The restaurant industry, like many other industries, has been significantly impacted by the COVID-19 pandemic. With dine-out options ruled out, restaurants are struggling to keep up sales and rethinking their delivery approach.
Popular restaurant chain Portillo’s, which mainly catered to dine-in requests, has since begun curbside service and got listed on Uber Eats. Portillo’s sales through third-party food delivery platforms has increased by 90% since the shutdown.
The restaurant chain is now considering self-delivery of its orders.
A year ago, with the labor market, it was impossible to do self-delivery. Now we’re saying we can do this, and we can get a decent amount of sales from them.
—Nick Scarpino, Senior Vice President, Marketing and Off-Premise Dining at Portillo’s
Restaurants are looking for ways to set up their own food delivery service to avoid paying the high commision charged by third-party food delivery platforms. Let’s take a quick look at the market numbers to identify competitors, as well as opportunities, for your business.
The global online food delivery service market is expected to grow at a compound annual growth rate (CAGR) of 7.5% over 2020–2024 to reach $182.32 billion.
The market is dominated by platform-to-consumer and restaurant-to-consumer delivery services. The former includes food delivery platforms such as DoorDash, Deliveroo, Postmates, and Uber Eats, while the latter includes restaurant chains such as Dominos and McDonald’s. These players have their own delivery logistics.
Ongoing social distancing norms have resulted in a dip in dine-in revenues, making delivery service a must-have—now more than ever—for your food business. Product, price, place, promotion, physical evidence, process, and people are the 7Ps of marketing that you’ll need to reevaluate in light of the current business situation.
Let’s discuss how you can start your food delivery service by working on these 7Ps.
Product refers to the object or service you’ll sell to customers. For your food delivery service, the product is your menu. Your dine-in menu can be different from your delivery menu. For example, you may be serving ice cream to dine-in customers, but you may not want to deliver it, considering the logistical issues involved.
You can specialize in a particular type of cuisine—Italian, Chinese, Thai, or Indian—to position your business uniquely. Quality products are another must-have, so ensure that you follow food safety procedures and your products meet hygiene standards, such as the FDA’s Food Code.
Delivery is the service you’ll be offering along with your menu (the product). Ensure that deliveries are on time and done with utmost courtesy. Use food delivery applications and GPS tracking solutions to improve the delivery experience for customers.
The core components of your pricing structure will primarily include:
Menu item price: Price of each food item on your menu.
Packaging fee: Fee charged for packaging orders.
Taxes: Applicable sales and other taxes based on local rules.
Delivery fee: Fee charged for delivering orders.
While deciding on pricing, ensure that your business has a healthy profit margin, but don’t forget to factor in competitors’ prices. Review your prices regularly or when market conditions or supply chain costs change.
Use pricing optimization tools to determine how much discount you can afford and to plan special offers and loyalty initiatives. Regularly analyze competitors’ pricing strategies to position yourself better.
Place refers to the channel through which you’ll sell your product. It can be a website; mobile app; phone call; or text, WhatsApp, or social media message. Determine which channel(s) you’ll be able to invest in and proceed accordingly.
Taking customer orders via WhatsApp or voice calls is the least expensive means to get started, especially if you intend to begin your delivery service immediately.
You can also choose to build your delivery website and mobile app. These channels will allow you to showcase menu items and receive online payments using point-of-sale (POS) apps. Ensure that your brand logo and colors are highlighted across the website and app and that both have an uncluttered and easily navigable interface.
Use these DIY website and application builder apps to build a website or mobile app yourself. You can also use food delivery software to set up online delivery for your restaurant. If budget isn’t a concern, consider listing your restaurant on third-party food delivery platforms, such as Uber Eats or DoorDash, to increase reach and visibility.
Promotion includes all the activities involved in marketing your products and services. Email marketing, social media marketing, pamphlets, hoardings, participation in events, etc., are some common methods to promote your food delivery service.
Content marketing is another area you should focus on to promote your business. Optimize website content with relevant keywords, such as “order online” and “food delivery,” to rank higher on search pages and attract more customers. Maintain a restaurant blog where you can feature your specials, share unique recipes, announce big changes to your restaurant, etc.
Use analytics tools to identity communication channels used most frequently by customers. Connect with your customers regularly, and ensure consistent messaging across marketing initiatives. Train your delivery personnel to handle customers politely. Their punctuality and behavior toward customers also help promote your business.
Process covers the business operations of your food delivery service. You must clearly outline your process flow and ensure that every task has been accounted for. For example, you must have provisions for removing out-of-stock items, processing refunds, identifying customer locations outside of your delivery zone, etc.
Having well-defined processes helps identify bottlenecks and determine which tasks can be automated or need manual intervention.
Also, build an IT process chart that specifies the software applications you use and the tasks they perform. An IT process chart will help you understand how and what data is being captured, used, and stored.
Understand the regulations you must follow and get all licenses you’ll need to start food delivery. Consult with a local council, or visit the U.S. Small Business Administration (SBA) website to learn about the licenses you’ll need.
Physical evidence refers to the tangible and intangible elements customers come across when interacting with your business.
Restaurant building, seating, and ambiance are the physical evidence for your dine-in restaurant. For your food delivery service, evidence will include your website or mobile app. An easily navigable website or mobile app that is well designed, loads quickly, and supports multiple payment options will help create a positive impression on your customers.
Packaging is another physical evidence. Distinct packaging colors or innovative packaging methods, such as using reusable or organic materials, will make your brand stand out. Your delivery personnel’s uniform is also physical evidence. It can make your brand colors/logo stand out even at a crowded traffic signal.
People or human resources are your most valuable asset. Their manners, attitude, hospitality, and other traits will be matched/associated with those of your brand. Thus, they play a vital role in enhancing customers’ experience. Train your employees, including delivery staff, customer service representatives, chefs, marketers, and salespersons, so they represent your brand well.
Now that your dine-in restaurant may be operating at less capacity, consider realigning employee roles. For instance, your receptionist could take on some delivery responsibilities. Depending on demand, you can also consider hiring part-time or contractual staff.
Food delivery service is essentially a digital business. Technology will help you effectively build each of the 7Ps to start a successful food delivery service for your restaurant. Across the article, we’ve listed a few software tools that can ease your shift to the food delivery business.
Your next step is choosing the best tools from among the many available on the market. Visit our software categories page to choose software tools, ranked and rated by real software buyers. You can also read customer reviews to assess a tool’s usability for your food business.
The digital transformation survey referenced in this article was conducted by GetApp in April 2020 among 503 respondents who reported executive leadership roles at small businesses with 250 or fewer employees.
Note: The applications selected in this article are examples to show a feature in context and are not intended as endorsements or recommendations. They have been obtained from sources believed to be reliable at the time of publication.