A food delivery company is a business that is involved in the delivery of foods to any destination within their coverage area as ordered by their clients. The process of ordering food from a local restaurant or food cooperative is through the telephone, website, or customized mobile app.
Payments are usually done either by credit card or cash, with the restaurant returning a percentage to the online food company if they are not the owners of the restaurant. The United States online food delivery market reached a value of US$ 21.2 Billion in 2020.
Looking forward, the market is expected to exhibit strong growth from 2022 to 2026. Almost 112 million Americans say they used a food delivery service in 2020. That represents a 17% year-over-year increase from 2019. The U.S. food delivery industry is dominated by a handful of major players, namely Grubhub, Uber Eats, and Doordash.
With a combined market share of around 70 percent, these three providers have been the leading food delivery companies in the United States for several years
Steps on How to Start a Food Delivery Business from Home
Table of Content
Conduct Market Research
If you are considering starting a food delivery business, you would need reliable market research to be able to maximize profits from the business. The first step in the market research process for your food delivery business should be to develop market-based research questions in line with your overall business goal and objective.
In this regard, you should source information that will help you maximize your business, give you reliable data and of course clue of what your potential market will be looking out for from a food delivery business and also help you operate your food delivery business with less stress and of course, build the business to profitability.
a. Who is the Target Market for Food Delivery Business?
Fast food restaurants, households, offices, construction sites, assisted living homes, nursing homes, hostels, dormitories, camp houses, and everyone who resides in the location where you intend to operate your food delivery business.
The demographic and psychographic composition of those who consume food cut across all age groups and gender; male and female above 18 years with the financial means to order food and get it delivered to them, hence the demographic composition of a food Delivery Company is all encompassing.
The truth is that when it comes to the food delivery business, there is indeed a wide range of available customers. In essence, your target market can’t be restricted to just a group of people or business, but all households, offices and sites within your business location.
b. Is Food Delivery Business a Profitable Business?
Yes, the food delivery business is profitable. It is important to note that the United States has one of the most competitive food delivery markets, with DoorDash, Grubhub, and Uber Eats competing for first place.
c. Are There Existing Niches in the Industry?
It is important to state that there is no known niche area when it comes to the food delivery business. Every player in this line of business is involved in the delivery of food as requested by their customers. On the other hand, some food delivery companies may decide to own their own restaurant or may decide to operate without a restaurant. Some may decide to operate online and others may decide to operate both offline and online.
d. Who are the Major Competitors?
- Uber Eats
- Ovations Food Services, LP
- TooJay’s Gourmet Deli
- Feast on Us
- FOODNOW Restaurant Delivery Service
- Sysco San Antonio
- Schwan’s Home Service
- Boss Wings
- Peapod by Stop & Shop
- Fresh Meat & More Inc.
- LAbite Meal Delivery Company
- Delivery Hero
- Just Eat
In every industry, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long time, while others are best known for how they conduct their businesses and the results they have achieved over the years.
e. Are There County or State Regulations or Zoning Laws for Food Delivery Business?
Yes, there are county or state regulations and zoning laws for food delivery businesses, and players in this industry are expected to work with the existing regulations governing such businesses in the county or state where their business is domiciled.
In addition to that, it is important to state that in the United States, government agencies and departments routinely grant variances to rules and regulations. Often, you only have to fill out a short form. In other cases, your request may have to be publicly heard before your city council, zoning board, etc. Please check with your zoning or planning department to find out what options are available to you.
f. Is There a Franchise for Food Delivery Business?
Yes, there are franchise opportunities for the food delivery business, and here are some of them;
- Time To Eat Delivery
- Takeout Waiter
- Go, Waiter
- Waiter On The Way
- We Go Shop
- Uber Eats.
g. What Do You Need to Start a Food Delivery Business?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- Delivery Vans or Bikes
- Commercial Driver’s License (CDL) (at least a Class B CDL)
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Commercial Kitchen
- Food Ingredients and Packaging Materials
Choose a Memorable Business Name
When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable.
Some of the catchy business name ideas suitable for a food delivery business are;
Creative Food Delivery Business Name ideas
- We Move© Food Delivery, Inc.
- Praise Vitalis® Food Delivery, LLC
- GOP© Food Delivery, Inc.
- Food Solutions® Food Delivery Company, Inc.
- Meal King™ Food Delivery Company, Inc.
- Green Line™ Food Delivery Company, LLC.
- Luke Elton and Co© Food Delivery Company, LLC
- Food Guys® Food Delivery Company, Inc.
- Star Serve© Food Delivery Company, Inc.
