A company using a third-party delivery service enjoys increased profits and expanded marketing capability.
Five years ago rising demand led Chuck Curcio, owner of $2-million Tortilla Factory restaurant, in Herndon, Va., to consider expanding his carryout service to include home delivery. But he thought the projected extra sales couldn't cover the cost of new hires and insurance. Enter Takeout Taxi, a fledgling company eager to handle delivery for Curcio.
Companies in today's rising third-party-delivery industry (the service is spreading to retail businesses, like bookstores and videotape rentals) contract with several restaurants at one time. The delivery company takes the orders and relays them to the restaurant, dispatches drivers, and handles all promotion and menu mailings. The cost? Takeout Taxi takes 30% out of all delivery sales.
At first that seemed like a lot to Curcio, until he realized that payroll for staff (who now prepare food for deliveries, too) and overhead are "sunk costs" -- already paid for when the incremental delivery orders come in. After 35% of each delivery sale is deducted for food and packaging costs and 30% is paid to Takeout Taxi, 35% goes to Tortilla Factory's bottom line. (Eat-in restaurant pretax-profit margins are normally 4% to 8%.) Deliveries, worth more than $3,000 a week, now make up 8% of Tortilla Factory's total sales.
Curcio is excited about reaching an untapped market through Takeout Taxi's targeted mailings. "The marketing is the jewel in the crown," he says. Takeout Taxi designs and mails promotional pieces that can blanket the community or pinpoint one restaurant's customers -- for about 35¢ per mailer. To combat the industry's January slump, Takeout Taxi mailed holiday coupons to Tortilla Factory patrons in December 1991. In 1992 the restaurant served up the best January in its 16-year history -- a 28% sales increase over January 1991 that Curcio attributes entirely to the coupons.
And on inclement nights, when patrons are reluctant to go out, delivery service keeps the kitchen hopping, and, says Curcio, "the customer sitting at home is happy."