Restaurants on the Run Gobbles Up Rival

Restaurants on the Run, the largest restaurant delivery service in Orange County, said Monday it agreed to acquire competitor Galloping Gourmet of Laguna Beach for an undisclosed sum.

The deal marks the second acquisition this year for the fast-growing Lake Forest company, which delivers meals prepared by local restaurants to people’s homes. In Orange County, Galloping Gourmet works with about 70 restaurants and adds Laguna Beach, Dana Point, Laguna Niguel and Newport Beach to Restaurants on the Run’s delivery area.

The company already delivers to Costa Mesa, Irvine, Tustin, Santa Ana, Orange, parts of Newport Beach, much of South County as well as Woodland Hills and some of San Diego County. All told, Restaurants on the Run buys meals from more than 230 eateries in three counties at a discount but charges customers the regular menu price. The company, which serves about 75,000 customers a month, also charges a delivery fee of $3.99 for lunch, $4.99 for dinner.

Restaurants on the Run had only six restaurant clients when it was founded in 1993 by brothers Michael and Anthony Caito, who are now chief executive and vice president of corporate marketing, respectively. The third founding partner, Matthew Martha, also is a marketing vice president.

The company made Inc. magazine’s 1999 list of the 500 fastest-growing small companies in America, checking in at No. 359.

Buying its rivals has been Restaurants’ chief growth strategy, Martha said.

“Rather than having to go in and start on the ground floor and build, it’s easier to already have a database of customers as well as a relationship with restaurants in that area,” Martha said. The company expects revenue to grow about 44% this year, to an estimated $7.5 million.

Galloping Gourmet owner James Benjamin could not be reached for comment Monday. Martha said Benjamin and another manager won’t be joining Restaurants on the Run, but its 20 drivers will join Restaurants’ fleet of 100 drivers.

The company’s growth comes as consumers are increasingly strapped for time, said Randall Hiatt, president of Fessel International, an Irvine restaurant consultant.

“People are obviously looking for more variety than the original take-out and delivery food of pizza and chicken,” Hiatt said. “They are more willing to pay for restaurant-quality food than to buy prepared food at the supermarket.”

Restaurants come out as big winners through the arrangement.

“They sell food to customers who don’t want to come to the restaurant but know and like their food, and they have an empty seat to sell to someone else,” Hiatt said.

The acquisition is Restaurants on the Run’s third. It acquired San Diego-based Dine and Dash in 1998 and Laguna Niguel-based Good to Go in 1995.

The company plans to continue growing by acquiring more of the dozen or so delivery companies in Southern California, Martha said.