Troubled third-party delivery company Waitr said it is working with its restaurant partners during the coronavirus outbreak to waive diner fees on delivery orders, which have started to rebound after dropping in mid-March.
CEO Carl Grimstad said the company also booked its first ever profitable month in February, which coincided with Waitr’s decision to convert its fleet of W-2 drivers into independent contractors.
“Earlier this year, we implemented several strategic initiatives with a focus on improving revenue per order, cost per order, cash flow and profitability. We believe these actions allowed us to stabilize and position the Company for the long term,” Grimstad said in a statement released Thursday.
With restaurants forced to offer takeout and delivery during the crisis, the CEO said “driver supply is at an all-time high and new restaurants are signing up for our services rapidly.”
The company reported preliminary first quarter revenue of $44 million, down from $48 million for the same period, last year. A net loss of between $2 million and $3 million compared to a $24.7 million loss for the first quarter of 2019.
“While the current circumstances remain inherently uncertain, we are encouraged by our preliminary financial results and believe the current situation has only further proved the importance of Waitr’s services,” Grimstad said in a statement.
The CEO outlined measures the company is taking to help restaurants and supermarkets while also keeping drivers and the community safe including: offering no-contact delivery for all restaurant orders; adding grocery delivery in some markets; and equipping drivers with masks.
Grimstad said the company is also "working with restaurant partners to waive diner delivery fees."
The company did not elaborate on who subsidizes the costs of these consumer-facing fee reductions.
In a business update announced earlier this week, Chicago-based Grubhub said it is seeing a record number of new diners and new restaurants on its platform with delivery orders trending upward in April. The company it is reinvesting most of its profits to drive more business to its restaurant partners through diner promotions including reducing or eliminating diner delivery fees.
Industry insiders have long said that free delivery promotions are the most enticing ways to drive third-party delivery orders.
But restaurant leaders and advocacy organizations have argued that relief in the form of reduced commission fees will help restaurants survive the devestating economic impacts of the pandemic.
Until dining rooms are allowed to reopen, restaurants can only generate revenue orders through off-premise channels like delivery. But with commission fees as high as 30% per order, restaurant advocates say third-party delivery can cause more harm than good -- even in a normal non-COVID-19 environment.
Last week, San Francisco’s mayor capped delivery fees at 15% to help restaurants during the pandemic.
San Francisco-based DoorDash is reducing fees by 50% through the end of May for restaurants that have five or fewer locations on the DoorDash app. The reduction does not apply to a franchisee of a large chain like McDonald’s or Subway who owns fewer than five units.
Andrew Rigie, executive director of the NYC Hospitality Alliance, said it is encouraging to see DoorDash modify their fees for some businesses.
"But as long as some delivery platforms like Grubhub are still preying on the economic desperation of restaurants and eateries in New York City for their own benefit, government urgently needs to intervene and cap third-party delivery fees at 10%," he said earlier this week after Grubhub said
Louisiana-based Waitr works with chains and independent restaurants in more than 600 cities with populations ranging from 50,000 to 750,000.
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