What to know before you set up your own delivery service

With the eye-watering commission that third-party delivery services often take, setting up a delivery arm makes sense for many indie food or drinks businesses. Here’s what to know.
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With margins already so tight, paying commission that can sometimes hit the heights of 30% is a very tough pill for food businesses to swallow. A reality check, though: setting your own thing up is a big and inevitably expensive operation. Although research from WebstaurantStore suggests 76% of consumers prefer ordering from a restaurant directly, you should only consider this if your business is established and has a loyal fan base.

Beyond the potential financial advantages, one big benefit is having more control. Research from market research firm Zion & Zion suggests 62% of consumers blame both restaurant and delivery company when they have a bad experience.

On the other hand, you’ll be responsible – and potentially liable – for all the problems that might arise. From hiring and managing staff to overseeing transport logistics and actually processing orders, it’ll be a substantial managerial and administrative burden to take on. Plus, you’ll be losing the platform – and subsequent new eyeballs – that you were getting from the big boys.

The key practicalities

How will you receive and process orders from customers?

Yes, we’re talking tech – and you’ll probably need to upgrade what you’ve got. Plenty of point-of-sale (POS) software has upgrades that cater for delivery management – with online ordering, order tracking and retention of customer info all coming as part of the package. In terms of receiving orders, you might choose to go with those specialist software platforms, or use your website, Instagram, messaging or phone calls.

How will you deliver?

A biggie. You’ll need to consider whether you’ll use current staff or have to hire delivery staff, how they’ll get around and the issue of transport. Plenty of drivers will have their own transport and insurance if they’re already working in the sector. You’ll also need to consider who’ll manage it in-house. Restaurant software company Olo suggests that once you hit 30 or more delivery orders a day, you can dedicate one employee to it.

What’s on the menu?

Many businesses create a separate, tight delivery menu to simplify production and packaging. What are popular items? What will work being transported? Could any be tweaked to work better? Then, you’ll need packaging and delivery bags, which should be eco-friendly, made for frequent use and, ideally, include your company’s branding.

Have you considered setting up a hybrid model?

An increasing number of brands find that a hybrid model suits them better. This will require much number crunching and an understanding of your customers’ habits.

• You process orders through your website (or other channel) but use the delivery infrastructure of third-party companies.

• The third-party app processes the orders; you provide the delivery fleet.

• You integrate a food-ordering software platform on your website, which then works to connect with third-party apps to organise delivery – with customers only interacting with your website.

• You find a local courier company and hire them to deliver – with this company taking a smaller cut of commission.

Expert advice: steps to assess feasibility

Noah Munro is a food business consultant at Taste Profit Marketing. Here he outlines some key steps to take when assessing whether setting up your own delivery arm is feasible.

Build a budget. ‘Start with the numbers, based on your business. What is your delivery revenue? Will you offer a different price? What will the cost of goods be if doing your own delivery? Projected volume is key.’

Understand your assets. ‘Do a SWOT analysis [strengths, weaknesses, opportunities and threats]. How’s the geographic spread of your delivery zone? In a densely populated city, you might be able to build a service with a radius of just one or two miles.’

Think about user experience. ‘Customers are used to shopping on their phones. Do you have a plan for that, and for how much it’ll cost?’

This article was first published in Courier issue 40, April/May 2021. To purchase the issue or become a subscriber, head to our webshop.

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