The Internet is changing how Americans satisfy their craving for convenience with the growing culture of food delivery services. The food industry has transformed dramatically, making marketing and order placement a breeze through user-friendly websites and apps.
Today, 86% of Americans actively order food online. This presents an unmatched opportunity for restaurants to tap into this demand.
If you want to start a restaurant delivery service and get ahead of the competition, this guide is your ultimate resource. Here’s what you’ll discover:
- Types of food delivery service models
- Steps to set up a service-based restaurant delivery business
- Key considerations for success
Read on to uncover how to launch your food delivery service and meet modern consumer demands.
How to Start a Restaurant Delivery Service: Understanding the Business Models
Food delivery services are categorized into various business models. Selecting the one that best fits your needs is necessary. Here’s an overview of these options.
The Order and Delivery Model
This model is ideal for businesses looking to expand their reach and generate additional orders while maintaining a dine-in option. Restaurants can extend their menu to a wider audience by adopting this approach. They can reach potential customers through DoorDash, Uber Eats, and App2Food food delivery platforms.
The order and delivery model relies on software like App2Food’s online delivery systems. These platforms act as a bridge, facilitating restaurant order placement and delivery services. While the app manages orders and deliveries, the actual delivery process can be handled in two ways: managed by the restaurant itself or outsourced to third-party logistics providers.
Some restaurants prefer using their own delivery fleet for greater control, while others rely on the convenience and resources offered by delivery platforms. Partnering with these apps offers significant advantages, with increased exposure to a broad customer base being the most notable.
Ultimately, these services create a mutually beneficial relationship between delivery providers and restaurants. Quick and efficient order fulfillment is the shared goal.
The Order-Only Model
Platforms like Grubhub and JustEat showcase the order-only business model. They focus on connecting customers with restaurants without managing the delivery process. In this model, third-party software acts as a marketplace where restaurants list their menus. When a customer orders, the request goes directly to the restaurant for fulfillment.
This model is particularly suited for restaurants that cater to takeaway or pickup orders. Customers place their orders online and then visit the restaurant to collect them. The primary purpose of the order-only concept is to boost a restaurant’s visibility. They make it accessible to a broader audience while simplifying the order process.
While this model is often compared to traditional table reservation systems, it differs in its ability to serve as a hybrid solution. For example, if platforms like Grubhub feature your menu and contact information, it opens the door for direct customer communication. Restaurants can use this information to manage customer inquiries, handle complaints, or accept delivery orders.
Additionally, restaurants can transition from an order-only to an order-and-delivery model by integrating their own delivery fleets. This hybrid approach allows businesses to maintain control over the delivery process while benefiting from the platform’s expanded reach.
The Full Stack Model
The full-stack model combines both the order-only and order-and-delivery business approaches, with the restaurant managing all aspects of the process. This includes maintaining the restaurant’s online presence, handling orders, managing deliveries, and tracking them—all simultaneously.
While this model provides complete control, it has a higher initial investment. Starting a full-stack operation can be costly. If your goal is to launch a restaurant delivery service, it doesn’t necessarily mean adopting this model from the outset.
However, the full-stack approach could be a great option if you have the necessary capital to invest in your business, including food delivery services. To reduce costs, you might avoid custom app development. These developments can range from $8,000 to $25,000 or more. Instead, you can opt for a free solution like App2Food, which provides custom-built mobile apps for restaurants at no cost.
How to Start Restaurant Delivery Services: The Complete Guide
Even with the models discussed above, you’ll need to learn the basics of setting up a restaurant delivery service. Here’s a step-by-step guide to help you launch a restaurant delivery service and turn it into a success.
Make a Plan and a Budget
Planning is an important foundation for any successful venture. Well-crafted plans pave the way for smooth execution and outstanding results. Thorough preparation is necessary before starting a food delivery business.
This process should include in-depth market research and a detailed understanding of your target audience—their preferences, tastes, and habits. Effective planning also allows you to identify potential risks, anticipate challenges, and develop strategies to address them. It serves as a valuable tool for improving performance and fine-tuning your approach.
A thorough plan gives you clarity and peace of mind and enables regular revisions and updates to keep your business on track. Additionally, it can help you pinpoint your brand’s unique selling proposition (USP) to attract and retain customers.
To set yourself up for success, make sure your plan includes the following key considerations.
A Sizable Workspace
Restaurants operating entirely via food delivery services will require a large workspace where you can set up your kitchen items and carry out your operations with maximum flexibility.
