Government advice and regulations in place to stop the spread of COVID-19 have had a severe negative effect on the dining industry.
Many US states and counties required restaurants to shut down eat-in options, while official advice in the UK during strict lockdowns was that people should avoid socialising outside entirely.
This has led to a decrease in the number of people dining in restaurants. However, many AppInstitute clients have told us they see an uptick in the number of customers that are using food delivery services.
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Restaurants who can provide a food delivery service have continued to make sales. The good news is that even if you don’t currently offer delivery services, you can quickly set one up by making a few adjustments to your business.
In this article, we will look at eight steps you should take to start a food delivery service, as well as three different platforms you can use to set up your new business venture. These are:
- Delivery aggregators
- Social media
- A branded app
Each of these methods enables you to get started quickly; we’ll discuss the pros and cons of each one in this article. If you are unsure of how to start a restaurant delivery service, take a look at the following steps.
Step 1: Research the existing market
Before you start a restaurant delivery service, it’s important to do thorough research on your competitors.
The goal of your research is to find a gap in the market that your unique restaurant can fill. Take a look at the geographical area that your restaurant is in and see what customers in the area could be missing out on.
For example, if you find that there are already several restaurants that specialise in burgers in the area it might be difficult to establish yourself in this market.
However, if you find that your area is lacking high-quality healthy food options this is a gap your restaurant can potentially fill.
Image: Spencer Davis/Unsplash
While you are doing market research, remember to consider the competition’s pricing, menus and marketing strategies so that you can position your business favourably against theirs.
Restaurant owners must also consider if they would want to partner with third-party platforms like UberEats, Grubhub or Postmates for their food delivery service.
It’s also important to understand how much partnering with these platforms could cost your restaurant. Many of these businesses charge a commission, listing and delivery fee.
We will discuss these third-party platforms in more detail later in this article.
Step 2: Establish your target market
When you are establishing your target market, don’t forget about your existing customer base.
This group already has an existing relationship with your restaurant and would be interested in a food delivery service, too.
Since you already have an established audience, you can also identify different segments of the market to cater towards.
If your restaurant is near a residential area, cater towards families who could be interested in healthy food options.
On the other hand, if your restaurant is near a student town you can tweak your menu to include affordable meal options.
Step 3: Define the costs of setting up a restaurant delivery service
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As with any business venture, you need to establish the costs of starting a restaurant delivery service. Here are some of important costs to consider:
If you decide not to partner with a third-party platform, you will need to invest substantial capital into purchasing your own delivery service equipment. This might mean investing in one or two motorbikes or cars to deliver the food.
Alternatively, you can use your staff’s vehicles for deliveries and compensate them for their fuel expenses until you can afford your own branded vehicles.
To start a restaurant delivery service, you will need point-of-sale (POS) software to process online payments and GPS tracking systems to monitor deliveries.
Many versions of these systems are available for free until you can afford to upgrade to more advanced software.
What’s the point of offering a restaurant delivery service if you don’t spread the word about it? This is especially important if it’s new.
To promote your service, create a social media post that introduces your delivery services. You should also add collection or delivery instructions to your profile description to make it easily accessible.
The post below effectively advertises the restaurant’s service. It attracts the customer’s attention with an engaging picture of its food, offers some different delivery or collection options and tells customers how to make an order.
Step 4: Make Sure You Have the Correct Licenses
As a restaurant owner, you should already have food and business service licenses for your restaurant.
For good measure, contact your town or city’s municipal office to see if there are any other licenses or permits you may need to start your restaurant delivery service.
Step 5: Decide How You Will Receive Orders
The next step in setting up your restaurant’s food delivery service is to establish how you will receive orders from potential customers. Here are a few different options:
Third-Party Delivery Companies
As mentioned previously in this article, the easiest way to set up a delivery service is to sign up to a third-party delivery company like Grubhub or UberEats.
These apps provide ordering, delivery, and payment logistics for your business. You also get to take advantage of the platform’s existing audience. All your restaurant needs to do is focus on making food and preparing it on time.
There are some downsides to using third-party delivery companies—the biggest of which is cost.
These platforms can take up to 30% of the order total, which amounts to a sizable chunk for a small business over time. The exact amount they charge will depend on the service, and many don’t advertise rates online.
Some restaurants may be okay with this commission, but for those working on a tight margin losing 30% per order is unthinkable.
The other problem is the overall lack of control you have over the delivery time and process. This can result in several issues, including:
- You are at the mercy of the app’s algorithm. One day you may be at the top of the search results and receiving plenty of orders. A drop down the rankings the next day will result in far fewer sales.
