Craving for some ice cream? Just head online and search for “ice cream near me.” And with a click, it will be delivered to your doorstep. Today, food delivery services have penetrated the everyday lives of millions of people.
Today, you can access hundreds of menus from different restaurants in your area on your phone. This era of convenience and comfort is an opportunity worth considering if you want to be your boss.
You can be part of the industry, from food delivery apps like Uber Eats to services dedicated to healthy diets like Factor. In an industry generating $26.5 billion in revenues and still growing, you could make some money and enjoy flexible working hours. Before diving further, you must understand the opportunity, its business model, and how you can earn some money from it.
History of food delivery service
By 2030, the food delivery industry is estimated to be $365 billion in sales. Notably, from 2015 to 2020, the market revenues from the food delivery industry increased by over 200%, from $8.7 billion to $26.5 billion in revenue.
Today, most people remain indoors to enjoy their favourite shows or play games. Thus, the need to go to restaurants to eat is steadily declining. As a result, most restaurants have introduced a carryout and delivery option.
Food delivery dates as back as Ancient Rome times. The Romans, from 753B.C. to 476A.D, loved enjoying their meals conveniently.
Dues to this, food trucks or food on wheels became an option in the 1960s, and until today, they offer convenient meals and snacks to workers. By 2004, people could order their meals online through logistical services for restaurants.
By 2007, meal kits became popular, and by 2013, you could order freshly prepared meals to your home. Now, almost every corner of the country has a food delivery service. Therefore, the market is expansive, and you can get your opportunity too.
What is a food delivery service?
Like any delivery service, a food delivery service is a courier option in which you avail food at a customer’s location. Stores and independent food delivery companies use couriers to take their food to customers.
Customers access hundreds of menus from their favourite restaurants using a food-delivery app. Food delivery has become very popular with the surge in COVID-19 and new fiercer variants coming into play.
Takeout and delivery orders are higher in restaurants because they offer a convenient way to access delicious food during the lockdown.
With a food-ordering app, you can view your options, including menus from multiple restaurants. Your options could vary from fast-food restaurants like Taco Bells and McDonald’s to a fine dining establishment and everything in between.
You also get to choose between food, beverages, and drinks, like wine and beer.
Why do people need food delivery services?
Thanks to the digital revolution, you can shop for anything online, study and order your favourite food. Thinking of having a hot pizza slice brings a smile to your face, but walking out of your home and standing in long queues is not an entertaining idea, especially with the pandemic and lockdowns.
This is why food delivery services work well. People need food delivery services because they are convenient. Customers can choose their favourite fried chicken from a variety of restaurants is better than having them visit multiple stores. No more long queues and, most importantly, no waiting for 30 minutes to get a $20 pizza.
Food delivery services are the modern solution to save time. If you get home and are tired, you do not have to worry about preparing your dinner. A family can spend more time together by using a food delivery service. It is also cost-effective for customers since restaurants want to compete for the best offers.
With their busy schedules and fight against COVID-19, food delivery services are necessary to many individuals.
Importance of food delivery services
Food delivery services are a revolutionary option for people with physical obstacles. For instance, people living with disabilities find it challenging to go to restaurants and enjoy their favourite meals. Therefore, food delivery benefits them a great deal. Using their phones, they can request their favourite dish while remaining safely in their homes.
Another critical aspect of food delivery is the wide variety that customers get. As the customer, you get the option to select your favourite food from different brands and cuisines. You can employ your food calories knowledge when ordering foods to manage your diet plan. In addition, food delivery services are transparent and straightforward.
Cost efficiency is another crucial reason why food delivery services exist. They save a lot of time and money for the shopper. You do not have to adjust your schedule or incur travel expenses to find your favourite dish at your favourite restaurant.
Finally, food delivery services are easy to access for most users. Therefore, many people will be using these platforms. Customers do not need a phone number to call and place orders. You can download an app for Android and iPhone; you can order meals in a few simple steps. The payment process is also easy, with most food ordering apps having an E-wallet option.
Food delivery business models
A food delivery business is relatively straightforward. Companies such as restaurants and courier services leverage technology to build platforms that allow their customers to order and receive food at their location.
The setup of this business model involves a platform and a multi-sided marketplace. The food delivery companies then charge restaurants a commission on all orders delivered to make money. Customers also pay their share of commission for the delivery services.
There are three main business models in the food delivery industry:
Order Only Model
These models have a two-sided marketplace. The online food delivery service platform only acts as a bridge between customers and restaurants. Their main goal is to help restaurants reach wider audiences while allowing customers to access multiple options.
Grubhub is an excellent example of an order-only business model. It allows restaurants to generate more takeout orders. Therefore, restaurants access hungry diners when they can buy some takeout. However, they do not sell at discounted prices and only pay a commission to the platform when an order is complete.
