Key challenges in food delivery logistics & how food delivery logistics software can solve it
By Komal Puri | October 20, 2022
Food delivery logistics plays an important role in restaurant operations and can be a determining factor for the success of a restaurant’s food delivery service. A decade ago, the convenience of ordering a meal from your favorite restaurant with the click of a button was a dream in the pipeline. But with the advent of mobile phones and associated technology including food delivery logistics software, the possibility of food being delivered as soon as possible, at any time of the day, and at any location, has become a reality. While the online food delivery business seems simple, it takes a lot of logistics planning to make it a success.
The food delivery service has seen a major change in delivery order fulfillment. Problems like delays in order placement at restaurants, orders getting mixed up and late delivery are mostly problems of the past. Through the use of technology, the food delivery logistics market has been able to provide services with low delivery costs while maintaining a high level of customer satisfaction.
The Significance of Food Delivery Logistics
Consumers have become quite tech-savvy and prefer ordering food using apps or using websites offered by restaurants or third-party aggregators. Food delivery logistics plays a significant role in delivering customers restaurant-quality food in the comfort of their home or any other location of their choice. Food delivery logistics have enabled small food establishments to cater to customers by using third party aggregators. Food delivery logistics also contribute to the gig economy by hiring the required manpower as freelancers or short-term employees.
The increase in demand for food delivery services has forced almost every food delivery logistics company to hire independent workers to transport food items quickly and efficiently. This has turned out to be a win-win situation, where demand for temporary workers is being met by the gig economy.
Modern Challenges in Restaurant Delivery & Food Delivery Logistics
In today’s world, customers have high expectations when it comes to food delivery. Food delivery services are currently leading the online market. The online food delivery market currently shows an annual growth rate of 6.4% and is expected to become worth $182,327 million by 2024.
Let’s look at 10 key food delivery logistics challenges.
1. Managing delivery expectations
For customers, the shorter the time window, the better it is. Without the flexibility to plan and optimize delivery routes, providing this feature can be difficult for restaurants. It is challenging to ensure fast delivery without having the proper logistics in place while trying to keep a tab on rising operational costs.
2. Competition from bigger players
One of the biggest challenges faced by small players in the market is the difficulty in gaining a large customer base due to the presence of already established food delivery players in the market. Big players have financial and operations resources to meet the market demand and can keep fighting for a long time to keep competition at bay, without incurring much loss.
3. Inconsistent food quality
The delivery of food from a restaurant to another location, while maintaining the ideal quality standards, is challenging. Without proper order and time management by restaurants, it can be difficult to deliver quality food to customers.
4. Inefficient order management
Garnering a larger customer base is only possible if order fulfillment is optimized. Restaurants need to have their operations and logistics in place to handle large volumes without compromising on the quality of service provided to customers. The managing and tracking of food orders manually in the absence of efficient food delivery software can lead to inefficient order management.
5. Absence of convenient payment options
An increasing number of customers prefer cashless payments as they are quicker, more convenient and secure. Restaurants need to incorporate easy and convenient mode of payments. These payment methods can include card and wallet payment. Provision of multiple modes of payments will ensure customer satisfaction.
6. Wavering customer loyalty
The restaurant and food delivery markets offer many choices to consumers. At the end of the day, what consumers choose depends on where they get the best deal. A restaurant or delivery service that provides better deals, incentives or freebies can earn customer loyalty.
7. Inefficient Multi-delivery Route Planning
Customers expect the food delivery to be on time and a delayed delivery leads to a disappointed customer. To achieve timely delivery, optimal routes need to be planned, to take care of as many deliveries as possible with the least amount of resources.
8. Absence of a customer-centric approach
Customers are more likely to order from a restaurant that is capable of catering to their preferences. These preferences could be a specific delivery window, timely notifications for each stage of the food delivery, payment preferences and many other things. Restaurants need to make their delivery service more customer-centric in order to retain customer loyalty.
9. Unreliable deliveries
Restaurants need to cater to several orders simultaneously. Without proper restaurant logistics in place, deliveries can get missed or delivered late. An unreliable delivery service can lead to a loss of customer trust and business.
10. Broken communication between drivers and customers
Customers prefer to be kept in the loop regarding the status of their food delivery order. If a restaurant is unable to communicate effectively with the delivery driver and customer via phone call or text, it can create issues and dissatisfaction
How can a food delivery logistics company help?
Food delivery services need to be well planned to ensure the timely delivery of food. Such companies can provide these services through their advanced logistics platform. An food delivery platform is able to integrate technology and business needs to meet the requirements of the food industry. Advanced logistics platforms use data analytics to map out optimal routes of delivery that help to reduce operational costs. An advanced logistics platform can increase productivity by auto allocating fleet and driver, thus enabling easy order fulfillment. By using an advanced logistics platform, human dependency can be eliminated, and errors minimized.
