How to Start a Food Delivery Business [Founder’s Edition]
The online food delivery business has undergone an amazing transformation in recent years.
The fact that we can order food with one click shows how far we have come from eating at restaurants to eating at the house couch.
Thinking about how to start a food delivery business?
Well, think holistically.
A lot of reasons accrue to the increasing trend where entrepreneurs are craving to know how to start a restaurant delivery service.
It’s like the hunger games out there.
Watch out for these 10 food delivery startups.
Businessmen are getting on each other’s necks to get their idea working and build a working solution out of it.
It was way too quick that we went from ordering pizza online to receiving food from drones through the window.
If only there was a potion to take your business from start to apex in a matter of days.
Reaching to the top of the food chain may not be as easy as you think, but it is possible if you follow the right process.
Below we have prepared a guide on how to start a take out food business or a food delivery service.
We have consulted restaurant owners and food startup founders to build this guide.
In our approach to help you with how to easily start a food delivery business, we have covered;
- Promotion and Marketing
- App Development
Let’s begin with knowing why is now the right time to know how to start a food or restaurant delivery service.
Now is the Best Time to Launch a Food Business, Why?
Gradually we have seen a paradigm shift in the entire business structure of online food delivery.
This has also changed how to start a take out food business.
Earlier, eating out was all about going to a brick and mortar restaurant.
But today, there are concepts like virtual or cloud kitchens.
By 2024, the online food delivery growth is expected to grow by $182.3 billion.
The 2021 market value of the same is expected to reach $151.5 billion.
This is a CAGR of 6.4%.
IBIS World predicts that the Chain Restaurants in the US are among the top 10 fastest growing industries in the country.
Other than this:
- The virtual kitchen and cloud kitchens are also high in demand due to easy and affordable access to commercial kitchen spaces.
- You can also get access to ready-to-use ordering and delivery platforms.
- Developing a business-specific platform is easier by getting help from gig economy workers.
- Millennials and Gen Z want access to convenient and delicious food.
Amalgamating these aspects, a food delivery startup owner will find that this is perfect to know more about how to start a restaurant take out food business.
Let’s understand how, as an entrepreneur, you can move ahead.
How to Start a Food Delivery Business?
It all begins with the concept. There are several ideas for food delivery, but the way to start a business in this industry is somewhat similar.
The answer to how to start a food or take out delivery business depends on your concept and value proposition.
Are you planning to start your kitchen or hire a kitchen-setup while taking care of the delivery only?
Do you have access to a virtual kitchen, while taking orders and delivering the same?
Or do you have a food truck and want to run your business from four wheels?
In all cases, delivery is the most important aspect.
So, your plan must be optimized to conceptualize delivery in the most convenient manner.
Take care of four things here in how to start a restaurant or food delivery business:
- Value Proposition
- Positioning + Value Proposition
- Market and Idea Validation
Your market positioning is highly influential in making a good revenue out of your business. This is an important decision, since you might like to start a ghost kitchen instead of running a fancy restaurant.
From farm to table or delivering meal kits or delivering out of the most popular restaurants in the city, find your niche market.
Before finding out how to start a take out food delivery business, decide what will be your target market.
Do you want to provide ready to eat meals to the white and blue-collar professionals?
Or are you looking to provide “what do you want to have” type meals?
Uber eats and Zomato being the most favorable examples.
Then you need to decide on your value proposition.
What is a Value Proposition, you might ask?
Well, the Value Proposition of your company pertains to what it does, as simple as that.
Think of a scenario where you have to explain your business to another person within 30 seconds.
Your explanation of your business is the first step to actually understand how to start a food delivery business.
In this, you need to explain the most with the least words.
Before knowing how to start a restaurant-based delivery service, know what it should provide.
Researchers tried to bridge the theory of consumption value (identifies the consumer choice-behavior) and value-driven food delivery application.
