re: Let’s discuss WTRH in this thread

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Why can’t they?

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because less people would want to do that, which isn't good for them. They just have to hope that it doesn't make it a deal breaker for the restaurants using their service.

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Pizza joints etc charge higher prices for delivery than they do for in store pickup orders.

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the price of the food is the same, though. Which is different here. In this case restaurants charge a higher price just for the food to make up for some of the fees lost by using the waitr service

So I was curious as to what a more popular competitor like Grubhub charges restaurants and it appears to be more; however, I think their fee pricing and flexibility makes more sense. In particular, besides the credit card processing fee (which all seem to charge! their fees are:

1. Marketing Commission fee (15% to upwards of 30%), which increases for a preferable search ranking (e.g., more for front page).

So they’re paying for premium space and allows for restaurants to consider the competition and market size to determine whether it’s worth that premium. So theoretically, more potential sales comes at a higher cost. That makes more sense to me for a restaurant than waitr’s fee structure that decreases with revenue.

2. A delivery fee (10%) if restaurants choose to use Grubhub’s third-party delivery, but restaurants with their own delivery service can use Grubhub for online ordering but still charge their own fees and use their own drivers.

This also makes sense to me because it gives restaurants flexibility to use the service, depending on their needs and the costs rather than requiring them to use the third-party delivery.

Grubhub Fees: The Price Restaurants Pay

I also think using a service like Grubhub that’s so much more popular nationally provides a benefit since any visitors to a location are more likely to use it, the long-term viability of the service is more certain, and its scalability to minimize costs in the future is more likely.

In addition, I think waitr really has some issues to deal with that are highlighted in this article:

NEW WAITR RULES MAY PUT RESTAURANT DELIVERIES ON HOLD

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Meaux says that the new contract terms with restaurants are being introduced because of market pressure and increased competition from Uber Eats, Grubhub and DoorDash, which all operate in Baton Rouge.

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So apparently the fee change are a result of them already feeling the pressure in their “home” markets. I don’t think that bodes well for an expansion to other markets, especially given how crowded the space already is and the advantages the competitors already have.

I also think that the CEO’s remarks are a bit troubling, as he seems to have a strange, if not poor, understanding of the business market he’s tapping into:

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Waitr founder and CEO Chris Meaux says he’s surprised at the negative reaction among some restaurant partners, since Waitr brought new sales revenue that didn’t exist before the platform. He also says the commission is still lower than national competitors.

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1. A CEO shouldn’t be surprised when businesses react negatively to an increase in their costs, even if they costs are lower than an alternative.

2. This ignores that while the costs may be lower, the competitors probably offer some advantages (e.g., larger consumer base with a greater chance for more sales and marketing costs). So even if they are still less costly than the competition, a CEO should realize that as the costs get closer to their competitors, the advantages of the competitors probably make them more worthwhile to use instead.

3. This ignores the possibility that the competitors costs did not make them worthwhile and his own service was worthwhile because the costs were lower. So a CEO should realize that raising the costs may make businesses determine that none of the services are worthwhile including his own.

4. In fact, it seems that with raising the costs due to increased competition, is the exact opposite of what one would want to do since supply of the services in that space has increased.

And finally, I think this quote just sums up the problems in general of the companies providing these services, not just waitr:

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“If we’re bringing a company $5,000 in sales, and they’re paying us $1,150, it’s still sales they wouldn’t have, and they’re still paying less than they would with something like Uber Eats or Grubhub.”

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These companies seem to only focus on the top-line revenue, while ignoring the impact on the bottom-line, especially given the margins and priorities in the businesses they’re working with.

Waitr may be focused on rapidly increasing revenue, as they are trying increase the number of markets and their market share in new and growing service sector, while not worrying too much about profitability at this time as they can more easily raise money in the stock market.

On the other hand, the businesses they are working with likely have a completely different focus as they’re much more limited in revenue expansion (a single market; lots of competition; an old, crowded, and well-developed sector) and have much more focus on profit in a risky, low-margin sector to sustain their businesses with little to no access to outside capital to offset any losses.

So his example that focuses on the benefit of the $5,000 in increased revenue, but dismisses the costs that amount to 23% of that revenue solely because competitor may be costlier, ignores the reality of the the entire sector’s viability for businesses they are working with.

In other words, I think that the sector has some major issues, and I think a smaller service like waitr has additional problems to face. On top of all that, the CEO’s interview would make me really bearish on the potential of his service in that sector.

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Why can’t they? Pizza joints etc charge higher prices for delivery than they do for in store pickup orders.

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Because the WTRH contractual agreement has with restaurants specifies the restaurant can't have two-tier pricing, one for dine-in and one for WaitR pickup. That is according to an article I read about the new pricing schedule.

WTRH new low today ($4.62).

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Therefore the proper change was to increase their pricing on ALL to-go orders.

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Why would restaurants do this when all they have to do is bring it from the kitchen to the checkout - with no server involved??

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Why would restaurants do this when all they have to do is bring it from the kitchen to the checkout - with no server involved??

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For one, to-go is a huge PITA and much more work then your standard plate. You have to put everything in to-go containers and many things have to be split up. For a normal meal you may have one plate, but with a to-go you may have 3-4 different containers to keep shite like sauce and sides seperate. Then you have things like sauces that are extra, ketchup, plastic ware, napkins, etc. Things the server used to do, the kitchen or someone else has to provide and do it now. You also have to double or triple check the bags because if one side of fries is missing and someone lives 2 miles down the road that's a big deal. If a side of fries is missing from dine in meal that's easy.

This has changed recently, but it used to be a huge PITA actually for to-go orders because no one was "in charge" of it. If you have ever done to-go's from a busy place and had to get them from the bartender you'd know what I was talking about.

Many places now have a "to-go" person often times like an extra hostess. But in the past it would be a struggle to have someone in charge of them and they were pretty rare. Now they are much more common.

But for one, things like drinks are a huge profit for a restaurant. If someone is not eating in, its possible the profit margin goes down. If a large percentage of to-go orders are done through an app charging the restaurant money then they are simply passing the cost onto the customer of most to-go orders.

I can’t believe that somehow I sold this stock at $14.01

If you still like the company, I'd average down here. If not, hope earnings provide the boost and plan an exit

We're headed to...... $3.50

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Surge 500% and we can all break even

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I’d do a hell of a lot better than even if it did