Sit-down restaurants lean on delivery

-- Deborah L. Cohen covers small business for Reuters.com. She can be reached at smallbusinessbigissues@yahoo.com

By Deborah L. Cohen

CHICAGO (Reuters.com) - Amelia's Bistro, a Jersey City, New Jersey restaurant specializing in new American cuisine, is sending a lot of dinner orders out the door these days, as patrons enjoy everything from sautéed chicken sauvignon to chickpea-crusted Atlantic salmon in the comfort of their homes.

"We're pretty strong on delivery," says owner Frank Mandaro, who has been increasingly marketing the service to residential customers in the densely populated neighborhood near Manhattan to help offset a slowdown in lunchtime corporate dining. "It is a large portion of our business."

Restaurant delivery, once the purview of pizza chains and other fast-food joints, is becoming an important prop for full-service dining establishments looking to bolster revenue. These days, consumers are thinking twice before they hire a sitter, fill up the gas tank and head out for a sit-down meal where they are expected to leave a healthy tip.

"In this tough economy, where consumers' cash on hand is definitely constrained, table service operators overall have been focused with laser-like intensity on delivering a high-value proposition to the consumer," says Hudson Riehle, senior vice president of research and information services for the National Restaurant Association, an industry trade group. "Many table service operators are stepping up to the plate regarding delivery options."

In its 2009 industry forecast, the association reported that four in 10 family and casual dining operators and about a third of fine dining operators polled said they expected delivery would become increasingly popular for their industry niche in the future.

And nearly half of the consumers surveyed in the report, which was released in December, said they would patronize full-service restaurants more frequently if those restaurants offered delivery or convenient takeout options.

To cash in on the trend, many full-service restaurants are expanding the offerings listed on their delivery menus and using more sophisticated means of packaging meals to ensure that food arrives fresh and hot, Riehle says. And some operators are leaning more heavily on third-party providers to assist with everything from order processing to pickup and delivery.

Numbers from at least one service provider underscore the trend. Delivery.com, an online middle man that handles some of the front-end order processing for Amelia's and a multitude of other restaurants in 65 cities, has seen the price of its average delivery jump more than 20 percent to $21.95 in recent months, says company spokeswoman Melanie Gordon-Felsman. That's an indication that customers are choosing more upscale restaurants for home delivery, she says.

Customers enjoy services like Delivery.com because they reduce the hassle of placing an order, eliminating the need to pick up the phone, which sometimes means being put on hold. They also boost order accuracy because patrons can view their selections before confirming them. Restaurants, which are charged a fee, say the services bring them additional traffic and take some of the pressure off in-house staff.

"The time, the gas, the traffic -- people are seeing the value of bringing things in to them," says Gordon-Felsman. "People still want to have a nice meal and feel like they've had a night out."

Delivery.com, which is owned by the investment bank Cantor Fitzgerald, has also seen an increase in weekend volume; more couples seem to be ordering in on Friday nights, while families are taking advantage of the service on Sundays. To capitalize on demand for sophisticated delivery options, Delivery.com has been adding additional choices such as wine, grocery and flower selections, she says. It also has a rewards program for frequent diners.

Mike Evans, founder of GrubHub.com, a rival online delivery service, says he's observing similar trends.

"We have seen more white-linen restaurants signing up for our services," says Evans, whose company handles orders in four East Coast cities as well as San Francisco and Chicago, where it is based. In September, the service will be offered in Los Angeles.

Demand has skyrocketed this year, he says. GrubHub booked $20 million in food orders in 2008 and 300 percent growth in discount promotions and coupon usage over the last year.