How To Start a Food Delivery Business? [7 Easy Steps + Business Models]

What if I tell you that the food delivery services market size is expected to grow at a CAGR rate of 15.4% during the forecast period 2014-2025? It will be a huge market. Isn’t it?

Therefore, you are likely to start your new food delivery business on a positive note. But, doing so is not that easy as you might face many challenges. You need to analyze market situations, operational costs, organize food menu and offerings, and even build marketing strategies.

To help you get a perfect start, we will discuss significant factors on how to start a food delivery business from scratch.

What are The Different Types of Food Delivery Businesses?

A food delivery business involves delivering food to customers. The customers generally place an order either through mobile apps, websites, or even phone calls. It involves simple steps:

Restaurant delivery services and meal delivery services are the two main types of food delivery services.

Restaurant delivery service: You can make money by charging a commission to the restaurants it works with and charging customers service fees or delivery fees.

Meal delivery service: To entail a chef or cook, often working from their home or a rented commercial kitchen, delivering pre-made quality meals or home meal prep ingredients to homes or many businesses.

Besides, below are the things done easier with the help of Upper.

  • The customer makes an order from the food delivery system.
  • The system transfers that order to stores, restaurants, or even third-party applications that prepare food.
  • The delivery boy picks the order from the restaurant chains, meal-prep business, or food producers and delivers it to the customers.

7 Easy Steps To Start Your Own Food Delivery Business

To start a food delivery business, you need to take care of the following steps.

cheat sheet for food delivery business

Step 1: Compile a Food Delivery Business Plan

Before starting your own food delivery company, you must ask yourself: For whom you are starting your business? The customers who are most likely to buy what you’re selling will be your target market. Generally, there are three familiar target audiences involved in the food delivery business.

  • College students and young adults: In the active social and fast-paced lives of college students and young adults, they don’t have time to think about what they will have for lunch or dinner. So, this generation will be a good target audience.
  • Parents: Busy parents and families are the target audiences. They are overwhelmed to deal with busy schedules and plan for a meal at the end of the day. It will save them time to visit grocery stores and have more time to spend with their kids.
  • Working professionals: Working professionals, particularly men, are increasingly turning to meal kit delivery services. Working professionals are often busy, but having a meal kit delivery service takes the guesswork of planning and making dinner. What could be better after a long day at the office?

Along with that, you will have more potential customers in your business by having a good business name, your marketing strategy, and the meals that you offer. 

Once you know your target audience, the chance of business success will reach another level.

Step 2: Money Planning for Investment

The next thing that you need to concentrate on is having good funding for starting your new food business. Initially, it would help if you had to predict overall startup costs for your business venture. You need to spend many upfront costs just before starting it. Some of them are mentioned below:

A workspace
  • The cost may vary depending on your business location and delivery area you operate in.
  • If you start to operate your business from home, you need to consider it less expensive than buying or renting a kitchen space.
Technology & infrastructure costs
  • You have to include the cost to purchase a computer, telephone system, internet access, and possibly a printer or scanner.
  • You’ll need to purchase a table, kitchen materials, and some cooking items.
Business license and insurance policies
  • You’ll need to consider the cost to purchase general liability policy and a license for your business.
  • You have to buy commercial auto insurance for your delivery fleet.
Marketing materials and website
  • To promote your business, you’ll require printed napkins, cutlery, and other ways to provide superior customer experience.
  • You have to consider the costs of purchasing a paid subscription to social media and a website domain.
  • You also have to consider other tactics like flyers and advertising.
Business/ Delivery vehicle
  • In your business, you have to consider the transportation costs like delivery vehicles’ maintenance.
  • The cost for food service bags and reusable food containers designed to maintain freshness and temperature.

Considering all the factors discussed above, we can say that the startup cost to start a food delivery business can range from $3,000 to $25,000.

Step 3: Set up SOP for Food Delivery

For starting a new delivery business, having proper planning is of utmost importance. A business plan defines a path to your business success.

Your delivery business plan must have information on a target audience, revenue figures, operational cost projections, overhead costs, and even a marketing plan. In addition, you should describe the target audience’s specifics in your business strategy, especially if you need to target a specific customer base.

What are the essential metrics that you must include in your business plan?

