Are you interested in starting a pizza delivery business from home? If YES, here is a complete guide to starting a pizza delivery business with little money and no experience plus a sample pizza delivery business plan template. Starting a pizza delivery business is a profitable business venture, and can yield a high profit margin for any entrepreneur who is serious about the business.
With pizza, you get to be creative as well as learn how to cook. You would also need to be as creative as your mind can possibly conceive; pizzas come with different options such as chicken pizzas, Hawaiian pizzas, Italian sausage pizzas, barbecue pizzas, as well as other traditional cheese, and hamburger pizzas.
Your pizza delivery business would need to have a great menu that will show your customers what you have to offer. Most pizza businesses always tweak the recipes for some of their pizzas; you can also start by tweaking the recipes of your favorite pizzas so that it raises the standard for your pizza delivery businesses.
Your menu should not be limited to pizzas alone but should include other items such as desserts, appetizers, as well as drink options. If you feel you aren’t creative enough, then you would need to get a pizza chef that will assist you in compiling menus, and adding ingredients to add to your inventory.
24 Steps to Starting a Pizza Delivery Business from Home
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Write a Business Plan
- 14. Prepare a Detailed Cost Analysis
- 15. Raise the Needed Startup Capital
- 16. Choose a Suitable Location for your Business
- 17. Hire Employees for your Technical and Manpower Needs
- 18. Write a Marketing Plan Packed with ideas & Strategies
- 19. Work Out a Reasonable Pricing for your Services & Products
- 20. Develop Iron-clad Competitive Strategies to Help You Win
- 21. Brainstorm Possible Ways to Retain Clients & Customers
- 22. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
The pizza industry generated $40 billion revenue, making close to 17% of all restaurants in the U.S, with a projected annual growth of 1.2% between 2010 and 2015. The industry had about 59,834 businesses that employed close to 930,000 people.
Interesting Statistics About the Industry
As at 2015, only the revenue from four companies in the entire industry represents 39.7% of total industry revenue. This percentage represents a low level of concentration among the largest players in the industry. According to PMQ Pizza Magazine, about 54.3% of pizza stores in the united states were small and also independently owned.
According to research from Franchise Disclosure Documents, most Americans eat an average of 100 acres of pizza daily or 350 slices per second. According to the research, 93% of Americans ate pizza every month, which has made pizza the number one dinner of most people in the United States. 68% of American families that had children which were 18 and under usually had occasions which involved pizzas.
According to a Gallup Poll, children between the ages of 3 – 11 preferred pizza to other lunch and dinner meal choices, however the people from ages 65 and above have proved to be the group with the highest preference for pizza.
To retain customers, some pizza businesses changed their marketing strategies using a combination of conventional and unconventional marketing ideas and strategies, such as allowing customers to choose their own toppings as opposed to a pre-customized pizza. This not only retained customers but revived the industry as well.
Pizza franchises are always coming up with new trends so as to keep up-to-date with current trends in the industry. Frozen pizza is a new such trend as approximately two-thirds of households in America has at least one frozen pizza in their refrigerator with sales as at 2009, increasing to $5.3 billion.
Also, most pizza businesses are making serious use of the social media and have to step up in their services, as pizza lovers are now scouting social media such as Twitter or blog sites for recommendations. Also more people especially the young adults, are now ordering for pizzas online and via text messages, with research pegging those who have ever ordered for pizza online at 16%.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of people that take pizza is definitely all age groups of both sexes, from the child age group 3-11, to the teenagers and adolescents. 12 – 19, to the young adults, middle aged and senior citizens.
Most of these people usually order for their pizza from home either for lunch, dinner or special occasions.
3. Decide Which Niche to Concentrate On
There aren’t many niches available in the pizza delivery business in the food industry, as delivery services are mostly uniform across all delivery businesses. A pizza delivery business might however, offer related but additional services to delivery just pizza.
Some of the areas of specialization in the pizza delivery business include pizza delivery, making and sales of pizza, sales of pizza boxes, sales of drinks, sales of specialty food items. There really aren’t that many niches for the pizza delivery business, but if you are an entrepreneur that wants your business to make extra income, you could go into this as well.
The Level of Competition in the Industry
Starting a pizza delivery business might sound fun because you get to deliver pizza to customers at home, offices, or wherever the pizza might be required. While you would need a bicycle, motorcycle, or car to make your deliveries, it has to be done in a timely manner. Starting out your pizza delivery business, you might need to devise means on how to get pizza to your clients on time.
