5 Reasons Why Food Delivery Businesses Sometimes Fail
The industry of food deliveries or the so-called ‘e-restaurants’ has been avidly popular in accordance with the rise of the internet. It was in the early 1990s when Pizza Hut opened its first ever online food ordering system.
It was followed by several online delivery services such as World Wide Waiter, WebVan, Home Grocer, and GrubHub in 2005. After these names, more and more have also started, both major and startup businesses, but some of them have failed eventually. The following are the reasons why food delivery businesses fail sometimes.
1. Demands higher price due to delivery charges
Not to mention, food delivery business requires additional capital for transportation expenses such as gasoline, insurance, repair, maintenance, and all. In order to make the service profitable, e-restaurants would demand the customers with additional delivery charges to increase the total price of the order, making it more expensive than taking the food from the actual restaurant. As a result, most customers would rather find a better service with cheaper fees or free delivery, might as well, dare for dine-in instead.
2. Fiercer competition
Losing from a battle is another cause of bankruptcy. With over thousands of online delivery services based in different sides and corners of the world, there is no surprise that competition is becoming out of hand for some. Rivalry with newly-established sites that are jam-packed with all new sets of marketing strategies is a real challenge not only for popular chains but mostly for startups like you.
3. Limited market reach
The sudden popularity of a startup business leads to a larger number of customer requests that must be met. However, some may find it difficult to handle a flood of orders due to shortage of time, logistics, and certain ingredients for marketable dishes especially if they run an actual restaurant and its online delivery at the same time. The inability to meet all these demands is basically one of the reasons why some online services decide to close their doors and shut down for a while.
4. Inconsistent food quality
Admit it or not, you’d still rather go for freshly served dishes on the table than a cold pizza delivered at your door. Imagine a typical delivery would take 15 to 30 minutes of travel which often includes over-taking or sudden drifts and breaks by any chance. These actions can turn your ordered burgers upside down or spill your gravy if not properly sealed. The inconsistent food quality can greatly affect the image of the business by receiving bad comments and feedback from the customers. This could be a great challenge for all sellers and services online.
By: Sarah Contreras
The author holds a bachelor’s degree in Communication with expertise in certain fields like media and marketing. She currently works as a web content contributor for ANC Delivers, one of the fastest fleet home and corporate delivery services in Australia.