Waitr Holdings Inc. (WTRH) Q1 2019 Earnings Call Transcript

Waitr Holdings Inc. (WTRH -9.09%)
Q1 2019 Earnings Call
May. 08, 2019, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to Waitr Holdings first-quarter earnings conference call. This conference call will include forward-looking statements within the meaning of the securities law. These forward-looking statements will include things about the company's strategic priorities and certain statements of our expectation and plans. Forward-looking statements are subject to risks and uncertainties that could cause our results to differ materially from the forward-looking statements that are contained in our company's filings with the SEC, including the Risk Factors section of our recently filed Form 10-K.

The company does not assume any obligation to publicly release any revisions to the forward-looking statements discussed during this call. In addition, on this call, we will refer to certain non-GAAP financial measures to help understand the company's financial performance and to supplement to financial results that we provide in accordance with GAAP. The company has provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP counterparts in our earnings release filed with the SEC earlier today and can be found on the Investors section of the Waitr website at investors.waitrapp.com. Hosting today's call is Chris Meaux, founder and chief executive officer of Waitr; and Jeff  Yurecko, Waitr's chief financial officer.

I would now like to turn the conference over to Mr. Meaux. Please go ahead.

Chris Meaux -- Founder and Chief executive Officer

Thank you. Good afternoon, everyone, and thank you for joining us today. When we founded Waitr in 2013, we couldn't imagine that the company would become what we are today. Our founding strategy to serve smaller markets in the U.S.

continues to pay off. Our business model has proven to be an advantage over competitors in the small and midsized markets that we serve. These markets are won at the local level, and our proven playbook is local market focused. Therefore, national scale is not always an advantage to winning at a hyperlocal layer.

We cater to the wants and needs of the community for consumers and restaurant partners alike. Our technology platform is purpose built to serve restaurants and consumers in small to medium markets. Our routing algorithms are optimized for getting food to customers by car in the more spread-out geographies, creating leverageable advantages in our business model. Our restaurants are all contracted partners working with our local teams to magnify their presence in a crowded restaurant space, giving them visibility by putting their menu in the pocket of consumers, creating a frictionless way to order.

Our W2 drivers are uniformed and trained to represent our brand to be an extension of our restaurants. This enhances the quality of the experience for both restaurants and consumers. These are all advantages for Waitr over larger competitors in the markets we serve and provide a path for growth for our restaurant partners. For example, when the owner of Hot Food Express in Lafayette, Louisiana, had dreams of growing sales for his small restaurant inside a convenience store and in opening a second location, he turned to Waitr.

After being added onto the Waitr platform, he experienced increased sales and had enough business to open a second location, turning his dreams into reality and increasing opportunities for his family. It is this partnership mindset at the heart of our strategy for growth that pays dividends for our restaurant partners and Waitr alike, as illustrated in the deck that we published, along with the earnings this quarter. Our objective is clear: We strive to be the most valuable partner to restaurants, and our leadership position in markets we serve is proof of our commitment. Our hyper-local focus was further expanded with the acquisition of Bite Squad in January.

I am happy to report that the integration of the combined company is moving along nicely. We started unlocking the value of integration with the consolidation of the leadership team as reported in February. Since then, we have achieved nearly complete integration of marketing, accounting and sales and have made significant progress toward the integration of restaurant operations, customer support and technology. We expect to achieve full integration in the first half of 2020.

After the Bite Squad acquisition, we now have a hyper-local but national footprint, serving customers in over 700 cities in 29 states, and we continue to expand rapidly and successfully in local markets across the nation. In the first quarter of 2019, we added approximately 50 new cities in three states to the Waitr and Bite Squad footprint, and we now reach a population of more than 30 million Americans. What is most exciting is that we currently serve only 5% of the population in these cities, and we continue to expand our reach by adding great new restaurant partners at a record pace, along with quality diners in the cities we serve. To illustrate our continued opportunity, I will again to refer you to the deck we published.

The very first market we entered was Lake Charles, Louisiana. To date, only 31% of the population of this small city has ordered on Waitr, and we continue to grow by healthy double digits year over year after five years in the market. If we only capture this same 31% in our existing markets, we would achieve more than $5 billion in gross food sales. What's even more exciting than the opportunity for sales is our opportunity for margin expansion as margins -- as markets scale.

Gross margins will improve with scale due to large levers on take rate and operating cost side of our business. We believe this illustrates the tremendous opportunity we have for growth in 2019 and beyond. In the hyper-local markets in which we operate, Waitr has a clear leadership position, and our sales continue to grow at a rapid pace. Not only are our sales continuing to grow, but the strength and commitment of our customers is strong.

At the end of Q1, we had over 2.2 million Active Diners, and we're serving more than 57,000 orders per day. Moreover, the order frequency of our customers has been increasing every year. This provides us with an attractive undercurrent for growth, which is not generally affected by economic conditions, our level of marketing spend or our growth in surrounding markets. We see clear and proven opportunities to further improve the cohort behavior, both at Waitr and Bite Squad, to supersize the recurring growing streams of orders and revenue.

