A single store would work quite well too, actually - Christchurch (and the North Canterbury region) certainly has a large enough potential customer base.

Would you charge different delivery rates for different areas (a la Metro's Zone charges), or impose a single delivery fee no matter where?

The recyclable bit works, although you might want to be careful with how much of a discount you allow people to claim. While it's not really a problem, it's possible someone could accrue hundreds of bits of packaging and claim something for free. Of course, they'd actually have to buy the stuff first...

Pasta might be the way to go, too - pasta's actually surprisingly easy to make (egg + flour + beat the crap out of it), and it's possible to go the dessert route with it while still maintaining an overall theme - start out with Neapolitan icecream and just extend the lexeme from there.