Glen Steele was a 29-year-old actor picking up rent money by making deliveries, when he decided it was time to settle down.
Steele grabbed a pencil and paper and started running a restaurant delivery service from his home. To his surprise, Cuisine to You was generating nearly $1.5 million in annual revenues within a couple years. But success caught the overnight entrepreneur unprepared for managing a full-blown business.
As it grew, Cuisine to You no longer had the infrastructure it needed to operate effectively. Worse yet, Steele took a step back from the day-to-day operations because he was unwilling to give up his dream of becoming an actor, leaving many of the daily decisions to someone else.
Five years later, Steele has learned plenty of valuable lessons. After retrenching, he has rebuilt Cuisine to You, investing in technology to help the company run more cost effectively and setting the stage for future growth.
“Our growth was fast, but at the same time, we would be bigger today if I hadn’t mismanaged the business,” Steele said candidly. “I didn’t know what I was doing. Here I was an actor, and I go in two and a half years to a business of over $1 million when balancing my checkbook was a challenge.”
Cuisine to You operates on a simple premise: Working couples don’t have the time or inclination to cook at home for their families, and they’d rather pay a modest fee to have dinner, not just fast food, delivered to their door. Further, businesses often want lunch delivered to the office and don’t want to send an employee out to get it.
“I think they’re great,” said Jennifer Ahlquist, who works in radio promotions at Hollywood Records, a frequent Cuisine to You customer. “We order from them every Monday and Tuesday because we’re too busy to step out of the building. It’s prompt and courteous, and there’s all different kinds of stuff, so we never get bored.”
Inside the business
Studio City-based Cuisine to You has agreements with about 15 different restaurants in the San Fernando Valley, ranging from The Good Earth to Cha Cha Cha. Customers can order from one or more of the restaurants, and Cuisine to You collects a $5 service charge for each restaurant from diners and a percentage of the meal check from the eatery.
The tab for lunch orders, popular among many of the major film studios in the Valley, averages about $70. For dinners, it is about $40.
Steele got the idea for the service from another restaurant delivery company where he worked in Beverly Hills. Not wanting to compete directly with his former boss, he decided to open up shop on the other side of the hill, serving a territory that runs roughly from Burbank on the east to Encino on the west, and from Mulholland Drive to Victory Boulevard.
At first, growth was extremely rapid: from $93,000 in revenue in 1994, the company jumped to $1.4 million in 1995.
By 1994, Steele had computerized the business, enabling him to cut in half the amount of time it takes for processing an order. The computer program tells order-takers instantly whether a menu item has been discontinued, if the price has changed or if soup or salad comes with a meal. It can also provide an accounting of what customers owe to each restaurant.
With business booming, Steele expanded the company’s territory to include Pasadena and Brentwood. But with each of those additions, he had to set up new call centers with new equipment, staff and phone numbers. The more he expanded, the higher his cost structure, and costs were eating up the company’s profits.
“I didn’t put enough money back into the business to facilitate the growth,” Steele said. “I let it grow by itself.”
Several years ago, Steele took stock of the business and realized he needed to make some changes. He closed the Brentwood and Pasadena offices, added an 800 number and began developing a Web site. He also returned to managing the business full-time.
Revenues declined, largely because of the closures, but Cuisine to You was earning more money on the business it did generate. “Instead of trying to see how big I could get, I restructured to see how profitable I could be,” Steele said.
The 800 number enables Steele to operate with one call center in one location instead of setting up offices to cover each new territory.
“I can basically go into another market at one-third the cost I could before, and give it a year to grow with virtually no cost,” Steele said. “Before, every time I opened a new market, it was like opening a new business.”
Going online
The company’s Web site, www.cuisinetoyou.net, went live several weeks ago. Customers can use the site to peruse the menus and call in or fax their orders, or they can handle the whole transaction on the Internet. If a customer orders on the Web site, a hard copy of the order automatically prints out at the call center.
With the new structure and systems in place, Cuisine to You opened a second location in the South Bay, where the restaurant selection includes McCormick & Schmicks, Tequila Willie’s and Soleil. Steele would like to open an additional two locations in the next year.
Each location, which delivers to an area with a radius of about five to seven miles, has a revenue potential of about $2 million a year. And Steele expects that by 2003, the company will generate $7 million in sales.
Some challenges to profitability remain. Cusine to You can’t increase its service fee to customers without running the risk of jeopardizing its sales because it is competing with restaurants that offer free delivery services, yet it’s hard to maximize profits at only $5 a delivery.
“We don’t want them to feel that to use us they’ll have to pay such a premium that they’re getting ripped off,” Steele said. “At the same time, if we go too high, it does open us up to competition (from cheaper or free services) as well.”
Although it is too early to tell, Steele hopes that new Internet grocery delivery services like Kozmo.com and HomeGrocer.com will help build his business because, while they don’t directly compete with Cuisine to You, they are helping to make the idea of home delivery more familiar to customers.
