Louisiana Case Study of Delivery App Scams

Ideas and Issues

New Orleans        A funny thing happened to platform capitalism and its predatory business model in Louisiana of all places making the experience there a case in point.  Being Louisiana, the fact that somehow booze triggered the revelation almost makes the story too good to be true.

Once upon a time, just minutes ago it seems, there was a Lake Charles, Louisiana based company making waves in the app-delivery space called Waitr.  One of their salespeople, a regular customer at Fair Grinds Coffeehouse, or so he claimed, hounded us for a meeting as the company first tried to sign up restaurants in the New Orleans area.  Waitr argued it was different.  It would charge a flat fee for a delivery, five bucks.  It would prevent restaurants from charging extra for products to be delivered.  They would pay minimum wage and the workers would be their own employees.  We didn’t bite, but about 800 locations in metropolitan New Orleans did, at least according to the company.

Louisiana being Louisiana, it helps to be homegrown and being homegrown means that Waitr understood that politics was part of the grease in making its delivery system work, especially if they could corner a part of the market.  The legislature had debated allowing liquor deliveries in a recent session.  This isn’t as unusual in a state (and city) that allows drive-in window daiquiri sales and allows open containers everywhere.  The bill failed, so they put together a committee to study it for the next session, and this time Waitr had a seat at the table.  With an eye to leveling its own playing field, Waitr got them to require that any delivery service classified the workers as employees, as they did then, not as independent contractors.  The state rep who carried the bill described that requirement as “the linchpin” in the passage of the bill.  This also of course blocked Uber, Instacart and other third-party app companies from hauling booze to the thirsty by ripping off their workers.

In a stunning revelation covered in The Times-Picayune / New Orleans Advocate, the major regional grocery chain, Rouses, “is expanding into the delivery market but isn’t able to make a profit under the current alcohol delivery laws, which require using hourly wage employees.”  In other words, if the company has to at least guarantee a minimum wage, a measly $7.25 in Louisiana per hour, it doesn’t work.  For the business model to work, there has to be a worker rip-off.

Meanwhile Waitr, the company whose fingerprints were all over the law, is not one of the 50 companies licensed to make deliveries.   The company went public and then was bought out.  All 2300 employees were laid off and told to reapply as independent contractors.  They now charge restaurants 15 to 25% as a service fee as well as for any credit card transaction, but still bar the restaurant from charging separate prices for delivery items, as they do routinely in New York City.

The precarious and predatory nature of app-based delivery services and their enablers seems beyond debate.