Hello,

I am planning on starting a website that will enable people at home to
come to my website, look up all the restaurants in my area, and order
online from them.  I am only going to do it locally because i do not
have the finances, and i know there are other websites that do the
same, such as Seamlessweb.com.  I have a few questions.

First, if i am planning on taking a percentage of the amount of food
purchased from the restaurant off my website, what do most websites
that do this charge?  And what do you think would be the optimum price
for gaining popularity withing the restaurant community?

Second, if i must pay 2.9% + 3 cents per transaction to paypal, and if
currently only have one restaurant, how much money of food would i
have to sell from my site to make a profit?  If i only sell 10$ per
transaction, and lets say keep 2% of that for myself, then i would
have to pay paypal 30.0058 cents, but i am only making 2 cents off
that transaction.  Also, is there another cheaper alternative to PayPal?

Third, Would it be wise to charge customers a flat fee for a
transaction, and if so, what would be a typical surchage be for the
service?

Lastly, What website host do you think i should use based on price,
flexibility, and easiness to operate?

Thanks so much for your help!

---

Clarification of Question by msbyanks-ga on 28 Apr 2006 18:11 PDT

You do not really need to answer the second question, as it is only
math and i figured it out.  Also, in another question someone asked,
"what is the average number of transactions per restaurant that an
online food service would process?"
That would be an extremely helpful thing to answer if you can (i dont
know if there is any info out there) and i would happily give a tip
for it...

---

Request for Question Clarification by sublime1-ga on 28 Apr 2006 20:40 PDT

msbyanks...

If I remember correctly, the last time I used a similar service
that allowed you to order by way of a fax service, the service
added an amount in the neighborhood of a decent tip. In other
words, for the convenience offered, the service added something
like 20% to the cost of the meal. The 2% you're projecting seems
too small, and much less than the market would happily accept.

Also, some restaurants may opt to offer certain online specials
via your site. You might be able to negotiate that they pay you
a fee amounting to half the difference between the full price
and the discounted price, and then have the customer pay you only
10% on top of the discounted price. That way, both the restaurant
and the customer are paying you. After all, you're providing a
service to both of them - though that might complicate the
accounting somewhat. Since Seamless has restaurants offering
a 20% discount on first-time purchases, it seems to me that
they're probably using some sort of arrangement of this type.

Let me know your thoughts...

sublime1-ga

---

Request for Question Clarification by sublime1-ga on 28 Apr 2006 20:46 PDT

Another thought that occurs - you're talking about $10 per
transaction, while I believe that services such as this
(and the restaurants themselves) protect themselves from
small orders by setting a minimum amount for the amount
which can be ordered for delivery in this way. A $20-25
minimum should save you a lot of headaches, and many 
customers will happily comply, and store the excess for
a later meal.

---

Clarification of Question by msbyanks-ga on 29 Apr 2006 09:02 PDT

Ok, so i do not want to charge to much for the restaurant, because i
want it to get around fast on my local scale and i do not have that
much time as i am in school.
But, do you think it would be possible to add an extra 1$ flat fee for
the costumer when they order, and that will cover my paypal, and then
charge around 5% of the transaction to the restaurant?  I do not want
to make it that confusing for the costumer so charging a % of their
transaction might get them confused.
Also, i never thought about the online specials...good point.  I could
just charge the costumers fee (surcharge like above) at the same
discount as the meal the restaurant is offering.  So if they offer A
10% discount on a hamburger, my costumer will pay that to the
restaurant, but only pay me 90 cents instead of a dollar.  I think you
might have been gettin at that, just was a little confused...

---

Request for Question Clarification by sublime1-ga on 30 Apr 2006 12:38 PDT

msbyanks...

I'm wondering if you could specify what further information you
might need, in relation to the initial question, that might be
posted as a formal answer so that I can earn a fee.

As for website hosts, I've had limited experience with them, but
GoDaddy is the hot ticket right now, and seems to be providing 
a good experience for their customers.

GoDaddy
http://www.godaddy.com/gdshop/default.asp

sublime1-ga

---

Clarification of Question by msbyanks-ga on 30 Apr 2006 17:45 PDT

Sorry, this is all i need...then you can do an answer...
Do you think it would make good business to add a 1$ flat fee to the
costumer when they purchase from my website, and charge the restaurant
3-5% of their meal also?

msbyanks...

Thanks for confirming that you've received what you needed as an
answer. I'll repost my input here, for the sake of future readers.

-----------------------------------------------------------------

If I remember correctly, the last time I used a similar service
that allowed you to order by way of a fax service, the service
added an amount in the neighborhood of a decent tip. In other
words, for the convenience offered, the service added something
like 20% to the cost of the meal. The 2% you're projecting seems
too small, and much less than the market would happily accept.

Also, some restaurants may opt to offer certain online specials
via your site. You might be able to negotiate that they pay you
a fee amounting to half the difference between the full price
and the discounted price, and then have the customer pay you only
10% on top of the discounted price. That way, both the restaurant
and the customer are paying you. After all, you're providing a
service to both of them - though that might complicate the
accounting somewhat. Since Seamless has restaurants offering
a 20% discount on first-time purchases, it seems to me that
they're probably using some sort of arrangement of this type.

