Delivery routes are one of the most lucrative businesses to own in 2021. Great thing about these routes is that they provide stable yet passive form of income. In simpler terms, a delivery route business basically takes up a franchise of an already established company to own, operate and deliver in one of their routes. You might want to consider the following key questions before jumping into delivery route business.
- What type of delivery route should you own?
- Which type of delivery route is right for you?
- What are the licenses and procedure to own these routes?
Don’t worry, this step-by-step article will guide you on how to start a delivery route business and also covers best delivery routes to own in 2021. Since there are a lot of things to cover, lets jump right in.
What is a Delivery Route Business?
Delivery routes are one of the few hidden treasures in the franchising world. Delivery routes are highly profitable investments with many advantages. Therefore, starting a delivery route business appeals to a lot of young entrepreneurs. However, sometimes it may get overwhelming to figure out how to get started. This, in turn, scares a lot of people away from this business.
Delivery route owners get paid on a weekly basis once the delivery is done. With such a business, you can either go for a protected route or an independent route. The difference between them is protected route has a set of predefined addresses while independent doesn’t have any of those limitations. Independent routes are far more competitive and are more profitable than protected routes.
Types of Delivery Routes you can buy
There are different kinds of delivery routes available to start your business with. Some of the most popular ones are listed below:
- Courier Routes (UPS, FedEx etc)
- Vending Machine Routes
- Food Delivery Routes
- Personal Service Routes (Pet Grooming, Pool & Spa etc)
- Bread Routes
- ATM routes
If you want to buy the route of an established company like UPS you can be an independent operator but represent the brand as well. That is, you will have to follow the guidelines provided by UPS and your drivers must wear UPS uniform while at work.
How to find a Route to buy?
If you have decided on which route you want to buy, you can directly contact the company. You can also look at all the different kind of routes for sale on broker websites like:
How do Delivery Routes work?
As an owner of the delivery route, you will have exclusive access to the route and act as a sole owner of the delivery route business. Furthermore, you will be responsible for all the sales within the area.
In most of the cases you will also be buying equipment need to do the work alongside the route itself. Many of the expenses incurred can be written off in this business, such as vehicle expenses, interest from payments mane to the seller of the route. In some instances, even your home can be written off as a business expense, should it be used as your base of operation.
Always remember that a well established high volume route will go for top dollars, but routes are available for all the price points. I will highly suggest you to start small, and either add more customers or own multiple routes in the future.
Best Delivery Routes to own in 2021
1. FedEx Routes
FedEx route is a package delivery route offered by FedEx to independent businesses. These routes comes in two flavors:
- FedEx Ground Pickup & Delivery(P&D) Route
- FedEx Ground linehaul Route
P&D route delivers to home and businesses within a predefined area while linehaul provides long distance transport. When you own a FedEx P&D delivery route you have exclusive rights and make money off package delivered in your territory.
These routes are localized and deliveries are usually made with small vans or trucks. This make P&D routes less risky than linehaul routes which requires larger vehicles and drivers with commercial licenses.
What makes FedEx route great?
FedEx is arguably one of the biggest companies in the world. With this fame comes an incredible brand recognition. This leads to a potential of massive profits. FedEx route business, if structured right can turn into a passive money-making model.
Plus the task is simple. All you need to do is make sure that the deliveries happen on time, every time. The best thing about working with large companies like FedEx is not having to worry about your competition or marketing. FedEx has all that covered for you.
What is expected ROI of a FedEx Route?
The answer to most important question for any business model lies in its ROI. You can calculate the ROI by yourself. All you need to do is take a sample of 20-30 FedEx routes for sale in any one of route broker’s website. I used this exact strategy and found the average ROI to be around 22.47%. I used BizBuySell to calculate this ROI. You can choose any website mentioned above to do your calculation.
2. Bread Routes
A bread route is a bread distribution network within a predetermined route. Bread routes are normally claimed by independent businesses that have exclusive rights to circulate bread items from a a specific bread provider inside that domain.
You bring in cash owning a bread route by acquiring a commission (as a rule around 20%) on your deals to different organizations in your region who purchase bread from you. Since you are the distributor for the bread company, you can purchase bread from those companies at discount costs and sell that bread to add to your commission income too.