Technology Costs
Technology plays a significant role in starting and managing a food delivery business. Multiple software, tools, and features are necessary to effectively run food delivery services. For example, you may be required to set up a POS system, fast internet connectivity, and a mobile app.
As a result, the cost may seem intimidating. However, you can choose between your private application and less expensive third-party platforms. You can also read our other articles on starting a third-party restaurant delivery service.
Business License and Insurance
The US Food and Drug Administration issues restaurant business licenses. Certification of incorporation, a health inspection certificate, and a tax identification number are the few legal terms that must be fulfilled at all costs.
A third-party delivery service provider may not require you to submit the documents. However, it is still advisable to stay prepared. Insurance is also necessary to make sure that a natural crisis or accidental damage does not hamper your business’s productivity.
Marketing Material and Setting Up a Website
Less than 40% of independent restaurants list their menus on a website. While many rely on Google Business Listings for visibility, this approach often lacks a professional touch.
A website is a medium for building a loyal audience base for your business. It supports your marketing efforts and makes them goal-oriented in the end. Your plan should also cover marketing material costs.
Delivery-Specific Investment
If you are partnering with a third-party delivery service provider, it may be an optional consideration or even unnecessary. However, if you are attempting to launch your own delivery fleet, a delivery-specific investment must be assessed cautiously.
Launching a private delivery fleet requires investing in delivery vehicles, bikes, and GPS systems for tracking orders. Additionally, you’ll need to account for the salaries of delivery personnel as part of your operational expenses.
Optimizing Your Kitchen for Delivery Services
Starting a restaurant delivery service doesn’t have to be overwhelming. With a few key considerations, you can set up a system that works seamlessly for your business.
Whether you plan to operate a fully “delivery-only” model or add delivery services to your existing dine-in operations, one constant remains: the kitchen is the heart of your restaurant business.
From the outset, your kitchen should be equipped to handle the demands of delivery orders and prepared for potential upgrades to support new business ventures. Choosing the right kitchen size and equipment based on your order volume and venue type is essential for efficiency.
Here are additional factors to consider when preparing your kitchen for delivery services.
Kitchen
The overall infrastructure of a kitchen must be smartly built. Space must be smartly utilized to make certain that chefs don’t delay delivery. If an order takes 10 minutes to prepare, it must not take 20 minutes for another. If a delay occurs, know what went wrong. It’s worthwhile to build a responsive kitchen from the start to fuel swiftness in the workflow.
Staff
Experience isn’t something everyone starts with. Hence, focusing solely on hiring seasoned professionals is not always necessary. New hires who are dedicated to their roles can often bring fresh enthusiasm and stay true to their commitments.
To support your team, use tech-enabled tools to monitor performance and provide training adjusted to their responsibilities. This is so every staff member understands their role and can grow into it effectively. However, this approach doesn’t apply to chefs, who must already possess strong culinary skills to meet the job demands.
Accounting
Who oversees the internal operations at your restaurant? Is it your kitchen manager, the chef, or the restaurant manager? Clear accountability is important for resolving issues efficiently. However, if hiring dedicated personnel isn’t an option, you can still manage your food delivery fleet effectively with the right tools and strategies.
Working on Logistics
When starting a restaurant delivery service, it’s important to establish a strong logistical framework. From the beginning, you need to define who will deliver orders to your customers. Generally, you have two main options to consider:
- Outsourcing Delivery Services
If you’re unsure how to start a restaurant delivery service or hesitant to hire your own delivery staff, outsourcing delivery services can be a practical solution. Many third-party platforms in the United States offer food delivery services for a fee or commission.
Partnering with these platforms can help you delegate the responsibility of managing and delivering orders to their tech-enabled networks. This enables you to focus on other aspects of your business.
- Building Your Own Logistics Fleet
Many restaurants choose to highlight their unique selling proposition (USP) through their own logistics fleet as a strategic decision. If your budget allows, consider launching your own delivery service. Be prepared for additional investments, including purchasing delivery vehicles and paying salaries for delivery personnel.
Integrating a reliable tracking system into your operations can help guarantee smooth and efficient deliveries. This is to maintain high service standards and manage your fleet effectively.
Connecting Food Delivery Menus and Services
Once you’ve finalized the foundational elements of your food delivery service, it’s time to integrate your menu and services through a web portal or app. Here’s how to set it up effectively:
- Menu Presentation: List all menu items clearly and include an easy-to-access “Order Now” button to make ordering a one-click process.