Our business model advantage starts with our restaurant partners and is exemplified by how we manage drivers, which is a dynamic that is tailored to the markets in which we operate. Our W2 driver model allows us to provide a more consistent customer experience by allowing us to schedule our drivers to ensure that supply meets order demand, but it also allows us flexibility to change schedules real time to add or subtract supply, as necessary, to keep costs aligned. This allows us to process more orders with less drivers than the typical contractor model. Moreover, it provides significant savings in driver recruitment and cost leverage with increased driver efficiency at scale, and thus, increase profitability, as further illustrated in the deck.

Finally, our W2 model allows for better quality control and professionalism, which we believe better serves our restaurant partners and consumers in our local communities. I am happy to say that our business is strong and growing. In the first quarter, we saw record sales of $52.3 million on a pro forma basis, an increase of 78% year over year. Gross food sales grew to $183.5 million, a 73% year-over-year pro forma increase.

While we are beginning to gain more visibility into the seasonality of our business, we foresee strong growth for the remainder of this, year particularly in the second half of the year and into 2020. A combination of our strong start to this year, progress in new markets, and most importantly, positive momentum in existing markets makes us increasingly confident that we will now exceed our initial pro forma revenue guidance of $250 million. By leveraging our continued growth, our W2 business model, restaurant partnerships and our consistently repeatable local market profitability, we are targeting long-term EBITDA margins of 20%. One only needs to look at the profitability of our top 10 markets to see a path to long-term profitability.

In conclusion, we believe opportunities abound for Waitr's continued growth in 2019 and beyond. In the coming months, we will provide more insight into our future plans around our vision for the future, as outlined in last quarter's call. Now I'd like to turn the call over to Jeff Yurecko to share with you our results for the quarter. Jeff?

Jeff Yurecko -- Chief Financial Officer

Thank you, Chris, and good afternoon, everyone. Before walking through our first-quarter results, Chris had mentioned a short slide deck posted to our website that I wanted to briefly discuss. As a newly public company, the first pure on-demand food delivery company and given our unique focus on small and midsized cities, we wanted to help you to know our business a little bit better. This will not be a regular presentation, and we do not intend to update or release similar information on a regular basis, but we felt it warranted to share some information just this one time.

Now on to Q1 results. As Chris already mentioned, first quarter was another great growth quarter. Revenue increased 287% year over year from $12.4 million to $48 million. The increase was largely due to the acquisition of Bite Squad that contributed $22.9 million of revenue in the first quarter, as well as strong organic growth in both existing and new markets.

On a pro forma basis, revenue increased 78% year over year, and quarter-over-quarter pro forma revenue growth slightly accelerated to 14% versus approximately 13% growth from third-quarter 2018 to fourth-quarter 2018. As discussed on our last call, we completed the acquisition of Bite Squad on January 17 using approximately about $198 million in cash to fund a portion of the acquisition. In January, we amended the credit agreement with Luxor in order to provide an additional term loan under a debt facility of approximately $42 million, the proceeds from which were used to finance a portion of the consideration for the Bite Squad merger.  Average daily orders for the first quarter of 2019 were more than 57,000, an increase of over 230% year over year, and active diners grew 309% year over year, both driven by the acquisition of Bite Squad, combined with strong organic growth. Gross food sales for the first quarter of 2019 increased to $170.4 million or 215% from the prior year with a slight average order size decline of approximately 1%.

Operations and support expenses increased 297% year over year from $9.1 million to $36.2 million in the quarter driven by the significant increase in order volume. Our operations and support costs are comprised primarily of variable order fulfillment costs, such as the costs of our delivery drivers, credit card processing costs and customer support, as well as other local costs of our ground teams. On an order basis, gross profit, defined as revenue less operations and support expenses, in the first quarter was approximately $2.49 or 25% of revenue, a change from $2.15 or 27% of revenue in the prior year driven by a higher revenue per-order contribution from Bite Squad and slightly higher delivery fulfillment costs. Sales and marketing expenses increased by 337% to $10.3 million in the first quarter of 2019 from $2.4 million in the first -- in the prior year driven by the inclusion of Bite Squad and by increased investment in both diner and restaurant acquisition due to our expanding footprint.

We intend to continue to invest at similar or higher levels going forward where we see clear opportunity to grow efficiently. Research and development expenses increased by 230% to $1.9 million in the first quarter of 2019 from $588,000 in the same quarter of the prior year due to the inclusion of Bite Squad and the continued addition of new technology talent. Compared to the prior quarter, R&D costs were held flat, mainly due to $905,000 of stock-based compensation expense recognized in the fourth quarter of 2018 due to the Landcadia transaction. We expect to increase spend on R&D in the relative short term as we continue to integrate Bite Squad and accelerate product initiatives.

