Newport Firm Makes Culinary House Calls

Her help was off for the day, she had just had her nails done, and Rae Jean Ryan was hungry. So she picked up the phone.

An hour later, a $60-plus dinner for two was served, and Ryan never had to lift a finger: vegetable-filled spring rolls; Chinese dumplings with a spicy citrus sauce; homemade ravioli stuffed with smoked trout, ricotta and Parmesan cheeses; pan-fried crab cakes with mustard sauce, and, for dessert, chocolate-raspberry torte and a fruit tart.

A miracle, you ask? Well, not exactly.

The credit for Ryan’s fast feast goes to John Pugsley, whose company, Restaurant Express, has turned him into a kind of gastronomic go-between for the tired and tony.

Seven nights a week, Pugsley’s tuxedo-clad waiters roam the Newport Beach-Costa Mesa area, shuttling among the area’s white-tablecloth restaurants and diners who are too weary to go out and don’t feel like cooking. The average price for a dinner for two, according to Pugsley, is a little more than $30.

Eating with ease is what Pugsley sells, and it’s fast becoming a commodity in affluent enclaves throughout the country. In the past two years, other entrepreneurs have hopped on the delivery van, opening businesses with names like Waiters on Wheels in San Francisco, Chef’s Express in Pacific Grove and Gourmet on the Run in Sherman Oaks.

While California has spawned large numbers of these culinary concerns, similar operations are rolling in New York, Chicago, Washington, Houston and Tampa. Their targets: affluent, two-income families in the 20-to-50 age range, with little time and a lust for luxury.

“What they’re doing is satisfying a high consumer demand for convenience that, at the low end, is being satisfied by a Domino’s Pizza,” said George Rice, chairman of GDR Enterprises Inc., a marketing and research consultant to the restaurant industry.

The way Rice sees it, the consumer demand that has driven Domino’s success “isn’t for pizza but is for a quality product in a convenient environment.” He adds: “Over the last year in particular, upscale restaurants have been getting on that bandwagon and taking advantage of it.”

But while restaurant delivery services like Pugsley’s have high consumer appeal, “there is a major flaw in the logic,” Rice contends. Success depends on good service, Rice says, and many restaurants are likely to give short-shrift to the delivery customers if the eateries’ dining rooms fill up.

Pugsley’s was one of the earliest restaurant delivery services and is among the largest and most sophisticated. Waiter-drivers are in constant communication with the company’s Newport Beach dispatch center via shortwave radio.

An estimated $140,000 worth of computer software and hardware keeps menus and orders up to date, and the 36 restaurants involved are connected to the dispatcher via computer.

Customers leaf through a 36-page menu book--mailed to their homes by Restaurant Express--until they find a meal that pleases their palates. Then they ring Restaurant Express and tell the dispatcher from which restaurant they’d like to dine. The dispatcher finds the restaurant’s menu on the computer, punches in the order and sends it directly to the restaurant kitchen by telephone hookup.

Ryan’s repast, for example, came from Trees, a Corona del Mar restaurant. Ryan, a partner in an Indiana oil company, stayed home and ate out all at the same time--for $63.50, plus tip and a $4 delivery charge.

“Mondays and Tuesdays, I don’t have anyone who works for me,” Ryan said, so food preparation is much more complicated. Restaurant Express, she says, “is a convenience and a nice way to entertain people. The service is very good. The help they have is very nice. The only thing more they could do is set the table and do the dishes.”

But service hasn’t always been so smooth. Pugsley, a lifelong entrepreneur and author of economics tracts and tomes, opened Restaurant Express in March, 1987, with an initial investment of $100,000.

The inspiration for the service came to Pugsley as he drove by Rothschild’s, a Continental restaurant in Corona del Mar. His thoughts turned to job opportunities, his recent takeout dinner from the restaurant and the time he had spent “sitting up in the den, enjoying that great food without having to make it.”

“That started me tumbling some numbers around in my mind,” he said, “and a couple hours later I decided there was a major business opportunity in the concept of delivering dinners from the finer restaurants.”

Early Mistakes Common

Corona del Mar was the perfect spot to test his concept, he said, because “there are a lot of affluent people and good restaurants.”

The business boomed in its first several months, but then the problems started. In the fall of 1987, when the service was expanding out of Corona del Mar and into Newport Beach, Costa Mesa and Irvine, Restaurant Express mailed out its first major advertising blitz.

“We ended up having too many orders, more than we could handle,” Pugsley said. “On peak problem nights it took 2 hours to deliver a dinner. When that happened, we gave them (the customers) their dinner free. Of course, we had spoiled their evening.”

Today, after revamping the company’s operations and investing about $400,000 more, Pugsley said the business’s major problems are really minor problems: waiters losing the keys to their cars; restaurants sending customers the wrong dinners; waiters getting lost; dinner landing on the front stairs instead of the dining room table.

But it is just those problems that cause restaurant consultant Rice to pan services like Pugsley’s.

“My professional opinion to people I’ve counseled is that you cannot control the restaurateur” or the end product, Rice said. “The beauty of the restaurant business is that you really interact with the public.”

Through delivery services, the restaurant business is basically reduced to “some kid racing through the street,” he said. And instead of ambiance and service, “the kid gets screwed up and is late and the food gets cold.”

Pugsley, however, disagrees. It is his contention that customers get what they want--fine food and convenience--and everyone else involved makes a buck.

Restaurants increase their profits by, in effect, extending their dining rooms and the number of customers served, he says.

Waiters work for tips and a small salary. And Pugsley makes money in two ways. First, there is the $4 delivery fee. In addition, restaurants give him a 35% discount on the price of the food, while he charges customers the full restaurant price.

Some Restaurateurs Skeptical

“Though we give a discount of 35% of the bill, it’s still a plus,” said Yvan Humbert, owner of Le Biarritz in Newport Beach. “I think we are too expensive for them, but we are still doing business. We gross between $25,000 and $75,000 extra a year because of this. That does help to pay the bills. The chef is already paid; the only thing we have to pay extra for is the containers.”

But not all restaurateurs agree. Phil Crowley, general manager of Five Crowns in Corona del Mar, is considering ending his relationship with Restaurant Express because it’s not making his business any money.

“We serve a high concentration of red meat,” Crowley said. “So there’s not a lot of margin in our items to start with. By the time we forfeit 35% to Restaurant Express, it about wipes out any opportunity for profit.”

Still, Pugsley is working on a $3-million expansion of his business and plans to open outlets in five additional Southern California markets. He said he is in discussion with several venture capital firms for financing.

“We anticipate that in 4 years we will be a $100-million company, making $10 million in after-tax profits,” he said. “There is nothing more convenient than being able to order a fine meal where you want it, when you want it. . . . People who can afford it will pay for that convenience.”

His colleagues agree. Constantine Stathopoulos, president of Waiters on Wheels in San Francisco, says: “Business is very good, especially now with the Christmas season. It’s going berserk; it’s hard to handle it.”