Pros & Cons of Food Delivery
Delivery of food can be described as a facility of courier service in which restaurants, stores or third party applications send out food to consumers when they demand.
The rise of the modern-day food delivery system can be attributed to random shift in lifestyle or also rather as an economic necessity.
The increased use of digital technologies is rapidly changing the food market.
It has been estimated that the market for food delivery is worth around 83 billion euros on a global scale This is said to be 1% of the food market cumulatively & 4% of the food sold through such fast food chains & restaurants.
The pace of increase of overall demand for food delivery is found to be at a yearly rate of 3.5%.
The restaurant business is already facing the tremendous impact of online food delivery.
There are many food delivery startups which have mushroomed and have raised a joint total of $15 billion.
Most of the popular apps have gone on to become an integral part of our daily routines.
Here are some of the pros & cons of operating a food delivery business:
Product Loyalty: Once a customer gets accustomed & satisfied with a particular app, it is very rare that they will switch to another competing app. After all, food is about taste.
And once the taste buds get rolling and pacified by a particular style, it is difficult to find a new avenue.
Wide Market Access: With an online presence which is robust, business can get a boost and fetch revitalization. This will enable access to a larger customer base.
Ofcourse one has to manage promotions effectively, and also the menu along with any product based discounts or offers.
Broad Time Availability: Even if the restaurant is not open to customers for services 24/7, the products or food items are made available throughout thereby gaining customer satisfaction.
With time the base of customers broadens and this can also lead to word-of-mouth marketing.
Revamped Revenue Model: Once the online food delivery business is set and proficient, this will spike the sales and would in turn increase profits as customers prefer convenience and saving of time by placing orders online rather than going all the way to the restaurant.
Supply prioritization: An established business in a food marketplace can decide which restaurants and suppliers it would like to promote. This gives the freedom to pamper products with high margins and better customer reviews.
Pricing Monopoly: At a suitable scale, a food delivery business can also set prices and commission at will. And restaurants are bound to comply with any changes done to charges as they depend on these apps to receive orders.
High Operating Cost: To commence and execute such business in a perfect manner, has an extreme cost to it.
It also is a highly complex task that requires all pats to function in sync. Costs revolve around developing the app, identifying restaurant partners, finding good drivers & grooming or training them, equipping them with necessary equipment to optimize delivery routes are some of the high investment avenues.
Food quality can be compromised: There is a never ending stream of online orders from the customer’s side.
To adhere to the huge demand, restaurants can play around with the quality despite the menu mentioning something else. Even though the packing maybe in strict order, the quality of the food within cannot be seen.
Fierce competition: Once a business line becomes a trend, many want to get a share of the pie.
With venture capital funding becoming a vogue, entrepreneurs are now finding it easy to fulfil their desire. Furthermore, the competition is also with other restaurants and the customer’s willingness to cook at home.
Expensive Delivery Charges
There are many restaurants out there that prefer differential pricing as there are additional costs involved for food delivery at doorstep. Some restaurants have even set a bar as minimum price to take in orders which may exceed customer budgets.
Despite the odds, building an online food delivery system is a must in today’s consumer driven economy. And when seeking long-term profitability, it’s better to develop presence online. .