Food.com delivers dinner to your door
The start-up plans to offer takeout delivery over the Internet starting May 1, moving into a relatively untouched area of e-commerce.
The company, which currently lets customers order food only from restaurants that offer delivery, is expanding its service through a March purchase of Takeout Taxi, a delivery company.
Quick delivery of takeout is a relatively untouched area of e-commerce. Webvan offers some ready-made meals, but it has yet to push the service.
Analysts aren't sure whether Food.com's plans to tap into the $126 billion takeout delivery business are a moveable feast or a last meal for the company.
"I believe there is less margin in food as compared to videos and books," said Chase H&Q analyst Genni Combes. "In terms of profitability, food will be more challenging than videos."
The relaunched Web site will let customers browse menus and order takeout from more than 12,000 restaurants in New York, San Francisco, Los Angeles, Chicago and 26 other cities. Food.com said it hadn't decided whether to charge customers a fee.
The site will also have professional and customer restaurant reviews, and it will be accessible by wireless devices such as cell phones or personal digital assistants. The company plans to expand into delivering videos and video games through its partnership with Blockbuster.
Food.com charges each restaurant $79 a month and a percentage of each online order, said John Laing, Food.com's chief operating officer.
The company will be taking on offline delivery services and brick-and-mortar restaurants that have been in the business for years. But those companies require customers to call in an order, whereas Food.com's customers order online.
The company says it can break from the pack by blending old-fashion delivery methods with the latest technology. It uses a voice-automated system that turns online orders into voice messages that are then phoned to restaurants, many of which are unequipped to take orders over the Net.
"Restaurants are notoriously backward," said Jupiter Communications analyst Ken Cassar. "Getting them to enter the tech world is a huge challenge."
Food.com will have an advantage over online grocers or restaurants that deliver because it has lower overhead: It doesn't manage warehouses, pay waiters or buy dishes.
"I don't carry inventory," Laing said. "I have the ability tap into 400,000 warehouses--that's the number of restaurants in the U.S."
Other sites such as Ticketmaster Online-CitySearch and Opentable.com are using the Web to let diners make reservations at local restaurants, a service that Food.com plans to add in the future.
Last month, the company raised $80 million from investors including McDonald's, Blockbuster and Kraft Foods, and it has deals with several major restaurant chains, including Pizza Hut, KFC and Pizza Inn.