The Economics of Food Delivery Costs and Profitability - Handover

The Economics of Food Delivery: Costs and Profitability

Food delivery service is not a new phenomenon but a decade old service. But during Covid-19, the government had imposed restrictions on people’s movement, preventing them from visiting restaurants. Consequently, people started ordering their favourite meals from restaurants, leading to a massive assistance in the food delivery business and  boosting third-party delivery services due to their involvement in food delivery from restaurants to customers. Since then, food delivery services have been playing a crucial role in online food businesses. The pattern exists the same across India. Be it about delivery services in Noida, Gurugram, Delhi, Mumbai, Bangalore or even smaller locations like Karnal, most people are ordering food online. According to the report of Research And Markets, a world’s leading research market store, the Indian online food delivery market is expected to reach INR 1,515.17 billion by 2026, growing by a CAGR of 30.11% during 2021-2026. 

What is the Food Delivery Business Cost?

As we already know, the food delivery business is rising significantly. A decade ago, it was restricted to Pizza and Chinese food only. But, now all kinds of food are being delivered to customers. You name it, that will be delivered to your address. This is how the food delivery businesses flourish today. As demand continues to grow, there is a sheer need for appropriate infrastructure that helps businesses deliver food to their respective customers, hence increasing the expenses. The following are some of the stuff businesses have to include to make their food delivery operations smooth. It eventually increases the food delivery business cost. 


Delivery Vehicles

For expanding the infrastructure, businesses need to purchase multiple vehicles that help them deliver food to their customers. Otherwise, the lack of vehicles can seriously affect your business. For instance, if customers order food from you and you don’t have adequate vehicles, you might have to make customers wait. You have to wait hours for the vehicle to come so that you can deliver food to other customers. This process takes time which customers would not tolerate. Rather they will switch to another. So. purchasing enough vehicles is crucial for businesses. 


Hiring Delivery Executives

Vehicles are useless without drivers. Businesses need to hire delivery executives for making their food delivery operations successful. Delivery executives’ work is basically defined as they are required to pick up food from restaurants and deliver it to customers directly. They help businesses deliver food to their customers on time which makes customers happy and loyal. Hiring delivery executives costs lots of money to businesses who ensure smooth delivery operations. 

Third-party Delivery Service Helps Business Cut Several Expenses

If businesses take all responsibilities of delivering food to their customers on their own. It would cost them enormous money. Because they need to maintain required infrastructures such as purchasing vehicles and hiring delivery executives. Furthermore, businesses are required to fill fuel in their vehicles in order to deliver food. On the other hand, if businesses collaborate with a third-party delivery service company, they can be exempted from these heavy financial burdens. Interestingly, these delivery service providers use electric vehicles (EVs) for food delivery services, eliminating the hefty fuel expenses involved in conventional logistics services. 



By joining hands with a reliable third-party delivery service provider, businesses can expand their services to large numbers of customers. Besides, third-party delivery services arm businesses with adequate delivery executives proficient in on-demand delivery services. As businesses don’t need to pay a fixed monthly salary to these executives, they are able to lower their costs and increase profits too. Joining hands with Handover, a leading delivery service company in India, will also help businesses by interacting with their customers, something that is rare these days.




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