Restaurants have to keep up with changing market trends constantly. And the most prevalent trend in the market – Online food delivery! Online food delivery service has occupied a significant chunk of the restaurant industry.
Consumer behaviour has shifted tremendously over the last two years; people now prefer conveniently eating delicious meals in the comfort of their homes instead of stepping out. The food delivery market keeps attracting more and more customers every day.
The market of food delivery apps is getting tougher to penetrate. Third-party platforms such as Zomato & Swiggy are ruling the market. They have successfully established themselves as a reliable food delivery service provider. Along with that, to help generate more revenues, restaurants are boosting their own websites.
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Online Food Delivery Market In India
The online food delivery market in India is witnessing a rampant rise. The Indian food delivery market was worth 2.9 billion U.S. dollars in 2020. It is expected to reach nearly 13 billion by 2025. A contributing factor is a shift towards starting cloud kitchen models.
Cloud kitchens are delivery-only restaurant models that only function by taking online orders through their restaurant websites or third-party aggregators. As per research conducted by Redseer Management Consulting, due to the current situation, the cloud kitchen restaurant model is estimated to be worth $2 billion in India by 2024.
Challenges With Online Food Delivery
While online food deliveries in India are increasing and making customers’ lives easier, it comes with multiple challenges for restaurants to navigate through. If you plan to start your restaurant’s own delivery fleet or tie up with a delivery partner, you should be aware of these challenges. This blog lists some key challenges restaurants face in managing food deliveries.
1. Lack Of Customer Loyalty
When people order food from home, they have more available options at their disposal. They are tempted to try new things and go to restaurants offering better deals and discounts. With online delivery, you further lose out on building a relationship with your customers through your in-person services. In such a scenario, it is difficult for restaurants to maintain customer loyalty and retain their base customers.
2. Heavy Competition
If you decide to start your delivery service, it can be challenging to shift customers towards it. Food delivery service giants like Zomato and Swiggy take up a massive share in this market. Zomato accounted for 12.8 billion rupees in the last quarter of 2021-22.
Swiggy had a gross merchandise value of over 1.9 billion U.S. dollars during the financial year 2020 in India, an increase from the previous financial year. Customers are growing used to their interface. Thus, attracting customers to your restaurant website can be highly challenging.
3. Less Profitable
Due to the fiercely rising competition in the food delivery sector, it is challenging for restaurants to adopt a pricing model that works for them. This is tougher for cloud-kitchen or only takeaway restaurants.
They don’t have the ambience and staff services to offer service to the customers to justify the price. And so, customers tend to go for lower price options in online delivery. Therefore, restaurants offer lower price margins to survive in the market, with no guarantee of higher traffic and loyal customers.
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4. Poor Door-To-Door Delivery
Customers have high expectations of the food that gets delivered to their doorstep. It is difficult to maintain food quality, as the taste of some food items changes over time. Moreover, restaurants and delivery partners must ensure the food arrives fresh and in proper condition. Your delivery agents must be adequately trained to maintain customer expectations and hygiene standards.
There is easy accessibility to the internet & multiple prominent channels of customer review. And so, a single bad review or complaint by the customer on any of these channels can hinder the potential business of the restaurants.
5. Lack Of Time Management
A highly critical aspect of an online food delivery service is time management. Customers are generally fussy when it comes to receiving their meals on time. Many customers tend to cancel their orders due to late delivery, and once an order is cancelled, the business gets nothing. Thus making timely managing deliveries one of the most critical factors of online food delivery services.
6. Logistical Operations
Whether you have your delivery fleet or a tie-up with a delivery partner, the logistical challenges of providing these services are immense. Deciding the delivery radius, allocating vehicles, updating your delivery menu, ensuring food quality, getting the correct delivery boxes, etc., are some of the demanding logistical issues a restaurant has to deal with.
7. Running Out Of Ingredients
What happens when you run out of required ingredients for a particular dish, and a customer places an order for it based on your delivery menu? It can be highly disappointing for customers when they place an online order to find out the food they want is unavailable. Therefore, you must constantly monitor and update the menu based on available supplies.
An exemplary Point of sales software can help you manage many of these challenges you face with online food delivery. For instance, smoothly toggling on and off-menu items when ingredients are unavailable, seamless integrations with all the major online order aggregators (like Zomato, Swiggy), effortless menu upgradations and many more!
We hope this blog helps you navigate the challenges faced by restaurants in starting online food delivery. Follow us on Instagram and subscribe to our newsletter for regular restaurant-related updates!