As a food delivery service, you'll be offering more options and convenience for both current and future customers. Your goal will be to make ordering food from a variety of restaurants much simpler.
In recent years, the food delivery market has seen major shifts. These changes have been driven by things like:
- Growing demand and competition
- Competitive pricing
- The rise of digital technology
- Shifts in customer preferences
When putting together a business plan for your food delivery service, there are a few key factors to consider early on. In this blog, we’ll walk you through how to craft a successful plan for small businesses in the online food delivery industry.
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Why is a Food Delivery Business Plan Important?
Customers’ habits have changed. They now expect more food options, different delivery methods, and their behaviors have shifted. Here’s what this looks like:
- Fast delivery is key to keeping customers happy.
- Most orders are placed and delivered to homes.
- The busiest days are Friday, Saturday, and Sunday.
To handle these and other challenges, you’ll need a detailed business plan and affordable pricing. This plan isn't just a summary or guide—it’s a comprehensive approach that includes using the latest technology to meet these changing needs.
Let's see how a solid business plan can make a difference:
- Gives you a clear picture of your industry, main competitors, target customers, food delivery platforms, and current trends.
- Helps you do a SWOT analysis to understand your strengths, weaknesses, opportunities, and any challenges.
- Acts as a guide for running your business and helps you figure out average pricing for your products.
- Helps identify what new team members, tools, or equipment you’ll need to achieve your goals.
- Supports you with cash flow management, financial planning, strategies to stay competitive, revenue models, and your investment plan for the food business.
Key Stats to Know Before Getting Into the Food Delivery Market
- Since 2017, global revenue in the online food delivery industry has doubled.
- 57% of millennials would rather have restaurant food delivered to them.
- 33% of customers are willing to pay more for quicker delivery.
- 60% of restaurant owners say offering delivery has increased their sales.
- Partnering with third-party delivery services has boosted restaurant sales by 10% to 20%.
- 70% of customers prefer to order delivery online for a smooth and easy experience.
- Ghost kitchens or cloud kitchens are expected to become a $1 trillion industry by 2030.
Different Types of Food Delivery Business Models
When you’re ready to create your plan, it’s important to know which business model will work best for you and how it will benefit your business. You should choose a model that fits your needs. This helps you decide what services you’ll offer your customers, where to operate, and how much it will cost. You’ll also need to decide if you want to run a physical food store or focus on an online delivery service.
Here are some of the most popular food delivery business models.
1. Order-Only Model
This model is used by companies like Grubhub. These services act as a middleman between restaurants and customers, only providing the software to handle orders. Order-only platforms like Grubhub and Postmates have seen significant growth.
This model is great for offering on-demand services and making it easier for customers to order online. It serves as a bridge between restaurants and online users. Namely, it helps businesses manage online orders more efficiently. That’s why many food business owners choose to use online order systems.
With an order-only model, your main role is to handle the delivery of food. Your restaurant or business will earn a commission of 10-15% for each order placed.
2. Order & Delivery Model
Apps like DoorDash, UberEats, and Deliveroo are platforms that help restaurants get more orders for takeaway and delivery. These apps handle the delivery process using their fleet of independent drivers.
This model is different from the order-only model we discussed earlier. Here, the delivery service isn’t directly linked to the restaurant. Instead, you’ll need to partner with a third-party delivery service to get food to customers quickly. These services work with local restaurants to ensure faster deliveries, but they may add extra charges for their service.
The order and delivery model also comes with some challenges. Since you’re outsourcing the delivery, the food must be kept at the right temperature to maintain its taste and freshness. So, having a reliable delivery system is crucial.
3. Fully Integrated Model
Fully integrated delivery businesses create their own apps so customers can get meals delivered from cloud kitchens to their location. These apps focus on making things easy and providing a direct experience for users.
This model is often chosen by new restaurants or family-owned businesses that cook and deliver their own meals. Owners using this model usually operate within a specific area and work with chefs to offer a variety of foods in larger quantities. Yet, you’ll need to invest in equipment, which can increase your operational costs.
With this model, you can provide faster deliveries and have more flexibility in scheduling based on customer needs. Additionally, being able to optimize delivery routes can give you a competitive advantage in the busy delivery market.
How to Create a Food Delivery Business Plan
Here are some useful tips to help you build a successful food delivery business plan:
Do a Deep Industry Analysis
1. Identify Your Unique Selling Proposition (USP)
- Create a USP that stands out and is easy to remember. It should highlight what makes your service different and valuable. Think about how your USP will be reflected in your products, services, user experience, and branding.
- Find What Sets You Apart. To figure out your USP, compare yourself with both direct and indirect competitors. Determine what you’re doing differently and how you can stand out. Analyzing the on-demand delivery market, customer preferences, and market size will help.
- Spot Market Patterns. Pay attention to gaps or trends in the market. If you see features or services missing from your competitors, consider adding those to your offerings.
- Talk to Your Customers. Conduct surveys and talk to your loyal and diverse customers. Their feedback will help you understand what’s working and what needs improvement in your food delivery service.
