Boost Your Food Delivery Business: Track These 7 Essential KPI Metrics!

As a serial entrepreneur who has started and run many successful businesses, I can attest to the importance of tracking your company's key performance indicators (KPIs). In the rapidly growing industry of food delivery, knowing your KPIs is more important than ever before. In this article, we will explore the top seven food delivery KPI metrics that you need to track and calculate for success in this industry.

First and foremost, you need to pay attention to your average delivery time. In the world of food delivery, customers expect their meals to arrive quickly, so being able to quickly and accurately track delivery times is essential.

• Order accuracy rate: Another critical metric for food delivery is your order accuracy rate. Ensuring that the right orders are delivered to the right customers is key to keeping them happy and coming back.
• Customer retention rate: Your ability to retain customers is an essential factor when it comes to measuring the success of your food delivery business. Tracking your customer retention rate will help you identify areas for improvement and continue to grow your business.

It's also important to keep an eye on your commission percentage, as this will directly impact your profits. Partnering with multiple restaurants can increase your earnings, which is why it's important to keep track of how many partnered restaurants you have. Additionally, tracking the number of orders processed daily and the driver efficiency rate will help you streamline your operations and maximize efficiency.

Are you ready to take your food delivery business to the next level? By tracking these seven essential KPIs, you'll gain valuable insights into your business and set yourself up for success in this booming industry. Keep reading to learn more about each metric in detail.

Average Delivery Time

As a food delivery service, delivering food on-time is a crucial aspect of your business. Customers want their food delivered quickly and efficiently, and as such, it's important to track your performance in this area through the Average Delivery Time KPI.

Definition

The Average Delivery Time KPI measures the average time it takes for food to be delivered to customers from the point of order. It is usually measured in minutes and is an important metric for assessing your delivery services' efficiency.

Use Case

Tracking your Average Delivery Time is essential for optimizing your delivery services. With the insights provided by this metric, you can identify areas that need improvement in terms of delivery processes, delivery routes, and staffing. This, in turn, ensures that you're providing a better customer experience while also improving your bottom line.

How To Calculate KPI

The Average Delivery Time KPI is calculated by adding up the total delivery time for all orders and dividing it by the total number of orders delivered. The formula for calculating the Average Delivery Time KPI is as follows:

Calculation Example

Suppose your food delivery service delivered 100 orders in a day, and the total delivery time for those orders was 1,000 minutes. To calculate the Average Delivery Time KPI for that day, use the following formula:

Therefore, your Average Delivery Time for that day was 10 minutes per order.

KPI Advantages

• Better Customer Satisfaction: By delivering food in a timely manner, customers are more likely to be satisfied with your service, leading to repeat business and positive reviews.
• Improves Efficiency: Analyzing and optimizing your Average Delivery Time KPI allows you to identify areas that need improvement, leading to better efficiency and cost savings.

KPI Disadvantages

• Not Always Accurate: Factors such as traffic, weather, and distance can affect delivery times, making it difficult to obtain accurate data to calculate the Average Delivery Time KPI.
• May Not Be Relevant to All Businesses: For businesses that do not offer delivery services, the Average Delivery Time KPI may not be relevant.

KPI Industry Benchmarks

The average delivery time can vary greatly depending on the type of food delivery service; however, industry benchmarks show that a delivery time of 30-45 minutes is considered acceptable for most food delivery services. Nevertheless, we highly recommend comparing your KPI with other food delivery services within your location.

Order Accuracy Rate

The order accuracy rate is a KPI used to evaluate how often a restaurant or delivery service fulfills customers' orders correctly. This metric helps businesses to ensure their processes are optimized and any issues can be addressed promptly, ensuring customer satisfaction.

Definition

The order accuracy rate is the percentage of correct orders generated in comparison to the total number of orders placed by customers. This includes both the food and the delivery aspect of the service.

Use Case

The order accuracy rate is a key metric for any food delivery service. This KPI provides insight into the operational efficiency of the company and the overall satisfaction of its customers. It helps businesses to identify areas of weakness in their processes, such as order processing, food preparation, and delivery, which can all have an impact on overall customer experience.

