How to start a food delivery business

The key points to know before you start a food delivery company.

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The Australian food delivery market is booming, with an expected annual growth rate of over 6% until 2024 according to Statista. There's never been a better time to start a venture within this niche.

But are you unsure of where to start? In this article, we'll look at everything you need to know before you start your own food delivery business.

What is a food delivery business?

A food delivery business is a courier service that delivers food from restaurants, cafes and grocery stores to customers. Orders are typically placed via a mobile app or website.

man delivering food

Create a business plan

Before you register your new venture, you'll want to be clear on what type of business you are creating. Writing a business plan can help you focus on the business's objectives. Moreover, it can help you estimate how much the costs and what the projected revenues of the new company will be.

Your business plan doesn't need to be overly detailed. However, it should include the following for a successful set-up:

  • Market research. Who are your competitors? Who are your potential clients? How big is the market opportunity?
  • Business model. How will your business generate income? Will you reach customers directly through a mobile app?
  • Financial projections. What equipment will you need to invest in? How will you fund the initial costs of the business? Will you need to hire employees?
  • Set out your projected vision. How will the food delivery company look in 1, 5 and 10 years' time?
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    Register the food delivery business

    To register a business in Australia, you will need to choose a business structure and decide on a business name first.

    Choose a business structure

    In Australia, there are three common business structures you can choose from. These include:

    • Sole Trader. Also known as a Sole Proprietorship, a Sole Trader structure is essentially a one-person business. It can be a cheap and simple business structure to set up. However, you are personally responsible for all aspects of the business including tax and debts.
    • Partnership. If you're setting up a business with someone else then you may consider a Partnership. A Partnership is when two or more people run the business. Ownership and responsibility are split between the partners.
    • Company. A Company is a separate legal entity from its owners. Instead, it's owned by shareholders. Setting up a Company requires more ongoing support and costs.

    Once you've chosen a business structure, you'll need to register for an Australian Business Number (ABN).

    Decide on a business name

    Choose a name for your food delivery business next. Check that your business name is available using the Australian Securities and Investments Commission's (ASIC) business names register search tool. If you choose a company structure, you'll also be provided with an Australian Company Number (ACN).

    Tax and other considerations

    If your annual business turnover is $75,000 or more, you're legally required to pay goods and services tax (GST) on all sales. Pay-as-you-go (PAYG) instalments must also be made on behalf of any staff you employ.

    Buy the right equipment, software and insurance

    Even if you run your new food delivery venture alone, there are still certain investments you will need to make. We've broken down the three areas to consider into equipment, software and insurance:

    Equipment

    You won't need a lot of equipment for food delivery. What you may require are:

    • Vehicles. There are different vehicles suitable for food deliveries. These include cars, bicycles, scooters or vans.
    • Food delivery bags. Food must be kept at a certain temperature to keep it safe. The food bags you acquire must comply with the Australian Food Standards.
    • Mobile phones. Communicate with drivers and ensure they know where to pick up food and where to deliver it.

    Software

    There's a large amount of software available to download that can help you carry out the whole delivery process. These include:

    • Routific. This app helps you streamline your deliveries. Routific promises faster deliveries that arrive on time.
    • OptimoRoute. You can use this software to manage delivery dispatching, orders and do live tracking.
    • GSMtasks. This software helps you plan and optimise your delivery routes, as well as assist with your admin tasks.

    Insurance

    Insurance cover is essential to keeping your business safe. Consider the following types of insurance for your delivery service:

    • Vehicle insurance. Your mode of transport will be your most important tool for getting food delivered to your customers. Whether it's bike or car insurance, remember to protect your vehicles from damages or theft.
    • Public Liability Insurance. Public Liability Insurance covers your business if someone is injured or property is damaged whilst interacting with your company.

    Before you can begin your food delivery business, you will need to secure certain licences. Moreover, you will need to comply with the Food Standards Code. Some of the licences you may need include:

    • Food licence. A licence that showcases that your business knows how to handle food safely.
    • Food transport business. If you transport meat, seafood, plant products and more, then you'll require this licence. The licence needs to be reapplied for every 12 months.

    There are certain legal agreements you can use to protect any data and your intellectual property while operating online. The key agreements include:

    Name Product What's offered? Starting price to become a member Annual Fee from Free legal documents available?
    Lawpath
    Legal documents and templates, Access to lawyers, Legal guides, Legal advice
    $79 per month
    Essentials: $288, legal advice: $828
    You can view samples for free and you can create your first document for free.
    Choose an annual plan from just $288 and get unlimited revisions to your legal or business documents. Plus, unlock exclusive partner offers.
    LawDepot
    Legal documents and templates, Legal guides
    $4.99 per month
    $59.88
    Free one week trial available which gives access to hundreds of documents.
    Customise and download legal documents in as little as five minutes. Plus, LawDepot offers peace of mind with two service guarantees.
    Legal123
    Legal documents and templates, Legal guides
    Varies per template
    N/A
    No
    Legal123 offers a range of individual templates or document packages for consultants, app developers, personal trainers and more.
    LegalVision
    Legal documents and templates, Legal guides, Legal advice
    $49 + GST per week
    $2,548 + GST
    No
    Your business can take advantage of unlimited lawyer consultations, fast turnaround times and free legal templates with LegalVision.
    Law Central
    Legal documents and templates, Legal guides
    Free for the Silver membership
    Gold: $99
    You can view samples and create your own document for free with the Silver membership.
    Law Central offers a large number of legal templates for super, trusts, estate planning, employment and commercial uses.
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    Build a customer base

    The next step is to start marketing the business, building a customer base and growing sales. There are different ways to go about attracting new customers, including:

    • Search Engine Marketing. Promote your food delivery business online using certain keywords. For example, when a customer types in "food delivery in my area", a small advert is displayed at the top of the search engine promoting your business.
    • Social media. Establish a presence on social media. For example, showcase the meals customers can order via your food delivery platform.
    • Referral program. Incentivise your existing customer base to refer your business to their network. Offer these loyal customers a discount or freebie.
    Promoted
    Accept payments from your customers in person and online with Square's card readers, payment terminals, digital invoicing and e-commerce tools.

    Frequently asked questions

    How do I advertise my business?

    You can use different social media channels to promote your business. Establish a presence on relevant social channels to find and engage with customers. You can also consider hiring a digital marketing expert to help promote your business.

    How should I insure my business?

    There are several types of insurance available for startups which can protect your business against the unexpected. Some insurance to consider includes vehicle insurance, Public Liability Insurance and Professional Indemnity cover.

    How do I brand my business?

    Good branding starts with a good name. Make sure it stands out from your competitors, that the online domain is free and it resonates with your business. To ensure your business name is exclusive in Australia, think about registering your business as a trademark.

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