Waitr buys Florida-based Delivery Dudes for $23M

Dive Brief:

Waitr has acquired Delivery Dudes, a Florida-based food delivery company, for approximately $23 million in stock and cash, according to a press release. Delivery Dudes operates in small- and medium-sized markets in over 50 cities, mainly located in South Florida. The transaction is expected to close by the end of this week.
Delivery Dudes' ordering properties, including its website, app and phone number, will remain in place, according to a separate release. Delivery Dudes founder Jayson Koss said in the press release that Waitr's resources will allow Delivery Dudes to provide improved service for its customers.
The Delivery Dudes acquisition comes as Waitr expands into more markets and verticals, including alcohol and cannabis. The company has also been adding more partnerships, most recently with Chowly and ItsaCheckmate, as well as with virtual kitchen marketplace Nextbite.

Dive Insight:

Waitr's efforts could be an attempt to gain market share in an intensely competitive delivery market. But as of January, Waitr currently has less than 1% market share in the space, compared to DoorDash (56%), Uber Eats (20%), Grubhub (17%) and Postmates (6%), according to Second Measure data. Acquiring Delivery Dudes probably won't move the needle much on segment share for the company.

But it will continue to diversify Waitr's business model and perhaps help with profit generation. Though its bigger competitors have also been diversifying their businesses outside of restaurant delivery, the profit piece remains elusive for these aggregators. Waitr, however, achieved profitability last year.

Its partnership with Flow Payments to create a cannabis delivery marketplace, could position Waitr even more favorably, as this market seems ripe for growth. A recent report from ArcView Market Research and BDS Analytics finds that global licensed dispensary sales of cannabis will register a compound annual growth rate of over 24.5% by 2024, with the U.S. accounting for 73% of that market.

Still, there aren't many players in the delivery space to leverage that growth as more states adopt legalized marijuana. There are now 16 states, along with Washington, D.C., that have fully legalized marijuana and 14 states allow cannabis delivery. The "Uber of pot," Eaze, has struggled with cash flow and a major fraud case involving its former CEO. A few smaller cannabis delivery concepts have emerged, including San Francisco-based Onfleet, which raised $14 million in funding in October to scale its business as "cannabis delivery has exploded this year," CEO Khaled Naim told Forbes in December.

Waitr and sister brand Bite Squad operate in over 700 small- and medium-sized U.S. cities, which means they already have delivery infrastructure in place to scale up quickly with the Flow Payments' partnership. Waitr also has good cash flow, increasing revenue to $46.8 million in Q4 2020 compared to $43.1 million in Q4 2019.