Another thought that occurs - you're talking about $10 per
transaction, while I believe that services such as this (and the
restaurants themselves) protect themselves from small orders by
setting a minimum amount for the amount which can be ordered for
delivery in this way. A $20-25 minimum should save you a lot of
headaches, and many customers will happily comply, and store the
excess for a later meal.

-----------------------------------------------------------------

As for adding a flat fee to the customer's bill, again, as a
consumer, I, personally, would not have a problem with that, or
even a larger amount, equivalent to the cost of tipping a wait-
person. Keeping in mind, however, that the customer will be 
paying the restaurant's delivery fee of $1-2. plus (hopefully)
a tip for the driver, and you may want to limit your fee so
that the TOTAL amounts to a 15-20% tip, so a $1 fee might make
good sense.

On the other hand, the companies that are actively engaged in
this business model are stating that they add NOTHING to the
cost of the meal, which suggests that they are obtaining their
fees entirely from the restaurant. 

One of the oldest of such companies is CampusFood.com:
http://www.campusfood.com/default.asp

One of the newest is EatNow.com:
https://ssl.eatnow.com/index.cfm

Both, however, cater to college students, and have a $7-10
minimum order. In catering to the population of adult citizens,
I would think you could change the dynamics and add a surcharge,
as well as increasing the minimum order to a higher figure.


Both of these are modeled after the hugely successful CyberMeals
company, which is no longer available to the general public, but
which is discussed at length in this article from BusinessTown:

"Cybermeals is a free service for Internet users, and a way for
 restaurants to make money they would not otherwise make. First,
 the customer types in some basic information to see a list of
 the restaurants in his or her neighborhood. Then, there is a
 choice of cuisine types and a selection of price ranges. After
 choosing a particular restaurant, the menu appears on screen
 and the order can be placed. Cybermeals processes the order
 and sends it in to the restaurant. Once the order is placed,
 Cybermeals sends the customer an e-mail verifying the order
 and delivery time. The customer can then go pick up the order
 or sit back and wait for the restaurant to deliver it.

 Customers can order meals up to ninety days in advance. They
 can also save their favorite orders online so they can order
 even more quickly in the future. If for any reason an order
 cannot be filled, Cybermeals? twenty-four-hour customer
 service center will phone the consumer immediately and
 suggest another restaurant.

 Once a restaurant registers with Cybermeals and links to their
 Web site, it pays Cybermeals 10 percent for each order that
 comes through. For Cybermeals, this translates into five to
 sixty cents per order?piling up twenty-four hours a day seven
 days a week. The Cybermeals system automatically tracks all
 orders received through the site, calculates the commissions
 due, and sends a quarterly check to each restaurant. Restaurants
 do not need a computer or access to the Internet to participate
 with Cybermeals. Instead, computer orders are converted to fax
 (which includes maps and driving directions) or a digitally
 synthesized ?voice? that phones in the order."
Much more on the page: 
http://www.businesstown.com/internet/profile-three.asp


Here's EatNow's pitch to restaurants:
https://ssl.eatnow.com/restaurants_info.cfm

And here's CampusFood's:
http://www.campusfood.com/feedback/restaurant-owners.asp


So the trend seems to be that of pitching to the restaurants
about the added exposure they'll receive, the additional orders
they'll receive from internet users who would otherwise never
hear of them or have access to them, and, in some cases, the
creation of a website for them that showcases their menu and
allows them to make changes, with training for the employees,
as needed.

However, if you want this to remain a simpler operation, you
won't be offering 24 hour customer service by telephone, or
offering personal training to restaurant employees, so how 
much you charge the restaurant should be in accordance with 
what you are actually offering in terms of increased sales.


As you can see by exploring both of the sites in operation,
they also take payment via a variety of credit cards, rather
than limiting their business to those who can use PayPal. I
think this would be well worth very serious consideration.


Best of luck in your venture!

sublime1-ga


Additional information may be found from an exploration of
the links resulting from the Google searches outlined below.

Searches done, via Google:

"restaurant service" "home delivery" "order online"
://www.google.com/search?q=%22restaurant+service%22+%22home+delivery%22+%22order+online%22

cybermeals
://www.google.com/search?q=cybermeals

Cybermeals, Inc
://www.google.com/search?q=Cybermeals%2C+Inc

a lot of information and insight...a lot of help thanks!!

My feeling is that your business plan needs revising.

As Sublime pointed out, few people will deliver a $10 order

What is your 'product offer'
- do you consider ordering online an advantage over the telephone
- are you offering a 'fast food directory'
- do you consider handling the payment an advantage to the consumer
- do you consider handling the payment an advantage to the restauranteur
- do you consider you taking the order an advantage to the vendor
- are you selling a credit card service to the vendor
- are you selling an advertizing/promotional service to the vendor
- are you saving the vendor telephone hassle

People don't much like paying surcharges, so my bet is that you'll
need to get your slice from the vendor.

