Setting a delivery area for a food delivery business
Having a delivery service is an important part of the business for many restaurants. However, a wrong delivery area setup can cause many to lose money rather than raise a profit.
So if your food is delicious and people can’t get enough of it, then here are our tips on how and where to deliver it to make sure you stay atop of your customers’ preferences and make a nice profit in the process.
Best practices for a food delivery business
Generally, restaurant owners use one of two principles for their food delivery business component (or a combination of both). On one hand, you can set various delivery areas based on a minimum order amount. On the other hand, you can eliminate the minimum order, but establish varying delivery fees depending on the distance.
However, what we recommend is the following:
1. Avoid setting a delivery fee.
Instead, go for the minimum order principle: set minimum amounts which increase depending on the distance from your location. This way, your customers will gain a higher perceived value of the food ordered.
Let’s imagine two scenarios: A – paying a 5$ delivery fee for an 8$ order (e.g. the price for a small-sized pizza) and B – order for a minimum of 12$ (e.g. the price for a medium-sized pizza or small pizza+salad), and zero $ delivery fee.
In case B, the customer gets more food aka a bigger value for the price paid, which means they will tend to order more this way; at the same time, your fixed costs for food preparation are not that high, which means you are not losing money, on the contrary, you stand to gain more money in the long run.
2. Set a minimum order amount
If you have multiple delivery areas, then for the one that is closest to your restaurant’s location (e.g. within a 100-200 m radius), you can set a minimum order amount that is most compelling for your loyal customers ordering delivery.
This amount should be kept low (as long as it’s economically viable for you), but at the same time, it should be slightly higher than the price of your average meal.
For example, if a medium-sized pizza is worth 12 $, then you can set your minimum amount order to 14$. This way, a customer feels compelled to also buy a drink or side, or even opt-in for a menu.
Setting the delivery area inside the online ordering system
Inside the Administration Panel, you are able to set up your delivery options. Using this feature, you can even customize various delivery areas and set different minimum order amounts and delivery fees that are zone-dependent. Needless to say just how easy it is to configure everything.
Tip for ‘pick-up’ only restaurants
You can always set up a very narrow delivery area, especially for your very loyal customers living nearby. You could, for example, focus on the area within a 100-200 m radius, where a staff member would have to take a 5-minute walk.
This is a sure way to make your loyal customers living in the neighborhood love you even more
We’d love to hear what your food delivery business strategy is, so tell us more on our Facebook page.
Till next time!