G&A costs increased to $18.9 million in the first quarter of 2019 from $3.5 million in the first quarter of 2018. Removing the impact of $6.9 million of onetime business combination expenses related to the Bite Squad transaction, general and administrative expenses were $12 million or 25% of revenue in the first quarter. Depreciation and amortization increased to $4.1 million in the first quarter of 2019 compared to $226,000 in the first quarter of 2018, primarily as a result of the Bite Squad merger, which contributed $3.6 million of that increase. Net other expenses totaled $1.2 million in the first quarter of 2019 compared to $10,000 in the same period last year, mainly related to interest expense on the Luxor debt.

Net loss for the first quarter of 2019 was $24.7 million or a loss of $0.38 per share compared to a loss of $3.4 million or $0.34 per share in the first quarter of 2018. Net loss included $6.9 million of onetime business combination expenses related to the Bite Squad transaction and $2.1 million of noncash stock comp, both considered within adjusted EBITDA. Adjusted EBITDA for the first quarter of 2019 was a $9.9 million loss compared to a $2.1 million loss in the first quarter of 2018 as the company continues to invest heavily in growth. We continue to optimize for growth, integrate Bite Squad and make strategic investments to bolster our team and our infrastructure in 2019 in order to strengthen our foundation to allow us to grow aggressively and efficiently into 2020 and beyond.

As of March 31, 2019, we had cash on hand of approximately $43.6 million, consisting primarily of cash and money market deposits. As of March 31, 2019, we had total outstanding long-term debt of approximately $127.1 million, consisting of $67.1 million of term loans and $60 million of notes. On February 25, we announced the completion and settlement of our warrant exchange offer and consent solicitation relating to our publicly traded warrant. A total of 4.5 million shares were issued in connection with the offer, after adjustments for fractional shares, which were settled in cash.

We believe that the elimination of the public warrant simplified our capital structure and reduced the potential dilutive impact. As of March 31, 2019, we have 69.4 million shares of common stock outstanding. Going into the second quarter, we fully expect to build on the strong momentum of the first. Given the shift in the Easter weekend calendar from the first quarter to second quarter this year, we expect the slightly exaggerated seasonal pattern in the second quarter but remain very confident.

To reiterate, the combination of our strong start to the year, progress in new markets, and most importantly, positive momentum in existing markets makes us increasingly confident that we will now exceed our 2019 revenue guidance of $250 million. And with that, we'd be happy to take questions.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from the line of Alex Fuhrman with Craig-Hallum.

Alex Fuhrman -- Craig-Hallum Capital Group -- Analyst

Congratulations on a really strong start to the year. Wanted to ask about customer acquisition costs. It certainly sounds like from your prepared remarks and just the numbers that you just put out that you're continuing to grow very nicely. It doesn't sound like new competition coming into your market has really derailed your momentum in terms of revenue and food sales.

Curious if you can comment on the cost of acquiring new customers, whether it's entering a new market that has an existing competitive set versus perhaps some of your older market launches where you were really the first game in town and then some of your existing markets, maybe where you've seen more competition coming in. Has there been any change to your cost of acquiring new diners?

Chris Meaux -- Founder and Chief executive Officer

Alex, this is Chris. Thanks for the question. I'll answer part of that, and I'll let Jeff answer part of it. But a high portion of our customers still come from the network of X of our business, and so it's much lower cost to acquire those customers and that is a result of the strong partnerships that we have with restaurants, the experience that the customers have and the nature or the types of markets that we serve.

So that continues to be the case, still acquiring a large percentage of our customers there. I'll let Jeff answer a little bit more specifically.

Jeff Yurecko -- Chief Financial Officer

Happy to. So the way we think about is really at a market level. So without bringing the specifics there, the cash within our market has actually held very flat. To Chris' point, the majority of our customers still come in via organic means rather than paid media, so there is a natural increase in CPA when more dollars are spent because paid media is going to bring in a higher share of customers versus the organic customers.

Overall, our LTV is strong. There's a big gap between our LTV and CAC, and we're seeing some very positive retention trends. So in general, CPA is looking fairly strong, and we feel good about it.

Alex Fuhrman -- Craig-Hallum Capital Group -- Analyst

That's great. Really appreciate that color. And then if I could ask a similar question about your ability to attract new drivers, I mean, here in the Twin Cities. I don't know if any of you guys are here in Minneapolis, but it's just been an absolutely miserable day, raining pretty much all day.

I see -- it looks like one of your big competitors was offering drivers an extra $2 to $3 per delivery during the lunch rush and with a similar bonus at night during the dinner rush. Just curious that as you see more competitors enter your markets on both the Waitr and the Bite Squad side, if you've seen any difficulty or any increase in prices that you need to pay to hire quality drivers?

Chris Meaux -- Founder and Chief executive Officer

Yes. So our problem has never been hiring drivers versus competitors. I mean, our biggest -- I mean, obviously hiring drivers is the No. 1 thing or is one of the top things that we have to constantly focus on, but it has never been an issue for our supply of drivers and we've had one of the highest retention of drivers -- highest retention rate of all of the on-demand economy.

