Are you searching for the perfect recipe to start your food ordering and delivery business? After years of experience running a physical restaurant, your current concern is how to achieve the same success online? Or, if you want to start your journey as a food business owner online, this blog is surely for you.
With our years of experience in the food industry, we know the concerns and challenges entrepreneurs have to deal with in starting an online food ordering service or business in the initial phase. So, in this detailed guide blog, Here We will cover all the topics to solve your doubts and queries.
As an entrepreneur, you may ask the first question: Is the food delivery business profitable? Let us see some facts to get the answer to these questions.
As per statistics, 56% of U.S. food-brand websites get traffic from search engines. With the increasing usage of smartphones, people rely more on food delivery mobile apps for ordering food.
57% of millennials prefer ordering food online to watching movies and TV shows at home.
60% of restaurant operators experienced a surge in sales or food orders when they started offering food delivery services.
The popularity of online food ordering and delivery is on a constant rise, and the demand for online food delivery systems too. Adopting the latest technology to stay competitive and sustain in the long run is important.
The online food ordering systems automate the process of order booking. Now the restaurant staff can get the food orders on their smartphones and can save time spent otherwise on attending calls for order bookings. It reduces the chances of errors and offers customers a better experience.
So, now you know why you should invest in a corporate food delivery business. Next, we will understand the various food business models.
What are the best Online Food Delivery Business Models?
There are different food business models which you can choose as per your budget and target audience. They vary depending on the services you offer to consumers. Let us have a look.
Aggregator Business Model
We all order food from food delivery apps like Swiggy, Zomato, and UberEats; these are aggregator models of the online food delivery business.
They allow multiple restaurants to register on the aggregator platform and operate as a single service. Customers get the benefits of discovering new restaurants and ordering from multiple restaurants using a single app. Thus, it acts as a bridge between customers and restaurant owners.
More big names in the aggregator business models are JustEat, Delivery Hero, and Talabat. The growth and demand of the aggregator model are exponential. So, if you too wish to start a food delivery business like UberEats or Swiggy, you can go for the aggregator business model.
As a startup or a small business owner, if you are concerned about the huge initial investment, you can try the subscription model. You can get your ready-to-launch food delivery app and pay a monthly fee. To choose the best food ordering system for your restaurant, you must first know your business needs, the features you want to serve, and your customer demands.
The Order and Delivery Model
In this food business model, food business owners hire or collaborate with a third-party service provider for food deliveries. The delivery service provider can be a logistics company or restaurant or collaborate with food aggregators like Dunzo, Swiggy, or Zomato. Since the delivery is in charge of the third-party provider, they fix the delivery charges on food orders.
If you don’t want to invest in a delivery fleet, this model is apt for you as a food business owner. You can partner with a courier or logistics company to manage food deliveries. The delivery providers take responsibility for timely and efficient deliveries.
One drawback of this model can be the coordination with the delivery agents. If you have your delivery service providers, you can train them or connect with them anytime for urgent or important deliveries.
Order Only Model
Popular online food delivery company like Delivery Hero, JustEat follow the Order Only model. Under this model, the platforms allow food ordering only and not the delivery services.
The food business owners invest in this model to increase their customer base. They can be visible among users for online orders and increase food sales.
Under this model, customers can place online orders through the web or mobile app. Restaurants receive the food order requests online, but for deliveries, they have to rely on their own delivery fleet.
Cloud Kitchens
The Cloud Kitchens are immensely popular these days, and we often hear about them. Cloud Kitchens do not have physical existence or entity. They do not allow dine-in and takeaway services. People order food online, and cloud kitchens deliver them to their homes. Thus, they do not need a prime location or fancy decor for their setup. They can even run a cloud kitchen from home.
Entrepreneurs can save huge investments without needing a physical restaurant setup. So, it can be a good choice for startups or those who want to start their business with minimal investment. Also, it has lower operational costs to restaurants, comparatively.
Another profitable model can be a meal prep business, where you can deliver prepared or cooked meals to individuals at their homes. You can keep static or dynamic menus for people to choose. It is also affordable as you can start from your home.
Once you are clear on your food business model, you would like to know how you can start a food delivery service? So, let us see the detailed steps and tips for starting your own food delivery business.
Steps to Start A Food Ordering & Delivery Business
Delicious food and cooking skills are the essential prerequisites to starting a food delivery business but not the only skill. You require a well-thought restaurant business plan, market research, budgeting, technology, etc. Let us dive into the detailed steps to start a food delivery business.
Food Type & Quality
The primary need to focus on is the food you will serve your customers. If your food tastes delicious and you make it from quality ingredients, people will surely love to order more from you. After all, tasty food is what attracts people to the restaurants.
The next vital item you want for quality food is the ingredients. You need to search for a source for your kitchen ingredients daily supply. You can get the vegetables and fruits from local farmers or nearby grocery markets. The key thing to focus on is to source and use quality ingredients.
Decide your Target Audience
With an online food delivery business, you will have greater reach to people; it is important to consider what kind of audience you want to serve. You can plan your food services and marketing strategies based on that analysis. It is important to take care of your customers’ needs to ensure you get repeat orders.
Get correct answers to the following questions to determine whether your decision of choosing the audience is right or not?
Is your target market sufficiently large to give you enough orders?
Do your food offerings are the same as they demand?
Can they afford the food prices you’re asking?
The choice of target audience also depends on the location or market you want to serve food deliveries. If your restaurant is located near a college or university- chances are you get more orders from students who prefer snacks, juices, and other beverages.
So, your target audience directly impacts the meals and dishes you offer and vice versa.
Study Your Competitors
You can analyze your direct competitors to know what you can and should avoid doing. If the competitor is strong and has a large audience, copying them isn’t very helpful. You will instead cause your loss.