- Seven Twenty™ Food Delivery Company, LLC
- Grace 2 Grace® Food Delivery Services, LLC
- Tango & Charlie Food Delivery Company, Inc.
- Thomas Page© Home and Office Food Delivery Company, LLC
- White Angels® Food Delivery Company, Inc.
- Mike Pentagon® Food Delivery Company
- Gomez Carlos & Sons™ Food Delivery Co., Inc.
- Zaps® Home & Office Food Delivery, Inc.
- The Vintage Group© Food Delivery Company, Inc.
- Finger Snaps™ Food Delivery Company, LLC
- Timely People™ Food Delivery Company, Inc.
When it comes to Choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business.
Register Your Business
a. What Type of Business Structure is Best for Food Delivery Business?
When it comes to the business structure of a food delivery business, the one that most players in this line of business consider is an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings and other managerial formalities.
Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below. Most new single-member LLCs classified as disregarded entities will need to obtain an EIN.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Food Delivery Business?
- General Business License
- Commercial Driver’s License (CDL) (at least a Class B CDL)
- Zonal Permits
- Signage Permit
- Proof of ownership, proper identification, and vehicle license
- Proof of district-issued food manager identification card
- Food purchase record storage and record-keeping
- Depot, commissary, or service support facility meets vending unit operation needs
- Copy of license for the service support facility and/or a recent inspection report.
d. What Type of Certification is Needed to Start a Food Delivery Business?
You don’t need any certifications to start a food delivery business.
e. What Documents are Needed to Open a Food Delivery Business?
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval (For your kitchen and parking)
- Certificate of Incorporation
- Commercial Driver’s License (CDL) (at least a Class B CDL)
- Food Handlers’ License
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be too long before the long hand of the law catches up with you.
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting a food delivery business, usually you may not have any need to file for intellectual property protection or trademark. This is so because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Food Delivery Business?
The startup cost for a food delivery business is not uniform. But basically, a food delivery business will cost from $5,000 – $100,000 to start and that can easily go higher depending on your overall business goals and objectives.
b. What are the Cost Involved in Starting a Food Delivery Business
- The total fee for registering the Business in the United States of America – is $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines, and other software) – $1,300.
- Marketing promotion expenses for the grand opening for $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of – $3,580.
- The cost for hiring a business consultant including writing a business plan – is $2,500.
- Insurance (general liability, workers’ compensation, and auto insurance) coverage at a total premium – $2,400.
- Other start-up expenses include stationery ($500) and phone and utility deposits ($2,500).
- Operational cost for the first 3 months (salaries of employees, fueling of the food delivery vans and bikes, payments of bills et al) – $60,000
- The cost of storage hardware (bins, rack, shelves, food case) – $3,720
- The cost for store equipment (cash register, security, ventilation, signage) – $3,750
- The cost of purchase of food delivery vans and bikes – $30,000
- The cost of launching a website – $1,200
- Miscellaneous – $5,000
c. What Factors Determine the Cost of Opening a Food Delivery Business?
- The size of the food delivery business
- The choice of location
- The required licenses and permits
- The cost for branding, promotion, and marketing of the food delivery business
- The cost for insurance policy covers
- The cost for registering the business
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
It is not compulsory to build a new commercial kitchen or parking facility for your food delivery business. This is so because the nature of the business makes it possible for you to get everything done on the go.
e. What are the Ongoing Expenses of a Food Delivery Business?
- Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
- Salaries of employees
- Delivery vans and bikes maintenance
- Marketing costs
f. What is the Average Salary of your Staff?
- Chief Operating Officer (Owner) – $38,000 Per Year
- Manager – $30,000 Per Year
- Delivery Vans and Bikes Driver – $26,800 Per Year
- Call Center Agents – $26,500 Per Year.
g. How Do You Get Funding to Start a Food Delivery Business?
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
- Source soft loans from your family members and friends.
Starting a home and office food delivery company can be cost effective especially if you choose to start on a small scale with just one delivery van or bike delivering for just one fast food restaurant and covering a small neighborhood.
Acquiring a delivery van or bike is part of what will consume a large chunk of your startup capital, but if you choose to start the business on a large scale with fleets of delivery vans and bikes, then you would need to go source for fund to finance the business because it is expensive to start a standard large scale home and office food delivery company.
No doubt when it comes to financing a business, one of the first things you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Write a Business Plan
a. Executive Summary
We Move© Food Delivery, Inc. is a registered and licensed food delivery company that will be based in Brooklyn Park – Minnesota but operate across major cities in Minnesota.
