In this modern age, where we are all propelled by technology, one no longer has to worry about having to cook at the end of a hard day at work. All one needs to do is go to one’s trusted food delivery app, order what his taste buds fancy, indulge in some binge watching and go to bed a satisfied soul!
The one person that can be counted on at such times is the food delivery guy who shows up at your doorstep with your favourite dish when you are tired and hungry. While you are ordering your favourite dish, there are probably millions around the world who are doing the same thing making the food delivery service one of most popular and profitable businesses across the globe.
The food delivery service business is in the midst of a revolution with the online food delivery or takeaway delivery market garnering a lot of attention. Today, we take a look at what it takes to set up a successful food delivery business in this very competitive arena. The good news is that with increasing use of technology there is a burgeoning consumer demand. Customers are always seeking platforms that personalise ordering experience, with the help of data analysis. Today, we delve into the knowhow of starting your own food delivery business.
Fix the delivery area
When you decide to begin a food delivery service, the first thing to do is identify the area of service. If you are bootstrapping your food delivery business, your seed capital is evidently small. It is thus a good idea to keep a narrow delivery area. For instance, you can begin within a 100-300 m radius, where your delivery staff can walk or use a two wheeler to deliver the food to short distances. Delivering hot food on time is a great way to establish contact and build lasting relationships with customers who are closest to your centre of operation. While you build small, concentrate on establishing good relationships with both restaurants and your customer base. This brings us to understanding of the market.
Know the demand
If you are planning to start a food delivery business at a time like this, you know for a fact that there is already plenty of competition all around. What you need to do in order to differentiate yourself from others is to identify voids in the existing market and try to fill those voids by creating a niche. For instance, you can choose to deliver home cooked food to students to who live away from home or to bachelors who are looking for comfort food at the end of the day or deliver healthy and hot lunches at offices.
Knowing your customer
Customer is king and thus the success of your business will depend on how satisfied your customers are. Once you have decided the niche you want to serve, walk the extra mile to know the kind of food they already order, their likes and dislikes about the same, the quality of service and whether they are satisfied and what would they like different. Do remember, that this is a crucial step as once a customer finds a comfort with a delivery service that is fast and efficient, he is likely going to be a loyal customer for a long time.
Finding restaurant partners
Once your delivery niche and target customers are decided, the next step is to establish relationships with restaurants, cafes, home chefs who cater specifically to the taste and palette of your customer. The idea is to narrow your offerings in contrast to the bigger delivery services that cater to a wider audience and have tie-ups with all eateries in the area. When seeking partnerships, discuss what is your unique offering vis a vis an established player to win over a partner. At a later stage, when your partnership is up and running, you can charge them a small advertising fee for a fixed number of deliveries in a day.
Hiring delivery employees
Delivery employees are the backbone of a successful food delivery business. It is therefore very important to hire employees with clear credentials, who are passionate about the job and have oodles of patience. It is thus a good idea to depend on a recruitment agency to hire the right people. Once you have hired them, spend time with them and invest in training them. The important thing is to determine competitive salaries, benefits and compassion, so that they do not feel short-changed. Maybe you won’t be able to pay them as much as an established delivery business, but what you can deliver on is a promise to keep their welfare at heart and offer training and benefits as your business grows.
Creating a menu
The next crucial step is to offer a complete menu, which is in fact a guide to all the favourite cuisines at the best prices. Your initial research should help you build a menu with the best restaurants or home chefs in your area who cater to the palate of the customers you wish to serve. The menu you offer should be honest and appealing and provide the assurance that the customer is looking for. The use of technology is key in menu creation.
While it is a given that you may not be able to invest big bucks like the established players on your app and website, invest your earmarked budget in small but savvy design outfit and a programmer who can help you create an app that is easy to navigate, has all the information including menus, estimated delivery time and an efficient tracker. Make sure you have a hands-on approach in the process and use all the aspects of your research well to turn your vision into a reality.
Create a business plan
The next step of establishing a business is to write a business plan. A food delivery service is no different. Here are some steps to follow to create a successful delivery service plan.
➢ The basic details– List out the important details upfront, such as your name (as the entrepreneur), your professional credentials, the name of your business, its legal identity and a short description of the vision you have for your business.
➢ Identification of the staff – The success of the delivery business is entirely dependent on the staff. Identify your staff and list out the roles you wish to assign to each member, the cost to company that should include training costs if any.
➢ Logistics and inventory– Even at the very minimum you need a centre of operations to begin a food delivery business. Your business plan should therefore state clearly if the property being used is owned or a rental, the cost of equipment such as vehicles to be used for delivery stoves, microwave, refrigerator, etc. Determine the cost of purchase or rentals, license obtaining and tax compliance costs and other recurring costs. The business plan should clearly break down logistics and inventory cost and the cost of maintenance and inventory control.
➢ The financial plan – The last step is to provide an accurate financial projection for your business. Whether you are bootstrapping your business alone or in partnership, your business plan should include the personal assets and liabilities of each owner, the capital required, the plan to break even and make profits with a projected timeline.
Promoting your business
Once your business is up and running, you cannot expect to be successful from day one. It is therefore important to promote your business through a host of methods, such as traditional fliers in newspapers, online means such as emails and social media platforms and word of mouth advertising through your restaurant partners. Advertising budgets will have to be earmarked right at the very beginning of your business. While you may not have a big budget, it is important to be creative with your advertising and promotion strategy to reach the right target audience.
Be prepared for pitfalls
The food delivery business may not seem as cost intensive at the beginning, but the margins are not high in the business due to the intense competition. The idea is to be prepared for lower margins and concentrating on improving your services. When things go wrong (like a vehicle break down, a wrong order picked or a meal that does not get delivered in the condition as expected by the customers) be honest and upfront and compensate the customer despite the losses. That is the way to retain the customer rather than lose him with the wrong attitude.
At the end of the day, the food delivery business, though seemingly overcrowded, does have a lot of potential. To sum it all up, setting up a food delivery service is all about finding one’s niche, offering regular and honest services to one’s targeted customers, having a transparent relationship with restaurant and home chef partners, having your employees’ benefits in mind and having patience and perseverance to break even and make profits eventually.