And so we're still good at retaining drivers, although we can get better, right? What makes driver hiring more difficult in some markets is just the pace of the economy. And so you get into markets where unemployment might be 2% or maybe in some markets even less, and you're up against -- hiring against other companies like Midland Odessa, for example, hiring against oilfield companies. So there are some challenges there when it comes to that, and I think that comes with having such a strong economy. But also, drivers that come to work for us are making more money because the economy is really strong, too.

And so it's always something we're going to have to watch and look at. It's not an issue of driving for a competitor versus us. I mean, that's never really been an issue for us and so -- in any of the markets that we're in. But we will certainly keep watching that and because we have W2 drivers and we can schedule them and we can look at the weather forecast to predict the weather in the future, we can fill slots on a day like today in Minneapolis, whereas others have to try to attract people to come on, we may already have a full schedule during a day like today.

So not much of a problem yet.

Jeff Yurecko -- Chief Financial Officer

And to follow on what Chris said there, as I said, the point of our W2 workforce is scheduled. So we're well aware generally in advance that it's raining, we know when it rains on occasion, there can be the higher no-show rate. And so what Max and Chris, our managers up in Minneapolis, are doing is making sure ahead of time that the schedules are well built and taking that into account. And so we're not in a situation right now when the weather's not good in a market like Minneapolis where we have to throw out additional incentives because we're already all set.

Alex Fuhrman -- Craig-Hallum Capital Group -- Analyst

That's great. That's really helpful. And then, lastly, if I could ask a housekeeping question here. You had $6.9 million of business combination expense in the quarter.

Can you give us a sense of what buckets of income statement that fell into just to give us a hand with modeling future periods?

Jeff Yurecko -- Chief Financial Officer

Yes, no problem. All of that is within G&A. So the vast majority of that is professional fees and that's going to fall into our G&A bucket.

Operator

Our next question comes from the line of Dan Kurnos with Benchmark Company.

Dan Kurnos -- Berenberg Capital Markets -- Analyst

A few questions. Chris, I think maybe to ask the first question a little bit different way. Obviously, there's been a lot of noise around competition here and thank you for all the incremental disclosure in the slide deck. If we look at kind of Slide five and just kind of think about a couple of things here, can you maybe tell us what you guys see in market where, let's say, is an established market, doesn't have to be Lake Charles or someplace that you have established, where your competitors come in and just dump a boatload of money into the market and how that -- how people -- customers in that market respond if it increases awareness in the channel or just generally what you guys are seeing there.

And then, separately, also on the competition front, obviously there is a ton of noise made around potentially Uber dropping take rates, although a lot of that seems like a large market phenomenon. If you could just talk about we know that you guys have seen more restaurants take the higher take rate and less upfront fee in recent history. Is that a trend that's still continuing? And are you seeing any take rate pressure or concern about take rate pressure in your small or mid-tier markets?

Chris Meaux -- Founder and Chief executive Officer

Yes, Dan, so let me try to make sure I cover all of these, and if I don't, then I'll ask you to reiterate some of the questions. But first, the take-rate question. I mean it wouldn't be surprising to me if competitors tried to lower take rates. I mean, we've seen it in the markets.

I think that actually works in our favor. And the reason it works in our favor is because, with increased efficiency, we see the leverage capabilities of leveraging our relatively fixed cost per hour for our drivers to increase profitability as we increase efficiency. So for example, if a driver can deliver two orders-plus per hour and the cost per order goes down, so it works with our take rate. But if our competitors lower their take rates, they also have the lower the -- I imagine they would have to lower what they pay per order to their drivers.

And because they're a contract, they don't get that same leverage. They don't get the same leverage of being able to deliver more orders per hour and lower their cost per delivery. So if there is going to be competitive take rate pressure in the markets, which we've seen a little bit of that and it hasn't really been an obstacle for us for growth, I think that would work in our favor. I think the first question, Jeff, do you want to take a stab on that? Go ahead and I'll let Jeff take the second question.

Dan Kurnos -- Berenberg Capital Markets -- Analyst

I was just asking more about if you guys see people coming into the market where you guys are established already and spending a boatload of money and losing a boatload of money, if that's just driving awareness in the channel, if it is impacting growth rates at all. Obviously, we've seen them -- these guys try to move down market and obviously some of the suspicion is there because those smaller markets are a lot more profitable despite what a lot of people think. So if you could just kind of talk to what you see in market from consumers and growth when somebody comes in and dumps a whole bunch of spend into a market.

Jeff Yurecko -- Chief Financial Officer

Yes. I'll happily speak to it. So we've seen competition. I know there's a lot of publicity recently, but we were walking down the business [Inaudible] when others started to scale.

So this is not new to us. We built our business, expecting it and knowing that they're coming. One of the slides that we released, I think Slide five addresses our market presence versus competition in kind of different stages of actually -- that's using third-party data to try to illustrate how we perform. The main point that we like to make is one this is not a winner-take-all marketplace and I think everybody believes that.

