Cash In On The Booming Business of Food Delivery
A decade ago, if you wanted food brought to your doorstep or to work when you didn’t feel like “brown bagging” it, you basically had one option: pizza. If you were lucky enough, there might have been a Chinese restaurant in your area offering delivery as well. Needless to say, times have changed.
Today, meal delivery services are spreading like wildfire. Thanks to apps, other technologies, and entrepreneurial spirit, more and more restaurants and businesses are offering meal delivery subscriptions, and people are gobbling them up!
If you’re looking for an in-demand entrepreneurial pursuit and want to help restaurants expand their reach beyond their walls, a food delivery service is definitely the way to go. However, if you want to be the next Grubhub or DoorDash, it needs to be done right.
Delivery is the Future of Food
According to Moody’s Analytics, more Americans are eating out than ever before. In fact, a sustained increased in leisure spending has led to a restaurant renaissance.
Sounds great for restaurant owners, right? Well, yes and no. Sure, there are more people with more money to spend today than ever before. However, thanks to an abundance of variety and quality among restaurateurs, the competition is fierce, especially in the casual dining and fast food sectors.
The skyrocketing popularity of takeout has forced a wide variety of restaurants to serve an increasing number of diners who never even pull up to the drive-thru menu, let alone step through their door.
With Whole Foods now owned by Amazon and an impending IPO for Blue Apron, it’s clear the entire food sector is getting into the food delivery business. Instead of dining out, more and more people will be eating in. However, rather than cooking, they’ll be ordering from an app.
Capitalize on More Americans Eating Out
From Portland, Oregon, dubbed by the Washington Post as the “best food city in America,” to Washington D.C., which was given the same title by Bon Appetit, food has become not only convenient but a central part of today’s culture.
In fact, according to a 2015 essay written by technologist and writer Eugene Wei, “Food has replaced music at the heart of the cultural conversation.”
This conversation, however, isn’t centered around cooking; it’s centered on dining out. According to The Wall Street Journal, Americans are spending more on dining out than they are on groceries for the first time in history.
But if this is true, why has dine-in traffic been steadily decreasing across the country? According to QSR Magazine, walk-in dinner traffic has been falling for several years now, and according to The Wall Street Journal, restaurants of all shapes and sizes saw the least amount of lunchtime traffic in 40 years in 2017.
The answer is a simple one – more people are utilizing technology to have their meals conveniently delivered to their door. The opportunity is there, and the meal delivery business model can help you capitalize on it.
Profit From The Takeout Takeover
At first glance, the state of today’s restaurant industry doesn’t make sense. How can restaurant sales continue to rise while foot traffic is on the decline?
Well, it’s because more people are ordering in and eating meals from their favorite restaurants and fast-casual spots right from the comfort of their own homes.
With the emergence of new online food ordering and delivery platforms like DoorDash, Postmates, UberEATS, and more, the meal delivery business has absolutely exploded in the past few years. In fact, according to GrubHub’s latest SEC filing, the industry leader has around 9 million active users, and it’s adding two million new users every single year.
While the online restaurant and fast-casual delivery sales currently only account for about two percent of today’s restaurant market, according to a Blue Apron study, online ordering and delivery sales are projected to increase 15 times faster than traditional walk-in sales in the near term.
Indeed, the data is clear, especially in urban markets. According to Trulia, people living in New York, Los Angeles, and San Francisco metro areas spend 50 percent or more of their food budget dining out. With the growing popularity of meal delivery services, this figure is only going to continue to rise.
This modern-day restaurant renaissance is most prevalent in California due to urban sprawl and the area’s proximity to the fertile Central Valley, which according to the Natural Resources Committee, produces half the nation’s fruits and vegetables.
However, it’s happening everywhere. According to Vitagene data, people in Austin, Pittsburgh, Miami, and all across the country are jumping on the delivery bandwagon and spending more and more eating in via meal delivery apps.
It’s obvious, the market is there, and companies like GrubHub, DoorDash, and Postmates have proven the food delivery business model can be a profitable one. So, why not create your own food delivery app and meal delivery business? Believe it or not, it can be done, and it might be easier than you think.
How to Do Food Delivery The Right Way
Offering meal delivery is a tried-and-true way for restaurants to expand their reach beyond the walls of their establishments. Despite having fewer people walking through their doors, their sales are going up, and it’s all thanks to delivery services.
According to McKinsey & Company, five online delivery platforms are currently valued at over $1 billion. Yes, that’s billion with a “b.”
Best of all, with the continued growth of online delivery, there’s room for more. If you do it right, you can profit beyond imagination.
However, in order to become an industry leader like DoorDash, Postmates, GrubHub, UberEATS, or Caviar, you need to have your ducks in a row and consistently deliver great service and value. You need to encourage loyalty and make the ordering process as easy as it can be.