Larger pizza delivery companies usually have more than one delivery driver for same routes so as to be able to get to clients on time, thereby retaining such customers. The best you can do as an entrepreneur if starting out on a small scale, is to deliver pizza to clients or handle only those you know you can reach on time, this would ensure that you keep to your word of ‘timely delivery’, while slowly expanding to be able to accommodate more customers.
4. Know Your Major Competitors in the Industry
In every industry and business sector, there are brands that stand out and are regarded as popular by clients, stakeholders, and competitors. These brands’ popularity came over a period of time where they would have survived the volatile business environment – both internal and external – and remained consistent over a long period of time. Some of the well-known pizza delivery brands in the food industry in the United States of America include;
- Pizza Hut
- Papa John
- Domino Pizza
- Papa Murphy
- California Pizza Kitchen
- Little Caesar
- Kraft Food
- Schwan Food Co.
The pizza delivery business is a very lucrative one as many Americans eat pizza every day and yet while it might seem lucrative, it is also a business that would require you carry out a thorough investigation before venturing into it. The fact that pizza delivery business is very profitable does that mean that all those who have tried this business have all succeeded, some failed because they did not take time out to really study the business before going into it.
In recent times, pizzerias and pizza delivery business have had to struggle to keep afloat during the economic downturn in the country, as prizes for food items such as cheese and flour rose astronomically during this period, causing companies to change strategies in order to keep afloat. However, the improvement in the economy has seen patronage pick up once again. This goes to show that demand is driven by more people possessing the income to purchase.
It is also important to note those that will be doing the delivery for you. If you are going to be doing the delivery yourself, it is best you pick routes that aren’t too far from your neighborhood. However, if you are going into the pizza business itself, you might need to get your own delivery drivers or contract the job to independent delivery drivers, but you would need to ensure that your insurance or your independent driver’s insurance is up to par, so that you don’t end up paying for incidents out of your own pocket.
5. Decide Whether to Buy a Franchise or Start from Scratch
If you are going to be starting out in your neighborhood, it might be worth it if you start your pizza delivery business from the scratch. Starting from the scratch comes with many benefits such as getting your customers yourself, being in control of your business, changing strategies to suit your business whenever necessary, seeing your business grow as well as many other benefits.
There are drawbacks as well, such as having to handle paperwork, and drafting strategies that would keep you ahead of competition, whilst trying to stay focused on your business.
There are numerous pizza delivery franchises, and if you intend to go by this route, you should carry out a thorough research on the franchise in question so as not to buy into a franchise that would not be of benefit to you. Buying a franchise means you do not have to worry about paperwork, or how to attract and retain customers. It also ensures that you do not make the mistakes most start-ups, as you learn the ropes of the business conveniently.
6. Know the Possible Threats and Challenges You Will Face
There is no business that is free of challenges and threats. Every once in a while, regardless of the business, the environment throws up challenges that if not careful can cause you to shut down your pizza delivery business. One of the challenges you would face in your business is more people deciding to either take their pizzas in pizzerias, or come to pick it up themselves.
Another challenge is the downturn of the economy, as well as stiff competition from rival pizza delivery businesses.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
Selecting the best legal entity for your pizza delivery business is a very important affair, as most entrepreneurs get confused on what to go for. However, when deciding on the legal entity to use for this business, you would need to carry out a research on other pizza delivery businesses as well, and the legal entities that use.
The importance of having a legal entity is so that you and your business would be regarded as separate entities, which would free you from any liabilities. However, this depends solely on the kind of legal entity picked.
Most pizza delivery businesses usually stick to majorly three kinds of legal entities, which include; Sole Proprietorship where all that is needed is to secure the necessary license and permit. However, the business and the individual are regarded as one, leaving the owner liable to all debts and actions of the business.
Corporation, which affords the owner a distinct legal entity with most pizza delivery businesses sticking to the S Corporations; which offers limited personal liability. The Limited Liability Company is a cross between a corporation and a partnership, offering benefits from both kind of legal structure, but governed by an operating environment.
If you are confused on which legal entity is best for your pizza delivery business, then you should consult with an attorney, as well as a tax professional. So as to be guided on what legal entity will suit you and your business best.
