How To Start a Food Delivery Business

Food delivery businesses are growing fast.College towns, large cities, and other areas where large populations of adults are willing to pay to have food delivered to them are where these businesses thrive.A basic business model for this type of business is to approach local restaurants and ask to deliver their food, then charge a small commission for your company’s profit.Set up a website or app that your clients can use to place orders, and build a small fleet of delivery drivers.

Step 1: You can structure your business as an limited liability company.

An limited liability company is one of the most common ways to structure a small business since it allows you to keep your personal finances separate from your business finances.You’ll need to file “Articles of Incorporation” with your state’s secretary of state to form your limited liability company.If you want to open a bank account under the company’s name, make sure your company name ends in llc.All of the owners of a company take an equal share of managing the company.If your business went bankrupt, the bank could come after your personal finances and savings.

Step 2: If necessary, find a source to finance your business.

Financing may be required in order to purchase delivery vehicles, rent office space, and pay for insurance and permits when you’re starting your business.If this is the case, you should take out a bank loan to finance your business.If you can find prospective investors who are interested in a piece of your company’s future stock, that would be great.If you have several thousand dollars in savings and plan to start with just 2–3 drivers and yourself, you probably don’t need any financing.

Step 3: A name that sticks in customers’ minds is a good choice.

Pick a name that describes your company because you only get one chance to name it.The name should tell people about some of your selling points.A clever name is a great way to stand out from the crowd.If you want to alert potential customers to your affordable meals, use a word like “affordable” or “budget” in your company name.Try something different, like, “On-Time People Food Delivery,” or “Sandwich in a Crunch Delivery.”

Step 4: You should register your business.

You need to register your delivery company before you can start doing business.You need to register the business name with your local government.The secretary of state’s website can be used to begin the registration process if you live in the U.S.You need to register to get a federal tax ID number.People can’t use your business name if you register it.You will receive legal and tax benefits if you register.

Step 5: General liability insurance can be purchased.

General liability business insurance is offered by nearly all large insurance companies.If you want to comply with state guidelines, you should speak to a representative from the company of your choice.Many states require you to have workers’ compensation insurance to protect your employees.

Step 6: Obtain permits and licenses to operate in your state.

Depending on where you live in the U.S., the licenses and permits you need to run a food delivery business will vary.The location and activities of your business will affect the state permits you need.Check out your state’s secretary of state website for the permits and licenses you need.The permits you’ll need to file for should be given to your insurance company representative.Fees may be associated with obtaining permits and licenses.Unless you intend to deliver alcoholic beverages, you don’t need a federal license.

Step 7: It is possible to calculate an operating budget.

Rent office space, driver salaries, insurance, and gas/vehicle costs are included in your business’s prospective expenditures.calculate your business’s prospective income to offset these.Determine how much money you can afford to spend on a monthly basis.Separating necessary expenses from optional expenses can help break the budget up.You will not begin turning a profit right away.It may take a while.The average startup costs for a food delivery business is between $3,000 and 25,000USD.Most of the time, this money will have to come out of your pocket.Your budget should include your employees’ salaries.Advertising and graphic-design specialists will need salaries if you start out paying delivery drivers minimum wage.It is possible to find reasonable salary amounts that exceed the cost of living in your area.

Step 8: You’d like to work with a specific demographic.

Consider your potential clients.The type of restaurants you approach about delivering food will be influenced by this.Take note of the types of restaurants and restaurant clients you see when you drive around the area.It makes sense to take advantage of the food markets that are already in place.This will help you find a niche for your business, rather than serving too broad of a market.Do you want to sell cheap eats to college kids?Is it better to deliver gourmet meals to upscale town home residents?Would you rather deliver lunches to business people in an office district?

Step 9: Take a look at the delivery area that you want to serve.

You will need to decide on a delivery area if you live in a large city or a rural area.Clients will expect your company to deliver their food within 30 minutes, so you can start by setting a 15-minute radius around your delivery headquarters.Pick 2 or 3 neighborhoods.You can build a niche for your business by Honing in on a few parts of town.People in the neighborhoods you cater will be familiar with your delivery service even if they haven’t heard of you.Depending on the location of the people you want to deliver to, you can decide on a delivery area.If you deliver fast lunches to busy business people, look into focusing on densely-concentrated business centers or corporate campuses.If you want to deliver late-night food to college kids, center your deliveries around student housing and affordable apartments.

Step 10: Delivery partnerships can be discussed with restaurant managers.

Pick 2 or 3 local restaurants that you think would appeal to your target audience.The restaurants should be close to the delivery area.Call to arrange a meeting with the manager.When you meet, explain that you’re starting a food delivery business to a lucrative audience and you would like to deliver their food.Explain to the managers that you will be establishing a partnership that will increase their profits, rather than taking money from them.Start by delivering food from a local 3- and 4-star restaurant.Instead of reaching out to chain restaurants, focus on a diverse representation of your city’s fine dining.Make it clear to the restaurants that your company has the same values.Explain that your company cares about healthy food access.The restaurant’s menu should be posted on your website.

