A study from the National Restaurant Association of India says that by the year 2021, the restaurant industry is expected to contribute about 2.1% to the total GDP. With the expansion of the digital platform and online food delivery startups, there is a radical shift in that industry. There have been a quick change in urban lifestyle facilitating easy, early home delivery models growing at a good rate. Thus, many online food ordering companies have started in recent years.
A SWOT analysis is a standard evaluation tool to assess strengths, weaknesses, opportunities, and threats. It is a technique to find out the internal and external factors that make a company successful or not. In simple words, SWOT is a tool to analyze in detail how your online business is doing, in order to prepare a long-term strategy for the future. SWOT is mainly used to assess business ventures; it can also be used to measure almost anything that is influenced by external and internal factors.
Strengths and Weaknesses – Strengths are the character traits or skills that are considered positive like knowledge, attributes, skills, and talents, while weaknesses are character traits that are negative or not that well developed.
A threat is a potential for something bad happening, when combined with weakness becomes a risk. Some threats that might be used for risk identification or swot analysis are: competition in the market, loss of talent, market entry of new competitors, changes in market prices (price war), changes to cost, approvals from government, weather, disasters, customer perception disaster, quality failure, the potential for knowledge shortfalls, treat from other brands, financial conditions, taxation, environmental damage, quality of life based on the air quality at your premises, the competitor is more efficient and more innovative.
How to conduct a SWOT analysis
- Decide on an objective of your SWOT analysis
- Research your business, industry and market
- List your business’s strengths
- List your business’s weaknesses
- List potential opportunities for your business
- List potential threats to your business
- Establish priorities form the SWOT
Some advantages in SWOT analysis of online food ordering
- Excellent Platform – This service of online food ordering has come as a boon both to restaurateurs as well as customers, as various orders can be processed directly for customers and sent to parner restaurants. The online food ordering service is available to the customers through mobile applications and websites, where the customers can order food by entering their postcodes there. The customers can browse for food from the restaurant list shown on the website, select their choice, enter their address and proceed for checkout.
- Quick delivery – After the order is placed on the website, the restaurant processes the food delivery with the least time as it tries to sync its customers to the nearby restaurant partners.
- Trained employees – Employees are trained for making faster deliveries.
- Wide Coverage – Online food ordering allows restaurants to have a wide coverage of customer requirements and food preferences.
- Good Customer Support – Online food ordering helps in gaining good customer support and works for their requirement and food preferences. It keeps changing food menus and tries to expand it with good customer support.
- Good Financial Returns – The more financial investments, online food delivery in India on a growth spree has actually made on their services and products, developing remarkable stores and spending for its employee trainings has return high revenue streams in the previous years.
Disadvantages of SWOT Analysis in online food ordering
- Limited Capital – Although, online food ordering business is cheaper than a physical hotel, it comes with some really competitive systems like capital for advertisement, billboards, and online ads. Referral and word of mouth marketing are good, though with not much safes. There might be a need of paid media tools to reach a bigger audience.
- Costly Food – With ingredients becoming costlier, the price you sell your product may not give you any advantage. Now when brands offer a similar price for the same item, then you may not be able to attract price conscious customers.
- High Turnover – This kind of food delivery is usually done by part-timers, who could shift jobs as and when they like because of the long hours, tough routine, fewer wages, and risk of being exposed to all kinds of weather.
Steps to Conduct SWOT Analysis
1). Objective of a SWOT analysis – To get the best out of SWOT analysis, you should have an objective in mind from the start. SWOT analysis could be used to help you decide to introduce a new product or service or change your process.
2). Research your business industry and market – Before you start SWOT analysis, you need to do research to understand your business, industry, and market and also find out about your competitors.
3). List your business’s strengths – Identify and list out the strengths of your restaurant business, like relating to employees, financial resources, your location, cost advantages, and competitiveness.
4). List your business’s weaknesses – List out the things in your business that you consider as weaknesses, like staff absenteeism, absence of new products, or clients, declining market share. Ensure that the points raised here on SWOT analysis are addressed during the next academic year. This list of weaknesses can indicate how your business has grown over time.
5). List Potential Opportunities for your business – Think about possible external opportunities for your business, these include new technology, training programs, partnerships, a diverse marketplace.
6). List Potential Threats to Your Business – List external factors that could cause a threat to your business, like rising unemployment, increasing competition, higher interest rates, and uncertainty of global markets.
7). Establish priorities from the SWOT – Once you have completed SWOT analysis, you will have 4 separate lists, that can be displayed horizontally so that you can have an overall picture of how your business is running and what issues you need to address. You can work on the issues on a priority basis.
8). Develop a Strategy to Address Issues in the SWOT – Answer the following as a review from your 4 prioritized lists:
- How can our strengths be used to take advantage of the opportunities identified?
- How can be strengths be used to overcome the threats identified?
- What needs to be done to overcome the weaknesses in order to take advantage of the opportunities?
- How to minimise our weaknesses to overcome the identified threats?
Now since you have answered these questions and finalized your lists, you can now use the SWOT analysis to develop strategies for achieving your business goals. After this study of SWOT analysis of food ordering service business, we come to understand that it is a very good low-cost business, although the current circumstances are very tough, the market is competitive, food ingredients are costly, and people have less affordability. In case, you have found some reliable suppliers, and you do think that you can compete in the food delivery market with a differentiation, you should go ahead and do it.