With increasing job demands and busy schedules, cooking has become a luxury. People are becoming too busy to prepare their own meals. This has opened a gateway of opportunities for startups to grow as meal delivery businesses. This also means that the food delivery market is very competitive.
If you are intending to start a food delivery business, then there are a number of measures that must be taken care of before you enter the market. This article will outline these considerations, including the administrative requirements for starting a business, legal documents, finance and much more.
So if you are looking for guidance on how to open a food delivery service or how to start a delivery business, keep reading!
What is a Food Delivery Business
A food delivery business hires people to pick up and deliver food and beverages from restaurants and food businesses to consumers. Food delivery businesses partner up with restaurants in their area that are visible to consumers using the food delivery application.
Consumers then order their food of choice using an app or by calling the food-delivery business. The restaurant partner is notified and a food-delivery executive is assigned to pick up the food from the restaurant and deliver it to the individual who ordered it. This helps restaurants save on money they would have spent to hire an in-house delivery driver.
Starting a Food Delivery Business: The Pre-Steps
The amount of effort and knowledge needed to start a food delivery business from scratch is different from that required for buying a franchise. One of the advantages of starting your own business is that you don’t need to pay any fees or commissions to the franchiser.
By running your own food delivery business, you have the chance to expand within the market and even start your own franchise. Before you start operating your business, you should ensure you have completed the following pre-steps:
Accounting Requirements
You should also take some time to think about the different accounting requirements that you will need for running your business, such as
- Taxation;
- Budgeting;
- Record-keeping obligations;
- Business plans; and
- Marketing plans
This is an important step to ensure that you understand where exactly your money is going, especially if you are starting a company. A basic understanding of accounting will help you and others know what your business does and determine whether to invest in it or not.
Business Location
The next step is to determine where you want to operate your food delivery business. Depending on the location choice, there will be different requirements that you will need to satisfy.
Some places that you may be considering about for the operation of your business are:
- Purchase a property, or
- Lease a small space
Terms and Conditions for Services Provided
It is important that you have a good set of terms and conditions for your business. Otherwise, you will lose your customer’s trust and be breaching the legal obligations that you owe to them. Some of these terms and conditions are:
- Details of the services you are providing
- The fees you are charging them for the provided services i.e delivering food
- An indemnity clause for any damages suffered by your customers as a result of using your services
Given the amount of competition in this industry, you may also want to consider operating your business online by having a website and/or mobile application. In order to do this, you will need other legal agreements. These include
- Privacy policy
- Website and/or mobile terms and conditions of use
- Website advertising agreement if you plan to allow others to advertise on your website
By deciding to operate your business online, it is essential that you keep your customer’s needs the top priority, and this means allowing them to pay online for their food orders. In order to do this, you will need to set up a merchant account and payment gateway, such as PayPal.
How to create a Business Plan
Before you register your business and start operations, you will need to create a plan for your business. This will involve research on your competitors, target audience, business structure and business name.
Competitor Research
Research on your competitors can help you create a good business plan. A competitor analysis can highlight gaps in supply and demand and where your business can add to the competition.
Research on the food-delivery businesses in your area can also provide insights into restaurants that are in high demand in your region. This can help you seek restaurant partnerships strategically.
Your research can also include business startup costs and business profit margins to get an idea of the costs you will encounter in your startup nursery business. This is a crucial step in order to succeed in the long term.
You should also consider reaching out to existing food delivery businesses to learn valuable tips and examine which features are valued by clients. You can ask insightful questions such as
- What were your biggest struggles when setting up the business? How did you overcome this?
- What features of your food-delivery business are the most popular with customers?
- Is there anything you wish you did differently when starting up your business?
- What is your number one tip for being successful?
- How did you get your business name out there?
- Who are your competitors at the moment?
- What are food-delivery service startup costs in your area?
Business Structure
Though before then, you need to first decide on how the food delivery business will be operated. This is an important decision that you will need to make as it will affect the future operation of your business, including issues to do with liability. Common structures to choose from are:
- A sole trader is someone who owns and operates a business under their personal name.
- A partnership is when two or more people come together to form a business.
- A company is when you register your business as a separate entity from your personal affairs.
Your business structure can have a strong impact on your business finances and long-term success. Therefore, you should do your research before making a decision. Choosing the right structure will depend on what you want to gain from your business.
If you intend to grow your business all across Australia and into other countries, then choosing to operate as a sole trader is not the best option for you. A company or a partnership may be better suited for you as liability can often be limited among the relevant stakeholders.
Business Name
After deciding on your business structure, you should then think about a suitable name for your food delivery business. It is best to be as creative as you can because it will help with creating your business brand. It is also important that you check the availability of the business name you have chosen.
If the name is available, then you should also ensure that you have exclusive use of your business name throughout Australia by registering your business as a trade mark.
