Advik was running a restaurant. He was using all online channels including Zomato and Swiggy to multiply revenue streams.
Initially, he found it very profitable and useful to sell food online through others’ mobile apps.
But later, he became a victim of miserable rules, review policies, and high commission.
To get out of this great circus of some billion-dollar food delivery apps, he decided to develop his own food delivery app.
He was thinking an app is the only thing he would need to sell food online!
But he was wrong!
Yes, you definitely need a mobile app to start an online food business. But to develop the app, you need to tick off many things from the long checklist.
Today, in this blog, we will discuss how to start an online food business.
But before that, let’s discuss 4 top reasons why you should consider starting an online food delivery business.
Why should you start an online food delivery business in 2021?
Restaurants either embrace technology and survive, or don’t.
- Multiple Revenue Streams And More Revenue
A mobile app opens up many new doors of cash inflows. In addition to offering dine-in service, you can offer online food delivery service too.
The best part is: since you’re offering food delivery services from your own app, you don’t have to pay commission to anyone.
Through the mobile app, your dine-in business can also strengthen as the app increases the visibility of your brand, and customers can book tables and pay bills from your app itself.
You can even store the details of your customers in one place and send them personalized offers that guarantee more business.
In essence, the earning possibilities are endless if you adopt an online food business model.
- More Control Over Your Business Activities
Imagine you’re accepting delivery orders from phones and managing the fleet of drivers manually.
Your one of the customers calls you. He asks you the menu you have. He asks the price of each food item.
You take 5 minutes to explain everything about the menu to him.
He finally places the order. You check the availability of the delivery driver. You call out to him. He leaves for the delivery.
The same customer calls you and complains that the driver hasn’t reached yet. You call the driver. But he is not picking up your call as he is busy finding a way to the customer’s location.
The customer is shouting at you. You are shouting at your staff. All other new orders get delayed because like you, each staff member is busy with unnecessary tasks.
This whole scenario can be avoided with a mobile app. Using the mobile app, your customer can explore your menu, place an order, and make the payment.
Using the admin panel, you can track the live location of the driver and contact him directly via chat or voice call.
- Analytics and Insights Into Business
When a customer enters your restaurant or orders food online, he leaves a lot of important information behind.
If you gather this information, store it and process it, you receive very useful insights into your customer behavior – what they like, dislike most, what they order together, how much they are likely to spend, your busiest days and hours, etc.
With such crucial information, you can plan your business activities accordingly which results in higher sales.
For instance, if you know the food item A your most of the customers would like to have with food item B, you can suggest food item A to the customer who orders food item B.
And there are higher chances that he would grab your suggestion.
All popular apps gather and analyze customer data to serve better and make strategic decisions.
- No Commission to 3rd Party Apps
To meet the market trend and customers’ demand, owners have to list their restaurants on some 3rd party food delivery apps such as Zomato, Swiggy, UberEats.
However, these 3rd party apps take a huge percentage of the commission on each food order.
The commission is as high as 30%!
The following image clearly depicts how much a restaurant actually makes!
Additionally, the restaurant owners lack control over delivery drivers as they are independent workers.
Many times, drivers delay the food delivery and restaurants cannot do anything except for giving 1 star to the driver!
But with your own app, you can enjoy ultimate control over your delivery drivers and you don’t have to worry about any commission.
So, now when you know the fact that starting an online food business with your own app is a profitable business idea, let’s discuss how you can accomplish that idea.
How to start an online food business? – A checklist
The 4 major aspects of the online food delivery business are market, business, mobile app, and manpower (delivery drivers & customer support team).
Each of these requires micro-planning and execution. So, let’s talk one by one.
- Identify the cities where you want to start an online food delivery business.
- Find your target audience.
- Figure out the challenges people are facing and you are solving.
- Identify existing players in the market you’re targeting.
- Analyze existing players’ business processes, revenue streams, marketing efforts, and mobile apps to find the pros and cons of it.
- Identify applicable government regulations and laws.
