no intention of pulling his cocktail restaurant off the delivery platform, saying it’s another revenue stream for the business.
“Even though you lose a portion of sales to the app, you’re still making money off of it,” Duke says. “The structure is still competitive based on the fee structures of a lot of the other popular apps. We’re definitely not dropping Waitr.”
There was confusion when changes to the fee structure were announced, says Liz Sniegocki, director of communications for Waitr, on whether owners were allowed to bump their menu prices to accommodate for the fee hike. Waitr staff have been meeting one-on-one with restaurant owners to ensure they understand the contract, she says, which allows for menu bumps as long as customers aren’t charged more or less than they would had they had food delivered by another third-party delivery service.
She defended the new structure, saying it was necessary for the company’s operational model, as well as restaurant operators, to “continue to succeed.”
“We’re still charging one of the lowest fees in the state and nation,” Sniegocki says. “For our highest volume operators, the fee is about half of our national competitors, and the fees are still lower than national competitors for our lowest-volume operators.”
Sniegocki declined to release how many restaurants have dropped the service since the new terms were announced for “proprietary reasons” and wouldn’t comment on whether the terms was related to recent changes to the company’s executive team.
The eateries dropped Waitr following a seemingly tumultuous summer for the business. Several Lafayette and Baton Rouge restaurants participated in a boycott of the business last month, and last week, founder Chris Meaux stepped aside as CEO as the company’s stock price tumbled.