Otherwise, you may not be protected against any potential misuse of the name by other businesses.
If you have decided on forming a company, then you can also think about registering a company name, although a company name is not compulsory. Special approval is needed in order to use certain words in your company name, such as ‘Royal’.
That is why it is important to check the availability of your company name on the ASIC’s website before registering it.
It is important that you also apply for an Australian Business Number (ABN) to gain all the benefits of running a business, such as tax benefits. If you have decided to form a company, then you will also receive an Australian Company Number (ACN) upon registration of your company.
Registering Your Business
To operate within Australia, you will first need to register for an Australian Business Number (ABN). This number is what the government uses to identify your business, and is important for processes like tax and invoicing. You will also want to register a business name which is required for you to apply for an ABN.
How to Structure a Business: Choosing The Right Employees
Starting a new business all on your own can be overwhelming so you might want to consider hiring new employees. Finding the right person with the right set of skills might be just the thing your business needs to move towards the right direction. Though, before you hire anyone, there are a few documents you need in place to protect your employees and your business:
You will also need to determine the type of employees that you wish to hire. You can hire casual, part-time or full-time employees for your food-delivery business:
- Part-time employees: Part-time employees generally work for less than 38 hours a week. They can still receive some employment benefits, such as sick leaves or annual leaves, on a pro-rata basis.
- Full-time employees: Full-time employees work consistently for fixed pay, subject to change at employer discretion. Generally, full-time employees receive a wide variety of employment benefits such as sick leaves, health insurance, etc.
- Independent Contractors: Independent contractors are freelancers or individuals who offer their services for a fixed period of time to a company for a fixed price.
Here is a webinar on how to hire the right employees for your business.
Marketing Your Business
There are a few ways you can use it to attract more customers to your business. For example:
- Social networking: You can use social media applications such as Facebook, Instagram, TikTok and Twitter to connect with your target audience and advertise your services.
- Advertising: You can also use television and print media to run advertisements about your business. This can often be expensive as you will need to produce an ad before it can be aired on television. Print advertisements could be a cheaper option.
- Online marketing: Once you set up your business, you should also create a website with your branding. You can run ads directing potential customers to your website and generate interest in your business through Google ads, Facebook ads, etc.
- Word of mouth: The best way to connect with your local community is through word of mouth. Talking to people around you to tell them about your business, discussing it with potential partner restaurants, etc. could be a good way to reach your target audience.
Advertising your food delivery business online may be the best way to go given today’s internet age. Another way would be to send notifications through email or SMS if you already have a customer base to begin with. However, there are important legal requirements that you will need to know before you decide to do this.
The most important of which are the regulations governed under the Spam Act 2003 (Cth) that deal with electronic communications with customers. If you are unsure of how to best promote your business online (or offline) then Lawpath can help you by hiring expert help.
Food Delivery and the Law
Opening a food delivery business can be daunting, especially due to legal paperwork required. Some legal requirements that you might need to fulfil as your set up your food delivery business are listed below:
- Employment contracts: You will need employment contracts to hire delivery drivers.
- Workplace health and safety (WHS) regulations: Your business must comply with workplace health and safety standards. In some regions you might also need to provide protective equipment to hired delivery drivers.
- Food, Health and Safety Regulations: Depending on the region you are operating in, you will also need to meet food, health and safety regulations while providing your services.
- Food transport licence: Depending on the type of food you transport, you will need a food transport licence. You can apply for a delivery licence online.
- Criminal Background Check: You might need to conduct a criminal background check for the delivery drivers that you hire to ensure customer safety.
How Lawpath can help
Starting a food delivery business in a highly competitive market is a difficult task. Legal expertise can help guide you towards making a robust business model.
Get a fixed-fee quote from Australia's largest lawyer marketplace.
Frequently Asked Questions (FAQs)
- Can you start a food delivery business from home?
Yes, you can start a food delivery business from home. One way to streamline the communication process between your partner restaurants and delivery drivers would be through an app or an automated messaging system to notify restaurants of orders and delivery drivers of pick-up details.
If you are a delivery driver for your food delivery business, then working from home will not be an option for you.
- How to start a food delivery business in a small town?
Small towns generally have a few restaurants and they have their own delivery services. You can partner up with these restaurants to complete their delivery orders for them. This will also save them costs they would otherwise spend to hire and keep a delivery partner at all times.
- Is a food delivery business profitable?
Yes, the food delivery industry has grown significantly over the years and is projected to have a market value of US$15.32 billion by 2027.
- How to start a take-out food business from home?
You can start a take-out food business from home by setting up a home kitchen and signing up with a food-delivery partner who would pick up and deliver your food from your home whenever you receive an order.
- How to deliver food to customers?
You can deliver food to customers in any sort of vehicle to ensure it reaches the customer on time.