In the research, four aspects were most important to a consumer:
- Social Value or Prestige
- Health Consciousness
While knowing how to start a restaurant or a delivery business’ value proposition, adhere to these aspects.
These points become even more important when you are also making the food and delivering the same.
Combining Value Proposition and Positioning
Your value proposition may differ due to market or product fitness.
This is essential in how to start a food delivery business.
To help you better understand what we mean, here are a few examples.
|Company||Value Proposition + Positioning|
|Formlabs||Formlabs’ provides “Powerful, Affordable 3D Printers for Professionals.” |
So, we have the value proposition and we have the target audience (professionals).
Any potential customer will understand the product or service they provide while knowing whether this product is right for them or not.
|Shopify||Shopify clearly denotes its target audience. |
The entrepreneurial grit often found in founders and business owners gets a channel with Shopify.
Where these two organizations have made bold claims.
If they say something and have to stick to it, or risk losing on reputation.
While some other organizations are not very prudent or do not plan to set too high expectations.
Be always sure what you claim and can fulfill. It is essential to consider your promises before knowing how to start and succeed at a food delivery business.
Understanding both these things vital in how to start a restaurant delivering business.
Let’s see another example from the food industry.
Instacart says, “Groceries delivered in as little as 1 hour.”
By saying in as little as 1 hour, they are not setting too high expectations.
However, you must also take care not to sell yourself short.
Once you have the product or service model, ascertain its acceptability and importance by validating the idea.
Use Facebook Ads and Landing Pages with the most important offerings to know whether the customers engage with them.
Set up analytics tools to measure the outreach and interaction levels.
This is how you build and validate your concept of how to start a restaurant delivery business.
Moving on with how to start and succeed at a food or take out delivery business, let’s work on the kitchen now.
Working on the Kitchen
What kind of kitchen do you want and have access to is vital to decide on how to start a take out food delivery business?
You have two options here:
- Get a Ready Made Kitchen
- Launch or Build your own Kitchen
Read closely as you move ahead in how to start a restaurant delivery service.
There is a difference in cost, services, and accessibility between a ready-made or for-hire kitchen and building your own.
|Why Have One?||Ever heard of a coworking space? |
It is a common space where professionals either hire cabins or individual seats to work.
Ready-made kitchens have a pre-built infrastructure.
The tenants are allowed to use the kitchens and their infrastructure subject to a fixed weekly or monthly rent.
While choosing the ready-made kitchens, it is essential to look at the location.
Have a kitchen in the areas that are easily accessible 24*7.
So, having a ready-made kitchen is essential to build and know how to start a food delivery business.
|Benefits||One of the primary benefits of a ready-made kitchen is the costs. |
Since you only have to pay for the service, you can save on rent/lease.
So, hiring a ready-made kitchen is best for cost-cutting and allows you to inject the limited resources into other activities.
An important part of how to start a restaurant or food delivery service is licensing.
Plus, you need to follow some set of guidelines and compliances.
These requirements can be bypassed with a ready-to-use kitchen.
|Cost||Most of the shared kitchen spaces charge hourly. |
The average price is between $15 to $20 per hour.
If you are finding it difficult to comprehend this model, hear this.
Since this sort of arrangement is highly flexible, the cost also varies as per your choice.
The other side of the coin is to launch or build your kitchen from scratch.
This sort of apparatus in how to successfully start a food delivery business requires a higher level of investment.
Not only money, but you need to invest your time to understand the compliances.
But if you can pull it off, it is worth it.
|Why Build a Kitchen?||Moving forward in how to start a take out food delivery business, you need to build a kitchen. |
Here we are talking about a cloud kitchen.
Cloud kitchens are meant to prepare food and that’s it.
You cannot serve food there.
The principle is the same as a coworking kitchen, but here you have exclusivity.
Nobody else can work in your kitchen.
You can have your own team to prepare food from any location in the city.
