How to Start a Food Delivery Business in 8 Steps

Online food delivery is booming more than ever, with people using apps, websites, and dedicated platforms to order in on a daily basis. As a result, the sector’s global market worth is valued at $150 billion - more than triple its value from 2017. Moreover, in the US, the market has doubled during the coronavirus pandemic, noting a growth of 8%.

Considering the saturated market, starting a food delivery business can seem daunting. So, to help you get started and set yourself up for success, we share a simple guide to creating a food delivery business in 8 steps.

Food delivery business

Define Your Target Audience

Building a business requires a solid business plan and the first step is to define your target market. For example, will you be catering to Baby Boomers, Millennials, seniors, or another age group? Additionally, consider the area you’ll be serving.

For instance, are you located in a suburban neighborhood or near a university? Office workers usually prefer healthy food choices, whereas university students want cheaper meals. Study your audience's consumption and buying habits closely to curate your offering.

Research the Market

Before investing, do diligent market research. First, familiarize yourself with the foodservice landscape, latest trends, and competitors. The next step is to study your competitors closely, including their menu offering, pricing models, and strategies.

Finally, use this knowledge to establish a point of competitive difference. Think about how you’ll differentiate from your competitors and what would make consumers choose you over them.

Find Your Niche

The next order of business is to find your niche. Think if there are some gaps in the market and whether you can offer delivery services to unattended customers. Then, you should focus on specific types of food and determine what will be your unique approach. If you specialize in a particular cuisine, use it as a strong suit and provide the best assortment and highest quality to your consumers.

Buy Insurance

Food delivery insurance can be more expensive than a traditional personal policy, but it’s essential to have. It will cover your business from legal fees, injuries, accidents, and damaged vehicles helping you avoid unexpected costs and protecting you from liability. You can get food delivery insurance online in just a few steps. The best insurance companies offer robust coverage options, affordable premiums, and high policy limits.

Formulate the Budget

When it comes to formulating your business finances, start with establishing an estimated funding budget. Typically, startups costs can range from $3,000 to $25,000, depending on the workspace, technology, business license, marketing, vehicles, and tools you’ll need.

Additionally, do revenue and demand forecasting. Make sure to estimate the projected earnings, expenses, and overhead. Don’t forget to calculate payroll expenses, licensing fees, taxes, insurance, and maintenance fees.

Deal With Legal Requirements

From a legal aspect, you should first set up a business structure to protect your assets. You can choose from many legal entity types such as LLC, Corporation, and DBA. Forming an LLC might be the best option since it allows you to keep your personal and business finances separate.

Then, you should register for taxes and open a bank account. Last but not least, check with local, state, and federal agencies to ensure you have all permits and licenses required for a food delivery company.

Hire a Delivery Team

Before opening your company, assemble the right delivery team. A delivery company is a customer-centric business and customers value friendly and knowledgeable service more than anything.

So, focus on hiring friendly people who have great communication skills, can work quickly and consistently, have attention to detail, and are open to learning. Additionally, consider candidates who are familiar with the designated area of delivery and understand the supply chain, logistics, and delivery systems.

Food delivery

Market Your Delivery Company

Once your business is up and running, you need to get the word out and get customers coming in. Establish a social media presence, set up a Google Business Profile, and invest in promotional materials.

Inform your audience about the launch and continue engaging with them regularly. As soon as you build a loyal customer base, consider rewarding them with discounts, special offers, and even free delivery to keep them coming back.

In Conclusion

The rising food delivery demand highlights the consumers’ need for convenience, greater food variety, and a personalized dining experience. Additionally, the industry gained momentum in the COVID-19 era, remaining a relatively safe dining option and the only opportunity to enjoy the restaurant food in lockdown. So, if you want to capitalize on this trend and venture into the food delivery business, now is the time. Make sure to follow this simple guide and you’ll be ready to roll.