How to Build a Food Delivery App in 5 Easy Steps
The world is going mobile, and the demand for utility applications has surged significantly in the past few years. One such field which has been completely transformed is on-demand food delivery service. Food delivery apps such as Zomato, Food Panda, and Uber Eats cater to the cravings of millions of people as per their convenience. Customers now don’t have to contend with limited options of restaurants providing food deliveries; whether it’s midnight craving or early morning hunger cramps, people are getting their food delivered when they want, from where they want.
On-demand food delivery is not a new phenomenon; initially, people called the restaurants by phone and placed the order, which was then delivered by the eateries. In 2011 the number of food orders placed via phone amounted to $11 billion in the U.S alone. With the advent of mobile phones, cutting-edge technology, easy access to high-speed internet, on-demand food delivery through apps have revolutionized the food delivery industry. Online ordering surpassed the phone order in 2015.
How does food delivery app work
Food delivery apps facilitate the delivery of meals from local restaurants. Online food delivery apps allow customers to order from a wide variety of establishments with a single tap on a mobile phone. Call to make an order and then go to a restaurant to pick it up or wait for their couriers to come, without knowing when exactly it will be delivered. Online services enable customers to search for their favorite restaurants and food.
Why build a food delivery app
According to Statista, online food delivery space generated revenue worth $107.44 billion in 2019 and is expected to surge to $156.82 billion by 2023, clocking a growth rate of 9.9%. The platform to the customer delivery segment has the most substantial part with a market volume of $53.8 billion in 2019 and is forecasted to surge to 82.2 billion by 2023.[/vc_column_text]
Launch Your Food Delivery App in 2 weeks
Step 1: Choosing the business model
Existing food delivery apps business models
I. The Order Only Model
The order only model was introduced by first-generation restaurant delivery services such as JustEat, Grubhub, Delivery Hero. In this model, the service providers act as a pure software layer that aggregates standalone restaurants’ offerings, assisting them in expanding their market reach. These aggregators did not prove delivery services. This model’s primary selling point was to bring new orders to the restaurants and replace their antiquated phone-ordering system by an optimized mobile and web platform. Food ordering apps connect customers with local eateries and facilitate interactions between them. Food ordering platforms provide easy search and order functionality to customers. Order only platforms generate revenue by charging 7 to 15% commission to restaurants.
How it Works:
- Customer places an order on the app or through website
- The restaurant receives the order
- The restaurant notifies that the request is received.
- Delivery is done either by a driver employed by the restaurant or through a driver employed by a restaurant delivery service provider.
Advantages: As they are not involved in food preparation, these delivery providers require limited resources and are highly scalable.
Limitations: The dependency on the restaurants to complete deliveries means they have limited control in the overall process. They cannot control and optimize the delivery service.
II. The Order and Delivery Model
The order and delivery model is the advanced version of the first model and is followed by companies like Uber, Zomato, DoorDash. In this model, the service providers bring additional orders and requests to the eateries and provide their own logistics network to deliver orders from restaurants through their fleet of independent couriers.
Order and delivery platforms handle logistics for restaurants, food joints, and home delivery services. The order and delivery model is beneficial for the restaurants as they don’t need to invest resources in delivering food and pay couriers or maintain vehicles. The drivers are paid based on the distance traveled to complete a delivery. Nowadays, Companies add surge pricing during peak hours and charge over and above the standard delivery rate. Order and delivery services cut 20 to 30% on each order’s cost and may charge a flat delivery fee to customers.
Ordering occurs at the app where the menu of a restaurant is uploaded. Customers select the food items and make payments (some providers also offer cash on delivery). Once the amount goes through, the restaurant is notified about the request, and they can confirm or reject the order.
When a delivery person is on duty, they are logged into their courier app. When a request comes in, the notification is sent to the couriers closest to the pick-up location. On receiving an order, couriers decide whether to accept or reject the order. The first courier taking the order will be assigned the order. If no courier is available nearby, it will be shared with drivers who are farther away until it is accepted. Deliveries provide crucial data to the service provider and help them in route optimization and pick-up/drop-off patterns.
Advantages: Since the service provider handles the delivery process, they charge a higher commission 25-30% on average. They benefit from substantial barriers to entry and scale advantage. Their prime feature is that they can offer a range of restaurants and price points that software-only marketplaces cannot.
Unlike order only business models, a large number of resources, such as a team of drivers, customer executives, technological support, and different apps for each stakeholder is required to operate the food delivery business efficiently.
The software companies have to invest a significant investment in operation work such as hiring and training drivers, equipment maintenance, shift planning, etc.; hence they are difficult to scale in the initial stages without investment.
III. Cloud restaurant model
In this model, the restaurants do not provide in-house dining services and only serve as delivery businesses. When a user orders food through the app or website, the food is prepared by the cloud kitchen. It is delivered through its own delivery services or delivery providers’ help, eliminating the need for a substantial real-estate area.