- The apps provide drivers, which can be convenient but also means you can’t train them about the specifics of your business and the food you sell. This could result in less-than-optimal deliveries which could harm your reputation.
- The third-party delivery company works as a middleman, blocking direct contact with the customer. This ultimately means that the customers are the app’s customers, not yours, making it hard for you to build a relationship with the people eating your food.
If you’d prefer to have more control over your delivery or collection operation you could try one of the options we’re about to discuss, or use an aggregator to bring in some initial custom while developing your strategy.
Launch a Delivery Service on Social Media
Social media can be an effective way to drive delivery orders. This is especially true if you already have an audience on one or more of these platforms. If not, your business needs to put some effort into building a following.
The benefit of using social platforms to drive orders is that it’s free. You don’t have to pay any setup fee or commission. The only cost would be if you decided to use paid ads to promote your service.
The downside is that social platforms aren’t built to take orders. You’ll have to put in place your own procedures for payments, accepting orders, and delivery.
Many restaurants have already begun advertising delivery and collection services on social media to help both them and their customers deal with COVID-19. This is why you need to create posts that effectively promote your restaurant’s new (or existing) service.
Use a Customer App
The other alternative to third-party aggregators is to use a customer app. Using your own app can be far less costly. It will give you more control over your delivery or collection service.
If you choose to create an app, you will have a branded product that you can use to receive orders and process payments. You receive the benefits of an aggregator app, but can control the process and keep all the revenue.
Here are some of the benefits of a branded app over an aggregator:
- You don’t have to pay a commission on sales, so you receive 100% of every order.
- You control your marketing. Choose to provide customers with offers or discounts when it suits your business.
- You control your audience. Sales aren’t at risk of disappearing due to an algorithm change.
- You can train and use your own delivery drivers or only offer food for collection.
- You can offer multiple payment options. Choose to process transactions via the app or avoid credit card fees by giving customers the option to pay in cash.
Apps also have several benefits beyond helping restaurants provide a delivery service. You can build a loyalty scheme to encourage repeat orders, provide customers with offers or discounts, send them notifications, or—when everything is back to normal—let people contact you to book tables at your restaurant.
Many businesses are worried about the start-up cost of creating an app. While it’s true that building an app from scratch can cost thousands of dollars and take a lot of time, it’s not your only option.
AppInstitute has an app builder with a fully customizable template that restaurants can use to build their app in just a few hours. This template includes all the features you need to run a successful delivery operation.
Our most popular plan starts at just $66 a month. This means you can have an app for a fraction of the cost of building one from scratch, and it won’t take long for you to start earning that money back.
To find out more about AppInstitute and begin to build your app for free (we only charge when you decide to publish your app), head over to this page.
Step 6: Share Your Collection or Delivery Menu
When promoting your delivery service, be sure to include your menu so people know what they can order.
This is especially important if you will be operating with a reduced menu, or if you want to attract new customers who don’t already know what you sell.
Colorado Cork & Keg effectively shares its menu in the post below. It’s a simple menu that contains the food, a short description, and the prices.
Step 7: Show the Steps You Are Taking to Ensure Cleanliness
Cleanliness and hygiene is understandably a worry for many people at the moment. Consider using your posts to explain the steps you are taking to reduce the chance of your business passing on the virus.
In the below post, Task Hopper highlights the measures it is taking to stay hygienic. They explain that delivery drivers will sanitize their hands before handling packages and wear masks while receiving and delivering items to minimize the potential spread of the virus.
Step 8: Ask People to Share Your Posts
A significant challenge is letting people know you are now offering a delivery or collection service.
One way to increase the reach of your posts is to ask people to share them. Many people will be happy to support businesses they like through hard times. Add that to the fact that delivery and collection services are genuinely useful, and you may find many people will share your posts.
In the image below, Two Many Cooks mentions that it will be offering a collection service and also asks people who see the post to spread the word. The post has 254 likes, which is significantly more than any of the restaurant’s other recent images.
Before the COVID-19 pandemic, the food delivery industry had already gained immense popularity among restaurants because of its ability to drive sales and increase profit.
Running a food delivery business is a great way to distinguish yourself from the competition and give new customers an opportunity to try out your restaurant.
Online ordering and food delivery has been a lifeline for the restaurant industry during the pandemic. These services have allowed many restaurants to stay in business and continue to serve their customers who have been unable to leave their homes.
We hope that this article has provided you with sufficient information to start a restaurant delivery service. Not only is it a great way to build customer loyalty, but it also increases sales and ultimately profit.