Are you eager to launch your food delivery business in this era? Check out this food delivery startup guide that covers various aspects of a food delivery business. Let’s start!
Overview – What Is On-demand Food Delivery
Can you order food in ‘no’ time? Well, if we replace ‘no time’ with 30 minutes, then probably you get access to tasty foods! Probably, names like Uber Eats, Zomato, Foodpanda, and Swiggy may ring almost daily in your lives. These are popular examples of on-demand food delivery startups. Hungry bellies or party with friends, the food delivery services facilitate the swift booking of the delicious dishes across multiple cuisines for delivery by 15-40 minutes. At minimal costs, consumers can order their favorites using a dedicated delivery service.
Introduction – How The Food Delivery System Works
The on-demand food delivery system works in three simple steps:
· Customers place a food order(s) at a restaurant/eatery/outlet.
· Restaurant prepares food after processing the order & payments (for online).
· The delivery guy collects and delivers at home/office & collects payments (for offline).
Here, the time factor plays a pivotal role since no one can resist hunger pangs for too long. So, if it’s too late they’d rather grab a bar of Snickers than ordering food online. (On a side note, do you remember Domino’s pizza delivery offer – “delivery within 30 minutes or FREE!”)
On-demand Food Delivery Apps – How It Works
Generally, you can have apps or web consoles for different categories of users – restaurant, customer, deliverer, and administrator.
Restaurant owners enjoy an interface for food-order management, menu management, notification updates, reports & analysis, order tracking, and customer reviews. From processing order requests to generating invoices to learning reports, restaurateurs receive a sturdy platform of controls for managing their business in just one place.
Customers can scan their preferred restaurants in the listings, browse delectable menus & prices with delivery & payment options, discount codes & offers, and submit reviews & ratings. We develop an ideal interface for helping consumers to buy the foods they have in mind for a special occasion or general hunger needs.
Delivery Partners can access a panel for delivery personnel, where they will find precise details about pickup and drop points, navigational help, route guidance, information about incentives, delivery fees, and so on.
Administrators will find a dashboard panel of features to manage menus & restaurants, manage categories, adjust profile settings, edit restaurant listings, control payments & commissions, access infographic reports, and provide valuable suggestions that help them make well-informed business decisions and perform required upgrades.
Importance of Food Delivery – Market Scenario
Need food quickly? Just order online. The trendsetting advice for millennials has sparked a unique resonance among modern entrepreneurs to enter the top charts of the food & beverage industry.
Non-frenzy yet needy of times, food delivered at homes or offices helps satiate hunger and troubles in tandem. Adding systematized, convenient, and easy-to-pay features to a food delivery platform, app developers create a highly sophisticated business model, not just a simple application.
Most consumers order meals online using 3rd party applications – a significantly higher figure than phone-based orders, thanks to the smooth & easy-ordering process. Food aggregators are also leaving an imprint of their legacy with frequent platform usage.
Though food chains have increased their strength with brand-controlled apps, 3rd party Platform-to-Consumer on-demand food delivery apps stay people’s favorite due to a carousel of alternatives, attractive food offers, loyalty points, cuisine-friendly suggestions, and more.
Food delivery facilitates:
· Convenience & comfort
· Timely doorstep delivery
· Contactless delivery
Let us entertain you with some numbers! (Information collected from Statista)
· The online food delivery segment’s revenue was projected to reach USD 136.431bn with 27%+ growth year-on-year. Was it an unforgettable figure, right?
· The major chunk of online food delivery – Platform-to-Consumer Delivery – was projected for a market volume of USD 70.741bn in 2020.
· The user penetration rate in the Online Food Delivery segment will be at 10.5% in 2021 and 12.5% in 2024.
· Statista Global Consumer Survey, October 2019, indicates a share of 36% of users is 25-34 years old, while the smallest share of 4% of users is 55-64 years.
· Most revenue generated in billion dollars corresponds to the countries of China, United States of America, India, United Kingdom, and Brazil.
The increasing penetration rate in the most populous countries highlights a bright picture! Entrepreneurs wanting to start food delivery startup businesses have a wide scope ahead.