8. Choose a Catchy Business Name
- Pizza Hunt
- Mr. Bee Pizza
9. Discuss with an Agent to Know the Best Insurance Policies for You
While a pizza delivery business might sound like a fun activity where you creatively churn out pizzas that your customers love; it is also a risky business especially if you are going to be delivering the pizza. If your delivery drivers are young, they might be more eager to earn big tips while delivering their pizza on time to be bothered about driving safety.
This is why you need insurance cover in place to protect you and those you would employ to help deliver pizza for you. You would need to talk to an insurance agent or broker to guide you on the best insurance cover for your pizza delivery business.
Some of the basic insurance cover that you should consider purchasing when you intend to launch your own pizza delivery business in the United States of America;
- General Insurance
- Car Insurance
- Business Owners Policy
- Workers Compensation
- Health Insurance
- Liability Insurance
- Hazard Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting a pizza delivery business, you would have no need for an intellectual property protection. People in this sector hardly concern themselves with such and do not consider it a priority. However, you could decide to protect your business name brand and logo, if it is of utmost importance to you.
11. Get the Necessary Professional Certification
If you decide to start a pizza delivery business in the United States of America, you are not required to possess a professional certification however, if you decide to add other related services such as running a pizza place, you would be required to own a permit.
This means that while you might need just insurance and driver’s license for your pizza delivery business, you would need more if you intend to extend your services to selling pizza itself, as this is a closely regulated industry in the United States of America.
12. Get the Necessary Legal Documents You Need to Operate
Some of the basic legal documents that would be needed for you to successfully run your pizza delivery business in the United States of America include;
- Certificate of Incorporation
- Business License
- Business Plan
- Insurance Policy
- Operating Agreement
- Employment Agreement
- Contract Document
13. Write a Business Plan
A business plan is a very important document for any business. It doesn’t matter if your business is for profit making or not, you would still require a business plan. No serious entrepreneur can think of starting a business without a business plan, because not only does the business plan act as a guiding document, it is also intended to let you know if the business would be worthwhile or not. Because many people consider writing a business plan burdensome, they do not pay attention to it as they should, which is totally a bad idea.
A business plan is a clear map for your business, where routes to your success and alternative routes are clearly written out so that anytime your business wants to deviate from the carefully laid plan; it can be brought back through the guide.
Writing a business does not mean that all other things would remain equal or that you would run your business smoothly without any challenges. However, it would afford you the opportunity of effectively administering and managing your pizza delivery business.
Your business plan should contain components such as your business summary, description of your business, history, the legal entity and management structure, the products or services you intend to render, and how you intend to source for the start-up capital for your business.
Other components should include target market, strategies and how you intend to implement them, your cash flow and financial plan, where you intend to locate your pizza delivery business and the utilities that you would need for the business. You would also need to describe the features and benefits that your company intends to bring to the marketplace, and what gives you an edge over your competitors.
Other components includes the market size, market trends, sales analysis / strategies, SWOT analysis, the strategy you intend to use to attract customers and retain them as well, pricing, costing and financial projection, publicity and advertising strategy, and budget. You will also state your company’s vision statement, mission statement and the areas where you want to cover.
If writing the plan sounds complicated to you, or you do not have the time to do so, you could hire the services of a business plan writer to help you in writing one. However, you also have the option of going online, souring and downloading a business plan template to aid you in writing your business plan.
14. Prepare a Detailed Cost Analysis
According to research, starting a pizza delivery business is not capital intensive, as most of the equipment that will be used can be bought off a pizza delivery business that is closing off, or gotten at a cheap price for those that are looking to sell off, so they could get an upgrade.
The cost of starting up your business depends totally on the scale of the pizza delivery business you intend starting off on, and the area you intend to start your pizza delivery business. If you operate your pizza delivery business as a stand-alone service, then you could operate from home, however, if you decide to add related services to it, then you would have to look for a place that isn’t too expensive and yet convenient for you and your and your customers.
Some of the requirements you would need to fulfill if you intend to start your own pizza delivery business include;
- Incorporation fees $1,000
- Liability Insurance, business permit and license $1,000
- Delivery vehicles $5,000
- Official website $200
- Renting of office facility for at least a year $10,000
- Equipping the office with utilities (computer, phone, filling cabinets) $800
- Additional expenses (business cards, fliers, signage) $500
- Other operating expenses $500
Going by the report gotten from detailed research, you will need an average of $20,000 to start a small scale pizza delivery business in the United States of America.