We Move© Food Delivery, Inc. has been able to secure all relevant licenses and permits to operate throughout the United States. We will ensure that we abide by the rules and regulations guiding the food delivery industry and we will only hire experienced and qualified drivers with valid commercial driver’s licenses (CDL).
b. Products and Service
- Food and drinks delivery services.
c. Mission Statement
Our mission is to build a food delivery business that will meet the needs of all our customers in the regions and cities where we will cover and to sell franchises all across the United States of America.
Our Vision is to become one of the preferred choices for individuals and organizations when it comes to the food delivery business in Brooklyn Park, Minnesota.
d. Goals and Objectives
The goals and objectives of a food delivery business are to bridge the gap between food retailers and customers; to make it easier for people to order their preferred meal from their homes or offices are get it delivered to them.
e. Organizational Structure
- Chief Operating Officer (Owner)
- Delivery Vans and Bikes Drivers
- Call Center Executives.
Normally, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a home and office food delivery company, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well-known brands determining the market direction for the home and office food delivery industry.
So, when you are drafting marketing plans and strategies for your home and office food delivery company, make sure that you create a compelling personal and company profile. Aside from your qualifications and experience, it is important to clearly state in practical terms what you have been able to achieve in time past as it relates to food delivery services and the people you have worked for.
This will help boost your chances in the market place when sourcing for food delivery contracts. As a matter of fact, your marketing strategy will center on reliability, swiftness, safety, pricing, secured payment platform, and above all excellent customer service.
You should ensure that whenever your customers hire your services, they will get excellent service. The truth is that if you are able to put the above stated in place, you won’t struggle to retain your old customers and at the same time win over new customers.
Businesses this days are aware of the power of the internet which is why they do all they can to maximize the internet to market their services. In other words, a larger percentage of your marketing effort will be directed to internet users; your website will become your number one marketing tool.
a. SWOT Analysis
- Excellent operational history
- Robust relationships with key stakeholders
- Experience and trained professionals.
- Excellent customer testimonials.
- Reliable and efficient food delivery vans and bikes and service.
- The owner is new to large scale marketing
- Will need a loan to purchase the latest food delivery vans and bikes
- The owner is currently running the business solo
- Lack of economies of scale.
- Growing eCommerce activities such as people ordering food online
- Build upon existing clientele
- Online market, new services, new technology, and of course the opening of new markets.
- Increase in the number of fast-food restaurants that would want to leverage online ordering.
- Loans diminish profitability until they are paid off
- The first year will be financially tight while we gain customers and pay off loans
- Competition in the area could increase
- Management of employees requires time, money, and efforts
- The regulatory department could change its regulatory status and decide to regulate enforce strict regulations that can strangulate new business.
b. How Do Food Delivery Businesses Make Money?
Food delivery businesses make money by charging clients for foods and drinks delivered.
c. Payment Options
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via mobile money transfer
d. Sales & Advertising Strategies
- Introduce your food delivery company by sending introductory letters to fast-food restaurants, households, offices, construction sites, assisted living homes, nursing homes, hostels, dormitories, camp houses, and other stakeholders in and around the city you intend to cover.
- Advertise your food delivery in community-based newspapers, local TV and radio stations
- List your business and services on yellow pages ads (local directories)
- Leverage on the internet and mobile apps to promote your food delivery brands
- Engage in direct marketing and sales
- Deliberately brand your food delivery vans and bikes
- Encourage the use of word-of-mouth marketing (referrals)
a. How Much Should You Charge for your Product/Service?
Most food delivery businesses charge based on the quantity of food and the distance the food is to be delivered. Generally, fixed fees range from $2 to $6+ and are paid by the customer, while percentages range from 20% to 30% and are paid by the restaurant.
One key factor that will help you deliver food at rock bottom prices is to position your delivery guys in strategic locations or try as much as possible to leverage on drone technology. The truth is that if your delivery guys are well – positioned and if you adopt drone technology in your home and office food delivery business, it will save you loads of cash on logistics.
Another strategy that will help you deliver food at the right price is to ensure that you cut operational cost to the barest minimum and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.
b. How Much Profit Do Food Delivery Business Owners Make a Year?
It depends, but the available report shows that on average, a food delivery business should net more than $100,000 per year assuming they have a steady clientele.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the food delivery business
- The location the food delivery business is covering
- The management style of the food delivery business
- The business approach of the food delivery business
- The advertising and marketing strategies adopted by the food delivery business.
- The number of years the food delivery service is in business
d. What is the Profit Margin of a Food Delivery Business?
The profit margin of a food delivery business is not fixed. It could range from 25 percent to 55 percent.
e. What is the Sales Forecast?