How To Calculate KPI

The formula for calculating the order accuracy rate KPI is:

Calculation Example

Suppose a delivery service receives 100 orders in a day, of which 92 are fulfilled accurately. The calculation for the order accuracy rate KPI in this case would be:

KPI Advantages

• The order accuracy rate KPI provides valuable insight into a business's operations, helping to identify areas that need improvement.
• By tracking the order accuracy rate, businesses can quickly identify and address potential issues before they become significant problems.
• Ensuring order accuracy leads to increased customer satisfaction and can lead to repeat business and positive reviews.

KPI Disadvantages

• The order accuracy rate may not provide a complete picture of all aspects of customer satisfaction.
• Tracking the order accuracy rate can be time-consuming and resource-intensive, especially for businesses with high volumes of orders.
• There may be external factors, such as bad weather, that can impact order accuracy rates, making it difficult to compare KPIs over time.

KPI Industry Benchmarks

The order accuracy rate can vary widely by industry, location, and other factors. However, a typical benchmark for the order accuracy rate KPI is between 90% and 95%.

Customer Retention Rate

As a seasoned entrepreneur who has started and run a multitude of businesses, I know that customer retention is key to the success of any business. It is not just about attracting new customers, but also about retaining existing ones. One of the most important KPI metrics to track in this regard is the Customer Retention Rate.

Definition

Customer Retention Rate measures the percentage of customers that remain loyal to your business over a given period of time.

Use Case

The Customer Retention Rate KPI is crucial to understanding how well your business is performing in terms of customer loyalty. It can help you identify if there are any issues with your products or services that are causing customers to leave and provide insights on how to retain those customers.

How To Calculate KPI

The formula to calculate Customer Retention Rate is:

Calculation Example

Suppose you started the year with 1,000 customers, acquired 200 new customers during the year, and ended the year with 900 customers. The Customer Retention Rate would be:

KPI Advantages

• Helps measure customer loyalty
• Identifies customer retention issues
• Provides insights on how to improve customer retention

KPI Disadvantages

• Does not take into account customer churn rate
• Does not consider the value of individual customers
• May not provide a complete picture of customer satisfaction

KPI Industry Benchmarks

Industry benchmarks vary depending on the business and industry. However, a good customer retention rate for most businesses is around 70% or higher.

Commission Percentage

Commission percentage is a key performance indicator (KPI) that measures the percentage of sales revenue that goes towards paying commission to sales staff or delivery drivers.

Definition

Commission percentage is an important metric for businesses that rely on sales or delivery staff to generate revenue. It measures the percentage of sales revenue that is paid out as commission to these workers.

Use Case

Commission percentage is used by businesses that have a sales or delivery team to determine how much of their revenue is being paid out in commission. It allows businesses to track the efficiency of their sales team and ensure that they are not overpaying for commission.

How To Calculate KPI

To calculate commission percentage, divide the total amount of commission paid by the total sales revenue and multiply by 100.

Calculation Example

Suppose a business has made total sales of $100,000 and paid out $15,000 in commission to their sales team. Their commission percentage would be:

KPI Advantages

• Allows businesses to track the efficiency of their sales team
• Helps ensure that businesses are not overpaying for commission
• Gives businesses a clear picture of how much commission they are paying out

KPI Disadvantages

• Does not take into account other factors that may impact sales team efficiency, such as marketing or product quality
• May not be applicable to businesses that do not rely on a sales or delivery team

KPI Industry Benchmarks

The average commission percentage varies widely depending on the industry.

• Real Estate: 5-6%
• Insurance: 10-12.5%
• Automotive: 20-25%
• Retail: 5-10%
• Technology: 10-15%
• Manufacturing: 2-5%

Number of Partnered Restaurants

As a food delivery business, one of the crucial KPI metrics that can affect your overall success is the number of partnered restaurants. This KPI tracks the number of restaurants that signed up to work with your business and offer their food through your platform.

Definition

Number of Partnered Restaurants is a KPI metric that measures the total count of restaurants registered to work with your food delivery business.

