How to Start a Food Delivery Service in 6 Steps

How to Start a Food Delivery Service in 6 Steps

Time is increasingly becoming a precious commodity—with most people opting to look for smart ways to streamline their day-to-day activities. For this reason, food delivery services have risen in importance as an opportunity for both entrepreneurs and consumers.

Restaurant delivery services cater to a pressing need for many consumers. These services offer fresh and tailored food options, allowing consumers to enjoy gourmet dining without having to leave their house.

So how do you start a restaurant delivery service? Is it the perfect match for you? Here are six pointers we have put together to help you set up your food delivery service.

1. Research The Market

Researching a market before establishing a business is key; it helps a business’ limit errors. Food delivery is a low-margin business; therefore, it is essential to understand the ropes and find a niche market.

Here are some key aspects to consider while carrying out your research.

Competitor — as stated above, the food delivery business is low margin, meaning it has a lot of competitors. Those that dominate the industry are platform-to-consumer, including food delivery platforms such as Uber Eats and Postmates, and restaurant-to-consumer platforms such as Dominos and McDonald's. If you do good research on market strategies, online menus, and pricing patterns of these players, then you’ll have a great sense of how to position your business and give your competitors a run for their money.

Partnerships — it’s best when you work as a team. That’s why most restaurants partner with third-party platforms such as Uber eats and door dash. Partnering with these platforms aids your business—making deliveries a quick and easy experience for your customers. Before choosing one, do some research on the existing platforms; the best information is in the reviews. Talk to people around you who use these services and get their sentiments. Next, study potential partners and talk directly to their representatives so that you can get all the necessary information.

Opportunities and Threats — analyze your business' strength, weakness, opportunities, and threats vis-à-vis your competitors. A keen look at these aspects will help you leverage your strengths, work on your weaknesses, grab opportunities and identify plus neutralize your threats. For example, if most of your employees have cars, you can grab that opportunity and use their help to set up delivery logistics.

Market Gaps — look for market gaps that you can capitalize on by positioning yourself and making profits. For example, few restaurants might serve a particular neighborhood or serve a specific cuisine. The research will help you catch that, and you can better position yourself to cater to the customers' needs.

2. Define Your Target Audience

Assuming you are moving from dine-in to delivery, you are not starting from scratch; this means that you already have an audience, a set of customers who already know what you offer. Just a few adjustments to better serve people in the delivery service.

The research you did in step one will make it easy to decide if you want to expand your horizon to reach other market segments and determine whether the area you want to service has potential customers.

A demographic mix that includes millennials, working families, college students, and hostellers are satisfactory to the delivery business. You might, however, need to refine your online menu to cater to all these customers. For example, provide healthier options for working families and affordable meals and snacks for college students.

3. Determine Initial Investments And Related Costs

Starting a food delivery business is sure to set you back a considerable sum in monthly overheads. Below are some of the expenses involved in setting up a food delivery business.

Website Development Expenses

You can take food orders through phone calls, but it’s ideal to have a website. You can use website builder apps to create a website to cut costs, but if you have a flexible budget, it’s best to hire someone to do it for you.

Software Purchase/ Subscription

Basic software tools you will need in the initial stages of your delivery service include Point-of-sale (POS) software to collect online payments and GPS Tracking apps to track deliveries. You can opt to use free versions of these tools. But as your operation expands, you’ll need to upgrade and get more features.

Logistics Costs

Can you work out a way to have your own delivery logistics? This approach helps in cost-saving, as you won't be paying commission to third parties to deliver food to your customers. That said, having a fleet of your own is costly. Here’s one option you have to help you overcome this concern; use your car or those of your employees for a start. Then, purchase delivery vehicles as your business grows.

Marketing Expenditure

Marketing your business is a crucial step when you want to get your business off the ground. Set aside a budget for marketing your services. You can use social media for marketing your business as the tool is fast-growing and has proven to be very effective in business marketing. Other ways to market your products and services include printing pamphlets, email marketing, and attending events and fairs.

4. Ensure Your Licenses Are Up-to-Date

Find out whether you need extra licenses to deliver food in addition to the ones you have for the restaurant. Get this information by reaching out to your town or city clerk’s office (requirements vary from state to state). Plus, you can visit the U.S. Small Business Administration (SBA) website to get all the information you need on permits.

5. Set Up Suitable Channels For Receiving Orders

As a start and to save on costs, you can use free channels to receive orders—this includes phone calls and messages. Plus, your social media handle can multitask by marketing your business and at the same time receiving food orders.

Thanks to food delivery software, you can see to it that you receive orders and even track them once they've been dispatched.

Another option is using free food delivery apps; over time, you can switch to paid versions that charge a fee per order or a percentage of your total sales.

6. Market Your Service

Marketing your food delivery business is essential because your restaurant customers should be aware that you are providing the service. You also need to expand your customer base to reach more people.

There are a few options of marketing strategies that you can use to market yourself. Social media has grown over the years and even more in marketing businesses. You can make more people aware of your service by creating an enticing business account on social media.

Other ways to market yourself include pamphlets that you can distribute by handing them out or through the mail. You can also use text messages and WhatsApp Messenger to promote yourself by announcing deals, discounts, and specials.

Food delivery software offers digital marketing tools that are free. Examples of such software include Gloriafood and Flipdish.

Using Technology to Build a Successful Food Delivery Service

Food delivery services are a rising trend. And you probably want in, right? Now, improving your customer satisfaction, minimizing inventory leakage, and limiting costs are the best ways to make the most of this venture.

Let us help you find a cost-effective website builder app to make sure you have the most accurate GPS tracking system and the most secure POS system.

Pick a business model and watch as the other steps fall in place.

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