How can today's food delivery software drive competitive delivery experiences?
Today's food delivery, in addition to delivering food in a timely and safe manner, needs to also incorporate various measures to attain cost-effective order fulfillment. The key to creating a competitive delivery experience is to identify the right food delivery software that will fit your business needs.
A few ways in which today's food delivery logistics software can help your business win over customers and ensure profitability are:
Using Gamification to Boost Driver Engagement
Gamification uses real-time data to display delivery key performance indicators (KPIs) such as the number of orders completed, late deliveries and other parameters. By syncing the incentives with the performance of drivers, employee engagement and productivity can be improved.
Leveraging Real-time Dynamic Routing to Shrink Delivery Turnaround Time (TAT)
By leveraging real-time dynamic routing capabilities to optimize routes, restaurants can direct drivers towards timely delivery. The software can optimize the overall performance of a delivery fleet by addressing constraints like no-entry time windows, tonnage and empty miles.
Intelligently Allocate Tasks and Ensure Rapid Scalability
Food delivery software allows restaurants to scale their delivery processes and save costs. The ability of the software to incorporate the outsourcing of delivery tasks to third-party logistics providers, based on the cost-effectiveness analysis, can boost profit margins.
Improving Customer Experience and Personalizing Deliveries
Food delivery software is capable of sending customers real-time updates on the status of an order placed till it is delivered. The software enables the customer to provide instant feedback based on delivery experience, quality of food and even register complaints. The ability to store customer information to personalize delivery can help to improve customer experience.
10 Must-Have Features of Food Delivery Logistics Software
Automatic scheduling: Automatic scheduling allows the intelligent allocation of food orders to the most suitable driver, taking into account the proximity and turnaround time.
ETA accuracy: ETA accuracy can help provide an estimated delivery time on receiving the delivery address. Accurate and predictable ETAs help increase customer satisfaction.
Online chat: Online chat allows customers to immediately connect with the delivery service representative and raise a query with them. It allows the delivery service to keep track of issues, which can be used to resolve recurring problems permanently.
Loop optimization: Loop optimization helps to handle all processes in a synchronized way to achieve optimal cost and service performance. By using digital and advanced analytics, the software can enhance loop optimization.
Real-time dynamic routing: Real-time dynamic routing applies complex algorithms to provide efficient and optimal routes. It provides drivers with the shortest and most optimized route to save fuel, avoid traffic or other unexpected problems.
Multi-drop food delivery: Multi-drop food delivery enables restaurants to save time and incur fewer costs as compared to doing each delivery individually. The software can keep a track of all deliveries on a single route and help save the delivery driver’s time, which can be utilized for another delivery.
Electronic Proof of Delivery (ePOD): The software allows the collection of signatures, notes and photos using mobile applications, which are immediately updated onto the system. Electronic proof of delivery in lieu of traditional paper is quicker, accurate, and makes it easier to keep records of orders.
Digital wallets: Digital wallets help reduce fraud and offer customers better security. A digital wallet can also be used to store loyalty card information and digital coupons.
Real-time tracking: Real-time tracking helps provide customers with the status of their food orders, thus ensuring complete transparency in the delivery process.
In-app gamification: Gamification helps to motivate drivers by introducing elements like leaderboards, measuring of performance, earning of rewards and much more. Gamification helps improve major last-mile KPIs like on-time delivery rate, first attempt rate, capacity utilization, customer satisfaction and damage to the freight.
As the food delivery industry becomes increasingly competitive, players need to embrace food delivery logistics software to survive the competition.
How FarEye Can Help You Create a Highly Competitive Food Delivery Experience
FarEye helps restaurants to create, orchestrate and control on-demand delivery operations. FarEye's on-demand and hyperlocal delivery solutions provide the right technology to handle demand fluidity for perishables like food and grocery.
FarEye’s last-mile delivery management platform has capabilities like automatic order allocation and dispatch, chat-based customer support, real-time dynamic routing, electronic proof of delivery to help create a highly competitive food logistics delivery experience. Additional features like driver crowdsourcing app, performance management with gamification, and maximum flexibility for customers, can empower you with a versatile food logistics delivery platform.
Komal Puri is a seasoned professional in the logistics and supply chain industry. As the Senior Director of Marketing and a subject matter expert at FarEye, she has been instrumental in shaping the industry narrative for the past decade. Her expertise and insights have earned her numerous awards and recognition. Komal’s writings reflect her deep understanding of the industry, offering valuable insights and thought leadership.