Food delivery is a hot subject in the restaurant industry these days.
Restaurants on the Run Inc. has been doing it for 21 years.
The Aliso Viejo-based company delivers meals—4,000 a day—from 350 restaurants to about 1,200 businesses in Orange County alone. It operates in six states, covering 300 cities and delivering more than 13,000 meals a day from several thousand restaurants to about 4,000 businesses.
Founders Michael Caito, Anthony Caito and Matthew Martha are the middlemen.
They face a growing roster of competitors in OC and other markets, where food trucks have become a staple of cityscapes and new entries aim for market share on meal delivery.
• Seattle-based Amazon.com Inc. added restaurants to its grocery delivery service in June.
• Mobile payments company Square Inc. bought Caviar, a fine-dining delivery company, two months later. Both companies are in San Francisco.
• Postmates, also in San Francisco, recently said it would begin delivery in Orange County, including food.
Local competitors already include Chicago-based and publicly traded GrubHub Inc. and LAbite in Pasadena.
The partners said hundreds of delivery companies operate nationally. This year they bought their 14th competitor—the sixth such buy in five years—and expect revenue to hit $36 million, with $40 million to $45 million projected for 2015, excluding more acquisitions.
“It all comes down to execution,” said Martha.
On Demand
When Restaurants on the Run buys a company, it transitions its newly acquired restaurant clients and corporate customers into its website and ordering system, as well as a loyalty program to reward volume buying. It takes various steps to promote restaurants, giving a boost to an establishment that’s new to the system, for instance, or one that has paid to be listed higher in a search of the company’s website.
Its main clients are the restaurants, which pay a commission of about 30% on each order.
Corporate clients ordering food for workers or events pay a small delivery fee and usually tip drivers.
Drivers deliver seven days a week. Business orders typically fill weekdays; residential deliveries heat up the weekends but remain a niche. More than 90% of the business is corporate, with an average check of $175, compared to $50 for residential.
One sub-niche is drug companies hosting doctors gathered for product presentations, the company said.
Same-Day Service
About 60% of orders come the day the food is needed.
“We’re focused on real-time, same-day deliveries,” Anthony Caito said.
“The buzzword is the ‘on-demand’ economy,” Martha said.
The rest of their business—advance ordering—is a benefit to the restaurants, similar to airlines preselling seats on a plane.
“Before they open their doors, the restaurant is selling food,” Caito said.
He said restaurants “get what we do,” are prepared for large orders—and they like selling a hundred off-site lunches by mid-morning.
The company capitalizes on the familiarity and consistency of big, familiar names. OC-based chains it works with include Huntington Beach-based BJ’s Restaurants Inc., Irvine-based Yard House, and Lake Forest-based Peppino’s Inc. Others include Los Angeles-based California Pizza Kitchen and Carlsbad-based Rubio’s Fresh Mexican Grill.
Restaurants also need to be big enough to have a catering menu.
Burger chains are not as likely for the trade.
“It’s not the best product to deliver,” Caito said. “But Rubio’s can do a taco bar or something like that.”
Average annual sales for a restaurant delivery company are about $1 million, Caito said.
Restaurants on the Run does that in about nine days, working from three call centers—in Aliso Viejo, Chicago and Tulsa, Okla.—and a website.
About 85% of orders come via the website—a revamped one launched in October—but for bigger functions such as ordering lunch for 150 people, corporate clients typically call.
Beginnings, Recession
The company was founded in 1993 with six restaurant clients and hit $28 million in revenue by 2008.
Sales dropped by more than a third when the recession hit, and businesses either cut back on orders or went out of business altogether.
Numbers slowly recovered and in the past three to four years have doubled, the partners said.
Their goal now is $100 million in sales in five years.
The partners own 90% of the company, and one outside investor and a few employees have bought stakes.
It contracts with Irvine-based Delivery Drivers Inc. for 250 to 450 drivers who deliver the food and earn 15% on each order.
Restaurants on the Run has 110 employees; 40 are in Orange County.
