How to Start a Local Food Delivery Service for Restaurants

Posted 3 years ago by Max Komonov

According to statistical projections, the online food delivery service market is expected to pass the $150 billion mark by 2023. So the question on everyone’s mind is: is this the right time for my restaurant to start a local food delivery service?

Our answer: yes!

A food delivery service will open your restaurant to lots of customers looking for a new place to grab a bite. At least, when the delivery service is properly managed.

One big effect of COVID-19 was a reduction in the number of people that physically patronize restaurants. Consequently, many restaurants shut down in 2020 or at least closed their doors to eating-in options. To correct for the lack of foot traffic, many restaurant owners started food delivery services to keep up their sales. Starting a local food delivery service can be a challenge if you have no prior experience. However, to help restaurants, we have highlighted a few steps on how to start a local food delivery service and make it work for your existing (or up and coming) business.

Step One: Research the Market

You need to research the market to understand the dynamics of the food delivery service industry and to figure out the most suitable entry point for your restaurant or food business. Below are some key aspects of the field you should research:

Analyze your competitors

Analyze and compare your emerging business with your competitors to know your strengths and weaknesses, and assess potential opportunities. For example, you should study your competitors’ pricing patterns, online menus, and marketing strategies. Incorporate what you find into your business plan to position your business favorably against theirs.

Choose the right partners

Depending on your location, you might need or want to partner with third-party delivery platforms to ensure effective delivery. For example, in the United States, reputable delivery platforms include Uber Eats and DoorDash. Choosing the right partners can affect how efficient and effective your delivery services will be. However, note that you will have to pay commission, listing, and delivery fees.

Get to know the market Gaps

Depending on your location, you might find out that there is a market gap. For example, with proper research, you can learn the number of restaurants that deliver to a particular location, and the menu options they offer. Are you the only vegan restaurant within a ten-mile radius of a hip new business park? Score! Using the information you gather, you can then use it to make the right plan of action for getting your food delivered.

Step Two: Define Your Target Audience

Your restaurant already has an audience…your regular customers. However, your food delivery service is a different entity entirely. So look into the ways in which this new target audience might be similar or different to the one you already have.

Defining your audience should be relatively simple since you already know your brand and you have an existing relationship with it. However, it should also be based on research conducted according to step one.

When defining your target audience, you should take note of the following:

Make sure that the location you are aiming to serve has enough potential customers.
Aim for a location with working families, college students, hostelers, and millennials.
The demographics you are working with will also determine your delivery menu. For example, most families will like healthy food options; students will like fast food that isn’t expensive, while working-class people will fancy something hearty that can hold them over during working hours. Take note of that when making your business plan.

Step Three: Determine Your Budget

The budget for starting up a restaurant delivery service is normally between $3,000 and $25,000. Make sure that your investment and research support such a huge figure. Below are the major expenses that you should be including in your food delivery service budget.

Website development expenses

Taking orders via text (either phone texts or chatting apps) or calls is ideal for receiving orders when you just started a local food delivery service. However, if you have a wide customer outreach, you should have a website.

You can build a website yourself if you cannot afford the professional fee. However, for better website creation, you should hire a professional.

Logistics

Logistics is the most important part of food delivery services. However, the price tag for setting up a working delivery system depends on your customer outreach and your location. If your restaurant has a vehicle, delivery becomes a little bit easier, as you can save in terms of the commission you pay to third parties. However, in the absence of a working vehicle that you can designate for deliveries, you should hire a delivery service in your location.

Marketing expenditure

Marketing expenditure is another thing you must have a budget for when writing your business plan. You can promote your food delivery service by using email marketing, social media marketing, pamphlets, hoardings, or participation in events.

Step Four: Ensure You Have the Necessary License

While your restaurant already has a license, you cannot say the same for your delivery services. Depending on the location, you might need to contact the required office to see if you need any additional licenses for food delivery services. For restaurants in the United States, you can visit the U.S. Small Business Administration (SBA) for information on state licenses and permits.

Step Five: Set Up How You Want to Be Receiving Orders

There are many suitable options for receiving orders. Popular methods include phone calls, text messages, social media, or websites.

Each method has its advantages and disadvantages. For example, phone calls, texting, and sending WhatsApp messages have a low cost when compared to other channels. However, there might be a mix-up when taking orders from many people. Social media offers ease of operation, and you can also promote your business at the same time. However, there might be issues managing it. The right channel for receiving orders depends on your budget and the number of customers you serve.

Step Six: Market your Service

The last step is to let your customers know about your food delivery service. You can promote your business in many ways. For example, by using social media, a website, word of mouth, etc.

While marketing your food delivery service, inform your potential customers about things like the deal of the day, the chef’s special, discounts, etc. This will further entice them, and if your service is quality enough, a recommendation (which is a pure organic promotion) follows.

Conclusion

The coronavirus pandemic has had a lot of effects on the global economy, especially on restaurants. To keep sales up and restaurants open, many have looked towards offering their services to a wider audience. For restaurants, a food delivery service is one of the easiest ways to make that happen. But creating a functional food delivery service from scratch can be challenging. We’ve highlighted a few steps on how to start a local food delivery service here, which we hope is helpful. Endeavor to keep these steps in mind as you go on to make something of value to yourself and your community.

About The Author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.