Many orders and delivery service providers are also dabbing in the cloud restaurant model, assisting existing eateries to open cloud kitchens. Since it requires lesser investment, they can offer food at a lower price while still maintaining healthy margins.
Since the restaurant only caters to online subscribers without any physical presence in the market, brand recall is difficult. They are also entirely dependent on the delivery providers for efficient operations; otherwise, they have to invest significant resources in building the last mile aspect of the food chain.
IV. Meal kit delivery model
The meal kit delivery model is an unconventional market but is gaining traction in the food delivery industry catering to customers who prefer to cook based on the recommendations, but do not have time to source all ingredients. In this business model, restaurants deliver hand curated ingredients along with their recipes to the customers. Customers have the option to select vegetarian, non-vegetarian, or family, and accordingly, they will be delivered recipes and ingredients to prepare the dishes. In-house chefs prepare different recipes and a team of delivery drivers to provide the meal kit. This is a niche market where.
Since the meal kit delivery model works on a subscription basis, the revenue per user is very high as it generated recurring revenue instead of a one time service. By using food delivery apps, customers can order their favorite cuisine or from their preferred restaurant. The restaurant is notified of the order and prepares the food and is delivered to the customer’s stated address by the food delivery app.
Check out 2 of the popular food delivery app business models
Step 2: Choosing the revenue model
Monetization strategy of food delivery apps
Delivery Charges: Food delivery service providers generate revenue by delivering food from the restaurants to the customer address. The delivery fees are calculated based on the distance traveled or a fixed price.
Before 2018, UberEATS used to charge a flat $4.99 delivery fee. Now the company calculates the costs depending on the distance between the customer and the restaurant. The delivery fee varies from $2 to $8 per order. Deliveroo charges around £2.50 per order to the customers.
Revenue Sharing: Most food delivery apps collaborate with restaurants on predefined commission rates from each order. The commission rate varies from 15% to 40% on every order, or it can be fixed based on the size of the order.
Advertisement and Promotional Services: The food delivery app also generates revenue by highlighting the advertising restaurant profiles on the search listings’ top banner for a fixed amount of time. By paying a fixed amount, restaurants can display their promotional banner or advertisements on the app listings and increase their visibility. Since the restaurant space is highly competitive, restaurants are eager to gain more visibility and attract more customers. This concept helps both the app as well as the restaurant.
Surge Pricing: This monetization approach involves charging delivery surcharge during peak times, such as lunch or dinner. Various top food delivery start-ups like Uber Eats, DoorDash, Grubhub, and Zomato charge higher delivery amount — surge price from the customers when the demand is high such as lunch or dinner time, festivals.
Daily deals: Food delivery apps collaborate with restaurants by offering deals on their dishes. A restaurant’s specific meal is being provided through food delivery apps at fixed prices, often at a very low mark-up.
Restaurants make use of such deals to up sell-side dishes along with the discounted ones. On the other hand, as the number of order increases, it also increases the commission and delivery fee earning for the food delivery providers.
White Labelling: White labeling is a concept where food delivery providers source food from restaurants and sell them as their offering. Through this method, food aggregators generate revenue, while restaurants are not needed to make any hassle. This arrangement is especially ideal if a restaurant is not well-known or is home-run.
Step 3: Watch out for Latest Trends
Online food delivery is a hyper-competitive space; to stay ahead, you need to be on top of the latest market trends as well as technological advances.
Social Media Ordering: Domino’s Pizza was the first organization to provide a social media-enabled ordering. Through this feature, Domino’s Pizza customers can use their Twitter account to order pizzas. The user needs to tweet a pizza emoji to Domino’s official Twitter account. Prior to ordering Pizza through Twitter, Domino’s customers need to create a profile on Domino’s platform. They can select their default orders, also known as Easy Orders. Users can then link the pizza profile with their Twitter account.
Chatbot: Virtual assistants are fast gaining prominence in many fields, and food delivery is no exception. Through Chatbots, customers can order food just by stating the orders. Domino’s pizza’s virtual assistant named Dom can take orders via Twitter and Facebook messengers. The chatbot also informs customers about the latest deals and vouchers. Another food delivery company, Grubhub, has integrated its system with Amazon’s virtual assistant Alexa. Grubhub customers can reorder any of their last three purchases made through their platform. Besides placing orders, Alexa also provides you the estimated delivery time. Another delivery provider, Just Eat, has also integrated Alexa into their ordering system. Through Alexa, Just Eat can place orders by voice and check the courier’s location.
Step 4: Deciding the Features
Features to Include in the Food Delivery Application
If you are going for the order only model, you have to manage three parts, the customer app, restaurant app, and the admin app. On the other hand, if you consider the order and delivery model, then it will have an additional driver panel.
