Food delivery services are a convenient option for anyone who wants to have a meal ready without leaving their couch. For example, the average Sydneysider spends almost $2,000 a year on delivered food and that figure is on the rise. Therefore, starting your own pizza delivery service can be a great way to turn your love for pizza into a profitable venture. However, to succeed, you need to consider the financial and legal aspects of your business. This article sets out what you should consider before starting a pizza delivery service.
Franchise or Independent Operation
First, you must consider whether you want to run a franchise or an independent operation. A franchise is when the owner of a business licences their business model and brand to third parties. Many large pizza delivery chains operate under a franchise model. You could, for example, pay Domino’s a fee to use their business model to open your own Domino’s store.
Licensing a franchise instead of starting your own business from scratch has its benefits, especially if you work well in a team environment and want to use an established brand and proven business model. However, if you want to have the flexibility of building the business your way, having a franchise may not be the right option for you.
Consider the following advantages and disadvantages of starting a pizza delivery service using the franchise model:
|You are using a business model that has proven to be successful.||You have to pay the franchisor a startup cost and ongoing royalties.|
|The franchisor often provides support. This may include training and advice.||You are given uniform operating procedures which leave you with less freedom to run the business however you want to.|
|You are using an established brand name with an existing customer base.||Damage caused to the brand by other franchisees may reflect negatively on you.|
|Due to the franchisor’s existing relationships, you may receive discounts on inventory and equipment.||You have to abide by the terms of the franchising agreement which may be onerous.|
If you choose to run an independent operation, you have to select a business structure. Common business structures include:
- sole trader: You own and control your business. This means you get all of the profits, but are also personally responsible for any liabilities;
- partnership: You and your co-owners own and control the business. Profits are split among partners according to the partnership agreement. The partners are also personally responsible for any liabilities; and
- company: In a company business structure, the owners’ liability is limited to their share capital. This means that if a company is unable to pay its liabilities, the owners are not personally responsible for the debt.
Licences and Permits
As a food business, you need to acquire various permits to operate. The permits required will differ in each state and territory. You also need to ensure you handle food safely and are compliant with the Food Standards Code.
For example, in New South Wales (NSW), you need to notify your local council of your business activities and appoint a trained food safety supervisor. Additionally, you may need a licence from the NSW Food Authority if you process meat. These licences are carefully monitored and regularly audited to ensure food safety standards are complied with.
Furthermore, you need a food delivery licence to deliver food. In NSW, you can apply for one online through Service NSW.
Setting Up Your Website
If you want a thriving delivery service, you should make a website allowing your customers to place orders. A website will ensure the process of ordering your pizzas is easy and convenient. It may also help new customers find you online.
It is prudent to include on your website:
- terms and conditions, which contain details of your products, delivery process, refund policies, compliance with the Australian Consumer Law (ACL) and limits on your liability;
- website terms, which outline how people should interact with your website and your intellectual property rights; and
Before starting a pizza delivery service, you need to determine how many staff members you require and what qualifications and expertise they need to have. You may need a chef, a driver and some waiters, so ensure you train all your staff on food safety standards.
You can also consider outsourcing the delivery aspect of your business by partnering with services such as Uber Eats or Menulog. This may lower your cost as you will not need to purchase company vehicles and pay a delivery driver.
Starting a pizza delivery service is an exciting opportunity. To ensure the success of your new venture, it is essential you consider the legal, regulatory and financial factors that affect your business. Understanding them will help you make informed decisions in the early stages of your business, setting you on a path to success. If you have any questions, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.
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