March 2021 – Waitr acquisition tops March M&A activity
April 13, 2021
CityBusiness April 12, 2021 By: G. F. Gay Le Breton and Ryan Gerton
Lafayette-based Waitr Holdings, Inc. expanded its Florida footprint in March with the purchase of Delivery Dudes, a Delrey-based food delivery company, for $23.5 million in stock and cash.
Like Waitr and its sister brand Bite Squad, Delivery Dudes operates primarily in small and medium-sized markets. The addition of 50 cities, primarily in south Florida, will complement Waitr’s existing operations in eight Sunshine State markets but is not expected to change Waitr’s U.S. market share meaningfully. According to Second Measure data, based on revenue as of January, Waitr has less than 1% market share, compared to DoorDash (56%), Uber Eats (20%), Grubhub (17%) and Postmates (6%).
In Waitr’s fourth-quarter earnings call with investors, CEO Carl Grimstad outlined how Waiter ‘s strategy differs from its larger rivals.
“I’m not sold on the strategy of focusing solely on diners,” he said. “And trying to attract diners to the platform by giveaways and other promotions that some of the larger companies have the latitude to spend. It’s hard for me to see how the payback works.”
Waitr is more focused on adding and serving restaurants and other businesses. This approach has proved successful for Waitr, which was profitable in 2020 while its competitors showed losses.
The Dudes deal comes as Waitr expands into more markets and verticals. In the past six months alone, Waitr has introduced dine-in tableside service technology, expanded same-day groceries and alcohol delivery service and recently launched in multiple underserved markets. In December 2020, Waitr purchased Gulfport, Mississippi-based restaurant delivery service Tiki Delivery for an undisclosed price. At the beginning of March, in an effort to strengthen its technology and boost order volume, Waitr partnered with Chicago-based food and beverage consultant Chowly and New York City-based consultant ItsaCheckmate, who will assist in streamlining and strengthening Waitr’s ordering platform as well as add access to large national chains.
Also in March, Waitr announced its intention to deliver marijuana to its customers by working with dispensaries in states where the delivery is legal. Currently 14 states allow cannabis delivery according to restaurantdive.com, but that number is expected to increase. Waitr also formed a partnership with Flow Payments to facilitate a compliant payment solution for licensed dispensaries. Although a few cannabis delivery concepts have emerged recently, Waitr operates in over 700 U.S. cities, meaning they already have delivery infrastructure in place to scale up quickly with the Flow Payments partnership.
Waitr was founded in 2013 at McNeese State University as a project of Christopher Meaux. Majority ownership was sold in 2018 to Fertitta Entertainment, the owner of the NBA’s Houston Rockets. Waitr went public in 2018.
In other news, Louisiana insurance brokerage firms continue to ride a wave of acquisitions into 2021. In March, three Baton Rouge brokerages were purchased by out-of-state firms. Chicago-based HUB closed a deal for Juban Insurance Group, LLC; Newport Beach, California-based Alliant Insurance Services, Inc. purchased Group Insurance, Inc.; and Fort Worth, Texas-based Higginbotham Insurance Agency, Inc. purchased the Harless Agency, Inc. None of the deal terms were disclosed.
Over the past 12 months, there have been a total of 10 purchases of local insurance brokerages in Louisiana, all by major buyers. This follows a national trend of consolidation among insurance brokerages, according to Deloitte’s 2021 Insurance M&A Outlook. Seventy percent of deals were backed by financial sponsors in 2020, according to Deloitte, due in part to the relative ease in which private equity groups can flip independent brokerages. Interest among financial buyers appears to remain high.
2021 looks to be another busy year for insurance brokerage transactions.
G.F. Gay Le Breton is managing director for Chaffe & Associates Inc., responsible for the merger and acquisition activities of the firm. Ryan Gerton is financial analyst for the firm.
Investment banking services are provided by Chaffe Securities Inc., member FINRA/SIPC.