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Why Aramark entered the online services biz

Technology supporting online ordering is gaining traction among restaurant chains, but for a different take on the use of such systems, consider the SeamlessWeb Professional Solutions division of Aramark Corp.

The Philadelphia-based foodservices and facilities management contractor in June 2006 paid millions of dollars for fast-growing SeamlessWeb of New York, a services company supporting online ordering and Web-based spending management. Aramark’s Kristine Grow said SeamlessWeb now “serves more than 1,000 enterprises, 2,000 merchants [primarily restaurants] and several hundred thousand consumers” in New York, a number of other U.S. cities and London.

The acquisition of an online company by a foodservice contractor may seem unusual, but there are a number of ways Aramark may benefit from the move.

For starters, SeamlessWeb generates a new revenue stream for Aramark by connecting restaurants looking for more takeout sales with companies that provide meals for employees who work late or need catered food. Among the targeted clients are law and financial services firms, pharmaceutical outfits, and broadcasting companies.

SeamlessWeb’s directory of affiliated restaurants is found at . Its software permits employees of client companies to browse among menu offerings and view estimated delivery times. Spending limits and other business rules designated by the employer are enforced through the underlying technology.

To use SeamlessWeb, an employer pays “a nominal” per-transaction fee, the service provider said. Sources at SeamlessWeb say the firm not only enforces spending policies, but also reduces a client’s overhead by consolidating meal bills, providing activity reports and supplying related data in a form usable by enterprise accounting packages.

Participating restaurants receive their SeamlessWeb-generated orders via a dedicated fax machine or browser-equipped personal computer with printer. They pay SeamlessWeb an undisclosed percentage of related sales. SeamlessWeb reports that operators “typically” sign a multiyear agreement obligating them to meet service standards and work with the company as their exclusive online services provider for delivery, takeout and marketing.

SeamlessWeb handles accounting, sending restaurants a single check covering all their transactions during a specified period.

Todd Nakasato, managing partner of Mac-War Restaurant Corp., operator of the 50-seat Hakata Grill in New York, said takeout and delivery sales have grown, year over year, each month since his group teamed with SeamlessWeb four years ago. Today, SeamlessWeb each month channels more than $100,000 in takeout orders to his restaurant, where such business is more than half of total sales, he said.

“We consider it much more than a technology company,” Nakasato said, which passes along hundreds of orders daily during the workweek. He said just one employee is needed to work the SeamlessWeb PC station in Hakata Grill, compared to the four or five bodies and multiple phone lines needed to field an equivalent number of orders from callers.

Some operators might cry foul over SeamlessWeb’s lack of integration with point-of-sale systems, but not Nakasato. Besides providing labor savings and supporting better service, SeamlessWeb “is a good deal” from a marketing point of view, he said.

SeamlessWeb touts its services as ideal for companies that want to better manage food spending and accounting but are too small to support in-house foodservice operations.

Late last year, the seven-year-old company began augmenting its employer-based business by connecting affiliated restaurants in selected markets with individual consumers.

SeamlessWeb gives Aramark yet another revenue stream by selling its Web-based platform as a management tool for companies with self-operated or contracted foodservice operations. Aramark can sell SeamlessWeb’s functionality as a value-added service to existing contract clients or book revenue from companies with internal foodservice divisions or sites managed by Aramark competitors.

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