- System Integration: Make sure your online platform (website or app) is integrated with your POS system for smooth order processing and inventory management.
- Instant Updates: Set up a system to provide real-time updates to your delivery fleet about new orders. This will make sure that communication between delivery drivers and restaurant staff is completed on time.
- GPS Tracking: Equip your delivery fleet with GPS-enabled devices so customers can track their orders in real-time.
Essential Metrics and KPIs (Key Performance Indicators)
Tracking is valuable for driving growth and optimizing your food delivery service. How successful is your delivery operation? What areas need improvement? To answer these questions, it’s important to analyze your performance using KPIs.
Key Performance Indicators (KPIs) provide measurable insights into your business’s success or challenges. KPIs can be assessed using specific metrics that highlight strengths and areas for improvement. They offer a clear picture of overall performance.
Platform KPIs
Key performance indicators (KPIs) for your platform evaluate how efficiently your web portal or mobile application operates.
For instance, a high bounce rate on your website may signal underlying issues. This includes slow loading times or a complicated ordering process that frustrates customers. Addressing these metrics helps provide a smoother user experience and encourages customers to complete their orders.
Average Number of Deliveries Per Hour
Tracking how quickly orders are delivered to customers is key for evaluating your delivery efficiency. This KPI highlights the effectiveness of your order fulfillment process and can also help identify underperforming drivers who may be causing delays.
If the number of orders delivered per hour is low, it may indicate the need for additional hires to keep up with demand. Consistently slow delivery times may also pose a risk of losing customers. This could significantly impact your business.
Average Profit Per Delivery
One of the most common questions is how to launch a successful and profitable restaurant delivery service. The key lies in paying attention to the small details, especially when analyzing metrics. While the online food delivery industry offers significant potential, overlooking KPIs could lead to costly mistakes.
One of the most important metrics is Average Profit Per Delivery. This reveals how much profit you earn from each completed order. It serves as a direct indicator of your delivery service’s profitability.
It’s important to note that most food delivery platforms prioritize efficiency, completing orders sequentially unless customers pay for premium services. If your business isn’t receiving enough orders, tracking profits per delivery can help you identify whether adjustments are needed to sustain profitability.
Average Order Duration
Restaurants commonly use this KPI to measure the average order duration. With so many restaurants in New York, US diners have high expectations and anticipate receiving their orders on time. Failing to meet these expectations can damage the first impression, which is important for almost every business.
To maintain a positive customer experience, monitoring the average order duration is important. Track key milestones such as when a customer places an order, when the chef prepares it for delivery, when the delivery person picks it up, and how long it takes to reach the customer.
Focus on these time frames to calculate the average time required for an order to be successfully delivered. This insight will help you meet customer expectations and create a better overall experience.
Total Number of Orders
The total number of orders received through a food delivery service should be carefully analyzed. Track and compare the total orders from the current month to the previous month to identify trends and growth opportunities. Using a POS system or a revenue calculator can simplify this process. However, it’s also important to back up the data and verify all entries for accuracy.
Customer Churn Rate
Customer churn rate can significantly impact a business’s growth and revenue. It is widely acknowledged that acquiring new customers is often more expensive than retaining existing ones.
If your business has a high churn rate—indicating a lower ratio of returning customers—it signals a serious risk to your restaurant’s long-term health. Reducing churn and building customer loyalty should be a priority to maintain stability and drive growth.
One effective strategy is to introduce loyalty programs for your customers. These programs are proven to deliver lasting results by encouraging repeat visits.
Customer Lifetime Value
Customer lifetime value (CLV) is an important metric for understanding your business’s long-term revenue potential. This KPI represents the total revenue your business can expect from a customer over their lifetime. It reflects the value they bring to your restaurant.
Calculate CLV by multiplying the average purchase value by the average purchase frequency and the average customer lifespan. To determine a customer’s average lifespan, multiply the average sales value by the number of transactions and the retention period.
Understanding and optimizing CLV helps you focus on strategies that maximize the value of your existing customers, ultimately driving sustainable growth.
Starting a restaurant delivery service is a strategic move to meet the growing demand for convenience. While the process requires effort and investment, utilizing tools like App2Food simplifies implementation.
We specialize in providing customizable online ordering systems and branded mobile apps to empower restaurants. Partnering with us, you can extend your reach, ease operations, and deliver excellent service to your customers’ doorsteps. Get started with App2Food to make your delivery service a success.