Offline and Online Models Of On-demand Food Delivery Business
Essential models in the food delivery segment have various pros & cons. New enterprises or startup entrepreneurs should evaluate each model to their merits & lacking. A perfect alignment with the business goal retrieves an affable solution.
Offline – On Phone calls
Have you ever called a well-known eatery for ordering some specialties? You may give it a try if you haven’t. But, as of now, you must understand that phone-based bookings were the most common models for everyone with a phone.
Though quick & easy to place, phone-led bookings had several instances of errors. Some of the errors may include misheard orders (read this hilarious post!), confusing preferences, order quantity, and so on.
The volatility of phone orders could lead to serious mistakes on the kitchen side. While some people will have a roar of laughter, others may get infuriated with a mix-up of orders. Careful order notes or recordings may help.
Addressing those major concerns faced by restaurants, this food delivery startup guide offers a direction.
Offline – Through messaging
People messaging their orders to a restaurant are a fun-kind of food delivery model. With popular IMs like WhatsApp or Telegram, anyone can just chat through a restaurant for an order(s). A written order seems beneficial against a vocal/verbal order via phone.
In areas where Internet connectivity is an issue, people can simply SMS their orders. Perhaps, this isn’t the ideal way of placing orders, but it works effectively if the eatery or food outlet responds.
You can readily see what’s problematic in this category of food delivery. Typing errors followed by inconsistencies, non-acknowledgment of orders, etc. clumsily hamper the credibility of this model. However, in the absence of technology or platforms, this method extended possibilities.
Online – Through aggregators
Models like Zomato and Swiggy as food aggregators got widespread recognition in India. These food delivery app platforms linked the consumers and local restaurants with an intuitive interface.
Commission-based model by the aforementioned aggregators has inspired a revolution. Delivery riders of these companies earn order-based delivery commissions.
As aggregators, Grubhub-like companies collect orders and transmit to the restaurants. They also provide customer support services on their behalf for resolving order-related problems or queries.
Every successful transaction made through the platform passes on a commission or fee to the platform. Some brands have included subscription models for free deliveries and discount offers against a monthly fee.
Online – Through the native app
The Platform-to-Consumer Delivery model is the most successful model of all. Zomato, UberEats, Swiggy, DoorDash, etc. are primary examples of these third-party apps.
Impeccably set for the consumers to place orders, these apps have partner restaurants to cook and prepare the food only to be taken out by their logistics team or delivery personnel.
This highly persuasive and successful food delivery model collected the highest sales in the last few years. The platforms charge 20-30% on the order value.
Some business models have included a flat delivery rate (including commissions and delivery fees) on their platforms.
How To Start Online Food Delivery Business in India
How to start online food delivery business in India? Understanding the core concepts of a business segment helps a person get familiarity. We share this piece of information with a motive to let you know the basics.
Initiating a food delivery business requires you to engage yourself in a list of activities, starting from research to procuring resources to establishing a model and more. Here’s a point-by-point coverage of what’s needed for starting the same.
Quite frankly, it also covers your query for how to start online food business from home.
Selecting the target market
Identifying a geographical location for penetrating the food delivery business is crucial. For instance, in India, you can choose to start with Mumbai and increase it further to the state of Maharashtra, depending on the success ratio, resource allocation, and different parameters.
Research your target market to know what the consumers demand in the region. The targeted area can help you design the preferable cuisines (if you are an aggregator) or menus (if you are a restaurant).
Single restaurants or food outlets
You can build a platform for a single restaurant or eatery or retail outlet or kitchen for order-only as food aggregator services or attach logistics for order & delivery purposes.
Being a restaurateur yourself is a perfect advantage, where you can penetrate the market using an app and fulfill orders to both regular and new customers.
Commissions earned on single order value may range between 10-30%. You can study & research a few single-vendor models for starting a food delivery business.
Multiple restaurants
This is a wholesome business for a food delivery startup, especially when brands like UberEats and DoorDash have maximized their efforts in drawing the best results.
In a hyperlocal region, you can start a partnership with a couple or more restaurants for food delivery business, where you can provide them a platform for listing their menus & cuisines.
