Point. Click. Pizza is on the way

Point. Click. Wait for the pizza to be delivered. That will be the future of restaurant delivery and pickup if Food.com has its way. The company, which rolled out its services in 11 major metropolitan areas with a marketing blitz this week, is riding the front of what many say is the newest trend on the Internet -- taking the World Wide Web and making it local.

"The Internet as a whole, it kind of went from this national play where people didn't know what it was but they thought it was cool, to now where people want to see local content -- they see it more as a tool than as entertainment," said David Gilcreast, Food.com's director of communications. "The Internet, at least the major portals, I don't think they're there yet."

Tapping into a juicy market
Gilcreast hopes Food.com can beat them to the punch. The idea is simple. The company puts menus from local restaurants -- currently concentrated in cities such as New York, Chicago, San Francisco, Seattle, Atlanta and Washington, D.C. -- on its Web sites. Users click on the food they want to order, and the restaurant makes it and either delivers it or holds it for takeout.

Food.com doesn't charge the customer. Instead, it charges each restaurant a $400 setup fee, then $50 a month and 5 percent of each order taken from the site, said Gilcreast. In the future, the company plans to also make money from offering ads and selling specialty food groceries.

The payoff could be huge. The company is salivating at the thought of tapping in to what Gilcreast said is the $126 billion a year takeout and delivery industry -- nearly half of the $300 billion made by restaurants and food services.

"When you look at it, it dwarfs the book and music business," Gilcreast said, taking a swipe at e-tail giant Amazon.com.

But Amazon is eyeing the trend as well, and recently bought a 35 percent stake in HomeGrocer.com for $42.5 million. HomeGrocer, which has also attracted money from Netscape founder Jim Barksdale, is one of a handful of companies vying for a slice of the $440 billion supermarket industry.

More than what you eat
It's about more than just food. It's also movie tickets, real estate, health care and cars, said Regina Lewis, spokesperson for America Online, which sees all those items as among the top beneficiaries of its Digital Cities local Web sites.

"If you look at the big picture and make the case that the Internet is becoming an integral part of people's lives, it's a natural extension," said Lewis.

The driving force behind e-commerce is convenience, Lewis said. And that force gets stronger the more it becomes local, she added.

"Way back when, we thought that entertainment would drive the Web --we found that bombed," she said. "The killer app is Internet planning. It filters right down to the local level. And the more you drill down to local, the more that convenience factor increases."

Cella Irvine, general manager of Microsoft Sidewalk's New York region, said the Web can offer the perfect combination of information that is specific to a locality and information that is universal -- and put them in the same place for consumers. (Microsoft is a partner in MSNBC.)

"A lot of these decisions, like buying a dishwasher, are the same whether you live in this Manhattan or Manhattan, Kansas," said Irvine. "But you're not likely to purchase them today from the same place."

One thing every Web site wants to be is "sticky" -- that is, keep people on the site longer and have them return more often. Stickiness and page views are the key drivers of advertising dollars.

"You don't have to be Will Hunting to see that the more relevant the content, the more page views a site can generate," said Kenny Pate, local product manager at Excite. "Local content, if it's done right, is among the most sticky content available."

Not an easy sell
But going local has its pitfalls. For Food.com, one of the difficulties has been dealing with an industry that is notoriously un-wired. Since most restaurants don't have computers, the site couldn't simply tap into restaurant ordering systems. So Food.com faxes the orders to restaurants -- at least those that have fax machines.

"There are 620,000 restaurants in the country and only half even have a fax machine," said Gilcreast. "Of that half, only 10 percent have fax machines anywhere near the kitchen."

The company had to set up an automated call system to phone in the orders to any of the 12,000 restaurants they’ve signed up that don't have a fax machine.

Taking on 'mom and pop'
Another hurdle has been signing up the restaurants, mostly "mom and pop" organizations.

"When Amazon.com and CD Now went out, they cut deals with six dealers and had every book service nationwide -- there are 620,000 restaurants," he said.

So Food.com has taken the low-tech method of wearing out shoe leather, sending a fleet of 60 sales people out literally door-to-door to sign up restaurants.

They needed the restaurants before they could get the customers. And that involved convincing restaurants -- which were naturally suspicious of technology -- to sign up to a service that didn't exist yet.

"It's a chicken and egg scenario -- it's kind of hard to get restaurants when you don't have consumers, and it's hard to get consumers when you don't have restaurants," said Gilcreast.

It has taken the site, which launched in December 1996 under the name Cybermeals.com, more than two years -- and two management teams -- to get to its current level of service. The company is now headed by former Disney Studios and Paramount Television exec Rich Frank, who is CEO and an investor in the site. (Other investors include venture capital firm Accel Partners and Chicago Tribune Ventures.)

Advertising and promoting Food.com also posed a problem. As an Internet company, it naturally looked to the portal sites first, signing deals with AOL, Lycos, Excite and Yahoo to the tune of $54 million over four years.

"What we found out fairly quickly was, it wasn't working," Gilcreast said. "We had in essence national exposure on these portal sites for what was a local business -- even a neighborhood business... Offline advertising is just more effective. Period."

The company backed out of all the deals: Gilcreast says Excite and Lycos -- which he stresses "were good partners to work with" -- let the company cancel without a penalty. The Yahoo agreement was year-to-year and was allowed to expire. And Food.com re-signed a six-year, $20 million advertising deal with AOL to be on its local Digital Cities sites.

For all the roadblocks Food.com faced in going local, the company may have had it easy. Food.com only acts as a middleman for the transaction, leaving the delivery to the restaurants. It didn't have to deal with the hassles of things like maintaining inventory or hiring delivery drivers.

One of the biggest challenges in going local is that the world of small businesses simply moves slower than the online world, said Lamonte Rhoades, vice president of channel alliance at PowerAdz.com, which has taken a local approach to the Web by putting local newspaper classified advertising on the web, doing local Internet auctions and making online sites for community newspapers.

"They're a herd of elephants, and if you get the herd marching down the same path, it becomes a tremendous force" said Rhoades. "But to get those elephants moving in the same direction takes a long time and a lot of work."