Company that bought Bite Squad signals it paid way too much

The company that in January bought Bite Squad, the Minneapolis food-delivery firm, on Thursday wrote off much of that deal.

It had been the most valuable acquisition involving a Twin Cities tech startup this decade.

Waitr Holdings Inc. disclosed a $192 million write-off as it announced quarterly results Thursday, contributing to a $220 million loss for its July-through-September quarter.

The move came just days after Waitr disclosed that it had laid off many of Bite Squad's corporate employees in Minneapolis. The amount accounted for most of the $321 million Waitr paid to acquire Bite Squad in January. Much of the rest of Bite Squad's value was in the form of long-term debt that remains on Waitr's balance sheet.

It marked another stunning development in the app-based food-delivery business, where companies have seen sky-high valuations plummet in recent months after growth slowed and investors pressed executives to shift their focus to profitability.

Waitr has lost 97% of its market value since April. Last week, the shares of the industry's largest publicly traded firm, GrubHub, dropped 42% in one day after its executives warned that the business had become a commodity more quickly than expected.

Waitr executives declined to comment directly about the industry assessment GrubHub executives put forth. But they said they are putting profits first now.

"It's hard to comment on growth and what can be expected," Adam Price, Waitr's chief executive, told investment analysts. "The management team's primary focus is controlling our cash and putting us on a clear trajectory to be a sustainable business."

Waitr effectively doubled its size with Bite Squad, reaching 700 towns and cities in 27 states. Even so, its national market share remained in the single digits, well below larger firms like GrubHub, Postmates, Door Dash and Uber Eats.

On Thursday, Waitr said it would halt delivery services in 38 markets, mainly in smaller cities that are new to its network. Price said executives did not see a clear path to profitability in the markets.

Adjusted for one-time gains and losses like the write-off, Waitr said its loss amounted to about $15.4 million in the quarter. Revenue was $49.2 million.

Waitr founder and Chairman Chris Meaux last year attracted Texas billionaire Tilman Fertitta to buy the firm and list it publicly through a special-purpose investment firm. Fertitta also owns Landry's Inc., operator of Golden Nugget casinos, restaurant chains like Bubba Gump Shrimp Co. and Rainforest Cafe and the NBA's Houston Rockets.

Bite Squad's founder, Kian Salehi, remained with the combined company for a few months after the transaction but left it this spring. He now runs a venture firm in Minneapolis.

Evan Ramstad • 612-673-4241