How do you plan on handling late delivery and disputes ?

The vendor has to handle the delivery, so the delivery person could
take payment, possibly the vendor wants pre-payment, so you might have
something of value there.

You have to find a way of passing orders to the vendor, fax, or direct
to a computer (Email sucks for this). My guess is that you would need
to set up a web link - the vendor would need a dedicated computer -
with printer.

I can see that the vendor would save telephone hassle, that might be a
real advantage as it could save a member of staff - also, the
telephone line would not be 'blocked' while orders are being taken.

You could also sell the concept as avertizing to the vendor, they
could put up special offers - and the online 'menu' could be a selling
tool.

You also need to set up a system where the vendor can turn off items
fast, and themselves, if they are running low on stock.

For the consumer there is the advantage of not having to go through
the hassle of giving name, address etc - also possible language
complications.
They might like the idea of you handling the credit card bit.

Also, once they get used to it, your site might be 'easier' than
rummaging through a pile of brochures/menus.

You are going to need to be pretty good at web design, also you'll
need some bespoke software written to handle the vendors side
- they need something that churns out the orders and the ability to
update their menus (at very least remove/disable dishes).
- Ideally they should be able to design their menus (well fill in a template)
- not difficult, but it needs setting up

Personally I would go for 10% from the vendors, with a 'rebate' if
they go over a certain sum - possibly 3% rebate. They know about
credit card costs and their margins should be pretty high.

You also need to find a local computer supplier who will be your
'recommended' vendor of kit - and even more important - maintainer of
kit. Probably he should think about renting the kit to the restaurants
(don't get involved in that - at least until the business is stable).

You are going to need a good Windows (? hmm) programmer to write the
software for the vendors machine (it could be Web based, but that
would probably be clumsy). The system would have to be very simple to
use.

Personally I would have the 'static HTML' on someone elses server,
with the server that does the calculation and onward transmission on
my own premises.
I once wrote an insurance quotation system that worked like that, it
was fine on a leased line and (due to relocation) is now Ok on a DSL
line.

The base local machine is a reasonable server-standard PC running NT
Client, I'm not sure which web server software they are now running
(wrote one but we found that O'Reilly's WebSite1 was perfectly
adequate).

You are also going to need someone running around photographing
dishes, food photography is not as simple as one might believe.

If you get this going, then I think that the 'killer income' will come
from franchising the system to other people in other cities, the setup
costs are not horrendous, but there are quite a lot of things that
need to be got right, to avoid a complete fiasco.

I've just had another thought, with a little ingenuity you could have
an online status of order display. Not very difficult as you need two
way communication with the restaurants.

I would have my website, and maybe a password protected page for the
restaurant, so they can update it when they want...most of my local
restaurants have computers.
But couldnt i just set up a direct line to their fax or computer? So
when someone orders, the money goes directly to my account, and i
handle the money, but the order goes directly to their printer?

Look, given you are young

- why not set up a web site the describes the restaurants (both take
away and eat in)

It is guaranteed that somebody smart will either try to take over your
idea, or go in with you.

Probably the first step is to register www.fastfoodin[saltlake].com
and then produce a simple list of vendors.

You can get that from Yellow (or White) pages
You have something on the web - you have a rudimentary product

You then sell the idea of personalized pages to the vendors.
- you link to their home sites, or even better, you host their sites
- you still have static web pages

Build it up slowly, level by level, visit your clients, show them
their sites and explain that $100 would enhance it
- and that you want to go for the big one
- shutting down that darn telephone

At first give their name and telephone number
- then scan their menu
- then scan food - as I said before that is tricky, but the punters
will understand - especially if you use a lap top and olive oil.

They are listed as default
- extra stuff they pay you for - not much, but they must pay
- one of them will finance you, give him 20% for 100% finance

Build up a local Mafia, the automation will follow on.

Some years ago I had a similar idea, but it was less targeted than
yours, on balance - I reckon you have something that will work.

The restaurants i visited do not have websites, and i dont really have
a way to make a website for each of them...
So if they just put what they want on my (1) website, and i have
unlimited space, that could work...

That's more like it, you are getting the idea.

You have one web site that you own, you have a main home page that
provides links to restaurants by type, by area, by name etc

Each restaurant has its own directory and a few pages of HTML
- in effect, the restaurants all have their own web site, but it is
really just a section of yours.

If I were you I would design a number of very standard layouts, rather
than highly tailored layouts for each restaurant.

The addresses would look like: www.fastfoodinseattle.com/sungyi.htm

You could find someone who knows a bit about PHP and/or setting up web
sites (maybe you) to make the 'addresses' look like :

www.sungyi.fastfoodinseattle.com

I would play around designing a couple of sample sites so that you
have something to show your clients before talking to them in any
depth.

Incidentally you can buy web addresses and have them directed to your
site, but I would not do that, you want to set up a 'portal' that you
own.

Take it steadily, step by step.
- the more I think about your idea, the more I think that it is viable.

msbyanks...

Thanks very much for the rating and the tip!

Best regards...

sublime1-ga