Restaurant delivery persons then take the order to the customer’s doorstep.
Order and delivery model
This business model handles the customers, delivery, and the restaurant. Most restaurants enrol in this kind of business model because they do not have to cater to the cost of delivery.
To receive orders, restaurants register on the platform where customers place their orders. The restaurant then receives notifications whenever an order comes to them. They accept payment online or through cash on delivery options.
For delivery, the driver closest to the restaurant gets the information on the order and the customer’s location. The delivery fee often depends on the distance from the restaurant, and the customer can include some additional information. Uber Eats, DoorDash and Zomato are good examples of the order and delivery model platforms.
For instance, when considering Uber Eats, you can visualize the business model of the food delivery industry. Uber Eats has a three-sided marketplace business model, including a restaurant, a driver, and the customer. At the centre, the Uber Eats platform allows the players in the market to interact.
The fully integrated model
This is a small-scale food delivery service, where you take care of the cooking and delivering the food to your customer. This business model is the owner’s sole responsibility. Examples of platforms for this model include Extra Plate, Eat Purely, and RocketFood.
Order allocation can either involve the admin or not. According to the customer’s requirements, food delivery is through company-hired drivers, operating on scheduled or instant delivery services.
The greatest challenge to this business model is the high operation cost.
How do you get started in the food delivery business?
You can begin your food delivering business today in four simple steps:
1. Find your niche
Food delivery is a growing industry, and you can expect more from it in the future. To join the team that makes it possible for customers to enjoy restaurant foods at the comfort of their homes, you first need to define your niche.
What are you looking to venture into? Are you going to start your delivery company or join an already existing company as a driver?
2. Define the approach
Whichever niche you select, you will need a platform to connect you to restaurants and customers. You can either choose to start a new marketplace, like DoorDash or Grubhub. When you do, you will need to sign up with restaurants, build an app, and find users.
To create a product to present, you need a lot of research on the correct pricing and order filing. You will need some advantages to help convince restaurants to join your marketplace.
You can also choose to build applications for restaurants to use to manage their orders. This is a simple option, where you write the code and sell it to the restaurant.
Alternatively, you can start a food ordering and delivery platform like Uber Eats. This means you create an app, which customers and restaurants will use to order and process orders. You go a step further to cover the logistics.
3. Include your logistics
The food delivery industry rests on the strength of its logistic operations. When starting your delivery company, you start with a small market jurisdiction, which is bound to grow. Therefore, you can start with a few bikes, but you will find yourself revising your plan to include more vehicles with time.
Another crucial part of logistics is keeping the food you deliver warm or cool. You need to make sure that when your customer orders a Pizza, they get all their toppings in place and not smooshed in one end of the box due to the hard turns your drivers take.
If you start your food delivery company, you will need to build a customer base. However, if you are joining an already established marketplace, you have customers ready for you.
How to make money in the food delivery business
Food delivery companies make money by charging a commission on the restaurant. Customers also pay for part of their earnings through a small delivery fee charged to their order. The drivers then earn their share from the amount the company makes.
Advertising is another way that food delivery companies earn money. This means listing the restaurant at the top search results in their apps. For this, restaurants have to pay extra costs.
Some of the top food delivering services include:
- Grubhub
- Seamless
- Uber Eats
- Instacart
- Caviar
- Postmates
- ChowNow
Onboarding process
The onboarding process depends on the marketplace you join. You must be18 years or older, with a valid driver’s license. A car, bike, the scooter is a must-have in this business and your social security number. Finally, some platforms will request a background check consent.
Most companies have an online submission site, where you fill out your application, choose a driver orientation and complete the process. You then get their app and proceed to accept orders after approval.
Benefits of joining the food delivery industry
Some of the benefits of joining a food delivery company include getting instant orders and choosing your working hours. In addition, you can select the route to work on, and the process is more straightforward.
Alternatively, if you wish to keep your 9-5 job, you can earn extra money by working in later hours of the night. Depending on the platform you choose, you can make extra income by achieving your delivery goals.
Potential expenses
The most common expense for food delivery drivers is tax. As a driver, you will need to keep track of your costs for every mile. This way, you can avoid overpaying your taxes.
Other expenses include:
- Mobile phone bills
- Fuel costs
- Bike and vehicle accessories
- Extra maintenance on your vehicle
- The company you work with deducts their commission
Regulations for food delivery services
A typical regulation that restaurants and delivery companies should look out for is public health and safety. This includes preventive measures taken by the restaurants and drivers to reduce risk and validate the packaging, temperature control, and contamination.
If you go into delivering food, make sure you are familiar with the US food and drug administration regulations and other local, state, and federal laws on food delivery. Alternatively, you can check other good business opportunities out there are get started
