BATON ROUGE, La. (WAFB) - Owners from many restaurants around Baton Rouge are planning to get off the Waitr delivery app. On July 1, restaurant owners that use Waitr received an email from the company detailing a new deal that voids their current contracts.
Business owners say Waitr’s new contract terms, which take effect Aug. 1, will take too much of the pie. Waitr has always charged restaurants a service fee, some as low as 6% in the past, but the company’s new sliding scale system will take between a 15 and 25% cut from restaurants on each order. It will also charge the business a fee per credit card transaction and prohibits restaurants from hiking up menu prices. The new system aims to reward restaurants selling more than $20,000 worth of product on the app with the lower fees, while taking higher cuts from lower-selling restaurants.
Chris Ko, who owns Drunken Fish on Highland Road, says there's no way he'll ever make enough to make it fair. He's only been using the service for a month and a half and already wants his old deal back.
“It’s impossible to make $20,000 a month on Waitr because people are still calling to-go orders themselves,” said Ko. “If I knew this change, I would have never stepped into it.”
Jim Uridales, who owns Mestizo, has worked with Waitr since it was a small Louisiana company. He’s chosen it over Uber Eats, which has taken a bigger cut than Waitr in the past. Even though his restaurant would be on the better side of the scale, he says the company is still taking too much and he’s not signing the agreement either.
“They don’t understand that restaurants don’t live in a 15 percent profit margin,” said Uridales. “Most people would be surprised that most restaurants live in a five to two percent margin on food, so taking that margin away would mean that every transaction would be a loss for us. I was OK with them going up on that percentage as long as I could pass that on to the pricing for the online. They’re now dictating that we cannot and that’s a game changer.”
Waitr was purchased by Houston Rockets owner, Tilman Fertitta, in May of 2018. The company went public in November that same year.
Ray Vanmerrienboer, who heads Red Zeppelin Pizza, says he’s not sure if he’ll stick with the company or not. He says pizza is a different category and is profitable enough off delivery that he could survive taking the gamble, but he understands how the smaller mom and pop shops can’t survive this way and says that because Waitr is now public, they’re trying to force those people out.
“Becuase they’ve gone public, they’re all about profit,” Vanmerrienboer said. “They’re all about margins and they’ve got to cut off people who are costing them money in the long run. Small businesses are starting to cost them money ‘cause they’ve got to make their quotas every quarter and they’ve got to start trimming the fat, and in doing so, they’re going to pressure those people to get out and then they’re gonna’ flip it to people who are in.”
Waitr released the following statement regarding their new terms:
“To stand out in the competitive food delivery landscape, Waitr has adopted a performance based rate model where the more our restaurant partners deliver, the lower their rate will be. Our partners will discover this is a far more attractive option than those offered by our competitors. Waitr constantly strives to be the most valuable partner to our restaurants and this structure is reflective of the quality and service we provide.”