It is better to analyze what are the things they lack to serve the audience and focus on that to make your strength. If you will serve what people need and your competitors can’t, they will surely like to order from you.
Decide Your Food Delivery Menu
Now that you know what your target audience wants and the unique services you can offer to beat your competitors. So, this is the perfect time to create a delicious digital menu for your business.
Make sure to create an attractive menu that attracts immediate attention. Focus on your best dishes and meals and offer customized menus for each mealtime.
If you are already running a restaurant business, you must have licenses. You can cross-check with local officials for additional license needs. Each state has different regulatory requirements.
The Right Delivery Platform or Logistics
Logistics is a crucial part of running a successful food delivery business in today’s time. Depending on your food model, you must plan your fleet and logistics.
If you don’t want to invest in logistics, you can hire a third-party delivery service to manage your deliveries. They will charge you a 20%-30% commission for the deliveries. But if you want to spend your profits on commissions, you must manage your fleet and logistics.
You can use the fleet to promote or advertise your restaurant brand when you own your logistics. You can also train your delivery professionals on the tips to deliver efficiently and on time.
However, you will be responsible for fleet maintenance, timely services, driver salaries, etc.
You can also try subscription-based delivery platforms like Foodiv, which will take charge of your food ordering and deliveries. It will also save you from massive initial investments as you have to pay the monthly subscription fee.
Promote Your Business
Once you launch your food delivery business, it is equally important to promote it. If the customers know that you offer online ordering and delivery services, they will only think of ordering from you. Proper marketing is the key to getting new and repeat orders.
It is challenging for restaurants to take charge of marketing and promotions. However, they can spread their food business to a dedicated ad network for restaurants. The ad network is a commission-free platform that targets the most suitable potential customers. Thus, they get more eyes on their food business and repeat customers.
Bonus Point :Tips to Promote Your Food Business
Start marketing your food business on social media platforms like Instagram, Facebook, and Twitter. Instagram is the most growing platform to promote your ventures and get quick conversions.
As per statistics, Instagram has 1 billion monthly active users, and 84% of the users trust online reviews more than recommendations from friends and relatives.
So, if your restaurant has a strong social media presence, you can easily gain new customers. If you get positive reviews from customers, more loyal customers will follow.
Upload pictures of the meals and dishes you offer to compel your audience to click the order now button. You can also upload restaurant and kitchen videos.
List your food delivery business on local listings to rank when customers search for restaurants in your locality.
Invest in promotional ads and email marketing.
Test It
You can first make your offerings available for a limited number of people and see if all the aspects of your food delivery business are coordinated. Track the delivery time required by the agents for each area. It will help you determine the areas to serve for deliveries and fix delivery charges.
Get feedback from customers about your food and delivery services and use the insights to make improvements. Ask which dishes they like the most, are satisfied with the deliveries, etc.
How Much Does It Cost To Start A Food Delivery Business?
Another biggest concern to starting a food delivery business is to determine the cost you will need.
Inventory: If you are starting fresh, you will need a place to set up your restaurant, kitchen equipment, interiors, flooring, etc. However, if you want to start at a low cost, you can plan to start a cloud or virtual kitchen from your home. It will save you huge inventory costs.
Technology costs: If you want to build a food delivery app from scratch, it will cost you from $30K to $60K. The cost depends on the app complexity, features, development team, location of the development team, and other factors.
But, if you want ready software for your food delivery business, the saas-based food delivery app is the perfect pick. It will cost you zero initial investment as you can get the software for monthly subscriptions.
Business License and Insurance: Expenditure to get a proper business license and insurance adds to the cost of starting a food delivery business. For instance, liability insurance, commercial auto insurance, etc. Many states also require worker’s compensation insurance for employees.
Marketing Cost: Marketing and promotional costs are other factors in determining the cost of starting a food delivery business. It would help if you promoted your venture to millions of online users. Social media ads, banner ads, email marketing, etc.
Logistics: The cost of logistics will also add to the cost of starting a food delivery business. If you plan to own the fleet for your food delivery services, you must invest in vehicles and drivers’ salaries.
Otherwise, you can contact third-party delivery service providers for food deliveries for a 20%-30% commission.
Interested in Upgrading your Restaurant to Online Food Ordering?
No matter what food delivery model or type you want to invest in, Foodiv can help. Get end-to-end help and support for launch, ordering, delivery, and scaling. We know the challenges food business owners face, and thus, we offer full-stack support to help them stress-free launch their food ordering and delivery business.
FAQ about Start a Food Delivery Business
is a food delivery business profitable?
Yes. Food business is perennial, being the basic necessity. With the on-demand economy, there are greater opportunities in the online food delivery business. Post-pandemic, people prefer ordering food online at homes instead of stepping out. With online food delivery apps, food business owners can reach out to millions of online users. People can order food at their convenience, pay online securely, and share their feedback. Thus, food delivery apps enhance customer satisfaction.
How do I start a food delivery business?
The online food delivery business is a profitable venture. To keep pace with the current market trends and customer demands, restaurant owners need an online food delivery app. You can start your food delivery business with these simple steps:
Research your Market and competitors.
Know Your Audience
Plan Your Menu and Budget
Clear all legal formalities and acquire a food license
Build a food delivery app.
Market it on social media platforms.
is it worth starting a delivery business?
Yes, with an online food delivery app, food business owners can expand their customer reach online beyond their locality or area. They can further boost sales by offering discounts and special offers.
How long does it take to develop a food delivery app?
The time required to develop a food delivery app depends on the app features, complexity, third-party integrations, etc. However, the estimated time to build an online food delivery business ranges between three to six months.
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