Dive Brief:
- Less than a month since merging with restaurateur Tilman Fertitta’s holding company, Waitr announced it will buy food delivery service Bite Squad for $321.3 million.
- The move will expand Waitr’s 235-city footprint to include a total of 500 cities in 22 states. To pay for the deal, Waitr also agreed to a $42.1 million debt commitment with Luxor Capital as part of the firm’s $85 million investment.
- Based in Minneapolis, Bite Squad brings nearly 900,000 active diners and 11,000 restaurants to the fold, though it will continue operating under its own brand and system for the foreseeable future, according to Skift Table.
Dive Insight:
When Fertitta explained his motive for buying Waitr last month, he told CNBC, “You wanna be the Pac-Man and eat up all the small companies and see what happens.” Bite Squad had already gobbled up some smaller competitors of its own, reported the Minneapolis Star-Tribune, taking over 40 companies in the past two years. It was also one of the first delivery platforms to offer real-time tracking similar to Uber’s technology.
Both Waitr and Bite Squad tout their business models as key differences from competitors with deeper pockets —especially their uniformed, company drivers versus contract workers. Waitr charges a flat delivery fee while Bite Squad's varies, but the latter's liquor ordering and and branded company vehicles offer key points of intrigue. Though Waitr CEO Christopher Meaux told investors in a call about the deal that Bite Squad would stay its course for now, according to Skift Table, the acquisition figures into the long-game, where diversification will no doubt be essential to success.
Meaux has emphasized the importance of not only integrating with POS systems — a common headache for restaurants getting into delivery today — but also creating proprietary POS systems and table management. Just as Yelp has learned that online reviews, restaurants and consumers have changed drastically since the early 2000s, Waitr seems to be on track to provide an all-in-one service to restaurants.
Waitr’s stock, up nearly 19% this year, increased 5% Wednesday after announcing this deal, according to market Watch. With the help of Bite Squad, Waitr now has a hand in even more territory in Florida, Texas, Tennessee, Arkansas and South Carolina, and Bite adds vital markets in Ohio, Virginia, Maryland, Hawaii and Nevada, per a company presentation.
Grubhub still dominates major U.S. cities and arguably mid-sized cities, too, while Uber Eats has focused growth internationally. As new upstarts crowd the category and M&A continues to sizzle, the good news for every platform will be the constant stream of customers who seem to be flocking to these services — and the estimated $200 billion industry on the horizon.
