How to Start a Meal Kit Delivery Service Business?

Key Takeaways:

• Offering a variety of menu choices and catering to dietary concerns can help to attract a larger clientele.
• Forming ties with neighbourhood farmers and vendors may help you find high-quality, fresh products for your meal packages.
• An easy-to-use ordering system available on your website and mobile app will help you draw in and keep clients.
• You may set your business apart from rivals by offering flexible delivery alternatives like same-day or next-day delivery.

Starting a new meal prep business is not only limited to serving hot food to its localities, but it could help you double your income as well. That’s right because the revenue of the meal kit industry is projected to get hiked by $64.4 billion USD in the next few years.

But what about food buyers? They too would become a part of your entire meal prep business due to these three factors:

• To order a hot-served meal from favorite cuisine
• Not having much time to buy extra groceries
• To refrain from cooking food at home

Now, you may wonder how will you operate a meal prep delivery business, would you handle multiple order deliveries at the same time? Will you be able to manage food drivers? For answers, let us understand how to start a meal kit delivery business, its challenges, and solutions.

What is a Meal Kit?

A meal kit is a subscription service, where a company sends their customers a small box consisting of half-cooked food, pre-prepped ingredients, and pre-portioned ingredients along with the recipe card attached to the top of it. Also, you may get fresh ingredients like pieces of vegetables and fruits to assemble and prepare a hot meal. 

Ordering meal kits from an online meal prep business will save your kitchen time and help you prepare hot food with fewer ingredients. Meal kits delivery are usually preferred by young consumers working away from home in order to eat delicious home-cooked meals. And so, they order meal kits from an online meal prep company instead of going out to grocery stores.

How does a meal kit delivery business work?

Nowadays, every food delivery business offers meal kit subscriptions for customers to avail of weekly or monthly online meal kits delivery at discounted prices. While ordering the food, you can select any one feasible option from the menus, and pay accordingly to confirm your order.

Now, let us study a real-life example of HelloFresh.

HelloFresh is one of the leading online meal kit delivery service providers that lures new customers by launching new offers and loyalty programs. But, it takes extra charges for food delivery up to $8. 

If you are a new user, it will give you a discount of -$22, plus five recipes for two people. Then, you can select your choice from the menu, such as veggies or low-calorie options before confirming an order. Ultimately, it may cost you approx. $68 for your first online order.

How to Start a Meal Prep Business?

Let us understand how to launch a meal delivery service in 8 easy and effective steps.

Step 1: Create a business plan

Before starting any service business, it is mandatory to curate a detailed business plan. Creating a business plan enables you to schedule tasks at different time intervals. From surveying your competitors to managing your revenue, you can plan every action.

Here is the list of tasks you must include in your business plan:

• Study your competitors
• Create a weekly menu
• Decide your target market
• Create a budget
• Adopt marketing strategies
• Hire staff
• Buy equipment and rent a workspace

Step 2: Arrange finances and make investments

Opening a business isn’t possible without making necessary investments. Firstly, you will need sufficient fundings to make basic investments to establish and successfully run a meal kit delivery business. Investments made in a proper way and smartly managing the resources can turn your business highly profitable.

Here’s a list of some investments you must consider while establishing a meal prep business:

• Buying cutleries and utensils
• Rent of workplace or commercial kitchen
• Ingredient inventory cost
• Food service license cost
• Packaging cost
• Employees’ salary
• Supplies’ cost
• Transportation cost
• Vehicle maintenance
• Advertising costs
• Other business operation costs

Step 3: Apply for a food service license

First of all, you need to apply for a business license and a food handler’s license. You can get a catering license from the online web portal. Thereafter, local officials will visit your meal prep workspace. Later, the health department permits a business license if your meal prep workspace complies with all safety norms. The business licensing process may cost you up to $1000 USD.

Step 4: Know your competitors

Competitors are the ones who may inspire you to develop a business idea for your meal prep delivery service. So, you should closely watch how they are performing in the meal kit delivery services market. Such techniques will help you to create a business model and find out business requirements. So, knowing your competitors is important to stay on top in the meal kit delivery market.

Step 5: Set up SOP

Once you are ready to explore a meal plan, set up business structures by creating a standard working procedure (SOP). By doing so, it will be easier to manage the shift timings of drivers and customer service teams. This step will help you to perform timely deliveries. Also, you can get the right delivery management software to improve delivery efficiency.

Step 6: Contact the meal packaging supplier

In the next step, you should reach out to the one who provides meal packaging supplies for smooth food service operations. And so, you should get in touch with portion packaging suppliers to get containers in bulk demand. You should meet farmers for daily deliveries of vegetables. In this process, you should keep in mind changing the weekly menu.

Step 7: Introduce your own food delivery app

To become a customer’s first pick for meal kit delivery service, as a business owner, you should come up with a well-developed demand delivery app or meal prep website. It will help mobile users quickly browse your weekly menu to place an order. Therefore, you should assemble the development team to build a feature-rich food delivery app.

