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Shift in ordering takeout a sweet and sour tale

Betty Fraser owner Los Angeles restaurant Grub has joined services an online food ordering company GrubHub which takes about 15

Betty Fraser, owner of Los Angeles restaurant Grub, has joined the services of an online food ordering company GrubHub, which takes about 15 percent of each order. | AP Photo

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Quick delivery services expand beyond food

AMAZONFRESH — Currently available in Los Angeles and Seattle, Amazon.com’s service provides same-day and early-morning delivery of more than 500,000 Amazon products including fresh groceries and local items. The service was launched in Seattle in 2007 and Los Angeles in June. The company is still figuring out if it will launch in other cities, says spokesman Scott Stanzel. “The economics are challenging,” he says.

AmazonFresh costs $299 a year for customers in Los Angeles, and includes a free subscription to Amazon Prime, a $79-per-year service that includes free two-day shipping on many Amazon items and access to the company’s video streaming selection. The setup in Seattle is different. Seattle customers generally pay for each delivery, but are able to qualify for free delivery if they order frequently over the course of a month or spend over a certain limit.

EBAY NOW — Launched last year in San Francisco, eBay’s service delivers items from local stores in about one hour. Items include everything from iPads to smoke alarms to heaters and plant fertilizer. The service, which has expanded to New York, Chicago and San Jose, Calif., costs $5 with a $25 order minimum. It’s expanding to more locations by the end of next year, including Dallas and London. Participating stores include Best Buy, Macy’s, Target, Urban Outfitters and Home Depot.

DELIVERY.COM — While the bulk of the company’s business still involves food, Delivery.com also acts as an online ordering service for a variety of other businesses such as wine and spirit shops, convenience stores, laundry services and delis. In June it acquired Brinkmat.com, a New York-based laundry, dry cleaning and delivery company. Its goal? To become the Amazon.com of same-day delivery, says CEO Jed Kleckner.

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Updated: November 13, 2013 2:00PM



NEW YORK — There’s been a shift in how restaurants satisfy their patrons’ taste buds. The consequences are both sweet and sour.

Eat24, GrubHub, Seamless, Delivery.com and a growing list of smaller online ordering services have changed the way people order takeout and delivery. Instead of dialing a restaurant, hungry souls go online, or open a smartphone app, to order their next meal. Competition to sign up restaurants and customers is fierce. The companies constantly update their social media accounts, hand out coupons and even advertise on porn sites to stand out.

As with many other industries, e-commerce and social media are changing how restaurants — which are often among the smallest of businesses — make money. The ordering companies offer great exposure. They sign up thousands of customers, pick up the tab for coupon-code promotions and have built websites and apps that make ordering simple. But not everything is so sweet.

The companies take up to 20 percent of each order. Some of the services charge restaurants more to show up higher in listings. And restaurants have to wait to get paid. Most services send one check a month. That translates into a longer wait for cash to cover bills. Restaurateurs say that so many people have switched over to using the services that they’re forced to join to stay in the game.

CAN’T LIVE WITHOUT ‘EM

When New York restaurant owner Steve Galanis was approached in 2001 by Seamless to join, he declined. Back then, Seamless was used by businesses so employees could order food at work, sometimes on the company’s dime. Cinema Brasserie had a strong delivery business. Galanis didn’t want to give up a percentage of his sales.

Three months later, regular lunch customers stopped ordering from his restaurant because their employers started using Seamless. That’s when he joined.

Now, Cinema Brasserie pays Seamless about 12 percent of each order. “You have to,” Galanis says. “If you want to do business with certain companies you need Seamless.”

AG Kitchen uses Seamless and Delivery.com. Its takeout business doubled after signing up, says Jeff Salamon, the general manager. He’s trying to convert new customers to come into the New York restaurant. He slips notes into takeout bags of frequent online customers offering free dessert if they dine in. It worked on one customer who ordered online four times a week. “She now comes in once or twice a month with her friends,” Salamon says.

Grub, a Los Angeles restaurant not to be confused with GrubHub, does the same, sending customers a handwritten note and a $10 discount to dine in.

Grub joined GrubHub earlier this year. Its lunch business was already busy, delivering to film writers and producers who work in the area, says owner Betty Fraser. She uses GrubHub to deliver dinner. She chose GrubHub because it provides a delivery person and saved her from hiring additional staffers.

GROWING INDUSTRY

The recipe has encouraged more players to enter the field with slightly different business models. OrderUp, launched in 2009, targets smaller cities and college towns like Boise, Idaho and Lawrence, Kan. FoodToEat, launched two years ago, enlists New York food trucks and restaurants, and charges the eateries just 10 cents per order.

Another sign of growth: The industry is starting to consolidate. Seamless, first launched in New York, joined forces with Chicago-based GrubHub in August, merging their members and restaurant clients into one company named GrubHub Seamless. The brands continue to run their websites and operate separately, for now. Company spokeswoman Abby Hunt says the combined company is looking for ways to improve the experience for restaurants that sign up. Together they cover about 500 cities in the U.S. and London. Although in some smaller cities, they may only have a handful of restaurants. Last year, orders through GrubHub and Seamless totaled about $875 million in gross food sales, and combined revenue of more than $100 million.

EDGY MARKETING

Since the companies are similar, many try to differentiate themselves by being quirky, fun or irreverent. Seamless plasters ads in New York’s subway cars and stations. GrubHub asks its Twitter and Facebook followers to come up with funny captions for cartoons. Eat24 posts one-liners on its Twitter feed and blasts weekly emails to customers.

Eat24’s emails are a must-read, say Silver Spring, Md. roommates Dani Lager, 27, and Sharon Rosenblatt, 25. A favorite was on avoiding bear attacks. Eat24’s advice: Stay home, and — of course — order food. “Fact: There are no bears in your home,” it said.

Jokes aside, the best part of Eat24’s emails are the treats at the end. Each one comes with a coupon, often for $2 off a $10 order. If Lager and Rosenblatt order from the same restaurant, they do it separately so that each gets a discount.

Eat24 tries to set itself apart with edgy advertising and places ads on porn websites because it’s cheaper. “We don’t have a lot of money to spend on marketing,” says Chief Marketing Officer Amir Eisenstein.

The company also pays to be featured in rapper Snoop Dogg’s smartphone app Snoopify. With the app, users can decorate their photos with cartoon stickers of sunglasses, necklaces, an Eat24 branded chef hat and marijuana. “We cater to everyone,” says Eisenstein, and that includes “people who have munchies and smoke.”

He’s not worried about associating Eat24 with porn and pot.

“We don’t discriminate,” he says. “Everyone has to eat.”



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