  • The complete information of your business (Executive summary and business description).
  • Analyzing market dynamics and making your business ready to fit into the local food delivery service market.
  • Describe how your business is set up, whether you’re the only proprietor or fall into the franchise.
  • Describe the food options, order value, and delivery cost you will charge.
  • Describe how you plan to advertise your food delivery startup and to whom you plan to market.

Step 4: Decide What Would Be Your Service Offerings

Once you have identified your target market, you have to make a selection for your food delivery menu.

One of the best recommendations is to opt for delivery-friendly menus that can fit all your target audiences like busy working moms/dads, seniors, disabled folks, businesses for meetings, and individuals who hate going out to restaurants/stores. You can even create a food menu by including quick meals, easy snacks, lunch, and dinner for college students.

You have to first analyze and consult with local restaurants and other food businesses to see what services they are offering. It will give an overall idea about the services that they lack and you can include in your business. Take a look at food delivery trends in the restaurant industry. It will give you some great ideas.

If you plan to have restaurant partners, strategically approach them with your market research and business plan.

Step 5: Ensure You Have Completed Legal Formalities

The most important thing you need to perform is to operate your food delivery business legally, and for that, you have to follow the steps mentioned below:

Form a legal business entity: First of all, you have to decide your business structure. It helps you to protect your assets. You have an option to select any of the following business entities as per your business regulatory requirements:

  • Sole proprietorship: You are the sole business operator and have complete authority over your company’s assets, liabilities, and other management.
  • Partnership: You have the option of forming a strong partnership with another company in the food and beverage industry.
  • Corporation: This legal entity is reserved for those with large-scale and well-established businesses. Even in this structure, there are taxable employees.
  • Limited Liability Company (LLC): You can quickly reap the benefits of limited liability by forming an LLC. It means that your business qualifies for sales tax breaks and exemptions.

Nowadays, many food delivery businesses are adopting either LLC or a Corporation business type.

Register for taxes: Taxation is important for your delivery business. Depending on the structure of your business and service offering, you have to apply for an employer identification number. Check your state and federal tax requirements before opening your doors to ensure that you are registered.

Open a business bank account: Remember that your personal and business accounts must be separate. By having a business account, you become entirely protected from your personal assets, and it becomes easy for you to file your federal taxes. 

Get food delivery business license & insurance: Find small business insurance coverage to protect yourself from liability risks and it helps you to reduce expenses.

Step 6: Know How Will You Deliver Food Parcels

The primary goal of any food delivery business owner is to deliver the food packages to the customers on time. Time management is a critical aspect for a food delivery service. And for that, there must be a faster delivery process.

Nowadays, the demand for same-day delivery is increasing day by day. So, you have to prioritize food deliveries so that customers opting for same-day delivery are scheduled first, then other deliveries on-route are added to the run.

To speed up the entire delivery process, you must adopt route optimization software that makes it easy for the delivery driver to take the road trip.

Upper Route Planner is one such food delivery route planner that is mainly designed for delivery businesses to plan daily deliveries in less time.

Step 7: Market Your Business via Online/Offline Channels

Now, you are ready to make your food delivery business and services online to the world. One of the most incredible places where you can advertise your business is getting on the internet.

Nowadays, digital marketing is the platform where you can advertise your business in many ways like brand awareness, leads, search traffic and exposure, social media accounts, and sales. Moreover, it allows you to get to know your audience personally, which may help you build brand loyalty.

  • Create a professional business website.
  • Perform search engine optimization (SEO) to get more customers by using the business website and sharing your business information with Facebook and Instagram accounts.
  • Word-of-mouth allows you to talk with your friends, neighbors, and even perform door-to-door advertisements to share your service details.
  • Using Professional business cards, flyers, signs, or newspaper advertisements.

These are the standard steps that you need to follow to start your food delivery business from zero.

Streamline Your Food Delivery Services with Upper

Want to find cost-effective delivery routes to perform on-time food deliveries? Switch to Upper and make 3x faster deliveries. Start now!

What Are Benefits of Starting a Food Delivery Business?

Starting up a food delivery business has many perks as mentioned below.

1. Increased Number of Repeated Food Buyers

Owning a food service restaurant for dining purposes may attract less customers. So, instead of that if you opt for a food delivery business, you can expect a large number of food consumers. By doing so, there are high chances of retaining existing customers and at the same time, luring new ones.