Here are some tips to help you do exactly that:
Get Off on the Right Foot with a Sound Business Plan
In addition to a smart marketing strategy, you also need a sound business plan, even if you’re starting small and staying local. With a business plan in place, you’ll be able to move forward with your eyes wide open and know what to expect as far as growth, your ROI, and much more.
When creating a business plan, you should include:
- Labor expenses for delivery drivers, graphic designers, marketing managers, and so on
- Packaging and materials expenses
- Vehicle and gas expenses
- Marketing expenses
- Any other miscellaneous expenses like hosting, domain name, etc.
Get Legal with Licenses and Permits
Unless you want an unexpected visit from the IRS or your local sheriff, you also need to apply for the required licenses and permits, including business permits, food handling permits, sanitary permits, and tax payments.
Many small businesses completely neglect these requirements, but doing so is like playing a game of Russian roulette – it’s just a matter of time until they’re caught. By having your licenses and permits from the get-go you can operate with peace of mind knowing your business is legit, and customers will trust you more as well.
Here’s a helpful video going over the importance of obtaining a business license, all the necessary permits, and properly setting up your business from the get-go.
Decide on a Business Model
There are two main types of modern meal delivery services: new delivery brands and aggregators.
Aggregators follow a more traditional approach. They take the form of online portals, allowing customers to connect with a variety of restaurants. Basically, they act as middlemen and serve as a bridge between restaurants and customers. In other words, they only handle the order and play no role in the delivery process.
While aggregators don’t actually handle the delivery and only earn their profits from restaurants, new delivery brands handle the delivery process as well.
Not only does this allow them to charge a delivery fee and earn money from both restaurants and customers, but it also opens up a wider variety of restaurants and food genres for customers to choose from.
Satisfy Customers by Researching Your Target Market
After deciding on a delivery business model, you need to research and zero in on your target market. Think about where your target market is and the types of food your customers will want the most.
For example, if you live in a university town, you may want to place more focus on snacks and late-night “munchie” food. Conversely, if your target market is corporate employees, it would be wise to work with restaurants offering salads, wraps, and other healthy lunch items.
You get the point. When you plan and organize the restaurants you work with according to the wants and needs of your target market, you’ll help solidify a constant following of satisfied delivery customers who are happy with paying a premium to get what they want conveniently delivered to their desk or door.
Deliver the Goods by Deciding on a Delivery Service Option
When developing a meal delivery service, you have a number of delivery options at your disposal. If you want to get started sooner and with less money upfront, going with Deliveroo, Menulog, or another existing delivery service is an option worth considering.
By going this route, you can utilize the delivery infrastructure they already have in place, saving yourself time, money, and headaches. However, as Forbes states, using these services will cut into your profits.
If you can make the time and money investment, look into developing your own driver staff. You’ll have higher costs upfront, but you’ll have greater control over the quality of the food you deliver and ultimately, your brand. Of course, you’ll get to keep all of your profits as well.
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Maximize Efficiency and Sales by Setting the Right Boundaries
Setting your delivery boundaries can be tricky. If your boundaries are too big, driver efficiency will decline along with food quality. However, if they’re too small, you’ll miss out on certain key pockets of customers. So, what should you do?
While you may be tempted to swing for the fences when first establishing your delivery boundaries, always consider food quality first.
Ask yourself, how many minutes will a burger and fries remain hot and crisp? How long will a California roll hold up in the July heat?
Figure this out and use the timeframe to set realistic delivery boundaries that will allow your drivers to deliver hot and fresh meals to each customer using your service.
Boost Quality by Investing in the Right Resources
To gain loyal and satisfied delivery customers, the quality of the food and its presentation must be on point. While you can’t control what comes out of the kitchens of the restaurants you work with, you can control how it’s presented to customers and how hot or cold it is when they get it.
To do so, you’ll need to invest in the right training and materials. Things like hot bags and cold bags or hot boxes and freezers in delivery vehicles can help maintain the quality of the food you deliver and create happy repeat customers.
Make a Great Impression with Well-Trained Delivery Drivers
In this business, your delivery drivers can make or break your success. They’re the first, and likely the only, face-to-face interaction customers have with your brand, so it’s important for them to recognize their role as brand ambassadors and understand your expectations of them.
A great delivery staff and their positive interactions with customers can make great meals taste even better. They may order online with a click of a button, but your customers won’t want a robot delivering their food. They expect a great meal to be delivered both promptly and with a friendly smile.
Profit From Perfection
With delivery, you need to aim for 100 percent accuracy with each and every order. Since you only really get one shot, accuracy matters just as much if not more than anything else.
Forgetting utensils, extra napkins, salt, and pepper, or extra sauce is an undeniable way to deliver disappointment. So, develop processes to ensure your delivery orders are double-checked and correct.