It's been proven over time and in different markets. And that we are market leader in the majority of our markets and that's what we have built our business on from day one, is taking big decisions. So we have meaningful restaurant penetration and we've built sizable diner bases in our markets. And so at the time competition does come, we found that greater marketing spend, something that the market can just naturally increase awareness and as you point out naturally bring new diners as they're adopting online ordering for the first time.

And as the incumbent-entrenched market leader there with already great -- we've got strong selection and already an optimized network, we've been the beneficiary of some of that. Being a market leader really deepens the network effect that we've already built and so it's just part of our business and it's something that we've dealt with for years.

Dan Kurnos -- Berenberg Capital Markets -- Analyst

That's helpful. And then just in terms of within markets, obviously you guys are -- this is the first year that I think you guys are really able to put pedal to the metal and try to accelerate growth so it's probably a little too early to ask. But some of the markets that you guys launched in, say, Q3 last year are markets that you've been in like Minneapolis where you've been able to increase investment, how are those markets responding? And has there been any change in sort of historical numbers for what you guys have seen from your kind of year two and year three in the markets or cohort growth rates?

Chris Meaux -- Founder and Chief executive Officer

Yes. So the response has been really great. And to just give you a couple of examples because both companies, Waitr and Bite Squad, historically have been capital constrained, sometimes we had to elect to invest in one area like maybe new user installs or new user acquisition versus repeat users. But now what we've been able to do is we've been able to invest in both and we started that in late February, and in March, we saw really good adoption in order -- increasing order frequency and increasing new user installs.

And so we think that now having the ability to continue to invest, we can harvest some of the opportunity that we know has been out there. And I mean we've seen it, we've increased them for short periods of time and can prove it. We just haven't been able to do that over a longer period of time, now we can. And so it's really encouraging and I think that's why we are so bullish on the year and why we had a great quarter, too, is that there's a tremendous amount of opportunity.

I mean we outlined it in the slide deck on Slide four. High percent penetration of all of our markets at the combined, right? It's a tremendous amount of opportunity in those markets that we're already in. It doesn't take into account launching new markets. So I'm very encouraged about the future and about our ability to continue to invest and see a significant return on the investments we make there.

Dan Kurnos -- Berenberg Capital Markets -- Analyst

Great. I know I've been going on a little bit here, I've got to as the profitability question. Thank you for giving kind of long-term margins, but if you guys can just help us maybe, Jeff, frame up sort of -- we get kind of a trajectory here. But just do you see decreasing losses over the balance of the year? Do losses stay kind of flattish as you see incremental growth opportunities? Forgetting incremental M&A, just based on the current organic trajectory of the business.

Jeff Yurecko -- Chief Financial Officer

Sure. No problem, Dan. I think one slide to highlight was what we released, Slide 9, that kind of walks through the unit economics and we highlighted a couple areas on that page where we see key opportunities for margin expansion, which is one of the primary keys to getting where we want to be on the profitability perspective. So commissions from restaurants, as you know, were among the lowest in the category in terms of commissions.

So over time, it would be reasonable for that to come up a little bit. And we've unified our sales force already and have gone back to market with slightly improved plan for slightly higher commission. On the driver labor side of things, one of the drivers of higher G&A cost is we've hired a team from Homer Logistics, a team of business intelligence individuals and data scientists and some logistic individuals, to help us really drive efficiencies across driver labor to try to get our orders per hour as high as we can, which will kind of help the broader business overall. And then there's a lot of opportunity still within the other support and operations costs with improving automation, etc.

So it's optimizing the business for growth, as you said before, but we're very focused on these areas as well. They have a tendency to be weighed down when we're aggressively accelerating new market launches. But as the markets mature, the margins are going to slowly creep up. On the G&A front, and I guess to touch on just really briefly on the Bite Squad integration side, we've obviously absorbed a really large business just over 90 days ago.

There were two disparate businesses operating independently, and for the most part, they still are. So there's a lot of opportunity as we go through the year here to start to realize some of the synergies that are going to be extracted out of that transaction.

Operator

The next question is from the line of Brent Thill with Jefferies.

Brent Thill -- Jefferies -- Analyst

Just following up on the profitability question and I know you're talking more long term than short term. But one of the questions is just around the W2 model and how that can be profitable versus some of the other marketplace models, and if you can just shed a little more light on why you're so confident in that given your model is different. If you could shed a little more light, that'd be very helpful.

Jeff Yurecko -- Chief Financial Officer

Yes, absolutely. So I can give you just some kind of high-level color on how we think about it. So at a high level, our business is all about providing the best and most consistent experience to the customers time after time, getting the order to the customer on time. Efficiency comes from, in our view, matching supply and demand.

And the control of the W2 model is really what allows for the most optimized matching of supply and demand versus drivers who are just selecting their own orders whenever they want. Doing things like accurate forecasting that feeds the driver schedule, coupled with smart order assignment, those things are going to drive big efficiencies over time. And high delivery efficiency means on-time orders, means more orders per hour and it reduces the cost for the company and increases driver pay. So kind of everybody wins.

