Karen Johnson’s first time was a little difficult, but since then she’s been completely satisfied. Johnson’s husband had seen an ad for Wok on the Web on television, and the two of them decided to try it out for dinner.
Johnson, a Takoma Park resident, placed her first order with the Rockville-based company, but something went wrong. “I’m not sure what happened, but my order didn’t go in,” she said.
Her phone number was all that went through, so Rick Forman, a former Potomac resident and CEO of Wok on the Web, called Johnson directly and took the order by phone. Then when the food came, it was not what she’d ordered. “Everything was delicious, though,” she said.
“Everything that could have gone wrong with her order, did,” Forman said. He refunded her for that meal, and Johnson has been returning to Wok on the Web since.
The idea for a Web-based Chinese delivery service occurred to Forman several years ago. “I’ve been working on this for a lot of years,” he said. The company actually opened up in January, and just started an advertising campaign in mid-March.
After looking at the Chinese food market, Forman realized that there was no one, large national brand. “There’s no major player in Chinese food. “It’s really an industry of mom and pops,” he said.
He compared Chinese to pizza, which he says is the only type of food which is delivered more often. In pizza, his research showed that most of the market is small businesses while major chains like Dominos, Pizza Hut and Papa John’s take up about 40 percent of the market. In Chinese, there aren’t any large companies to deal with – although locations like P.F. Chiang’s and Big Bowl are emerging, neither offer online delivery. “So we realized there’s a lot to work with,” Forman said.
Currently the company only operates in Montgomery County, Md. And they focus their advertising there. “If we could get 5 percent of the households in Montgomery County to order once a month, we’d be doing great,” Forman said.
The business model involves low overhead for Forman, he operates a few Web servers and when people log on, they place their order on the site. The company gets an e-mail of the order, and a fax is sent to one of 21 affiliate restaurants across the county. “We use existing restaurants,” Forman said. “So, even for the existing restaurant, because they’re already established, anything we give them is profitable for them.”
A typical Chinese restaurant in a suburban area such as Olney, Md. or Leesburg, Va. could have 50 deliveries in a day, Forman said.
Each of the affiliates is given an exclusive territory for their deliveries. “It’s actually been helping quite a deal,” said Ping Wang. Wang’s parents own and operate one of the affiliate restaurants which serves Rockville and parts of Potomac. Wang’s restaurant usually gets five or six orders per night through Wok on the Web, mostly at dinner. He noted that Potomac residents are typically good tippers.
Forman points out that it may not be just an increase in market share that the restaurants experience, but may actually help them to preserve it if they end up delivering to what had been their own customers.
Pricing is standardized on the Web site. Forman says it is an industry average which may be slightly above or below normal, depending on the location. “For Potomac, we may be a bit low,” he said. While he does not plan to start a more dynamic pricing model in Montgomery County, he may make the menu more receptive to the different areas.
For each transaction which is processed through Wok on the Web, Forman takes 10 percent. He then takes an additional five percent for advertising.
While that may seem like a lot in a business notorious for its razor-thin profit margins, Wang says that his restaurant is still able to turn a profit on each order. “The size of the orders are usually pretty big,” he said.
Wang also finds it helpful that his restaurant will get some benefit from the advertising, something which he could not do on his own. “It costs less to advertise that way, and you don’t have to do the advertising,” Wang said.
Forman’s background is in advertising sales for Comcast, so he understands how that market works. “If you put 20 together, it’s kind of like forming a consortium,” he said.