Create Loyalty by Focusing on the Customer Experience
McKinsey & Company reports that 80 percent of people who sign up to use an online meal delivery service will rarely if ever, use another platform. That is staggering! This high level of brand loyalty means it’s extremely important to focus on the customer experience.
It’s great if you get it right. However, if your service consistently delivers after the expected delivery time, has glitches with the online ordering platform, or underdelivers in any other way, you’ll create a poor customer experience and risk sending them to the competition, where they’ll likely stay.
Wow Customers with the Right Materials
A great aspect of the meal delivery business is you don’t need a substantial amount of money to start with and get it up and running. As far as materials go, all you really need are cardboard or plastic meal containers, napkins, utensils, and so on.
That said, you need to take some time in picking the right items and materials to keep the food temperature-controlled. You may also want to invest in branded materials to keep the food delicious while also promoting your brand.
Reel them in with the Right Marketing Strategy
Whether you’re launching a lawn care business or the next Postmates, in order to effectively reach potential customers and your target market, you need a marketing strategy.
There are dozens of ways to market your meal delivery service or any business for that matter. However, when just starting out, it’s smart to focus on word of mouth and digital marketing via Facebook, Instagram, and other social media channels.
Of course, if you’re starting small by delivering to your area only, at least at first, you can also go the traditional route by placing posters and flyers in offices and residential areas around town.
Whatever strategies you go with, it’s important to constantly think about customer acquisitions. The “if you build it, they will come” mentality never works.
Make Ordering Easy with a Great Online Platform
Online food ordering and delivery platforms like Postmates, DoorDash, and Grubhub follow a simple, tried and true business model. They serve as a common platform connecting customers to restaurants. Subscribers use the platform to search for restaurants and place and pay for their order.
The smoother and faster you’re able to help them do this, the better. To make the process as easy as can be, you’ll need the right infrastructure. This includes investing in a catchy .com domain name, fast hosting, WooCommerce or a similar tool to create your platform, and a payment processor to process the transactions.
If you’re tech-savvy, you may be able to accomplish all of this yourself, but if not, you should be prepared to invest in a quality designer to create a website and app that’s fast, functional, appealing, and most importantly, easy to use.
Prepare to Launch with the Right Transportation
When hiring delivery employees, there are two options you can take. You can hire them on as regular employees with a set wage or go the contract route. However, the big question is whether to invest in company cars or have them use their own vehicles. Regardless of which type of drivers you hire, transportation is a must.
Having drivers use their own cars to make deliveries is a cheap and convenient way to go, but there are some pretty significant drawbacks. For example, you can’t force a driver to get a large enough vehicle to handle large delivery orders. You also can’t force them to properly maintain their vehicle or retrofit it with refrigerators, freezers, or hot boxes.
That said, perhaps the biggest reason to invest in company vehicles is the opportunity to spread brand awareness. A branded company vehicle will provide a more professional image and provide you with free advertising back and forth from every delivery.
Supercharge Your Sales with Social Media
In today’s social media-driven world, chances are someone searching for a meal delivery service will run across your Facebook or Instagram page before visiting your actual website. Therefore, your social media page should be on point and as friendly and inviting as can be.
In fact, you don’t even need a website. You can take delivery orders right from your company’s social media page. How cool is that? Not only will this up the convenience factor, but customers can post reviews on the spot when they receive their food for instant credibility.
Optimize for Mobile and Make Money in the Modern Era
If you’re smart with your marketing and go the extra mile to make your social media pages as functional and appealing as possible, then you need to make sure these pages and your website are optimized for mobile. After all, people order primarily from their phones, and they need to be able to do that with your service.
This means your website should function differently for people viewing it on mobile devices. You may need to develop an app to allow mobile customers to reach you easier. You may also need to create a mobile-friendly version of your site to make it easier for mobile customers to read.
Without taking these mobile-friendly steps, your delivery business will never be able to compete in today’s world, so it’s worth going the extra mile.
Develop a Tipping Strategy to Attract Drivers and Reduce Payroll
Last but not least, when starting a delivery business, you need to develop a tipping policy for your drivers. While you probably wouldn’t need to worry about this 30 years ago when most people paid with cash, many customers today complicate things by paying with cards.
Therefore, they need to be able to add a tip when ordering, when receiving their delivery, or afterward. You may also want to consider automatically adding a tip or “delivery service fee” to every order.
Regardless of which route you take, having a tipping policy in place is a must in order to incentivize drivers and cut down on labor costs.
Make Money Delivering Food Today!
Food and meal delivery is a booming business that continues to grow year after year. With billion-dollar companies like Postmates, DoorDash, and Grubhub popping up left and right, it’s definitely a business model not only worth investigating but investing in.
However, setting up and operating a delivery service isn’t for the faint of heart. It takes planning, preparation, and the right know-how. The good news is it can be done, and you’re now more prepared than most to make it a success!
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Find out more about how Shiftpixy can empower your business growth.