Ultimate Guide on Online Food Delivery Business Plan

As a food delivery service, you will be expanding convenience and choice for your existing and potential customers. You will be working towards making it easier for them to order a wide variety of food from various restaurants.

In the last few years, there have been huge changes in the food delivery market. These changes have come into effect due to:

  • Increasing demand and competition;
  • Competitive prices;
  • The rise of digital technology;
  • Evolving customer behavior; and 

At the time of creating a food delivery business plan, you may require to consider several aspects in advance. In this blog, we will help you create an effective food delivery plan for your business.

Why Do You Need a Food Delivery Business Plan?

The customers have evolved. Their demand for food, types of food delivery, and behaviors have changed. These points show how:

  • Offer great speed of delivery and boost customer retention rate;
  • Most meals are ordered from & delivered to homes;
  • High volume of orders on Friday, Saturday, and Sunday.

In order to tackle these challenges and many others, you need to formulate a detailed food delivery business plan and affordable prices. The plan is not only an executive summary or roadmap, it is much more than that. 

Here’s how a well-developed winning business plan can help you:

  • Offers an understanding of your industry, key competitors, target audience, food delivery platforms and trends.
  • Conducting a SWOT analysis for food and getting insights on your strengths, weaknesses, opportunities, and threats.
  • Works as a benchmark on how to conduct the business and know average prices for your products.
  • You can find out the requirements of new members, tools, and equipment to help you reach any major goals or business goal.
  • Helps with cash flow statements, financial statements, competitive strategies, and revenue model of the food business along with investment strategy.

Key Statistics to Observe Before Entering the Food Delivery Market

Food Delivery Market Size

Source: Statista

  • The global revenue in the online food delivery segment has doubled since 2017.
  • 57% of millennials prefer to have restaurant food delivered.
  • 33% of consumers are willing to pay higher fees for faster delivery services.
  • 60% of restaurant owners & operators said that offering delivery generated incremental sales.
  • Joining hands with third-party delivery services has raised restaurant sales volume from 10% to 20%.
  • 70% of consumers prefer to place delivery orders online for a seamless robust experience
  • Ghost kitchens or cloud kitchens is going to be an office food delivery industry worth $1 trillion by 2030.

Different Food Delivery Business Models

When you are ready to create a plan, you must know which business model will you acquire and how it will benefit you. Business models should be considered on the basis of what are your requirements. Basically, it helps you choose which services you will offer to your clients including strategic locations. While doing so, you should decide whether you will run a food store or an online food delivery service business. 

Here are different types of popular food delivery business models.

1. Order Only

This type of food delivery is followed by food delivery companies like Grubhub. These services only function as a software layer between the standard restaurant and the customers. Order-only platforms like Grubhub & Postmates have experienced remarkable growth.

This model becomes ideal for those who want to provide on-demand services. In fact, it is the best way to customer contact more easily. This business model will act as a medium between your restaurants and online services. Hence, making it easier for online users to take benefit from online purchases of food. This is why so many food business owners consider preferring to consider online order requests.

By opting for an order-only business model, your main job will be to deliver food to the buyer. In this process, business cum restaurant will earn a commission of 10-15% for every order request they receive. 

2. Order & Delivery

Apps like DoorDash, UberEats, and Deliveroo are channels that bring in extra orders to restaurants in the form of takeaway and delivery. The apps manage the deliveries for these restaurants using their own fleet of independent drivers. 

It is quite different than what we understood in the previous model. In simple terms, the delivery process is not directly connected to restaurants. In fact, you need to hire a third-party delivery service that can provide timely delivery to the customer’s doorstep. Delivery service providers jointly work with the restaurants to provide quicker food deliveries or drinks to customers, but they also put on extra charges for received orders. 

This order and delivery model also comes up with challenges that you should look at before acquiring it completely. Since you are handing over the delivery duties to another party, they should store the food at a consistent temperature. If not done, food may not have the same taste and freshness. Thus, you need to put a systematic delivery system. 

3. Fully Integrated

Fully Integrated delivery businesses develop their own apps using which customers can get meal deliveries from cloud kitchens to the ideal location. These apps focus on convenience and direct experience to consumers. 

