Gourmet units: we deliver

Nation's Restaurant News, May 2, 1988 by Peter J. Romeo, Karen Bruno

GOURMENT UNITS: WE DELIVER

To make up for a slowdown in traffic, full-service restaurants are entering the home delivery market and offering specialty dishes at retail prices By Peter J. Romeo

With fewer patrons walking through the door, full-service restaurants are following their quick-service brethren into the precarious but promising home delivery market in an attempt to keep their kitchens busy.

Even gourment restaurants are making specialty dishes available at home, at customery retail prices," noted a U.S. Commerce Department report issued last year.

"The baby boomer is older, married, and doesn't go out as much during the week," said Lee Cohn, president of Big 4 Restaurants, a Phoenix, Ariz., dinner house operator that is contemplating an expansion of its delivery service into a freestanding business. "Ever since the baulous success of Domino's Pizza, all restaurateurs with vision have been trying to adapt gourment menus to the demands of Styrofoam packages and vans."

"We have hit a market that wants something other than pizza or sandwiches," said Reed Merdinger, proprietor of a full-service Chicago restaurant called R.D. Clucker's that delivers as many as 160 orders a day. "That gives me an edge. If it's a quiet night in here, delivery gives me an extra 075 to 100 people."

Faciliting broad-menu restaurant's entry into home delivery -- a market perviously dominated by pizza, Chinese, and chicken fast feeders -- is the rise of delivery middlemen. Bearing such names as EatOutIn, Dine In, Tele-Food, and Waiters on Wheels, the services cart various restaurant'se wares to patrons' homes for a fee or a percentage of sales.

The arrangement enables restuarateurs to enter delivery usually without any capital investment, since the middlemen provide vehicles, drivers, and often food packaging as well as supervising the delivery operation.

"I'm hoping someday we'll be the Federal Express of food service," said John pugsley, whose Newport Beach, Calif.-based Restaurant Express delivers meals for such local white tablecloth places as Le Biarritz, Rothchild's, and Villa Nova.

"This is really 'found' money," said Villa Nova operator James Dale, who estimated that delivery adds hundreds of dollars nightly to the upscale restaurant's top line.

The move into home delivery comes at a very trying time for many full-service restaurants, particularly dinner houses and white-tablecloth indpendents.

"Business stinks," declared the operator of a New York fine-dining landmark.

Full-service restaurants have seen their traffic flattened by the combined effects of overcapacity, fears that the economy will skid, and the loss of a full tax deduction for business meals.

The latter factor alone has curtailed expense account spending by 14 percent, costing white-tablecloth restaurants millions of dollars, according to a recent report from GDR/Crest, a research concern.

Fast feeders and limited-menu places, such as pizza parlors, have been similarly throttled, largely because of the overcapacity that is just now beginning to choke the more upscale restaurants.

Many players in the chicken, pizza and Chinese-food markets have sought to stem the erosion of in-store traffic by breaking into home delivery.

While dinning-room customer counts have leveled off or fallen in recent years, the number of delivery and take-off orders has surged.

Some 21 percent of food-service meals are now eaten at home, up from the 17 percent registered in 1982, according to Crest research conducted for the National Restaurant Association.

The number of delivery and take-out orders rose faster than did on-premises customer counts during the first three quarters of 1987, according to the NRA.

Although take-out still accounts for most of that eat-at-home market, home delivery is gaining. About 7 percent of restaurant meals consumed off-premises in 1986 were delivered, compared with a 4-percent share in 1984.

However, not all of the quick-service

PHOTO: Lee Cohn, president of Big 4 Restaurants, a Phoenix, Ariz. dinner house operator stands in front of Oscar Taylor's, a new entry in the arena of full-service operations that offer home delivery. players who branched into delivery have found the move a wise one. The high start-up costs can crush profit margins for years. And many found delivery to be a very different experience from on-premises food service.

The delivery middlemen promise to spare full-service restuarants from those danagers by assuming total responsibility for delivery operations, including marketing.

"Why settle for pizza?" teases an ad for Restaurant Express.

Such players as Chicago's Room Service even attempt to deliver a whiff of their restaurant partners' ambience. The upstart concern's staffers wear uniforms patterned after tuxedos. And they present patrons with meals packaged in serving trays rather than in cardboard boxes.

"We want to make ordering from Room Service a form of entertainment," said Room Service founder Jack Kellman, whose previous involvement in show biz has been as a manager of rock stars.