Last Updated on December 10, 2024 by Helena Akter
Let’s be honest, running a restaurant is hard work. Between happy customers, mountains of dishes, and that never-ending to-do list, there just aren’t enough hours in the day. That’s where a delivery service comes into play. But why food delivery service is important?
Food delivery service is important because it increases earnings, reduces food waste, expands your customer base, and adapts to food trends. While there are some challenges such as increased workload and less control, it remains a vital addition to modern restaurants.
Today, we’ll discuss how food delivery services increase restaurant profits, reduce food waste, and reach more customers. You’ll also see how this service works and the steps you can follow to set up a food delivery service. So, stay tuned!
What is Food Delivery?
Food delivery involves an independent courier delivering food or groceries to customers. Orders are placed online or via an app, and the courier picks up the items from the restaurant or grocery store and delivers them to the customer.
Many opt for food delivery because of its convenience, paying a service fee in addition to their order total. If you have a car and a smartphone, this business venture could be a good fit for you.
Why Food Delivery Service is Important?
Did you know that the online food delivery market, which was worth $77 billion in 2022, is expected to skyrocket to nearly $1.4 trillion by 2027? This massive growth isn’t just about delivering groceries, but meals too.
For your restaurant, starting a delivery service could be a turning point. To get a broader knowledge of this, explore how to prepare for the food industry.
Boost Your Earnings and Profit
In simple terms, online orders can give your earnings a big lift. You sell more food, but your overheads don’t go up much. So, you’re making more money, but your costs are pretty much the same.
If you’re running a ghost kitchen, where you only prepare good foods for delivery, your costs are even lower, and your profits are higher.
Yes, delivery platforms do take a cut of each order. But the increase in orders can still mean you’re making more money overall. And with fewer costs for things like premises and staff, especially if you’re a ghost kitchen, you could see a big financial increase from offering a delivery service.
Cut Down on Food Waste
Food waste is a big problem in the hospitality industry. A 2019 report from UNEP’s Food Waste Index showed that over a quarter of all food waste comes from the food service industry.
But a well-managed delivery service can help tackle this issue.
Think about it: the ingredients you might usually throw away could be used to make extra meals for delivery. It not only cuts down on waste but also increases your earnings. It’s a win-win for the environment and your business.
Expand Your Customer Base and Boost Your Brand
By using third-party services like Just Eat and Uber Eats, you can give your restaurant’s brand a big lift. How? These popular delivery services put your brand in front of more people, which means more chances for orders.
Think of food delivery as a free billboard. It shows off your brand to a wider audience, increasing the likelihood of more orders. Plus, it lets you reach new markets, like Millennials, who are more likely to order food online than any other group.
The more people see your brand online, the more they recognize it. A study from OnBuy.com found that 71% of shoppers are more likely to buy from a brand they know, so being seen online is definitely a plus.
Stay Open All Hours
If you’re in a place where restaurants and grocery stores never close, offering a 24/7 service is a big plus. Late-night cravings are a thing, and people often want pizza or Chinese food in the wee hours.
Being there for deliveries anytime meets this demand.
To make this happen, make sure you have extra drivers for the night shift. Good staff management is crucial for a smooth 24-hour operation. It might need some extra management, but it also means more profits and more chances for your drivers to earn.
Stay Ahead of Food Trends
Research from DoorDash shows that 46% of consumers will try new menu items because they get bored with the same choices. To keep your customers satisfied and encourage repeat business, keep up with food trends.
And online food delivery helps you track these trends. By analyzing customer data, you can see what’s popular and what’s not, giving you insights into what your customers want. It allows you to adjust your menu to meet their preferences.
Partnering with a delivery franchise also gives you access to industry experts who can monitor local trends, ensuring you stay ahead in the market.
What are the Cons of Food Delivery Services?
While food delivery services offer many advantages, they also come with a few drawbacks that need to be considered.
More Work to Implement
Handling deliveries in-house means you need to hire new staff and secure vehicles, creating an efficient delivery process. This adds significant workload and logistical challenges.
Less Control
Using either in-house or third-party delivery fleets means less control over the customer’s experience. Traffic, road conditions, or wrong turns can delay deliveries, potentially leaving customers with a negative impression if the food arrives cold or poorly presented.
Additionally, you have fewer opportunities to address any issues since you’re not there when the food is consumed.
Smaller Profit Margins
Yes, we’ve mentioned that delivery service can increase your profit. However, using third-party delivery services also incurs significant costs, as these companies take a large cut from each order. Therefore, a high volume of orders is necessary to achieve substantial profits.
More Points of Contact and More Room for Error
Food delivery introduces additional points of contact between order preparation and delivery, increasing the potential for errors. Whether you use in-house drivers or a third-party fleet, you can’t always ensure that the driver upholds your restaurant’s quality standards.
It can lead to mistakes and inconsistencies in the customer experience.
How Do Restaurant Delivery Services Typically Work?
It’s pretty straightforward. There are two main types.
One type lets you use an app or website to explore local eateries, view menus, order your favorite dishes, and keep an eye on your delivery.
The other type handles orders made directly on the restaurant’s website, either by integrating with their sales system or by redirecting you to their platform.
Here’s a quick rundown of the process —
- Placing Your Order: You pick out what you want from the menu and order it online.
- Order Alert: The restaurant gets your order via the delivery system, which could be a tablet or a sales system.
- Getting Your Order Ready: The restaurant gets your food ready and packs it up for delivery.
- Driver Assignment: A driver is chosen to pick up and deliver your order.