Hence, most of the entrepreneurs choose to work from a remote location with lower rents.
|Benefits||Having your own kitchen means freedom and seamless scalability. |
You can build a custom kitchen that suits your requirements and business model.
The basic purpose of a cloud kitchen is the ease of production and food delivery reliability.
|Cost||After co-working or shared kitchens, the cloud kitchens have the second-lowest overhead costs. |
You can save on staffing costs and compliances.
Plus, there is no need to comply with strict labor laws.
Servicing and following the in-house food service standards is also absent here.
Furthermore, in how to start a food or meal delivery business, you can take help from cloud kitchen providers.
The cost of this entire activity depends on the location, infrastructure needs, and scale of the business.
It is difficult to provide a direct answer to how to start a restaurant delivery service.
But we have tried to get you access to authentic information.
What follows is a summary of the interview with an entrepreneur who runs a cloud kitchen.
So, the information you seek so dearly is listed below, coming straight from the horse’s mouth.
You will also get to understand how to start a take out food business from these responses.
How to Build a Kitchen to Start a Food Delivery Business?
There are three major activities to this exercise.
|Staffing Tasks||It is important to hire the right people to achieve success in how to start a take out food business. |
|Accounting||Keeping a track of your account is also important for how to start a restaurant delivery service. |
That is how you can run and start a food delivery business from scratch.
After covering the setup and operationalizing the kitchen, let’s move ahead with how to start and succeed at a restaurant delivery service.
Your kitchen is complete and now let’s focus on the delivery and logistics.
Working on the Logistics | How to start a food delivery business?
Here too, you have to routes:
- Integrate your delivery requirements with an existing service.
- Build your Logistics System from scratch
Connecting to an Existing Service
This implies that you get on board with a delivery-only service provider.
For instance, Food Panda, GrubHub, Deliveroo, Postmates, etc.
These are the services that do not own any restaurant.
But they have a delivery service.
By connecting with restaurants across the city, they give access to an application to the customers.
Customers place the order, which is passed to the restaurants, and these guys deliver it.
|Why to Follow This Model?||Well, while you understand how to start a restaurant delivery service, your initial motive is to save costs. |
Connecting with an existing delivery service helps you save on the setup costs.
Here, all you need to do is build your kitchen, promote it, and then start taking orders.
|Benefits of this model||Apart from the cost savings, you won’t have to deal with regular fleet maintenance and hiring drivers. |
But while selecting the service provider take care:
Here you need to worry about scaling the fleet.
As the intensity of orders increase the fleet service provider will cater to the higher demand.
This model helps with how to start a take out food business by providing:
|Costs||With a third-party delivery service, the costs depend on commission or charges per delivery. |
So, make sure to check out the costing model of your shortlisted delivery services.
Build Your Own Logistics Fleet
The second option for food delivery in how to start a restaurant business is building a fleet.
For this too, we went out for you and talked to the business owners who have done this in the past.
Here’s what they told us to do with how to start a restaurant delivery service.
While creating a fleet is simple enough.
You need to buy vehicles or get them on rent.
Hire the delivery staff, train them, and assure their development.
Added to this,
- Create a development plan for the logistics system.
- Chart out the delivery areas
- Train the delivery staff to optimize the time
- Create a Schedule for deliveries and pickup
You can also check out these new food delivery trends to give your startup a unique touch.
After optimizing the purchase costs, delivery is the second area where you can save on costs.
While the maintenance and staff training costs are necessary, you can utilize modern measures for safe and cost-effective deliveries.
You must be thinking that we are done with how to start a take out food business.
Well, that’s not it.
We are still left with two core aspects:
- Promotions and Marketing
- Testing the Model
Promotions and Marketing of the Food Delivery Business
What follows is an account of things that you need to do to promote your business.
Start by deciding on a name, creating a logo, business concept, and your USP or Value proposition.
Remember the positioning and value proposition aspects that we talked about above.
Well, in a sense, your marketing and promotions are step one of how to start a restaurant food delivery business.