It is usually preferred by startup restaurants or family businesses where they can prepare meals and deliver them to the food buyer. Business owners opting for a fully integrated model only serve in a specific service region. They also collaborate with chefs to provide a different range of foods and a better quantity of foods. Going for this model, you need to pay for the cost of equipment which means your operational cost may raise. 

With this model, you are likely to provide quicker deliveries and may find it easier to adjust the delivery schedule as per consumers’ requirements.

How to Write a Food Delivery Business Plan?

Do In-depth Industry Analysis

  1. Identifying your USP

    • Make something memorable: A good USP is the one that is memorable, makes a case against existing products and offers valuable interaction with customers. How will you embody your USP in your products, services, user experience, and office food delivery brands? 

    • What are you doing differently?: In order to identify your USP, look at the direct competitors, and indirect competitors and find out what you are doing differently from your major competitor. An on-demand delivery market analysis, customer analysis and knowing relevant market size will be helpful. 

    • Notice patterns in the market: If you notice a pattern in the market about features or aspects missing in the competitors, note that down and see if you can offer those features or food services. 

    • Talk to your customers: Conduct a thorough market survey. Talk to your loyal customers or different types of customers and see what they have to tell you. It will help you find out what’s working for your food business and what’s not working.

  2. Developing your USP

    • Don’t try to be the best: Don’t try to be the best brand or product out there. Just carve out a niche for your own business in the food delivery industry and stick to it. You will not be concerned about the competition once you make the rules yourself. 

    • Who are you targeting?: Be particular about who your target market is. Focus on that particular audience. It will help you achieve corporate sales goals and keep your brand image consistent because you can’t be everything to everyone. 

    • Develop a personality: Incorporating a strong personality into your USP will make your product more memorable. Once you infuse a personality into your brand or product, it will be difficult for others to not notice you.

  3. Create your USP 

    • Write things down: Create a list of all potential differentiators. You will find these points if you do a thorough actual market trends. Wrap these points around your advertising strategies, business strategies and detailed strategies. 

    • What are your unique angles?: Pitch your most unique angles against the customer’s needs. Learn about their pain-points as it will help set long-term goals.

    • Compile data: Collect all the data you receive from your consumer and market research and integrate it with your product, service, marketing strategy, and business idea.

Prepare a Financial Plan

Your budget will be dependent on your approach and the food delivery business model you choose. Your approach to market and growth strategy will also be an important factor in the total operational costs or key costs you incur. 

As an office food delivery company, you can choose if you will be building an in-house tech platform and support or whether you will be dependent on third-party services for the same. It is an expensive thing to integrate advanced technology in-house. You need a great amount of investment just to get started. 

Figure out a budget considering all the major factors of your business model and food delivery marketing plan. You will have several financing options to choose from: 

  • PayPal Working Capital Loan: PayPal offers short-term loans to help small businesses grow. The application process for a PayPal Working Capital Loan is quick and easy and there are no extra fees and prepayment penalties. 
  • Credit Cards/Personal Loan: Business credit or personal loan can be acquired to fuel the daily functions of your business. Small business owners can easily qualify for credit cards and personal loans. 
  • SBA Loans: You can apply for a small business loan under the Small Business Administration advantage program. SBA offers small business financing with lower interest rates compared to other options. SBA Microloans can be used for inventory, supplies, working capital, and machinery.
  • Government Grants & Subsidies: There are several State and Federal Government grants and subsidies available to businesses. In recent times, the government has helped several small and medium-sized businesses to revive their existing food delivery business or any type of meal delivery startups. 
  • Crowdfunding: Reach out to investors and financial institutions to see if you are eligible for a loan. There are great opportunities for businesses with innovative ideas. An online platform where innovative businesses are identified and valued is KickStarter and Indiegogo.