Step 11: Each order should have a reasonable commission.

Businesses that deliver food make money by receiving a commission.The restaurants have to make money off of the food they sell.When you sit down with each restaurant manager, you should come up with a commission amount that will allow you to keep your business afloat but not keep the restaurant from making profits.You can calculate various commission percentages based on the total amount of sales you hope to make in a month.Your food delivery business will be paid by the restaurant.A 15% commission allows both you and the restaurant to make money.A 20% commission might cut too deeply into the restaurant’s profits and a 10% commission won’t allow your company to balance its budget.

Step 12: You can charge customers a flat-rate delivery fee.

A flat-rate delivery fee, paid by your customers, will help your business turn a profit and can be used to pay your drivers.It won’t deter customers from ordering food if the amount is low.A delivery fee of $5-7USD would be a good starting point.Setting a minimum order amount would be wise.Customers could be required to pay at least 15 dollars for their meal.

Step 13: The hub of your delivery business should be located there.

Your business needs to have a headquarters where you can dispatch drivers and return them after each delivery.It’s fine if you put it in your garage or in the back of your apartment.As the company grows, be on the lookout for cheap office space or a cheap storefront to rent.This will allow you to grow the business.Your customers will know where you are based if you specify this primary location on your business cards and website.As your company grows, you can set up offices for on-site personnel who aren’t directly associated with food delivery.

Step 14: Delivery drivers can deliver food to clients.

Before you can start delivering food, you’ll need to hire delivery drivers.Ensure that the prospective drivers have their own car and a legal driver’s license when you interview them.Make sure the prospective hires know that the majority of their working hours are on nights and weekends.It would be wise to run a background check on each of the drivers to make sure they don’t have a criminal history.If you’re a student or live in a college town, you can post Help Wanted ads in your newspaper.If you want to hire more drivers, you can post a job ad online in forums like Indeed and Monster.

Step 15: Hire people to fill other key company positions.

An accountant and a graphic-design specialist are required for your food delivery business to have a logo and website.As your driver base grows, you may need someone to oversee all of the drivers and manage their schedules.If you want to find qualified individuals to hire, try posting job ads online.You may be able to fill all of these positions by yourself if you start the business out as a tiny, at- home operation.If you hire other employees sooner, your business will be able to grow and make more money.

Step 16: A website can be developed.

The website can be easy to navigate when you first start your business.Your business can deliver food from different restaurants.The delivery options are marked with a price tag after users select an option.Users can choose their delivery address and payment info to conclude their order.It’s important that your website is user friendly.If you don’t know anything about coding, that’s fine.You can build websites for free on a lot of website hosting pages.You can check out other options.

Step 17: A companion app can be created.

Many users prefer to order their food via app, rather than using a web browser.It’s okay if you don’t have an app in place, but aim to have the app up and running in the first 6 months.The app should allow customers to input a delivery address and pay using a credit card, just like the website.The Apple andAndroid app stores are the most popular, so start by making your app available in those markets.Users can download the app for free.If you like, you can charge for the app once your business becomes well known.

Step 18: Incoming orders need to be established for pickup and delivery.

Before you start taking orders, the process should be streamlined.Someone from your business will need to call the restaurant to place the order after a customer places an online order.Pick up the food and deliver it to the customer.If the restaurants you’re working with have sophisticated-enough computer systems, you may be able to link their computers with the app and website directly.You will no longer have to relay customers’ orders over the phone.

Step 19: Social media accounts can be used to market your business.

It’s free to use social media to spread the word about your business.Start with social media.Reach out and like, follow, and friend people on all platforms.Start posting!You can post pictures of your drivers on your website.Customers can leave positive reviews of your business in the “Comments” section of Facebook andInstagram to build up your online credibility.You can advertise your business in local papers or on radio.

Step 20: You can advertise your business through flyers and mailers.

Online advertising is great, but you should have physical ads as well.If you want to deliver food to certain neighborhoods, you need to print out flyers and staple or tape them to the telephone poles.You can put your company’s logo on your delivery containers and menus.If you want your company’s name or logo on the stickers, place 1 or 2 in each delivery bag.

Step 21: You can post ads at the locations of restaurants that you have partnerships with.

You can take advantage of the store space by putting up ads.You can put a few flyers on the bulletin board.Ask the store if they can paint the windows to show your company’s name or logo.If the store would be willing to pass out fliers with every order they sell, you could see that.Make sure to get the store manager’s permission before putting up any ads.

Step 22: Local community papers and newsletters have advertisements in them.

You want your company’s advertisements to be seen by as many people as possible.Local papers are great places to use community newsletters.They are cheaper to advertise in than widely-circulated papers.You can target your advertisements to the areas you want to deliver food to.Breakfasts and lunches are often delivered to a large corporate campus.If the campus administrator has an employee newsletter, you can place an ad in it.