Use Case

This metric helps food delivery businesses to keep track of how their restaurant network is growing or contracting over time. It is an excellent way to understand how your business is performing and how many customers you may reach with a specific number of partnered restaurants.

How to Calculate KPI

To calculate the Number of Partnered Restaurants KPI, you need to:

• Take the number of registered and verified restaurants in your system as of the current date.

KPI Formula:

Calculation Example

Suppose your food delivery business has registered 500 confirmed restaurants in your system. The Number of Partnered Restaurants KPI would be 500.

KPI Formula Example:

KPI Advantages

• Number of Partnered Restaurants KPI helps you understand the health of your restaurant network.
• This KPI serves as a measure of how well your business attracts new restaurants to register.
• It is an excellent way to evaluate the potential reach of your current restaurant network.

KPI Disadvantages

• Number of Partnered Restaurants KPI does not give a complete picture of your business's profitability and efficiency, metrics crucial to analyzing profitability and understand your business's impact.
• This metric isn't sufficient in measuring how active the restaurants are, for example, how often they receive orders.

KPI Industry Benchmarks

The number of partnered restaurants has no industry benchmark values. It mainly depends on the area of your business coverage.

Number of Orders Processed Daily

In the food delivery industry, tracking the Number of Orders Processed Daily is critical to measuring business success. This KPI helps track how many orders a restaurant or food delivery service processes daily.

Definition

The Number of Orders Processed Daily KPI measures the total number of orders that a restaurant or food delivery service processes within 24 hours.

Use Case

Businesses leverage this KPI to gauge the total number of orders they receive each day, which can be helpful in finding areas for improvement. For instance, if a restaurant is overstaffed during certain times of the day, it can reduce staff numbers during those hours to cut labor costs while still providing excellent service. Additionally, tracking the number of orders helps businesses better forecast future order volumes, enabling them to better allocate resources and manage food and inventory costs.

How To Calculate KPI

Calculation Example

KPI Advantages

• Helps businesses forecast future order volumes accurately.
• Assists in planning labor cost and staff resources.
• Enables food delivery services to keep track of inventory and food costs.

KPI Disadvantages

• Does not consider variations in order prices, which can impact revenue.
• Does not factor in those orders that are rejected, canceled, or unresolved.
• Does not account for weather conditions or seasonal changes.

KPI Industry Benchmarks for the KPI: 'Number of Orders Processed Daily'

The Number of Orders Processed Daily KPI varies widely depending on the type of restaurant or food delivery service. For instance, fast food restaurants typically receive more orders than fine dining establishments, and pizza deliveries incur more orders than Chinese takeaways. However, according to industry analysis, a successful business should receive an average of 50–200 orders per day, with high-performing businesses seeing upwards of 500 or more orders per day.

Driver Efficiency Rate

As a food delivery company owner or manager, tracking the performance of your drivers is critical to optimizing your business operations. One of the key metrics that can help you assess how well your drivers are performing is the Driver Efficiency Rate.

Definition

The Driver Efficiency Rate measures how efficiently your drivers are completing deliveries. It looks at the total number of orders delivered by a driver over a specific period of time, divided by the total number of hours worked during that same period.

Use Case

Tracking Driver Efficiency Rate is crucial if you want to maximize the productivity of your team and minimize costs. Knowing which drivers are performing well and which ones are struggling can help you identify training opportunities and make necessary adjustments to your operations strategy.

How To Calculate KPI

Calculation Example

Let's say your driver, John, worked for 6 hours and delivered 12 orders during that time. Here's how you can calculate his Driver Efficiency Rate:

So John's Driver Efficiency Rate for that 6-hour shift is 2.

KPI Advantages

• Helps identify top-performing drivers
• Facilitates improvements to driver performance
• Allows for better management of resources

KPI Disadvantages

• Does not account for factors outside of driver control, such as traffic or order volume
• Can lead to unfair comparisons, as some drivers may work in areas with lower order volume

KPI Industry Benchmarks for the KPI: 'Driver Efficiency Rate'

Benchmarks and industry standards for Driver Efficiency Rate can vary based on factors such as location, order volume, and business size. However, a generally accepted benchmark for Driver Efficiency Rate is 2.