As a part of promotions, you need to understand and implement Social Media Marketing (SMM).
Not only with how to start a restaurant delivery model, but you can follow this activity in any new business.
- Hire an SMM Manager – he/she will know what tools to use and how to create the campaigns.
- Create an Instagram Account – This is where you will find a major chunk of your audience.
- Create a Facebook Account – those who are not on Instagram, they can be targeted via Facebook.
- Run Ads on these platforms and check for customer reviews while implementing them in your business.
Here is a list of a few other things to exercise here:
|Build a System for Discount-led Promotions||This will help you gain an audience with new customers. |
Plus encourage the existing users to engage more.
|Develop a Website||Helps with SEO, SERPs, and ranking.|
|Create a Menu||Allows the customers to know what you have to offer.|
|Cooperation with Offices||Helps generate B2B sales|
|Get a Dedicated Phone Number||Gives the customers a way to contact you.|
Your efforts to market a food delivery business do not end here, it is a recurring activity.
Apart from marketing, we want you to go through one last step before you can put everything into action.
It is testing the concept, getting proof of feasibility, and reiterating.
Test, Improvise, and Grow
In simple words, any idea or concept should not see the light of day until and unless you have proof that it works.
That is where feasibility studies enter.
Not just for how to start a restaurant delivery service, but every idea must undergo testing and reiteration.
This exercise identifies the product/market fitness.
We are not only talking about the concept per se, also about the food you will make and deliver.
Adopt measures to reduce food waste and improve its quality.
Because nothing can compare to quality.
One of the primary aspects of brand building is the quality of the product.
In testing, prepare, deliver, and receive the food as intended for the customer.
Use the delivery containers that your service providers have. No one likes to eat cold and soggy food.
Brands like Dominos and PizzaHut are built on an understanding that the pizza will be delivered hot and fresh.
Maybe this is the reason 63% of the food deliveries in the US are for Pizza.
So, quality check, control, and improvement provide a great answer to how to start and succeed in the take out food business.
Apart from preparing and delivering, also practice packing the food.
There are many ways to save on your packing cost that you should learn while knowing how to start a take out food business.
- Do not provide disposable plastic ware with the food.
- Do not send napkins or sauces (wait till you stand at par with Dominos to do that).
- Plus, do not send additional condiments as a gesture of goodwill.
All these things might not make a difference to the customers.
But to you, it will cost enough to waste money.
So, refrain from adding to your overall costs.
What you can do is send them something special, something personalized.
Make the customer’s experience memorable and unique.
Do I Need a Food Delivery App?
You might think that if you are associating with a delivery service, then you don’t need your own app.
Well, that is not true.
Just like a website, having an application is important in how to begin and start a restaurant delivery service.
Here are a few reasons you need your own food delivery app.
- There is a hike in demand for food delivery. This momentum has further seen an acceleration because of the pandemic.
- The future applications of food delivery are highly lucrative. In this case, it is better to be prepared.
- Having your application helps the customers get better visibility and builds trust.
- It is easier to entertain and delight the existing customers via an application. So, it helps with customer retention.
- Last, a mobile application is one of the best sources to target the right audience.
There you have it.
A complete guide on how to start a take out or food delivery business.
But, How Do I Make a Food Delivery App?
Aftering knowing how to start a food delivery startup or business, you should create an app.
Don’t know how to create one?
Well, that is where we come in.
SpdLoad has been at the forefront of the food delivery industry.
We have been following the trends, ideas, and talking to the owners.
This is to help us get the right direction and build an understanding.
Our resolve to help startups get the best digital solution makes us eligible to help you out in this matter.
You can also check out our guide on how to create a food ordering app.
Apart from a team of developers and designers, we have business analysts and validators.
These guys will help you validate your idea and make it a reality.
Not only we know how to start a food delivery business, but we can also help you with marketing and promotion.
Contact us today if you want to build your restaurant delivery app and know how to make it a success.