2. Creating Your Unique Selling Proposition (USP)
- Find Your Niche. Instead of trying to be the best overall, focus on finding a specific niche for your business in the food delivery industry and stick with it. By setting your own standards, you won’t need to worry as much about the competition.
- Know Your Target Audience. Clearly define your target market and focus on that specific group. This will help you meet your sales goals and maintain a consistent brand image, since you can’t cater to everyone.
- Build a Strong Brand Personality. Add a unique personality to your USP to make your product stand out. A memorable brand personality makes it harder for others to ignore you.
3. Create Your USP
- List Potential Differentiators. Write down all the ways you can stand out from the competition. Conduct thorough market research to identify these points and use them to shape your advertising and business strategies.
- Identify Unique Angles. Focus on the unique aspects of your service that address customer needs and pain points. This will help you set long-term goals.
- Compile and Integrate Data. Gather data from your research and use it to refine your product, service, marketing plan, and overall business strategy.
Create a Financial Plan
Your budget will vary based on your approach and the food delivery model you select. Your market strategy and growth plans will also affect your total operational costs.
As a food delivery company, decide whether you want to build your own technology platform and support system or rely on third-party services. Building and maintaining advanced technology in-house can be costly and requires a significant investment to start.
Create a budget by taking into account all key aspects of your business model, revenue plan, and marketing strategy. You’ll have several options for financing your business:
- PayPal Working Capital Loan: PayPal provides short-term loans to help small businesses grow. The application process is quick and simple, and there are no extra fees or prepayment penalties.
- Credit Cards/Personal Loans: You can use business credit cards or personal loans to cover everyday expenses. Many small business owners find it easy to qualify for these options.
- SBA Loans: Apply for a loan through the Small Business Administration (SBA) for lower interest rates. SBA loans can be used for inventory, supplies, working capital, and equipment.
- Government Grants & Subsidies: Various state and federal grants and subsidies are available for businesses. Recently, the government has supported small and medium-sized businesses, including food delivery and meal kit startups, to help them recover or grow.
- Crowdfunding: Look into crowdfunding to attract investors and financial support. Platforms like Kickstarter and Indiegogo are great for businesses with innovative ideas, offering opportunities to raise funds from a broad audience.
Managing Resources and Team
- Acquiring Equipment & Vehicles: Determine what equipment and vehicles you need for your food delivery business, based on your cash flow. Decide if you need bikes, box trucks, or cargo vans. Depending on your budget and business model, plan whether to lease or buy these items to stay competitive.
- Hiring Drivers: Decide if you’ll hire contract drivers or full-time employees based on your business model. Look for drivers on industry job boards and use social media to find the right candidates, keeping payroll costs in mind.
- Training Drivers: Provide thorough training for all new drivers, whether they’re full-time or contract.
The training should include:
- How to handle last-mile delivery processes.
- Responsibilities and expectations for delivery drivers.
- Building a strong management team with a customer-focused approach.
- Training management staff on the tools and equipment they will use.
- Encouraging a culture of excellent customer service.
- Emphasizing the importance of drivers’ health and safety alongside their delivery duties.
Create an Operations Plan
- Plan Your Last Mile Delivery: The last mile delivery process is the final step where customers can track their orders. Make this process as smooth and efficient as possible. Ensure it’s clear and reliable, resolving any customer issues quickly.
- Simplify with the Right Tools: Make your last mile delivery more efficient by reducing manual planning and optimization. Use delivery planner and route optimization software to automate these steps and streamline the process.
- Executive Summary: As a food business owner, you'll manage many drivers and routes daily. Prepare for unexpected challenges by creating a summary of your delivery operations. Include an overview of how things will run, discuss the business model with your delivery team, and address key issues with your marketing team to help attract your target customers.
Let eLogii Help You Grow Your Food Delivery Business
Creating a meal delivery business plan can be tough with so many factors to consider. The growing competition in the food delivery industry makes it even harder for newcomers to establish themselves.
A solid food delivery business plan is crucial. Be sure to cover all the key points mentioned above before launching your online food delivery service.
One critical aspect is planning and optimizing your delivery routes. Without proper route optimization and a strong last mile delivery setup, you won’t be able to attract customers effectively.
Use delivery management software like eLogii to optimize your routes and reduce delivery time. It helps you save on costs while increasing the number of deliveries you can handle per route.
Food Delivery Business Plan FAQs
Final Thoughts
Starting out in the food industry means you'll need to put in a lot of effort into your business planning.We’ve covered key factors to consider when creating your own plan. It’s essential to analyze current market trends to build a solid operations strategy. Understanding different business models is crucial before applying them to your own business.
Even with a completed business plan, success in the online food delivery space often requires the right tools. eLogii is one such tool that can streamline your food delivery operations and make it easier to reach your customers. With route planning software, you can handle unlimited deliveries efficiently. Simply import your data, optimize your routes, and dispatch with just a few clicks.