If you intend to start a medium scale pizza delivery business in the United States, you would need nothing less than $40,000. And if you intend to start a large scale pizza delivery business in the United States of America, then you should look towards raising as much as $80,000 for your start – up capital.
15. Raise the Needed Startup Capital
Except you are starting your business off inherited money, there is no easy route to getting financing for your start-up pizza delivery business. This is often a period where the business ideas of most people die because of their inability to source for finance that will give life to the business idea.
Also, depending on the kind of business, different financing options are available and what might be available for one business might not be available for your kind of business.
This is also where your business plan plays a huge role especially if you are intending to seek for funds from financial institutions such as banks, or other type of investors. A comprehensive plan can be the difference between you getting financing from an investor and a similar business like yours not getting any.
A comprehensive business plans lays all your plans bare to an investor especially your financial projections, and also tells the investor how serious you are with your intended business. Some of the financing options that are available to your pizza delivery business when it comes to raising finance include;
- Raising money from personal savings and properties
- Sourcing for some soft loan from family and friends
- Getting an investor to partner with
- Approaching a crowdfunding site
- Approaching an investor to invest in your business
16. Choose a Suitable Location for your Business
Choosing a location for your pizza delivery business is dependent on the kind of pizza delivery business you intend to run and your target market. If your target market is for those in the lower demography, then you could even have a food truck where you would sell out your pizza from, as your facility wouldn’t really matter.
However, if you intend to target the higher end market, then your location has to be one that will give consideration to factors such as a parking lot, for your customers, and your delivery drivers. Another thing to consider when choosing a location is the history of the place you intend to use for your pizza delivery business.
You would need to carry out a proper research on the location you intend to use, and ask questions such as; if the place had been used for a food service operation before, and if yes, what happened to the previous operator. Also, you would need to find out if your intended location had a history of health department violations; this will act as a guide to you choosing a location.
If you are getting a location that wasn’t a previous food operation, then you would need to ensure that your leasing contract protects you against early termination of electricity and gas into the building. This means you would need to be sure that obtain permits for items such as correct planning, fire, and health before you lease, so that you do not just throw money down the drain that will be a loss to you.
Even if you are not leasing but owning the building outright, you would still need to be sure of these items. Once you have taken all the above factors into consideration, then you might have solved one of your intending business problems and save yourself a lot of heartaches.
17. Hire Employees for your Technical and Manpower Needs
The pizza delivery business isn’t one that requires much technicality in operating, except sharp business acumen. You would mostly be required to deliver pizza to your clients on time regardless of whatever mode you use. Your delivery vehicle can be gotten for fairly used as well as other items you would be using in your office.
Some of the equipment that you would need so as to fully launch your pizza delivery business in the United States of America include;
- Delivery vehicle/bicycles/motorcycles
- Contract Documents
- Pizza Warming Bags
- Restaurant Delivery Software
If you intend to start this business on a small scale, then it is something that you can run from home. However, this would mean that your home would have to be close to major pizza places so that you can quickly get the pizza and deliver same to your customer without wasting much time. If you however live far, then you would need to rent a facility that is close to your target market.
If starting off on a small scale, you can run your pizza delivery business alone. However, as you start getting known, and more people requiring your services, you would need to employ other delivery drivers that would help you. You would need to employ a Manager, Supervisor, Delivery drivers, Call handler, Security Personnel. This is about 7 to 10 people.
The Service Delivery Process of the Business
There is no production process involved in the pizza delivery business as this is a service-oriented business. However, some of the process involved ranges from ensuring that the right pizza gets to the right customer and on time too.
The other process involved is being able to read, so as to be able to know what your contract documents entails, know routes well and the shortest cuts to get to your destination.
18. Write a Marketing Plan Packed with ideas & Strategies
Marketing is a very important part of the lifecycle of your business, as it not only brings your business publicity but also generates income for your business as well. However, if you want to market your pizza delivery business, you would need to understand who your target market is. While you are supposed to deliver pizza to where it is convenient for your clients, marketing your services to them will be doing so in the wrong direction.
Most of your marketing ideas and strategies should be targeted at pizza restaurants, because not all of them own their own in-house delivery department. These are the pizza restaurants you would bid your services to. It will also be to your advantage if you partner with some of the pizza restaurants.