Below is the sales forecast for a food delivery business. It is based on the location of the business and other factors as it relates to such startups in the United States;
- First Fiscal Year: $240,000
- Second Fiscal Year: $430,000
- Third Fiscal Year: $550,000
Set Up your Shop/Office
As regard leasing or outright purchase of an office facility, the choice is dependent on your financial standing, but the truth is that to be on the safe side, it is advisable to start off with a short term rent/lease while test running the business in the location. If things work out as planned, then you go on a long term lease or outright purchase of the property but if not, then move on and source for other ideal location/facility for such business.
a. How Do You Choose a Perfect Location for Food Delivery Business?
- The demography of the location
- The demand for food delivery services in the location
- The purchasing power of businesses and residents of the location
- Accessibility of the location
- The number of food delivery businesses, and food retailers in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
When it comes to choosing a location for your home and office food delivery company, the rule of thumb is that you should be guided by the demand for such services, the number of home and office food delivery companies and every business that also retails food within your business location.
Of course, if you are able to start your home and office food deliver company in the right location for such business, you won’t struggle to make headway in the business.
b. What State and City are Best to Open a Food Delivery Business?
- Los Angeles, California
- Las Vegas Nevada
- Miami Florida
- Washington DC
- New York City, New York
- Dallas, Texas
- Columbus, Ohio
- Oklahoma City, Oklahoma
- Chicago, Illinois
- Boston, Massachusetts.
c. What Equipment is Needed to Operate a Food Delivery Business?
- Food delivery vans, bikes, or drones
- Food bags and casing
- Relevant software (Apps)
On the average, there are no special technologies or equipment needed to run this type of business except for drones (optional) and relevant software applications. So also, you will definitely need POS machines, computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.
You would need delivery vans and bikes for this kind of business and you would have to procure one. In some cases, depending on the agreement you reached with fast food restaurants and eateries, they might provide you with their own branded vans and bikes that you can use for the delivery of food to your customers.
When it comes to hiring employees for a standard food delivery business, you should make plans to hire a competent chief executive officer (you can occupy this position), a manager, delivery van and bike drivers, and call center executives, Admin and Human Resources Manager, Sales and Marketing Officer, Delivery Vans and Bike Drivers, Accounting Clerk and Cleaners.
These are some of the key employees that you can work with. On the average, you will need a minimum of 5 to 10 key staff members to run a medium – scale but standard home and office food delivery company.
Launch the Business Proper
In recent times, no food delivery business opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening party if you are operating on a low budget or you can go for a grand opening party.
The bottom line is that with a proper launching of the food delivery business, you will be able to officially inform people in your city that your food delivery business is open for business.
a. What Makes a Food delivery business Successful?
- Choose a good location, and reliable food delivery vans and bikes to launch the business
- Partner with the leading fast-food restaurants in your city
- Build reliable and easy to use food ordering apps
- Hire only competent, hardworking, and trustworthy staff
- Be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your food delivery business
- Leverage on all available online and offline platforms to promote your food delivery business
b. What Happens During a Typical Day at a Food Delivery Business?
- The business is open for the day’s work
- The food delivery vans and bikes are cleaned, and ready for business
- Customer’s requests are taken (food and drinks ordering) and they are delivered
- Schedule maintenance of food delivery vans and bikes are carried out
- Marketing/website upkeep
- Supply ordering
- Administrative duties
- The business is closed for the day
When it comes to home and office food delivery services, there are no hard and fast rules about it. Basically, it is the duty of the marketing manager to help the organization source for fast food restaurants and eateries to help deliver food purchased from their restaurants and also to source for offices and homes to help deliver food that they purchase.
They go out there to source for good food delivery deals and they also ensure that they do not only deliver at the right prices that will guarantee them good profits, but also ensure that they deliver food for various fast food restaurants and eateries in their business location.
Once the deal is sealed, the delivery guys get orders from fast food restaurants and get them delivered to the appropriate locations within the specified time frame.
It is important to state that a home and office food delivery company may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated home and office food delivery company business process is not cast on stone.
c. What Skills and Experience Do You Need to Build a Food Delivery Business?
- Good driving skills
- Customer services skills
- Interpersonal skill
- Business management skills
- Work experience in a food delivery services industry
- Experience in managing people
- Experience in business administration
- Experience in handling relevant software apps.
9. Get Insurance Cover
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your home and office food delivery company.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own home and office food Delivery Company in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Credit insurance
- Motor vehicle insurance (comprehensive insurance)
- Deposit insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance