How much should I spend on Online Food Ordering System?

I’m an entreprenuer and a question that always plagues me is how much should I spend on my business. In food delivery I talk to multiple customers who are either starting their new food delivery business or already have brick and mortar restaurants and businesses and are looking out to increase their toplines. This question is always foremost in their minds. How much should I spend on my online food ordering system.
With so many options available in the market from free to setup with monthly payments to custom systems with very high upfront costs. A decision to move ahead with low cost system leads to high level of anxiety till the system is actually up and running and giving you returns. And if the low cost system does not eventually work out this would be actually a big price to pay for trying a low cost system. Moving ahead with an expensive system even if I have the budget and like all features – always keeps me in doubt “am I paying too much for the system’. I would hate to invest now and then learn later that I had paid much higher than what my peers spent the system would feel like a las Vegas marriage in full drunk state. Full high orgasam when getting started but the biggest mistake of my life after that:)
Ideally your decision should not be based on market prices as these are too confusing and the time spent on evaluating each one of them is not really worth the efforts unless you are on super bootstraped scenario.
A good way to decide on your budget is the anticipated profits you will make through the system 6 months after starting to use the system. 6 months is a good time to start seeing the results of your new initiatives you should at least have enough data to decide if the system is giving you the expected output or eventually will give the expected output.
Let’s take some example figures to have a look at your what your expected returns should be. As a brick and mortar restaurant owner let’s say your total monthly sales are $6000. The additional revenues generated by the online ordering system – both mobile and web, should be at least 20% in a worst case scenario where your major source of marketing is word to mouth publicity and repeat customers from your regular walk ins. 20% increase in sales amounts to additional $1200. Consider here again you make a net profit of 20% – this would amount to $240 net profit and additional revenues per month from your online food ordering system. $240 per month converts to $1440 for 6 months.
For a delivery business this equation would change – most likely in delivery business if you are evaluating a system you are in startup mode coz generally you won’t be able to start a delivery business without a system. Here you need to look at more long terms returns as this is not an additional revenue generating initiative for you. This would be an actual new business setup. For a new business you should keep a 3 year outlook but here let’s consider what you should start expecting 1 year down the line. Here ideally let’s say your per order average value is $100 and you charge $3 per order or earn $3 per $100. In a worst case scenario you should be doing deliveries of at least $10000 per month. With this figure you will be earning $300 per month. A 6 months returns as per this would be in range of $1800.
So ideally you should be ready to spend $1500 to $2000 for your system. This figure would vary and most likely increase for different needs.
Many of entrepreneurs I talk to ask me that they see $100 scripts and all in the market. Why should they not try them. After hearing this question repeatedly I myself tried about half a dozen of these. None of the system was cost effective eventually. The generic life cycle was I bought the script after what I had in my hand was a zip file of code and unclear instructions doc. After a lot of struggle I managed to setup the system on my server – ideally this would have taken about 40 hours if my developer was good. In few cases there was no reply from customer support and in some cases where I did get reply it did not help. One of them asked for a $500 installation fees.
After we managed to setup the system we started with reviewing the features. Lots of bugs in most of them, finding a developer was a pain as each system was built on their own choice of framework. Then we took estimate from a developer to add a couple of features that we needed extra specific to our business. This quote was way above our estimated budget. The developer would need to understand how the previous team had built the system and then make changes to the code. This was way too much efforts. A couple of these systems we were eventually not able to use at all. And the ones we were actually able to deploy were not worth the efforts and the money.
There are no free lunches. A low cost system will be worth that only and will need time and efforts to make it run good.
Another areas where I saw a major issue as an entrepreneur was that even for the systems where I managed to deploy and use, it would be a huge cost migrating to a better one down the line.
Remember the quality of the system that you use will eventually decide how much profits you make from that. So keep a feasible budget – it does not make sense to regret later.
Do check out eDeliveryApp this is a system I designed keeping in mind budget and design requirement of my users. The main core of the system fulfills most of the regular inline ordering needs keeping the cost of the core system low and then we add additional functionalities through modules. So that you as a customers pay only for what you need and don’t pay extra for features that you don’t need.

By | 2017-04-25T13:21:57+00:00 August 15th, 2016|restaurant|0 Comments

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