There's basically nothing proprietary about food delivery.
One company might offer better loyalty rewards or have an easier-to-use app, but the core service remains the same.
So, once an area has more than one food-delivery service, it becomes hard for any player in the space to make money. Competition commoditizes the service and drives the cost of acquiring customers higher.
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Similar market forces make it very hard for Uber and Lyft to make money. Because consumers can easily pick between the two brands, neither one can raise prices to where they will be comfortably profitable.
When you add even more players into the space, price competition becomes even more intense and marketing costs push even higher. Once that happens, what could have been a single successful business becomes a bunch of struggling ones.
Call it the self-serve-frozen yogurt phenomenon. When a community got its first TCBY or similar brand, lines stretched out the door. That led more people to open self-serve-frozen yogurt shops, leaving not enough customers to go around.
That's what's happening in the food-delivery space, where DoorDash and Uber Eats fight for customers while regional players try to take their own piece of the pie.
One of those players, which was purchased by the billionaire restaurateur, casino owner and Houston Rockets owner Tilman Fertitta, has closed its doors.
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Once-promising food-delivery brand closes
Back when it was known as Waitr, the company that later became ASAP became a fast success in the food-delivery space. The company, which listed on Nasdaq in 2018, offered delivery services in 500 cities across 22 states.
Fertitta became the majority owner in 2018, right before the company went public. It was a promising brand that saw its momentum derailed by the covid pandemic.
Rebranded as ASAP, the company fell out of compliance with Nasdaq, and despite a short-term covid lockdown comeback, it has struggled for years. Now, the company has officially closed its doors.
Visitors to ASAP's homepage are greeted with a letter that's headlined "Goodbye for now."
"With a heavy heart, we share the news of the closure of our delivery and carryout business," the company posted. "After years of dedicated service, we've made the tough decision to cease operations. We write to you today filled with gratitude for your unwavering support and loyalty throughout our journey."
ASAP files an SEC notice
The former Waitr adopted the ASAP name in 2022 to signal a change in its business model.
"ASAP’s new vision is delivering to consumers, same day, from any type of business," the company said at the time. "In preparation for the rebrand, the company accelerated the expansion of its services in recent weeks, signing agreements to launch delivery of a wide variety of items such as alcohol, sporting goods, luxury apparel, auto and electrical parts, and other need it now products."
Uber, DoorDash and others have also experimented with the model, but it's also a crowded space with Instacart as the established leader. It was not a success for ASAP, which on April 1 filed an 8-K with the Securities and Exchange Commission detailing its shutdown and potential next steps.
"On the evening of March 29, 2024, the online ordering services segment of Waitr Holdings Inc. which includes operations related to the company’s technology platform for online ordering, ceased operations with respect to carryout services," according to the post.
"The company previously ceased operations with respect to delivery services, as reported in the Form 8-K filed with the Securities and Exchange Commission on February 13, 2024. The company is evaluating its options, including commencing a case under the U.S. Bankruptcy Code."
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ASAP has not filed a quarterly report since 2022, so its debt and asset levels are not publicly known.
