Food Delivery Service Closes Amid Tough Competition- May File for Bankruptcy

Asap may even file for bankruptcy, thanks to an overwhelming number of competition in the food delivery market. Customers like the service, but it’s not making a lot of money.

Fertitta became the majority owner and offered delivery services in 500 cities across 22 states. However, the brand’s momentum was derailed by COVID-19.

In fact, it changed its employment policy to contract-only for all drivers. Despite now reaching 700 towns and cities in 27 states, Waitr’s expansion came with the announcement of stopping services in 38 markes, particularly in smaller cities new to its network, where profitability was questionable.

In 2022, Grimstad’s Waitr invested in software companies catering to the cannabis industry. The CEO said he saw an opportunity in this niche market. This strategy, he said, would help them when the time came for “bigger players come into the space, either we’ll be a survivor, or we will be an acquisition target.”

The name change also came with a shift in business model. At the time, the company had a new vision of delivering to consumers on the same day from any type of business. It also “signed 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.”

It fell out of compliance with Nasdaq, although it recovered briefly after the pandemic. But years of struggle proved to be too much and now it has closed down its business.

It announced: “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.”

The shutdown was announced in Asap’s official website, saying “Goodbye for now” followed by this message: “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.”

CEO Grimstad and CFO Armen Yeghyazarians have also left the company. Asap’s assets and liabilities will be taken over by a government-appointed trustee, which will liquidate them to pay its debts.

When a brand like TCBY first opened in an area, lines snaked out through the door, inspiring other people to open a similar shop. But there aren’t enough customers to frequent more than a couple of shops.

One business alone in the same space could have seen stellar success. But when so many other players enter the market, everyone struggles. No one gets a big share of the pie; only crumbs.

Forbes suggested, the companies that will succeed are the ones who focus more on the food, rather than the speed, as food is fundamental to humanity. Other strategies, like promotions and rewards, may also help but in the world of food delivery, only the fittest will survive.