Last Updated on June 20, 2022
The online food delivery industry has witnessed a huge rise in recent years. The customer’s shifting preference from dining-out to online delivery has fueled this enormous growth, especially after the Covid-19 pandemic.
As per Statista, the global online food delivery sector was valued at 107.44 billion USD in 2019. And it is anticipated to reach 154.34 billion USD by 2023, growing at a CAGR of 11.51%.
Owing to this massive growth, several business entrepreneurs and startups are looking to enter the online food delivery industry. They are striving to develop their own food delivery app to generate a steady revenue stream. Although the industry holds humongous potential and incredible scope for growth, the food delivery business comes with its own set of challenges.
Today, we will look at the most prominent food delivery business challenges faced by startups in this sector.
Top Food Delivery Business Challenges
Unstable Pricing Model
The food delivery industry is becoming extremely competitive with several new players joining in. And this, in turn, has made it difficult for competing businesses to identify the right pricing strategy.
The new startups entering this industry prefer to work on low margins to thrive and grab the attention of the users. They even adopt various offensive and defensive pricing models to stay competitive. However, all this puts pressure on the margins and affects their profitability. Additionally, the highly volatile food costs further add up to the challenge.
The best way to address this problem is by thoroughly analyzing the pricing policy adopted by established players in the market. Furthermore, identifying the latest trends in the online food delivery industry and the price sensitivity of customers can help to develop a profitable pricing strategy.
Unpredictable Food Quality
Maintaining the same level of food quality and freshness every time it is delivered to a customer is a challenge for many restaurant partners. Food undergoes a lot of stress during transit due to bumps, movements, and vibrations on the road. All this may sometimes adversely impact the food’s freshness levels.
For entrepreneurs, it is advisable to thoroughly check the restaurant partner’s packaging and safety guidelines before enlisting them on their food delivery platform. Also, restaurants should use high-quality packaging products, such as insulated food bags, to keep the freshness of the food intact.
This is one of the greatest challenges faced by many food delivery startups. Often, the huge influx of orders makes it difficult for the delivery partner to provide on-time deliveries. This usually happens in the beginning, when the restaurants do not have the capacity to manage big logistic orders without disrupting the walk-in orders.
Additionally, problems like prioritizing order requests, allocating the right number of vehicles, and selecting specific areas for food delivery also hamper several startups.
The best way to resolve this challenge is by integrating your food delivery platform with features like order scheduler, delivery router, location tracking, geofencing, etc. Besides, providing the right training to the delivery personnel can also help to ensure timely deliveries.
Also Read: How To Develop A Food Recipe App
Building A Stable Customer Base
In today’s age of eCommerce, the number of food delivery platforms is constantly rising. Thus, the customers are overwhelmed by the choices available to them. In such cases, engaging new users and making them stick to your platform is not easy. A restaurant or delivery service that offers better deals, incentives, and perks earns the loyalty of the moment. But there is no sure-fire way to engage and retain the customers.
The best way to address this challenge is by running a referral program and providing new customers with ongoing discounts and offers. Also, you can focus on developing a smart application with an intuitive and easily navigable UI. Features such as food tracking, advanced search, gamification, etc. can also help to improve the user experience and make them stick around.
Partnering With The Right Experts In The Market
For entrepreneurs developing an aggregate food delivery platform, identifying and partnering with the right restaurant partners requires loads of effort. Joining forces with the best and quality partners and listing them on the platform helps to establish a good brand image. However, with a plethora of food outlets out there, filtering the best ones may become a challenge.
Furthermore, making the onboarding process smooth for each restaurant partner may also involve a lot of time. To face this challenge, it is best to work with an onboarding expert who can provide actionable strategies and strong support to the partner restaurants to make the process easier.
The Threat Of Bigger Players
In the food delivery industry, the ultimate goal of every startup is to win customer loyalty and earn a big market share. However, players who are operating in this industry for a long time now have set up huge customer bases, leaving little room for the new players. And this has led to market capitalization.
This is one of the greatest challenges for new and upcoming players. That said, the best way to beat the competition is to maintain superior customer friendliness, high responsiveness, and great support. Entrepreneurs need to entice new customers with an online platform that they wish to use again and again.
Identifying The Most Suitable Marketing Strategy
Even if you have developed a full-fledged food delivery software integrated with the best features, finding new users can get challenging. This is especially because you are not channelizing the most suitable marketing platforms. Many times, the rapidly shifting customer preferences may make it hard to define a proper marketing strategy.
The best way forward is to create a robust advertising plan that lists all your marketing strategies in advance. This includes thorough details of your target audience along with the best platform to find them. Also, it is a great idea to collaborate with food bloggers and influencers to improve brand visibility and build a solid online presence.
To Cope With Customer Expectations
In this internet-enabled world, the customers have become highly cognizant. They have huge expectations when it comes to online services, especially food delivery. And to cope up with these expectations, you must provide them with high-quality food service.
The customers are looking for convenience and simplicity. They want the process of food searching and ordering to be straightforward. Also, they expect timely food deliveries at their fingertips. So, as an entrepreneur, you must ensure a strong food delivery system that meets the needs of your customers.
The future of the online food delivery industry is seemingly very bright and full of potential. But at the same time, the food delivery startups must ensure to battle these aforementioned hindrances to thrive and flourish in the competitive market. With the following pointers in mind, it will get easier to develop a smart food delivery solution and serve your customers better.
If you are facing any issues in building a food delivery app then get in touch with us for expert assistance. Emizentech has many clients in the food industry and our app development team is quite adept with it.