What about starting an outsourced food delivery business?

In the last video we were looking at how to become a number six type company and how to operate in this space in the middle. And we talked about the challenge being that because you're trying to get the restaurants to basically hand over their ordering and delivery to you, you've got to deal with a bunch of restaurants, you've got the attract the customers to the ordering platform, and you've got to manage the drivers. So it's really the hardest of all the potential delivery businesses that you could start and therefore you need quite deep pockets in order to make it really work or to be very, very good. The technology is there, but it's the commercial side that's going to be really challenging.

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What are the alternatives? Well, the most obvious things to do are to pick one of the two of those things, so either get involved in online ordering or to get involved in delivery. I'm going to talk about delivery side because that's the bit that's closer to my heart. If we're just talking about this space, we're just talking about the delivery side, it means you're not making any sales directly to customers, you're not preparing any food, you've literally just become an outsourced delivery service.

So why would anyone want to use this kind of a service? Well, for one thing if you're a smaller restaurant down here in the preparation game, whether your orders are coming from a platform or whether you're making the sales yourself, whether or not it's worthwhile you making your own deliveries really depends on how many deliveries you're getting. Because you don't have economies of scale, you don't necessarily have that big of a team, so it becomes just a logistical headache that you get and it's not really a profit centre for you because you don't know how many people that you need.

So that's why it can be quite attractive to go to one of these companies that's doing the ordering and the delivery for you, but then you're giving away the customer relationship. So if you are not making the delivery and you're letting the same people make the sale and the delivery, well they're the only ones who ever talk to your customers. And that means the next time that you get a sale, it's more likely to go back to the online platform rather than to your platform, and then you're never going to get the high commission that comes with being the one who actually makes the sale.

So if you are getting sales from an ordering platform or from a walk in or from your own sales or your own online platform, it makes sense in a lot of instances to try and manage your own deliveries or to get a third party delivery service who's at least neutral, so that you've got a better chance of future orders coming to you. And so this model's actually becoming more and more popular, and we're seeing companies who are doing deals directly with restaurants. So your customers in this case, your customers are actually not people ordering food. Let's delete some of this stuff. In fact, let's go ...

So your customers become ... is the restaurant. And so when you're trying to build your business up, instead of going and trying to build a campaign and competing directly with Uber, which quite frankly who wants to try and compete with someone with very, very deep pockets? You're just going to restaurants in a narrow geographical area, you want to start as narrowly as possible, and going around and doing the exact deal that I've just mentioned to you with them where they might pay you a management fee on a month to month basis or they might just pay you a per delivery fee, and your team of drivers are the ones who go and make deliveries for them. Either you promote their brand or you don't promote a brand and you're just giving their customer a really good experience that doesn't come from one of the big delivery and ordering platforms, so they're hopefully going to have a cheaper delivery because you're going to charge them a flat rate rather than a percentage rate, and then they keep a greater ownership of their brand than otherwise would be the case.

The sort of companies who are signing up and starting to use Spatula to manage this kind of role are much smaller than the big mega-companies who are doing the other things. So how does this work? You've basically got the orders coming in. Let's just come back to this other page for a sec. Because you're just doing the deliveries, the actual seller might be an ordering platform, or in many cases it's multiple ordering platforms. You've got people who are taking orders from anyone they can get, so it might be coming from Grubhub, from Eat24, from EatStreet, from some other small tech startup, whoever it is, you might be getting orders from lots of different platforms. Pus you're own website, plus they're coming in over the phone, and somehow the restaurant is supposed to manage them all. So your role is to use some technology in order to make that easy.

So let's just get rid of this and let's talk about how it works. In fact, I might stop there and we'll do another video to just talk about how the technology works to solve that problem for restaurants. So I'll see you in the next video.

Click here for part 2