A logistics partnership or starting your own logistics team opens a horde of opportunities for this highly successful business model.
Application platforms
If the area where you want to run the food delivery business has a mixture of Apple and Android users, you should develop platforms for both iOS and Android platforms. A food delivery startup has a great potential to cover the hyperlocal regions.
On learning that a majority of users have Android Smartphones, you can stick to this platform only. Later, when you expand your services, you can include the iOS platform too.
White-label application
Kick-starting a campaign with a turnkey solution is considered ideal for small restaurateurs, food outlets, home kitchens, and eateries. This entire food delivery startup guide focuses on these online platforms.
Often small businesses are perplexed about what they need to enhance their business. This is pertinent to the current pandemic-like situation when people don’t prefer venturing out of their homes. Either you can have a single store white label eCommerce website to take your single restaurant or cloud kitchen or eatery online.
Or, a readymade, turnkey, or white-labeled mobile application is all set for customization to your needs so that you can start within a WEEK! Without any setup or infrastructure or developmental costs, you can begin the journey at a very minimal price.
Are you one of these businesses who want to start right away now? Don’t worry about prices. Check our white-labeled food delivery app pricing plan for an idea.
Payment gateway
RazorPay, PayPal, WorldPay, Stripe, PayU, etc. are some popular examples of payment gateways. These ecommerce application service providers authorize payments for businesses.
These 3rd party services facilitate the transfer of money from a shopper or buyer to the seller or merchant. This interface helps merchants to collect from their customers via online transactions.
From POS terminals to online payment gateways, up-to-date technologies allow customers to make hassle-free payments or cashless payments.
Invoicing systems
Online invoicing systems with top features like prepayment, sales receipts, customization, the dashboard of sales tracking & profits, inventory tracking, etc. help a business capitalize its services.
Brands like QuickBooks, FreshBooks, ZohoBooks, Scoro, etc. offer versatile-designed invoicing systems for all kinds of businesses. You can refer to their details for more information.
Logistics & delivery
Managing a logistics team requires a full-fledged and established unit. Not all businesses had this luxury, but they eventually graduated this phase.
You can consider partnering with a professional delivery team so that you can facilitate order pickup, fulfillment, and delivery at the right time. Engage yourself in a promising learning curve.
Alternatively, you can have delivery integrations with existing logistic companies in India like Dunzo, Rapido, Wefast, Shadowfax, and more. Here, you don’t have to worry about the deliveries once it’s taken by the delivery rider.
As highlighted in this food delivery startup guide, you have to envisage new ways to make it a successful venture.
Social Media promotions
Branding in the days of digital space can reach almost everyone. The millennials have access to Smartphones, Tablets, or other handheld devices. They’re prevalent in popular social media channels like Facebook, Instagram, Pinterest, Snapchat, and so on.
You can work out on a goal for your food delivery startup business. Based on that, you can begin a social media marketing campaign. Don’t invest heavily in your campaign until you test the channels for efficacy, audience-reach, conversions, and sales.
You must explore ideas beyond this food delivery startup guide to make the brand visible in the market.
Loyalty Programs
As a food delivery startup, you should know that loyalty of a customer has to be won, not purchased. If you offer them good-valued deals, prices, etc. the customers will prefer buying from your platform.
You have to continuously study the market pace and aggressive offerings from competitors to keep in tune with your products for the buyers.
Loyalty programs or rewards programs enhance a brand’s value in the customer’s mind. You can surprise them with offers or give them loyalty points on a purchase. Similarly, you can start with 10 or 100 free loyalty points on downloading the app.
Wrapping Up
The above startup guide walks you through the basics of a food delivery business in a nascent stage. Not knowing the how-to and what-to-do of the process makes people feel confused. With the help of an online on-demand food development app company, you can cover a major part of the food delivery project.
At Cruzotec, we offer a White Label Food Delivery App that offers Custom Branding, Live-tracking, Multi-vendor Marketplace, Payment Integration, Delivery Integration and a variety of features. Try the DEMO HERE.
Do you have any food delivery-specific questions? Fill this contact form to connect with us!