What makes Bread route great?
Bread routes are one of the most popular passive income business model. If structured properly(hiring a driver), you just have to make sure the delivery is on time everyday. Moreover, bread routes operate under a well renowned business structure, there is an ample routes for them. This means, you can quickly scale your business by buying more routes. Keep in mind, there is high demand of these bread routes so you can sell them anytime you prefer.
What is expected ROI of a Bread Route?
The ROI of a bread route will highly depend on whether you will hire the drivers or operate it yourself. For owner operated bread routes the ROI could be as high as 46%, while it could be a lot less if you hire drivers for the task.
3. Vending Machine Routes
A vending machine route is a business where you own vending machines in multiple location. You can make great money in vending machine route by generating sales from those machines. A large part of this business is checking periodically your routes and making sure the machine has enough change and inventory available.
What makes Vending Machine route great?
Vending machines can be really a lucrative business for individuals who want to make passive income. It is highly scalable by adding more vending machines in your routes by income generated. Eventually, you will have fleet of vending machines making you huge amount of money passively month in month out. Another reason entrepreneurs love this model is it’s low starting costs. You can start a vending machine business from as cheap as $5000.
What is expected ROI of a Vending Machine Route?
Like bread routes, the expected ROI of a vending machine highly depends on if it is owner operated or you have hired someone route runners to do periodic checkups. For an owner operated vending machine, average ROI can reach up to 46%. If you want to check out the prices of these vending machines, you can refer to any of these website below.
4. ATM Machine Routes
Like vending machines, ATM machine route is a business where you multiple vending machine in your territory. ATM machines can be a solid source of passive income and it is highly scalable too. All you, as a owner, need to do is fill up the cash in those ATM machines. You can also hire a company that will fill up your ATM machines with cash periodically so you don’t need to manually run to the routes. You can read more about starting an ATM business in this extensive guide.
What makes ATM Machine route great?
ATM machines are one of the best routes to own. Since the ATM routes have really low starting costs and generate strong profits, you can ideally buy more ATM machines and put them in high-traffic areas for quick growth. Keep in mind, the decline in the use of cash is a real risk to this business.
What is expected ROI of an ATM Machine Route?
ATM machines can gross you an ROI of around 180%. You expenses are rent or possible revenue sharing with the owner of the location where you placed your ATM. According to Liebermann Companies, you are be able to make your investment back on an ATM machine within 6 months of buying.
5. Personal Services Routes
Another less talked about delivery route option is personal services route. These routes can entail any professional services such as pool servicing route, pet grooming route, landscaping route etc. These businesses can generate huge revenue however, they often require professional skills.
What makes Personal services route great?
Personal service routes are great because of the revenue they generate. Referrals are a key factor in getting more clients in this business. If structured correctly, they can be turned into an awesome way of generating passive income. If you have specialization and know how to operate them they can be a great delivery route option to own.
What is expected ROI of a Personal Services Route?
Personal services routes can generate ROI of up to 120%. You should keep in mind, this figure fluctuates according to the business and the business owner. If you do not have any specialization or interest in these personal services, I would highly suggest you choose any other delivery routes.
Are delivery routes a good investment?
Owning and operating a delivery route is a great investment. The ROI of these investments depends on many factors. However, on average it ranges from 20-50%. Moreover, these investments are highly scalable, which means you can reinvest your gains back into the business and in no time you will own a fleet of varieties of delivery routes making you a great income passively.
How much is it to buy a delivery route?
The cost for buying a delivery routes depends on a lot of factor. One of the most prominent factor is the nature of the route. FedEx routes can cost as much as $1 million dollars, while bread routes or vending machine routes can be started from as low as $10,000.
Is owning a bread route profitable?
Yes. Owning a bread route is really profitable if you want what you are doing. Average ROI for an owner operated bread route is around 46%, which is really high even for this industry.
How much money can you make on a bread route?
As we already discussed, the average ROI for a bread route is around 46%. This means, if structured properly, your bread route will make around $46,000 per year on average if you invest around $10,000. The route is itself an asset since it is consistent income producing business.
Are chip routes profitable?
Yes. If done properly, chip routes are highly profitable, passive income generating assets. The best thing is the owner can increase their income by growing sales in their current route or by adding more routes.