Sign up & Profile Management- Sign-up page is the first interaction between the customer and the app. Users need to register and create their profile on the app by entering relevant details such as address phone numbers etc. The registration process should be seamless. You can add an option for registering via social networks.
Geo-location- This essential feature allows users to track a delivery boy’s live location. This feature also enables users to find the location of the restaurant on the Map.
Restaurant List- A list of restaurants and their reviews and rating can be displayed to the user, who can order food from these restaurants as per their preference.
Delivery Address- This feature enables the app to identify the user’s current location if they are away from their regular address. Users should be allowed to save multiple addresses for delivery.
Food Cart- Customers may often not find all they want from one restaurant; hence this option will allow them to order from different places. Users can also add or remove food items before making payment.
Payment Mode– Integrate multiple payment modes such as online (eWallets, Debit/Credit Cards, and Rewards Points) and cash on delivery to streamline the payment. Online payment should be safe and secure.
Order Scheduling – This feature allows the customer to order food at a scheduled time to receive the order without any unforeseen challenges such as unavailability of food, late delivery, and higher charges.
Review & Rating: Users can rate or provide reviews on different restaurants and dishes that they have ordered. Reviews add transparency to the process and become a guideline for other users who are ordering food online.
Order History– This feature allows users to view the previously placed food orders from order history. This feature helps customers who like to make repeated orders and saves them from the hassle of searching for restaurants and dishes.
Push Notifications – This functionality allows you to transmit information about best offers, seasonal discounts, coupons on the customer’s screen using push notifications.
Multiple filters- Multiple search options make the process of ordering easier for the customer. They can filter restaurants based on location, price, review, and rating. Similarly, users can search for various food items, by cuisine, type, category, quantity, price, etc.
Real-time tracking – This feature allows the user to track the order status in real-time.
Promos & Coupons: This feature enables you to offer promotional offers to users that improve customer retention and increase in orders.
Help & Customer Support: Customers should be able to reach out to the support team if they face any challenges with order delivery, such as delay in delivery, the wrong item delivered, contacting the delivery person, unavailability at the delivery address.
One-click Dashboard – The dashboard is a centralized system where the Admin handles the entire back-end operation. Through the panel, the Admin can track orders received from the customers, manage inventory updates, and other business activities.
Registration & Profile Management – The admin panel should also have a registration and profile management feature where it can add details about customers, drivers, and restaurants. The different restaurants can register to your service with their details like restaurant name and address, their menus and prices, offers, etc. once they have registered, they can start receiving orders from the customers.
Manage Customers: The Admin can add or remove users or change their active status. This feature enables the Admin to view complete information linked to users such as their contact details, address, etc.
Payment Management: This function enables the Admin to view and manage all the transactions that have taken place in the app, including refunds. The Admin can also manage tax and commission related information in the app. Admin can track all the accepted online payments and set the commission rates with every partner.
Order Management: The option allows managers to assign orders once they receive a request from the customer. The Admin can monitor the order status, total amount earned per order, and make relevant business decisions.
Driver Management: This feature enables the Admin to observe all necessary information related to drivers such as their contact information, trip details, the total commission earned, availability, login time. The Admin can add or remove drivers, modify their details, and check their current status.
Modify Elements of the App: The Admin should be able to manage the entire process – start from the users and product information to changing the design of the application.
Reset Passwords: The app maintains the driver and customer database, and the Admin should be able to reset the passwords on user request.
Campaign Management: To attract and sustain customers, the app should have a facility to plan and run SMS, email, and Social Media marketing campaigns.
Plan Discounts & Promotions: This app feature allows Admin to add or run promotional offers or discounts on the app.
Manage Restaurants – This feature enables the Admin to add or remove restaurants from the app.
Feedback Management – This feature enables the Admin to view customers’ ratings and reviews and check their feedback.
Push Notifications – Admin can get the notifications of the emails, order delivered, drivers accepting the request.
Reporting and Analytics – By leveraging real-time Analytics, the Admin can obtain actionable insights to manage the business effectively.
The data assists the Admin to plan strategies to boost sales and user experience. Admin can monitor what discounts are gaining traction, what products are moving quickly and optimize their offerings accordingly.
Restaurant Panel Features
Managing Orders: The order management feature allows restaurants to handle the orders they receive and the delivery of those orders. They can manage and update the status of the order and let the user know when their order will be delivered.
Accounts & Management: From the admin app, the restaurants registered should be able to manage and edit the payment and financial accounts.
Dashboard- Dashboard of restaurant panel features the new order status, orders under preparation, canceled orders, and completed order, the total amount collected on each order, and take actions accordingly.
Restaurant Profile- Restaurant owners can add and update their food listings, prices, and make them available for ordering based on availability.