As opposed to paying on a per-order basis, we pay per hour. So paying per hour means as delivery efficiency improves and we are able to deliver more orders per hour, we leverage that fixed hourly cost structure, and at the same time, we're saving money and the drivers are making more money and more tips. So it's an everybody-wins type of situation. Other point to call out around our model would be that we train our drivers to be in branded uniform standards.

We enforce to encourage more professional experience. And we have regular employee engagement, etc., leading to generally higher engagement than you would typically experience. So we think the way that our markets are built, this is just the model that works for us across-the-board.

Brent Thill -- Jefferies -- Analyst

Just a quick follow-up for Chris, just this is really for the new markets you're entering, I think there's a perception on Wall Street that this is like Game of Thrones, that there's crazy wars breaking out in these new markets. And I'm just curious, from your perspective, it doesn't -- it feels that maybe these restaurants are capable of supporting a handful of platforms. And just curious kind of what you're seeing as you're making these determinations competitively, what's happening? And again, maybe the perception versus reality is different from what you're seeing, it would be great to kind of hear what you think is happening as you move into these new markets.

Chris Meaux -- Founder and Chief executive Officer

Yes, absolutely. I mean the reality is, is that when we're entrenched in the market and a competitor comes in the market, it really doesn't matter how much money they spend. They still have to get the restaurant supply. And without the restaurant supply, you don't attract consumers.

And so our restaurant supply in the markets that we operate, and even the restaurant supply in the new markets that we launched, is typically much higher than many of the competitors. Now if you take someone that doesn't sign a contract with every restaurant and doesn't get take a take rate, they can come in and put every restaurant on, but that doesn't mean that they're going to get any support from the restaurant and it's going to increase the fees on the consumer side. And so guess what, they may have restaurant selection, consumers don't want to pay the extra fees that they're having to pay just to get the right restaurant selection. So they'll stay -- or gravitate toward Waitr.

And so we've had competitors coming in for years and they spend a lot of money, they've done free delivery, they spent money on advertisement, they've bought at AdWords, whatever it might be, but yet they get very little of the restaurant supply in those markets to sign up. And that's been a significant advantage for us.  And the other thing about it, too, Brent, is our platform. Our technology platform is purpose-built for these kinds of markets. So -- and this maybe is a part to the answer to the last question that Jeff was talking about as well.

So if you take a platform that is built for stacking orders in major markets that allows you to deliver four or five orders in a high-rise at onetime and you try to put it in an area where orders might be four miles apart, it just doesn't work. And so by having a purpose-built platform for the kinds of markets that we operate in, having the significant share of the restaurants in that market -- and remember, most of the restaurants in these markets are independent, not chains. That's very different than in a major market where you would have thousands of chain restaurants. In the markets we serve, it's kind of 15 maybe.

And in the biggest of markets that we serve, maybe 100. So it takes the independence in order to make it work. And so what we have found is that competitors have had a hard time signing up independent restaurants. That gives us an advantage.

And that's, I think, primarily due to our team on the ground in those markets that can go pull the door, sit down, talk to those restaurants every day, solve their problems on a regular basis and get them committed to the partnership. I can't stress that enough because money doesn't -- the company with the most money doesn't always win. It's the company, I think, that offers the best overall experience to the restaurant, the consumers and the employees that ultimately wins. And I believe that's going to be Waitr.

Brent Thill -- Jefferies -- Analyst

Great. One quick follow-up. Just when you talk about the long term at 20-plus percent EBITDA margin, for you the definition of long term, are we -- is that five years out plus? Is it three to five? Is it we're just not going to say right now? I mean how do we think about the definition of long-term?

Chris Meaux -- Founder and Chief executive Officer

So I'll say as we think about it, it's not next year but it's in the relative near future, right? It's not -- we're not talking about 10 years down the road here. Look, I mean -- and remember, I think what maybe gets lost, too, about our business is because we were so capital constrained for so long, we were both either profitable or very close to profitability when we -- in Waitr's case, when we did the Landcadia transaction, we were just a few hundred thousand dollars a month away from profitability. In the case of Bite Squad, they had already been profitable at some period. So we know how to get this business profitable.

But we want to make sure that we're maximizing our ability to grow in scale and so we're putting the investments into those markets. And so if we stop expanding, if we -- or stop opening new markets, not so much stop expanding because most of our growth is coming from existing markets anyway. But if we just stopped opening new markets, it wouldn't take us long to find profitability.

Operator

[Operator instructions] The next question is from the line of Howard Penney with Hedgeye Risk Management.

Howard Penney -- Hedgeye Risk Management -- Analyst

I wanted to ask a couple questions about Slide five, if I could. The implications of the lines, there's no access, I can't tell. But the implications are that you have significant market share above competitor one, two, three and four. Is that -- am I reading the right implication from the way those lines are drawn?

Jeff Yurecko -- Chief Financial Officer

Yes, that's correct.