- Identify the IT resources you require to start an online food delivery business.
- Identify the manpower requirements to operate the business.
- Define the value proposition.
- Identify the key partners such as restaurants, delivery drivers.
- Identify the key business activities such as your response after a payment dispute.
- Identify the ways to optimize business activities.
- Consider automation for your back-office processes.
- Find customer segments.
- Identify the ways to maintain customer relationships.
- Identify the channels to solve customer problems.
- Define the cost structure for customers, delivery drivers, and restaurants.
- List out the revenue streams.
- Figure out the time it will take to break-even or cover the capital cost.
- Figure out the ways to quickly reach the break-even point.
- Calculate the risks associated with the business. (risks you’re likely to meet in the next 1 month, 6 months, 1 year, and 3 years.)
- Define the risk management process and strategy.
Mobile App Checklist
- Identify the type of mobile app you want to develop. I.e., native app, cross-platform app, or hybrid app.
- Decide whether you require a custom app, MVP app, or clone app.
- Define the user journey on your mobile app. I.e., how step-by-step, a user can order the food?
- Optimize the user journey on your mobile app. I.e., how with minimum steps, a user can order the food or do any other activity on the mobile app?
- Create the feature set. (feature set for customer app, a restaurant app, and delivery driver app)
- Hire the app development agency that not just codes the app, but helps you through business and market checklists.
- Test the app thoroughly before launching it in the market.
- Take initial feedback from the users and plan app updates.
Manpower (Delivery Drivers & Customer Support Team) Checklist
- Hire customer support teams to solve queries of customers, delivery drivers, and restaurants.
- Integrate a dispute and query management feature into the admin panel for the customer support team to track the status of each complaint and solve it rapidly.
- Decide whether you are going to hire your own drivers or go for a gig model.
- Identify the approach to make sure there are always enough drivers to satisfy the demand for food delivery orders in a particular area.
- Identify the ways to make payments to the drivers.
- Define the rules and responsibilities for the drivers.
- Define the onboarding process of the drivers.
- Consider legal concerns over drivers such as police checks, driving license validation.
- Consider validating the identity of drivers.
- Plan to provide insulated bags to the drivers to carry food.
Already planning to launch an online food business? You should consider the cloud kitchen model.
What is the cloud kitchen model?
Cloud kitchen only delivers the food through offline and online channels. And it lacks dine-in facilities.
The best thing about cloud kitchen is that you can start it from your home too as you don’t need a big property to arrange tables and chairs for customers!
The global Cloud Kitchen market was valued at US$0.65 billion in 2018 and is anticipated to reach US$2.63 billion by the year 2026, at a CAGR of 17.2%.
How to run a cloud kitchen?
You can start the cloud kitchen from your room or take some property on lease where you can cook comfortably.
You then get the food license, hire some delivery drivers, develop your app, and launch it in the market – targeting a user base in your city or area.
Benefits of Cloud Kitchen
One of the major benefits of cloud kitchen is that it requires very little investment as you don’t need to invest much in a brick mortar store for a dine-in option.
Another benefit of cloud kitchens is less requirement for the staff. With only a few kitchen staff and delivery drivers, you can serve more than 200 orders in a day with ease.
You also need to invest fewer efforts and time in customer service as it is easier to manage online customers.
Last but not least, you can easily adapt to new changes in customer behavior and market trend as the scale you’re running cloud kitchen is limited.
You don’t have to tick anything from this checklist. We – GED – will do everything for you.
Yes, because we are not just an app development company. We provide all kinds of solutions for the market and business challenges of startups.
Be it company registration, trademark registration, funding consulting, mobile app development, web app development, and digital marketing, it is within our skill set.
We on average entertain 10 inquiries in a day. And so far, we have delivered more than 200 mobile apps.
We provide DoorDash, UberEats, and Zomato clones at the price tag of somewhere between $3000 to $7000 – based on your requirements.
We also provide free business, technical and market consultation in our first conversation.
In essence, we help you not only build the app but build an online food business!