In the not-so-distant past, enjoying the delights of your local restaurant meant gathering friends and heading to the dine-in spot for an evening of delicious food and socialising. Now, things look a little different.
While people still dine with friends or family, a shift in consumer habits and advancements in food technology means this is often from the comfort of the home.
Global revenue for online food delivery will reach £241.40bn in 2022, and thanks to an impressive annual 5.8% growth rate – this could reach £321.30bn by 2027. For passionate foodies with dreams of running their own food delivery business, or a restaurant looking to expand, the delivery model could be the most fruitful.
Issues and Solutions of Food Delivery Companies
Launching a business is daunting, and food businesses are no different.
When you’re first starting out, it’s normal to have a few hesitations. However, we’re here to dispel the dread and talk you through any issues that might occur with starting a food delivery business from a dark kitchen, and solutions to overcome them!
Tough Competition: Customer Retention Issues
It’s no secret; the food delivery market, and your competition, is HUGE.
The number of established food businesses using food delivery apps and with a strong customer base can cause problems for smaller, independent food brands, especially for new startups hoping to compete and earn customer loyalty.
So, how can startups beat established competition?
People love a discount or free items, so use this to your advantage when you’re starting. To catch the attention of potential customers, you can launch your app business with introductory offers and discounts. Offers can be anything from a free side with a main, a ‘meal deal’ option, or 10% off orders over X amount.
After successfully reeling in customers, there are a few ways to keep them returning. Firstly, delicious food that your customer base wants. Pay attention to the trends, tastes and preferences of your target market, and make sure your menu aligns with this. Consumer preferences change frequently, and if you can’t offer the food your customer is craving (at high quality), they’ll move on to the next.
Secondly, your customer service must be second to none. Your customer service must offer help and support, be highly responsive, and always be friendly. Customers buy into brands, as well as the food on offer.
You can also tie in offers to encourage repeat customers by offering a loyalty scheme.
Inefficient Marketing Strategy
One of the biggest disadvantages for online food businesses compared to traditional high-street eateries, is that delivery only kitchens don’t have the footfall and free exposure of a physical restaurant.
In today’s competitive market, promotion is invaluable for brand awareness, especially for new starters. But, all too often, delivery-only providers rely on delivery apps alone and struggle to build a following.
Even if your business is on the best food delivery platforms, you should still maximise your reach through marketing. Defining a marketing strategy is different for each business and highly dependent on your target audience. However, social media is always a great place to start.
Creating a marketing strategy to promote your food delivery business should start from initially planning your business model. Whether you choose to advertise on Instagram, TikTok, or traditional routes such as flyering, you can’t afford to not have a marketing strategy in place if you want to compete with the big players.
Identifying the Right Pricing Strategy
Deciding on a pricing strategy for a food business can be complex. The customer base is unpredictable and the cost of food and supplies can be volatile. Creating a pricing strategy that is satisfactory for customers, encourages dark kitchen profits and doesn’t change drastically to keep up with market fluctuations is no easy feat.
Many food businesses use offensive or defensive pricing models to compete with their opponents, but there’s no guarantee that this will increase sales and may negatively affect your business further.
One way to approach this problem is by offering consistent and competitive pricing from the start and paying attention to how much your competitors charge for food. Your pricing strategy should also reflect delivery industry trends and consumer behaviour. But, you must ensure your prices firmly cover your overheads if you want to maintain or increase your delivery kitchen profit margins.
Inconsistent Food Quality
Another common challenge of food delivery is ensuring your food quality is the same standard when it arrives at your customers door as when it leaves your commercial kitchen.
The food often has a long journey from the kitchen to the customer, and typically on the back of a bicycle, where it is more exposed to the elements than in a car, for example. So you must find ways for the food to stay hot and fresh en route.
Before you start selling, invest in premium packing materials to maintain the quality of food orders on their journey. You should also ensure every delivery driver has an adequate, insulated food bag before they collect orders from your pick-up point and deliver the food to the customer.
Dephna’s food delivery kitchens are ready and waiting to fuel your business. Whether you want to sell your food on UberEats, Deliveroo or independently, our commercial kitchen rentals and cold storage rooms can facilitate this.
Book a viewing at one of our London kitchen locations to get started.