Some of the marketing strategies that you can adopt in marketing your pizza delivery business include;
- Send a formal introductory letter introducing your business to target pizza restaurants in your area
- Place window advertisements on your partner restaurant
- Display signs about your pizza delivery business on street corners
- Issue a new release to your local newspaper about your new pizza delivery business
- Offer special packages and promos to potential and existing clients.
- Consider using your official website to get clients to patronize your pizza delivery business
- Advertise your pizza delivery business in relevant radio and television programmes, as well as in newspapers.
- Make use of social media platforms such as Instagram, Twitter, and Facebook
- Pass out fliers and handbills in target areas
- Encourage the use of word of mouth referral
19. Work Out a Reasonable Pricing for your Services & Products
When setting the price for your services, you have to ensure that your prices are fair – not too cheap so that you aren’t able to keep up later along the line; or too expensive that you drive away potential clients. Your pricing has to be considerate of your operating expenses as well as your competitors. You can choose to keep your operating expenses down by operating from home.
20. Develop Iron-clad Competitive Strategies to Help You Win
If you are intending to start your pizza delivery business, you should be aware that you wouldn’t be the only one, as there will be some pizza delivery businesses already existing or even those that are intending to start the business as well. You would need to have packaged your business in such a way that you have identifiable unique selling points that will enable that your customers prefer you.
Part of your competitive strategies could include offering your clients incentives from time to time, like reducing your delivery fees for certain days; it could be on your clients’ busiest days. This way you get more work. Another part of your competitive strategy is also by offering additional services to your clients and ensuring that they are generally satisfied with your services.
21. Brainstorm Possible Ways to Retain Clients & Customers
According to statistics from reputable research companies, businesses that retained their customers spent less than those acquiring new customers. Customers stay with a business that valued them and kept the relationship active by employing several tactics that is intended at keeping them coming back to patronize the business.
This is why you would need to pay attention to your existing clients, as happy clients bring in more clients without you having to do anything extra.
One way at increasing customer retention is by keeping the communication strong in your business relationship. Once you are able to answer your clients’ enquiries, complaints, and any other general thing that needs your attention.
22. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Strategies that are needed to boost your brand awareness as well as create a corporate identity have to be drafted. If you want to get potential clients to patronize your pizza delivery business, while allowing your existing clients see reasons why they should stick with you, then you would seek ways to promote your brand even if it means bringing in brand experts that will help you achieve it.
Listed below are the means you can use to boost your pizza delivery business brand and also promote and advertise your business;
- Ensure that you promote your pizza delivery business via your official website
- List your pizza delivery business in yellow pages
- Encourage your loyal customers to help with referrals
- Use direct coupon mailing to get in touch with potential pizza restaurants clients
- Advertise your pizza delivery business in relevant food magazines and local newspapers
- Leverage on social media platforms such as Twitter, Facebook, Instagram, Google plus, to promote your pizza delivery business
- Distribute your fliers to target restaurants, and paste your notices in target places as well.
- Make use of blogs to promote your pizza delivery business
23. Create a Suppliers/Distribution Network
If you intend to run a standard pizza delivery business, then you would need to know that you cannot operate in isolation. You would have to partner with pizza restaurants, as well as clients you take the pizzas to.
For you to be in a good relationship with your suppliers, you would need to ensure that you are always on time and that they can rely on that. Once you are known for always being on time, then you would be referred to other clients. You would also need to cultivate a good business relationship so that they could give you heads up about new clients that you might approach.
24. Tips for Running a Pizza Delivery Business Successfully
In ensuring that your pizza delivery business is being run successfully, you would need to know your customers. This means that your research would know what your customers eating habits are, their ordering time for your pizza, the kind of pizza that is usually ordered and other such things. Knowing your customers is a sure way of running your business successfully.
Another factor is in ensuring that your pizza delivery business offers customers a complete menu guide and consists of a wide variety of pizzas. This way, your customers are presented with varied choices that would enable them patronize your business.
Running your pizza delivery business successfully would require that you market your business properly. Remember that no one would know about your pizza delivery business if you do not push it into the consciousness of people, which is what marketing does. This would be a combination of conventional means such as reaching your customers via your websites, and passing out fliers; or unconventional means like ref magnets or cards that contain your menus.