This Friday, around 35 restaurants from the Houma-Thibodaux area plan to do an indefinite blackout of the food delivery service Waitr after the company notified them that their transaction rates will go up, even though those restaurants were still under contracts that contained different agreed upon rates.
Customers will not be able to order any food from the participating restaurants through the Waitr app after the blackout is initiated.
On Wednesday, the first local dominos fell when Big Mike's BBQ Smokehouse went offline on the app, as announced on the restaurant's Facebook page. Zack's joined them, going black on Waitr from both of their locations.
“I think as a group, it's a good thing for us to represent, come together and support each other,” said Ricky Reaves, owner of local food establishments Honey Baked Ham, Your Pie and Auntie Anne’s — which will all be taking part in the blackout. “To be honest with you, if enough of us do it and decide we're not going to move on with Waitr, we could actually drive Waitr out of this market. Now, I don't know how important the Houma-area market is to them, but I'm sure it's not something they want to happen.”
When Waitr first arrived in the Houma-Thibodaux area, restaurant owners had a choice to pay no upfront fees and give the service 25 percent of the money earned from food ordered through the service. However, food establishments could make up those costs by raising the prices for the food on the app’s menu.
Another option was to pay Waitr $1,500 upfront, which allowed businesses to only have to pay a 15 percent fee, which several local restaurants chose. Some owners even paid more, depending on when they signed.
But as restaurants that partnered with Waitr were notified on July 1, effective Aug. 1 — regardless if they paid upfront money or not — they have to comply with Waitr’s new sliding scale system, or no longer be able to use the company’s services.
With the new system, restaurants that are within the monthly threshold of $0-$1000 in Waitr transactions will pay a 25 percent fee. The rates decrease from there with the lowest being 15 percent if the restaurant earns between $20,000 to $1,000,000 in Waitr sales per month — which a majority of smaller restaurants aren’t able to achieve. These higher rates put owners in a strenuous position as most restaurants already have low profit margins on food.
In addition to the new scale, Waitr announced, that they will also start charging its partnered restaurants a 3 percent credit card transaction fee.
Also, according to the new agreement, prices for food items on Waitr must match the current in in-house menu, call-in and online prices of the restaurants, effectively not allowing them to make up the transaction fees. However, Reaves said the company has started to walk back that stipulation.
“I would imagine that we probably have, at the very least, the top 10 or eight producers for Waitr in this market participating [in the blackout]. So, I think that'll make a big difference,” Reaves explained. “I think all restaurants in every market can do this: band together and say, ‘This is our hometown. This is our market.’ We would love for you to do business here, but you can’t do business on say the restaurants terms, but on the consumers’ terms. Now that they've walked this [price matching stipulation] back, there will be an increase in pricing across the board for all consumers.”