If you are an entrepreneur interested in the food industry, you may consider tapping into the significant growth experienced by the food delivery sector. With more people wanting to free up their time spent in the kitchen and supermarkets, an opportunity has arisen for more on-demand meal delivery businesses to enter this market. However, due to the size of the New Zealand population and the low barriers to entry in this industry, the food delivery market is very competitive. If you want to start your own food delivery business in New Zealand, there are a number of crucial steps that you should take. This article discusses:

  • how to test the profitability of your business idea;
  • how to set up your food delivery business;
  • some of your legal and tax obligations; and
  • how to market your food delivery services.

Research and Plan Your Business

The relatively small size of New Zealand’s population and the nature of the food delivery industry makes it relatively hard to compete in this industry. Like with supermarkets, there is often only room for a few key players. Therefore, you should analyse the market and the economics of your venture to ensure your success. Importantly, you must consider how you plan to gain market share from established players in the industry, like Uber Eats. 

You can do this analysis while creating your business plan. This will help you decide if your business idea is viable or not. As part of the process, you will: 

  • analyse the market and your competition; 
  • define your unique selling point; and
  • understand your costs.

When defining your selling point, it is crucial to try to find a competitive advantage over your competitors on either: 

  • quality;
  • price; or 
  • service.

Gather your data using reliable tools and statistics, such as the Data for Business website developed by Stats NZ.

Once you have refined and documented your business idea, you should register with your local Regional Business Partner Network to access: 

  • free resources; and 
  • mentoring available to new businesses, to help you test the validity of your idea.

Get Verified 

When you transport food or beverage products as part of your business, you need to meet specific food safety requirements. You can use the ‘My Food Rules?’ tool on the MPI website to find out which regulations you need to follow. Once you download your plan, you will need to register your business and get verified. 

Set Up Your Business

It is fairly straightforward to establish, own and operate your business in New Zealand. You can set up your business in a matter of hours using the Government’s online portals. Some of your key setup tasks include:

  • deciding on your business name; 
  • protecting your name and brand by registering a trade mark;
  • deciding on a business structure and registering your business;
  • opening a bank account, merchant account and payment gateway, such as PayPal; and
  • getting an IRD number for your business and understanding your tax obligations.

When deciding on your business name, you must check that your desired name is not in use by any other business. If you register a business name too similar to other existing ones, you could violate New Zealand intellectual property (IP) laws.

You can structure your business as a sole trader, partnership or company. There are other structures available, although these are the most common. Depending on your business structure, you will have different tax obligations, including: 

  • paying provisional tax;
  • registering and adding GST to your prices; and
  • deducting PAYE from your employee’s salaries. 

Once you register your business with the NZBN Register or the Companies Office, you will receive an NZBN number. This is a unique identifier for your business, which makes it easier to liaise with other companies and government agencies. 

You should also consider taking out insurance policies to protect your business and mitigate risks. For example, if you own a fleet of vehicles, you should have commercial vehicle insurance. You should discuss your business needs with an insurance broker, as your policy should be tailored to the needs of your business. 

Find New Customers

To gain market share from established competitors in your market, you need to make data-driven marketing decisions that contribute to overall sales and customer retention. A few strategies to gain market share include: 

  • finding a niche and sticking with it;
  • investing in innovation; and
  • engaging with customers.

As you start to gain orders from new customers, it is crucial to delight them from day one to ensure they turn into repeat customers. An easy way to do this is to maintain a database with your contacts’ information and request permission to send them marketing communications. 

For example, you can send them referral offers to help you grow your customer base, loyalty discounts and repurchase reminders to make them feel valued while helping you improve your customer retention.

Other essential marketing tools for your toolbox include:

  • a website or mobile application;
  • an email or messaging platform; and 
  • social media channels.

When you set up a website or app, you may need to engage your lawyer to help you draft some of your legal documents, including your:

  • privacy policy;
  • website and mobile terms and conditions of use; and 
  • website advertising agreement.

Key Takeaways

From creating a business plan to marketing your services, there are several things to do before you start your food delivery business in New Zealand. These include: 

  • creating a business plan to help you find a niche and determine if it is profitable; 
  • signing up with your local Regional Business Partner Network to access free resources and mentoring;
  • before settling on a name, searching with ONECheck to make sure that it is not too similar to existing business names, as this could result in violating IP laws; 
  • protecting your name and brand by registering a trade mark;
  • deciding how to structure your business and registering your business with the NZBN and Companies Office;
  • getting an IRD number for your business and understanding your tax obligations; and
  • using the ‘My Food Rules?’ tool on the MPI website to find out which regulations you need to follow.

If you need help with the legalities of getting your business off the ground, contact LegalVision’s business lawyers on 0800 005 570 or fill out the form on this page.

FAQs

Can an online food delivery business ever be profitable?

Existing businesses like Uber Eats and Menulog operate on thin margins and mass scale. Nevertheless, many of these platforms still struggle with profitability. Therefore, to ensure your business succeeds, you will need a strong business plan that identifies your niche and unique point of differentiation.

What are my legal obligations when starting a food delivery business?

You will need to follow all of the usual legal requirements when starting a business, such as choosing a structure, registering your business with NZBN and Inland Revenue and registering for GST. However, you will also need to consider specific food safety regulations. You can use the ‘My Food Rules?’ tool on the MPI website to help you understand your obligations.

How can I find new customers for my food delivery business?

You will need to lure customers away from existing competitors in the food delivery market. Therefore, you will need to identify a niche, invest in innovation and engage with customers to differentiate yourself. You could also consider offering a referral system to reward customers for bringing new users to your platform, or providing loyalty discounts for regular users.

What legal documents will I need to start my food delivery business?

To protect your business, you will need to draft a number of legal documents outlining the relationship between you, your users, the restaurants and your delivery drivers.These could include a privacy policy, terms and conditions of use, website advertising agreement and employment or contractor agreements.

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