- Delivery: The driver delivers your order right to your doorstep.
- Feedback and Payment: You share your thoughts and pay through the platform.
How to Implement Food Delivery at Your Restaurant?
Starting a food delivery service can transform your restaurant by unlocking new revenue streams and reaching a broader customer base. However, it requires meticulous planning and execution.
Here’s how to get started —
Step 1: Choose the Right POS & Restaurant Delivery System Software
The first step is selecting the appropriate Point of Sale (POS) system and delivery software. Look for systems with built-in online ordering, delivery management tools, customer accounts, loyalty programs, and an intuitive interface for both customers and staff.
Step 2: Adapt Your Menu for Delivery
When preparing your menu for delivery, consider how each dish will hold up during transport. Some items, like fries, may become soggy, while ice cream could melt. Adjust or remove such items from the delivery menu.
Plus, focus on dishes that travel well, such as pasta, pizza, and most Asian cuisines. You might also add special items exclusively for delivery.
Step 3: Consider the Packaging
Packaging is more than just a container; it’s part of your brand. So, invest in quality packaging that keeps food at the right temperature and maintains its quality. Use insulated boxes for hot items and separate compartments for sauces to prevent spills.
Meanwhile, consider eco-friendly materials to show your environmental commitment.
Step 4: Manage Online Orders Efficiently
Efficient online order management is important for a smooth delivery service. That’s why designate a specific area in your kitchen for delivery orders to prevent mix-ups with dine-in meals. Plus, implement a kitchen display system (KDS) integrated with your POS system to streamline order management.
For example, once an order is placed online, it can automatically appear on the KDS, reducing errors and speeding up preparation time.
Step 5: Choose Between Third-Party Service or In-House Delivery
When it comes to delivery, you have two main options —
- Using a third-party service
- Managing it in-house.
Each option has a different set of advantages and challenges.
Third-Party Delivery Services
These are platforms like Uber Eats, DoorDash, and Grubhub that handle the delivery for you. Their fleet of delivery personnel and ready customer base can help you reach a larger audience without much marketing effort.
However, these services usually charge a commission on each order, which can be as high as 30%. This could significantly reduce your profit margins. Also, you have less control over the delivery process, which could impact the customer experience.
In-House Delivery
Managing deliveries in-house gives you more control over the entire process. You can train your delivery staff to provide a certain level of service, ensure the food is handled properly, and even personalize the delivery experience. However, this option requires more resources.
You’ll need to hire and manage delivery staff, handle logistics, and possibly invest in delivery vehicles. There’s also the challenge of marketing your delivery service to reach customers.
Example: Let’s say you receive 100 orders per day with an average order value of $20. If you use a third-party service that charges a 30% commission, you’ll pay them $600 per day (30% of $2000).
In a month, that’s $18,000!
On the other hand, if you manage deliveries in-house, you’ll have to consider costs like salaries for delivery personnel, vehicle maintenance, fuel, and insurance.
If these costs amount to $500 per day, your monthly cost would be $15,000.
However, you also have to factor in the initial investment for vehicles and the ongoing marketing costs.
Step 6: Calculate the Costs
Calculating the costs involved in setting up a food delivery service requires considering several factors. These include the cost of delivery software, packaging, additional staff, and delivery vehicles if you’re managing deliveries in-house.
For example —
- If you choose a delivery software that costs $100 per month
- Spend $1 on packaging per order
- Hire an extra employee for $15 per hour
- Deliver 50 orders per day
your monthly cost would be —
- Delivery software: $100
- Packaging: $1 x 50 orders per day x 30 days = $1500
- Extra employee (8 hours per day): $15 per hour x 8 hours per day x 30 days = $3600
So, your total monthly cost would be $100 + $1500 + $3600 = $5200.
It’s a simplified example and actual costs can vary. You should also consider the costs of marketing your delivery service, any commissions paid to third-party delivery services, and other overhead costs.
Is Food Delivery Worth It?
Yes, food delivery is worth it as it increases your earnings without piling on extra costs, reduces waste, and broadens your customer reach. Plus, it improves your brand’s presence, especially with platforms like Uber Eats.
However, in-house delivery can mean more staff, more vehicles, and more headaches. Relying on third-party services can lead to less control, potential delays, and a less-than-stellar customer experience. Plus, they take a chunk out of your profits.
And the more steps there are from kitchen to customer, the more chances for mistakes. So, weigh your options carefully.
Final Words
So, why food delivery service is important? Well, it increases your revenue, minimizes food waste, and boosts your brand without heavy marketing efforts.
While exploring the food delivery services, we showed their benefits and drawbacks for restaurants. So, whether you’re a restaurant owner or a regular customer, food delivery offers undeniable convenience.
Looking ahead, food delivery is sure to become even more important. As our lives get busier and technology advances, ordering our favorite meals from the comfort of our couches will likely become more common.
FAQs about Food Delivery Services
Are food delivery services safe?
Food delivery services are generally safe, but you must follow certain food safety tips. So, when accepting a food delivery it is important to check the right temperature upon arrival, get it delivered within two hours of preparation, and reheat it to 165°F.
Always contact the restaurant or delivery service if food isn’t at a safe temperature.
Why do people use food delivery services?
People use food delivery services for convenience, cost-effectiveness, and time management. For their ease and efficiency, delivery services have become a favorite among modern consumers.
Can You Work with More Than One Delivery Service?
Yes, restaurants can partner with multiple delivery services simultaneously. This strategy increases visibility and customer reach, but it also requires managing orders from different platforms and coordinating with various drivers.