Step 8: Use marketing strategies

Launching a mobile application is not enough as you will need the best minds for marketing. So, you can hire an SEO executive or business analyst to create a content marketing plan. SEO executives guide you to create future-focused content that can push your website to the top of Google search results.

Else, do offline marketing by posting an advertisement in the newspaper. The offline and digital marketing team would help you attract desired customers and carry out a successful business operation.

Business Model: Meal Kit Delivery

Nowadays, you can find every service online and the meal kit delivery service business has joined the drill.

Meal kit delivery is a significant business model because it allows you to deliver partially-prepared food directly to customers. Meal kits are becoming an increasingly popular way for consumers to enjoy gourmet foods at home.

Meal kits are sold by companies that specialize in meal preparation and delivery, including Blue Apron and Hello Fresh. These companies offer monthly subscriptions for home cooking ingredients, which include recipes and instructions for preparing the food.

For example, Blue Apron sells its subscribers a box of ingredients that includes recipes for lasagna, steak fajitas and chicken pesto pasta. The company provides detailed instructions on how to prepare each dish, along with serving suggestions for each recipe.

Meal kit delivery helps improve restaurant sales by making meal preparation easier than ever before. Consumers can order their favorite meals from their favorite restaurants without having to leave home or visit the grocery store.

What is the Cost of Starting a Meal Kit Delivery Service Business?

Starting cost for a meal prep delivery business will be anywhere between $20,000 and $30,000. However, it depends on factors like business scale, owning a ghost kitchen, office space lease, and delivery team size.

At the start of your new business venture, you will need to have an operational budget in place so that you can begin making money as soon as possible. This means that you need to know your monthly costs and how much money you are going to make from each venture.

The following are some of the most important things that you need to take into account when creating your budget:

Mortgage or rent payments:

You will need to pay off any debts or mortgages that may be holding you back from starting up a successful business. If you own property or if you have any other financial obligations such as student loans or credit card debt, then paying them off before starting up your new venture is essential.

Paying salaries to teams:

You will be having a number of employees working for you. So, as meal kit business owners, you are liable to pay them on-time. So, you must count salaries as it holds a major significance on the initial costs.

Challenges in Meal Kit Business

Below are the main challenges you may come across as a new owner of a meal kit business.

1. Customers using service for 1-2 weeks

Since you are new to the meal kit delivery market, there are strong chances that meal kit buyers may order food online and never come to avail of your service again. Most people may buy a meal kit subscription plan and might not use it for a long time.

2. To convert new customers into repeat buyers

Discounted offers for online meal prep service may only work for first-time customers who may not appear again on your platform. This could be possible due to meal prices, expensive subscription plans, lack of essential features, or late deliveries. Therefore, you must figure out how to increase customer retention rates.

3. Inefficiency due to poorly planned routes

The food delivery business may take a hit if your delivery team is wasting more time on the road rather than delivering food quickly. And for that, you may have poorly planned routes to blame. Such issues may adversely affect delivery efficiency and financial planning.

Benefits of Meal Kit Business

There are a number of benefits to starting a meal kit business. Below we have listed and described a few benefits of starting up a meal prep business. 

1. Obtain more customers

Meal kits allow you to target specific customers with your product. For example, if you’re selling healthy meals, you might have a unique product that appeals to that particular demographic. This can help you gain new customers who may not have tried your food meals before.

2. Save time and money

If you’re able to market your meal kits effectively and deliver them on time, it’s likely that you’ll be able to save both time and money by not having to prepare meals from scratch every day or week. You’ll also be able to save on food costs since most of your ingredients will already be packaged in prepackaged containers ready for consumption straight out of the box!

3. Build brand recognition and loyalty

You could establish your brand identity among consumers who appreciate eating healthier foods without sacrificing taste or quality. Meal kits allow consumers to eat better without feeling deprived because they can buy their favorite foods in pre-portioned portions that look appealing and taste delicious!

How Upper Route Planner Helps Your Meal Kit Delivery Business?

Using an Upper Route Planner for food delivery is like putting a cherry on top of the cake. The reason why it is said is that an online route planner brings you multiple benefits for your meal prep business. Here is how the online route generator assists you in performing meal kit delivery service.

• The Upper makes sure you don’t waste more time planning routes.

• With Upper, you are most likely to deliver the hot-served meal in less than the expected time.
• You can save time spent on manual route planning. Upper route planner optimizes all the stops and curates an optimized route and following it will make you deliver more food orders during busy work hours also.
• With Upper, you can add up to 500 stops at once. So, you don’t need to figure out a route after every delivery.

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Pick Upper Route Planner to Boost Your Meal Prep Food Deliveries

So, after revising our meal prep business plan and establishing your business, when you reach a stage where making more deliveries is your only question, the Upper Route Planner will be helpful to you. You can plan routes, optimize and dispatch them with a single click of a button.

Upper helps you ensure your drivers are not wasting a minute while delivering the food orders. Because it can affect food quality and create a negative impression of your business. So, make sure you sign up for the Upper Route Planner for free and get a glimpse of its effect on your meal prep business.