Resource and team management

  • Acquiring New Equipment & Vehicles: Decide which major sources and equipment or standard kitchen utensils you will require for your standard food delivery company. Do you need bikes, box trucks, or cargo vans? Depending on your business model and budget, plan out the lease or acquisition of vehicles and new equipment.  
  • Hiring Drivers: You will have to choose whether you want to hire contract drivers or full-time drivers. It will depend on your delivery business model. Look for drivers on industry-specific job boards. Make use of your brand’s social media platform to search for suitable drivers.
  • Training Drivers: A thorough training will have to be provided for your newly-hired drivers, whether they are involved on a full-time basis or on a contract.
  • The training process shall cover:
    • Train your entire staff for your last mile delivery process; 
    • State their responsibilities as a delivery driver;
    • Form a strong management team to work with a customer-centric mindset;
    • Give access and train management staff for the tools and equipment they will be using on the job;
    • Help them establish excellent customer service culture;
    • Train drivers to prioritize their health and safety over the package time to time.

Generate an operations plan

  • Plan Your Last Mile Process: Your last mile delivery process is the front-end process that is often trackable and visible to the customers. Try to make this process as efficient as possible. A month of operation on customer-facing troubles always be crystal clear and should be carried out without any uncertainty. 
  • Simplify the Process by Employing the Right Tools: One major way of simplifying your last mile delivery process is to cut down planning and optimization time by eradicating a manual procedure. In order to automate these steps, you will have to integrate a food delivery planner and optimization software in your last mile delivery process. 
  • Executive summary: As a food business owner, you will be employing multiple drivers and creating multiple routes for them daily. You will need to be prepared for every unexpected challenge. Create a summary on how your food delivery operations will take place. You can give an overview and discuss the business model with your delivery team. Address your marketing team to work on key issues that help them attract target customers.

Let Upper Help You Grow Your Own Food Delivery Business

Developing a meal delivery business plan can be challenging. There are quite a few aspects that need to be considered seriously. The increasing competition in the office food delivery services industry only makes it more difficult for new entrants to make space for themselves.

With a reliable food delivery business plan, you can never go wrong. Make sure you consider all the important pointers mentioned above before setting up your own online food delivery system. 

One of the most important aspects, as mentioned above, is planning and optimizing your delivery routes. Without proper optimization and a strong last mile delivery setup, you will not be able to gauge an audience in the market. 

Use a route planning and optimization software like Upper to make sure your routes are optimized and you save the delivery time. It keeps eye on your personal savings while achieving more deliveries per route.

Utilize Upper to Automize Food Deliveries

Preparing a food delivery business plan? Why not include the best route optimization for getting faster delivery routes. Start using Upper for better delivery management and timely deliveries.

FAQs

Offices food delivery services are booming currently. The rise in quarantine and lockdown restrictions has people locked up in their houses. It has given a huge boost to online food ordering. Most businesses recorded the highest revenue only because of the online food ordering and delivery.

Food delivery businesses either prepare the cooked food on their own or partner with entire restaurant to handle food deliveries on behalf of them. These are the two main ways in which food delivery businesses operate. A food business that prepares and delivers on its own either receives orders through its website, third-party mobile app, or phone call.

You can start accepting orders for your homemade food online through your social media platforms, website, or phone calls. Many small businesses that sell homemade food accept orders through phone calls or online business plan software that help them sell and deliver their food to the customers.

Food delivery services business like DoorDash, Grubhub, and Postmates are some of the most popular food delivery services having the potential market share in the online food delivery service industry.

Conclusion

If you are new to the food industry, it means you need to work hard in business planning. We discussed significant factors that should be considered while making your own business plan. So, all in all, you must analyze the current food delivery market statistics that may help you make a robust plan. For a new player like you, it becomes necessary to understand business models before implying them to your business.

Successful online business may not even if you finish your food delivery business plan template as you may need support from online tools. Upper is one of such tools that streamlines your food delivery services and helps you reach the food buyers’ locations easily. You can manage unlimited food deliveries with the help of a fully automated delivery process. Import your data, optimize them, and hit the dispatch button with just a few clicks. Book a demo with us to get more insights into Upper Route Planner.

Author Bio
Rakesh Patel
Rakesh Patel

Rakesh Patel is the founder and CEO of Upper Route Planner. A subject matter expert in building simple solutions for day-to-day problems, Rakesh has been involved in technology for 30+ years. Looking to help delivery businesses eliminate on-field delivery challenges, Rakesh started Upper Route Planner with the ultimate goal of simplistic operations in mind.

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