Howard Penney -- Hedgeye Risk Management -- Analyst

What percentage of your markets, if I can ask, would you say you have that advantage over your competitors?

Chris Meaux -- Founder and Chief executive Officer

Well, we don't put out a specific percentage of the markets, but what I can tell you is that in most of the markets that we operate in, we have a clear leadership position.

Howard Penney -- Hedgeye Risk Management -- Analyst

Awesome. And then if I could read between the lines again from those lines, competitor one, competitor two seem to be outperforming competitor three and competitor four. Are you already seeing a bifurcation from the competition in the markets in which you compete? Meaning there's two winners and two losers, I guess, is the best way to ask it?

Chris Meaux -- Founder and Chief executive Officer

Well, I mean, I think on a market-by-market basis, there are stronger competitors in some markets versus other markets. And so I guess I never really thought of it the way you just put it, but I guess, yes, there's typically one or two competitors in the market that are kind of winning out, I guess, over others, at least in the markets that we operate in and what we've seen. But in the markets that we operate in, we have such a large lead on the competitors that I guess I really never stopped to think about, well, who's No. 2 but --

Howard Penney -- Hedgeye Risk Management -- Analyst

Right. I just was -- sorry, go ahead.

Jeff Yurecko -- Chief Financial Officer

I think if you look at kind of territory by territory, there are players that are clearly stronger than other players. So the people we bump -- the competitors we might bump up against in Florida, for example, might not be as strong as the competitors in the Midwest. So I think there is clearly in our view kind of a bifurcation, as you said, by sort of different territories.

Chris Meaux -- Founder and Chief executive Officer

Yes. And I think if you look at the other companies' businesses as well, everybody kind of has their regional stronghold because that's kind of where they started, right? So there's typically the one or twos in that region that would be the strongest.

Howard Penney -- Hedgeye Risk Management -- Analyst

The reason I asked that question is I'm just going to take Macon, Georgia because of the red line and the black line are clearly rolling over, which sort of suggests that what you're doing in Macon, Georgia is creating problem for competitor three and competitor four, and that's just I don't need to talk about that. So how does this look for Bite Squad in these core markets?

Chris Meaux -- Founder and Chief executive Officer

Yes. Well, I mean this is a combination of Waitr and Bite Squad markets, so for example, Gainesville, that's a Bite Squad market. But it's consistent across both Waitr and Bite Squad markets throughout the country.

Howard Penney -- Hedgeye Risk Management -- Analyst

Great. And then the last question is there's obviously been a lot of negative reports written about you, one of them was focused on the cash flowing or cash needs and I know someone previously asked about the profitability. But can you just address the cash needs of the company given your cash burn and what your thoughts are around that?

Jeff Yurecko -- Chief Financial Officer

Thank you for the question. I think our answer holds the same as it was on the last call, which is we built our guidance plan without the need to raise capital. So we hold to that and that's our plan for the year. Now we discussed should opportunities present themselves for M&A and other things, that there is an opportunity at the capital markets at the right price, we would.

Chris Meaux -- Founder and Chief executive Officer

And listen, I do believe that there are opportunities out there. I mean I think we talked about this last time, but there are other operators that operate, in some cases, maybe in the markets that we're in and in some cases in markets that we would like to be in that we could acquire, and we believe that we can acquire those companies at very reasonable valuations. And so having access to the capital markets to go and do that -- do those acquisitions was important for us. And so of course, that's part of the reason that the shelf registration is out there.But I think there's going to be a tremendous amount of opportunity this year to look at some additional growth other than our organic growth, which is so strong.

We can add to that with some acquisition growth as well.

Operator

The next question is a follow-up from the line of Alex Fuhrman with Craig-Hallum. We lost Mr. Fuhrman. Our next question is from Dan Kurnos with Benchmark Company.

Dan Kurnos -- Berenberg Capital Markets -- Analyst

So Chris or Jeff, I figured to just ask this since we know that you guys have been testing and you guys brought it up. Just on Unlimited, I know you rolled it out in some test markets. Can you kind of just update us on how long it takes for you to kind of roll that out over some Waitr select markets because I think Bite Squad has been the one testing it, what the unit of economics have been or look like? And maybe just kind of your thoughts on how that could influence growth going forward.

Jeff Yurecko -- Chief Financial Officer

Yes, happy to get that. So at least on the Bite Squad side, we've had an unlimited program in place, in some fashion largely on a test basis for about a year now, and the results have been great in terms of order frequency. But I can't say too much on it since we're still testing and haven't fully kind of rolled it out. But I think at the high level, it's been successful enough to a point where we are working on getting the same type of program built on to the Waitr platform as well.So customers who joined Unlimited on their first purchase make more orders in month one.

So it's shown a clear increase in time to repeat purchase and certain recurring customer segments have shown a tendency to order one to three times more per month when using it as kind of a retention tool versus a customer acquisition tool.So we've tested it both directions, both on diner acquisition and on the existing customer base, and we're pleased with the results. And it would be probably premature to say anything more, but the signs are good. We're contemplating a larger rollout and we need to make sure we do it in the right way and not sacrifice anything on the unit economics front.

