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Introduction to Food Delivery Business
Technology has made people sluggish and now they look for convenience and easiness in everything. Going out for shopping and selecting a hotel for food used to be a very time-consuming activity. But the online business of ordering food from your smartphone, and then get it delivered at your home. It facilitates people with speed and more options.
It has attracted the attention of many people and businesses because it provides you an option of convenience and speed that what people want. According to a study by Statista, online food delivery business has created estimated revenue of 4869 million dollars in the UK. By the end of 2023, the business would increase up to 8.3% and it would have a market share of 6703 million dollars in the US.
Today we will discuss swot analysis of food delivery Service business to dissect each part in detail, where we’ll study internal strengths/ weaknesses and external opportunities/threats. How takeaways and food delivery business could utilize strengths and opportunities to over weaknesses and threats. Here is the swot analysis;
Strengths of Food Delivery Service Business
Some of the strengths of food delivery business are as follows;
Experienced staff & Strong delivery system
If you have an excellent cook that can produce tastes in the final product, good packing, and delivery system. Then these are the plus points of your business. Since we are living in a time where everyone is busy and want convenience. If you provide quality food with good taste and timely delivery service, then people would prefer your product.
Well Recognized Brand
If your brand is well recognized because you have in the hotel and restaurant business for a long time, then it would benefit you when you launch your business online. People would immediately recognize your brand because they’re familiar with prices and the taste of your products. They won’t waste any more time exploring other options; they would place the order for delivery.
If you are new in the market, then low prices would help you to attract price-conscious customers. Low prices mean that you have to do a lot of homework to find out the cheap suppliers, you won’t be able to find them easily. Once you do, only then you would be able to offer your products at low prices. Otherwise, you won’t be able to do it and you shouldn’t offer cheap prices out of your pocket.
We all prefer freshly cooked food. When an online service that offers fresh meals to its customers. Then it would attract the attention of many people, especially those who have tried other online services before. When you deliver the same service that you advertise, then it would give a lot of referrals.
Your menu list shouldn’t comprise of few products. The items on the menu should have a variety, so that people would have options to choose. A customized menu would give your brand a competitive edge. People would be certain that it is your brand that offers a variety of products to its customers.
Weaknesses of Food Delivery Service Business
Some of the internal weaknesses of the food delivery business are as follows;
Of course, starting an online takeaway and food delivery business is cheaper than building a real hotel. But it doesn’t mean that it would be free. You would need capital for the advertisement, billboards, and online ads. Referral and word of mouth marketing are good, but it won’t give you a lot of sales. You would need paid media tools to reach a bigger audience.
Food ingredients are becoming very costly, and after adding up the value-added cost. The final price of the product doesn’t give you a much price competitive advantage. If your new brand offers the same food items with the same taste, then it’ll be difficult for you to attract the price-conscious market. What you need is a cheaper supplier to offer lower prices to your targeted market.
A food delivery service is a kind of job that people usually don’t do for the rest of their lives. Only part-timers and in-between-jobs people do such jobs. Whenever they get a better opportunity, they immediately leave the food delivery job. It is because of longer hours, tough routine, fewer wages, and risk of being exposed to all kinds of weather.
Lack of Trust among the Public
Online food offering store is a kind of business that people can’t see the operations going on in the kitchen. Therefore, it becomes difficult for the public to trust the new stores where they can’t be certain about the quality of the ingredients.
On the other hand, people have visited the well-recognized hotels and they have their kitchen and quality processes. When it comes to choices, they would always prefer the stores that they knew, rather than the new ones.
Opportunities for the Food Delivery Service Business
Some of the opportunities that food delivery business could advantage of are as follows;
Food Trucks and Wagons
Food trucks and wagons are a great option for the new online food delivery brands, because people have trust issues. When you introduce your products using the food trucks and meet people in person, then you would be able to minimize their trust issues. People know what kind of person you are, and see how you manage your kitchen.
Alliances with Bars
Bars and clubs offer only drinks if you make alliances with them to add an extra food service in their bars and clubs. Then you would be able to turn those bars into dinners. Extra service would make them attract new customers, and it would help you to increase sales.
Expansion across the Country
If you’re already doing good business in one city, you have good reviews and enough capital. Then you should open up branches in the other cities as well. Use the satisfied customers’ reviews in the marketing campaign of the other cities.
Since you already doing good business in one city, it is highly probable that you would easily new customers in the other cities across the country. Success multiplies with success, and you should keep on expanding.
Improved Customer Service
Neat and clean service is a type of quality that people admire and they want it in their meal. When you provide them the same quality food service that you advertise, then it would help to create goodwill. It is one of those characteristics that would make people choose your brand over competitors in the long term.
The Coronavirus (COVID-19) has turned out to be deadly to all kinds of public gathering hotels and restaurants. But it has also presented an opportunity for online food delivery businesses to continue to grow and expand. Since people can’t go out in public places, the only option for them is to order food online and get delivered at home.
Threats to Food Delivery Service Business
Some of the external threats that online food delivery business has to face are as follows;
Cheaper Prices of Competitors
If any of your competitors have found some cheap suppliers, and he is offering the same items at a lower price. Then it would be fatal for the life of your business unless you’re offering some unique service and differentiating products. Otherwise, the cheap prices of your competitors would help them to attract most of the price-conscious market share. Either you should find the new cheap suppliers, or you should look for the ideas to differentiate your product.
Restriction on the Food Truck
Some states, countries, residential, and public places don’t allow food trucks to openly sell food items. If you’re a new brand, and your state doesn’t allow you to openly sell food items using food trucks and wagons. Then it would be very difficult for you to connect with targeted customers.
Some people have trust issues in terms of food items, and you are unable to connect with them. It would take you a much longer time under such circumstances.
If somehow your food is contaminated and it makes people sick at once, then it is not something that you want. Because it would create negative marketing of your business and spread panic among the public. Even it happens at once; people won’t order for the delivery of your food again. It doesn’t matter how well established your brand it.
If it happens to a new brand, then it would mean the death of your business. For an older brand, they have to accept their mistake, apologize to the public, and pay medical bills of the affected people. Only then the public would accept their apology.
Economies across the world are going through a very rough period because of the current pandemic circumstances. The unemployment rate is higher than ever. It means that people have less money to buy expensive food. People are barely feeding themselves to survive.
People don’t have jobs and they are consuming their savings. The online takeaway and food delivery service market is comprised of many competitors. In such a competitive environment, it has become very difficult for online businesses to differentiate their products and offer low prices.
After studying the swot analysis of food delivery service business, we have concluded that it is a very good low-cost business. But the current circumstances are very tough, the market is competitive, food ingredients are costly, and people have less affordability. If you have found reliable suppliers, and you think that you can compete in the food delivery market with differentiation, then you should do it.