2. Surge in Business Revenue

One of the advantages of using food delivery services is that you can achieve desired profit. If you are operating delivery services with the help of a route planner like Upper, your food delivery process will be cost-effective. If you succeed in attracting new and existing customers to your service, your business revenue is likely to surge.

3. Knowing Current Trends In Food Industry

Nowadays, consumers are placing online food orders instead of going out for dining. This means food delivery companies can track the customers’ data, analyze their competitor’s performance and eventually, learn about the current trends in the food industry. It will assist them to follow the latest trends in marketing products.

How Upper Helps You Scale Your Business?

As a owner of food delivery business, you need to deliver hot meal to the customer’s doorstep. Such delivery process would get improved with the use of Upper route planner. How? Simply finding the best routes via Upper’s autonomous process to make quicker deliveries.

At Upper, we ensure the delivery drivers spend minimum time on road and get your food delivered instantly. No matter how many multiple food deliveries you got, it provides optimized routes and directs your driver to cover all the stops.

Here is how Upper can be your go-to delivery route planner.

  • Upper finds cost-effective routes in less than a minute.
  • It helps you manage your delivery teams by auto-assigning routes to the available driver.
  • Generates on-demand delivery reports for weekly or monthly analysis. 
  • The google-integrated platform lets fetch the exact address of the location along with the street view.
  • It offers route scheduling to organize route plans in advance.
  • It keeps customers in the loop by sending them customized automated notifications.
  • Online route planner ensures delivery drivers spend minimum time on road and perform faster deliveries.
  • Following the successful food delivery, it lets the delivery agent capture the delivery proof.

Use Upper to Deliver Hot-served Food in Minutes.

Taking it too long for your drivers to reach the location? Let Upper reduce your workload by guiding them. Try it Now!

Types of Food Delivery Business Model

In general, there are three types of food delivery models on the market. Let us go through them all one by one.

The Order Only Model: Partial Service Business Model
  • This model easily handles restaurants, customers, and delivery.
  • It is the common marketplace used by many food delivery businesses.
  • Customers will have to register to the platform, and they are not concerned with the delivery.
  • Restaurants will only be responsible for delivering food to the customers.
The Fully Integrated Model: On-demand Business Model
  • It’s a complete meal delivery business plan.
  • Here, you need to take care of everything, from cooking to delivery options.
  • You have an option to cook the meal at your place or can hire a chef for the same.
Business license and insurance policies
  • You’ll need to consider the cost to purchase general liability policy and a license for your business.
  • You have to buy commercial auto insurance for your delivery fleet.

We’ve just come across the basic information on these business models. We answered most of the common questions in the next section if you have any questions.

FAQs

If you decide to start a food delivery business, you must be aware of the business risks. Many delivery logistics service risks can be covered by insurance for small businesses.

  • Third-party injury and medical payments.
  • Third-party property damage.
  • Personal & advertising injury.

Of course, if you are a restaurant owner, you should start a food delivery business to expand your business network. It will help you reach the audience outside of your service area. Since dine out is not convenient for all customers, the addition of food delivery may attract potential clients to choose your service.

Generally, every restaurant is charged as commission for providing the restaurant delivery services. Additionally, most companies include a food delivery fee, which is paid by the customer.

On average, the profit of food delivery business services is calculated based on location, on-demand food, and overall growth rate. Many experts and professionals have reported an annual profit of $25,000 per year.

Here are the things to set up a successful food delivery business from home.

  • Follow Right Business Model
  • Kitchen Space
  • Online delivery Route Planner
  • Delivery vehicle
  • Efficient food plan
  • Competitive pricing for selling food

Jump Start Your Food Delivery Business With Upper

Referring to the aforementioned points, now you would be ready to start your own food delivery company. Moving on, you might need an online route planner as far as food delivery is concerned.

Once you start your own food delivery companies, you need to deliver the hot food to the customer’s doorstep. If not done on time, you may receive backlash for your food service. To get rid of such issues, you can switch to the Upper route planner. Sign up for free on Upper and explore its main features.

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.

https://www.upperinc.com/blog/how-to-start-food-delivery-business/