I. The Industry (2-3 pages) JP
a. Overall Industry
According to Statista (2020), the online food delivery industry is worth $26 billion. The largest of this industry is restaurant-to-customer delivery that is worth $15 billion. The industry is expected to grow to $32 billion by 2024. According to Franchisee Resource Center (2020), the USA cleaning industry is worth $46 billion. The industry is expected to grow by 10% by the year 2026 to reach about $50 billion. According to Mkink (2020), the cleaning industry had 875,000 businesses and employed about 3.5 million people by 2015.
b. The Economic Sector
There Are two major economic sectors under the online food delivery sector. They include restaurant-to-customer delivery and Platform-to-consumer delivery. The cleaning industry is subdivided into four sectors, including residential cleaning, commercial cleaning, specialty cleaning, and laundry and dry cleaning. Sparkle and dine is mostly specialized in residential cleaning.
c. Size and Growth of the industry
According to Statista, restaurant-to-customer delivery is worth $15 billion, and Platform-to-consumer delivery is worth $10 billion in 2020. Restaurant-to-customer delivery is expected to grow to $18 billion by 2024, while Platform-to-consumer delivery is expected to grow to $13 billion by 2024. According to Franchisee Resource Center (2020), the residential cleaning sector is worth $24 billion, and it is expected to grow to $40 billion by 2025.
d. Sensitivity to Economic Cycles
During the 2009 recession, the fast-food business was booming. The reason for booming is that it became cheaper to eat out compared to preparing meals (Thomas, 2009). In 2009, online food delivery was not well defined due to technological challenges. However, it can be clearly seen that it would work very well since there was adequate demand. Currently, in 2020, there is a COVID19 pandemic that has resulted in a 14% unemployment rate in the USA. The recession rate is -5%. Despite the recession, online food delivery services are reporting increased transactions. According to Forter (2020), online food transactions from restaurants increased by 134%. However, this big margin can also be contributed by shutting down of restaurants due to COVID19 safety precautions. Despite that, the case of 2009 suggests that food delivery and related industries are less sensitive to economic cycles. Similar to food-related industries, the cleaning service industry is also less likely to suffer during recessions. According to Franchisebusinessreview, (2010), the cleaning service industry is among the few industries that are recession-proof. The reason for this characteristic is that contract cleaning is flexible and affordable, hence, households and businesses consider them mostly during financial distress.
e. Seasonality
According to Cleaningtalk (2014), cleaning service booms in summer and suffers during winter. Similar to the cleaning industry, restaurant suffers the same seasonality trends with a boom during summer and decline during winter (Higuera, 2019).
f. Regulation / Certification
In Georgia, to start a cleaning company and food delivery services, county licenses are required. Some of these licenses include;
• General business license: this is the basic license for operation.
• "Doing business as" license or permit: register sparkle and dine name
• Federal and state tax identification number: you need this number for taxation purposes
• Zoning permit: dictate where a particular business can be located or not.
• Health permits: sparkle and dines deal with the handling of food; hence this license may be required.
• Environmental permits: sparkle and dine business deals with the supply of food that may have waste products. It also deals with cleaning that involves handling of chemicals. Both services may need environmental permit.
Other licenses include (OSHA, n.d.)
• Chemical regulation
• Labor laws
• Ergonomics safety regulations
• Training and licensing regulations
g. Financial characteristics
Cleaning industry requires low capital investment to start. If one goes for a franchise option, the cost is about $20,000 (Franchiseopportunities, 2020). The initial cost includes franchise fees, royalties, licensing, and advertisement. If there is no need for a franchise, the overall cost of a startup is low. However, if an app is required, the cost of the start-up may go up. Food delivery service also does not require too much investment since food will be prepared by local restaurants and supplied to the desired destination by the cleaning crew. That means there is no need to have restaurants, and that cuts a lot of costs.
h. Industry concerns
The major concern in the cleaning industry is high turnover. It is very difficult to find and keep the right employees. The cleaning industry is also very competitive, and doing more with less has been the main strategy. The result of low-cost approach has been poor pay and mistreatment of workers. It is the main reason for high employee turnover rates. Protecting employer and employee is another challenge facing the cleaning industry. There are so many occupation hazards in this business and it is the work of the company to train employees to meet the required standards (OSHA, n.d.). For food delivery, the major concern is the disloyalty of customers. In many cases, this industry suffers from a high churn rate due to high competition. There are also established giants in this industry, and it is quite difficult to wrestle them out to acquire a percentage of their market share.
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References
Cleaningtalk. (2014). When is your busy season? - Cleaning Talk - Professional Cleaning and Restoration Forum. Retrieved 1 October 2020, from https://www.cleaningtalk.com/f19/when-your-busy-season-17103/
Forter. (2020). Study: Covid-19 Drove Demand for Food Delivery, Increased Cases of Online Fraud. Retrieved 1 October 2020, from https://www.calcalistech.com/ctech/articles/0,7340,L-3829818,00.html
Franchisebusinessreview. (2010). Best Recession-Proof Businesses for Risk Averse Entrepreneurs. Retrieved 1 October 2020, from https://franchisebusinessreview.com/post/recession-proof-businesses/
Franchisee Resource Center. (2020). Cleaning Industry Analysis 2020 - Cost & Trends. Retrieved 1 October 2020, from https://www.franchisehelp.com/industry-reports/cleaning-industry-analysis-2020-cost-trends/
Franchiseopportunities. (2020). Cleaning Industry Profile | FranchiseOpportunities.com. Retrieved 1 October 2020, from https://www.franchiseopportunities.com/industry-profile/cleaning-industry
Higuera, V. (2019). Seasonal Factors Affecting the Restaurant Industry. Retrieved 1 October 2020, from https://smallbusiness.chron.com/seasonal-factors-affecting-restaurant-industry-31192.html
Mkink. (2020). 2019 CLEANING INDUSTRY REPORT: STATS, TRENDS, AND COSTS. Retrieved 1 October 2020, from https://blog.hellogenio.com/2019-cleaning-industry-report-stats-trends-and-costs-1b9e59334191
OSHA. Cleaning Industry. Retrieved 1 October 2020, from https://www.osha.gov/cleaning-industry
Statista. (2020). Online Food Delivery - worldwide | Statista Market Forecast. Retrieved 1 October 2020, from https://www.statista.com/outlook/374/100/online-food-delivery/worldwide
Thomas, D. (2009). Recession sees Growth in fast-food outlets. Retrieved 1 October 2020, from https://www.ft.com/content/c9215b3e-d7a0-11de-b578-00144feabdc0