Operator

The next question is a follow-up from the line of Brent Thill with Jefferies.

Brent Thill -- Jefferies -- Analyst

Chris, just as it relates to the next level, if you will, helping a restaurant with the delivery, there's an element of loyalty and customer relationship management, the voice of the customer, what I'd like to see more of or less of. And when you think about the additional value that you can bring to a restaurant, can you just talk about is this on the radar in the short term? Or is the focus we've just got to get more restaurants on the platform first? I mean how do you think about the trade-off of making that investment? And I had another quick follow-up.

Chris Meaux -- Founder and Chief executive Officer

Yes. So on that one, Brent, I said in our last call that we believe there are going to be opportunities around loyalty, and we still do. And those could come in the form -- several different forms. It can come in the form of partnerships, it can come in the form of new product development that we do internally and they can come in the form of potential acquisitions.

We do believe that loyalty is kind of a relatively early thing that we want to do, so -- but I laid out kind of the longer-term vision. There are a lot of things on there that might be more long term, but loyalty is one of them. I think the Unlimited program that we have on the Bite Squad side creates a significant amount of loyalty. But there are ways that we can do it through point system, through -- and add CRMs to that kind of a system and give that restaurant access to those things.

So we're looking at those kinds of opportunities as they present themselves. We're having those conversations internally, but nothing that we're prepared to announce on those things yet.

Brent Thill -- Jefferies -- Analyst

And sorry if this has been asked. Just on the driver side, is there -- just in terms of your ability to attract and retain and get that piece built out, has there been any constraints or any challenges there? Is that environment good as ever in terms of your hiring, your ability to get the drivers on the platform?

Chris Meaux -- Founder and Chief executive Officer

Yes. So as I talked about earlier, the ability to acquire drivers is always going to be something we have to watch but it's not been a significant obstacle at this point. But where the real opportunity is for us is in the ability to retain the drivers that we already have. Because they're W2 employees, it makes it a little bit easier for us.

And the team that we brought over from Homer Logistics had some really great things that they did to retain drivers and increase driver retention. Those things are starting to be implemented here. We're starting to see really positive signs in retaining drivers. In fact, I was talking with our logistics chief recently and we were talking about our percentage of retention versus others, and it's significantly higher.

And just since we've implemented some of these driver retention activities, it's gotten even higher. So that's a big focus for us right now. If we can retain more drivers, then we have to hire fewer drivers. And if we already hire fewer drivers than any of the competitors in our space because they're W2 drivers, so we can do more orders with fewer drivers, which keeps -- as I said in my prepared remarks, which keeps our driver acquisition costs fairly low.

But if we can increase the retention, that would be a tremendous win for us and we're already starting to see it happen.

Brent Thill -- Jefferies -- Analyst

I promise last question. To get to that 20% long-term target, there are one or two key areas that you say that are kind of most important in terms of the expense side. What are the keys for you to unlock that? And I know you're not going to be specific on timing, but at a high level you had two areas to focus on, what would they be?

Jeff Yurecko -- Chief Financial Officer

Sure. So obviously, our ops and support bucket is, on the cost side, is the biggest opportunity we have. So back to your driver question. It's not just drivers, but it's support cost and it's other cost.

As we scale, some of the cost within that bucket are very leverage-able. And on the driver side, as we scale and as we improve, getting higher and higher orders per hour is going to be one of the largest drivers in terms of the cost side of our P&L. From a top-line perspective, very slight commission increases over time our top-line unofficial and are straight to the bottom-line. So those are two things that are controllable and two things that you can really affect over time.

I don't like to think that there's a ton of room to play in the research and development or the sales and marketing bucket. So we said a way to achieve profitability, but we also fully intend to get as much leverage as we can on our G&A structure over time.

Chris Meaux -- Founder and Chief executive Officer

And to add to that, we have active initiatives under each of these to improve all those things that Jeff just talked about, and most particularly, the complete integration of the technology platforms for the two companies. Now that's later this year or into next year, but once we achieved full integration of that platform, there is significant leverage that will have been achieved at that point. So --

Operator

Thank you. At this time, I will turn the floor back to Chris Meaux for closing comments.

Chris Meaux -- Founder and Chief executive Officer

Well, I'd like to thank you, guys, for joining us today. We are extremely pleased with our results for the first quarter. We're absolutely excited about the opportunities that lie ahead for the rest of 2019 and into 2020. I look forward to speaking to you guys again next quarter.

Thank you, guys.

Operator

[Operator signoff] 

Duration: 57 minutes

Call participants:

Chris Meaux -- Founder and Chief executive Officer

Jeff Yurecko -- Chief Financial Officer

Alex Fuhrman -- Craig-Hallum Capital Group -- Analyst

Dan Kurnos -- Berenberg Capital Markets -- Analyst

Brent Thill -- Jefferies -- Analyst

Howard Penney -- Hedgeye Risk Management -- Analyst

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