Add Products – The store manager can push new items to the restaurant via this app and see the changes reflected in the app in real-time.
Accept & reject order- Restaurant owners can accept or refuse orders.
Payment- Multiple payment options and gateways allow the restaurant to receive or transfer money.
Brand Management – If a restaurant is operating from multiple locations on the app, they should be able to manage these stores seamlessly.
Special Offers/ Coupon Code Management – Store owners can plan and add new deals, discounts, coupons, and offers to drive sales and improve customer retention.
Order Alerts – Store owners get real-time notifications for new orders and can take further action.
Track Payments – Store owners can add account details and view successful and pending payment settlements.
Order Reports – Store owners should get real-time information about their business performance so they can take action accordingly.
Customer Support – With the customer support feature, the Store manager can efficiently address order or restaurant-related issues.
Reject Order – If a food item on the menu is out of stock or delivery is not possible for specific reasons, the store manager can reject it.
Delivery Personnel Panel
Registration: The delivery person can register on the app. They need to be first verified by the app to ensure safety and security to the overall process. Once the verification process is completed, drivers can take orders and start delivering.
Order- In this, the delivery boy gets auto-assigned order requests from nearby restaurants.
Delivery History: With this feature, the delivery person can track their deliveries and payment for each delivery.
Call/Chat option- This feature allows the delivery boy to contact the customer if they face any issue in finding customers’ addresses.
Online support– Consider this feature in your app to allow the delivery agent to communicate with the app support team.
Managing Orders: Through this feature, the delivery person can check if they receive order requests, and accept or reject orders
Status Update: The delivery person can update the status of the delivery with this feature.
Step 5: Choosing Technological Stack
The technological stack would be dependent on the delivery business model. Some of the essential tech stack are mentioned below:
- Payment Gateway – Braintree, Stripe, PayPal, Square API
- User location – Google Places API, Google Maps, Core Location Framework
- Direction Finding – MapKit, Google Maps, Routific
- Registrations – Facebook SDK, Gmail SDK, Autho
- Storage – AWS, Google Cloud Storage, Azure, Digital Ocean
- Analytics – FireBase, Google Analytics
- Push notifications: Amazon SNS, Urban Airship, Firebase Cloud Messaging
Bonus Tip – Zero-in on Food Delivery Model
Currently, the most prevalent models in the market are Order-Only Model where the app manages to order for the restaurants and Order and Delivery Model where the app is responsible for the end to end process or a hybrid of them as explained above.
Monetization: Order only businesses charge somewhere in the range of 7-20% of the overall order value done via the platform. On the other hand, the order and delivery model charges commission on the whole order. They also charge delivery fees, which can be either a flat rate or based on the distance between customers and restaurants.
Cost to develop a food delivery app
So, we have discussed all the steps needed for a successful on-demand food delivery app development. But do you know how much a meal delivery solution is going to cost you? The cost of developing a food delivery app depends on various factors such as the number of platforms, i.e., iOS or Android, feature list, the number of integrations, third-party APIs, etc. Additional features can cost more. The development cost is also dependent on the development company and region where the app is being developed.
The discovery (inception) phase is the building block of developing the app and provides a vision of the end product, comprising of Functional specification, UX/UI design, Visual prototypes. The product discovery phase can help you define the scope of work, develop the project roadmap, set a realistic MVP budget, plan your resources, test the app MVP with a target audience.
After this stage, you will have a clear vision of the end solution. The initial technical documentation and designing process takes approximately 50 work hours. Time taken for creating UI/UX design is around 50 hours to create. Building the back-end of the food delivery app will be 60-70 hours of work, while the development stage may take from 120 hours per platform. Testing and bug-fixture can require almost 100 work hours. This means the total work hours required is approximately 300-400 hours.
App development companies charge on per hour basis, and the charges may vary based on location. For example, US-based developers charge between $200 to $300, while European developers charge at $100 to $200. In the case of India based developers, the charges are between $20 and $100. Taking the median development cost of $50 to $100 per hour, the cost of building a food delivery app will be $15,000 to $30,000. Creating a food delivery app such as Uber Eats, packed with advanced features and technologies, would cost around $35,000. All in all, the cost of building a food delivery app can be estimated to be the range of $15,000 to $40,000.
Frequently Asked Questions for building a food delivery apps (FAQs)
Ans. Some successful food delivery apps are Zomato, Swiggy, Uber Eats, Deliveroo and ChowHouse among others.
Ans. Food Delivery Apps make money through the following methods:
3)Sponsored Listing Fee
Ans. You should start by looking for trusted and experienced app development experts in your local area. You’re looking for people who can understand your vision and are willing to work as per your needs and have a good record. You can also reach out to developers online, discuss your idea, and get a quote!
Oyelabs is one of the On-demand food delivery app development companies. Now get your customized food delivery solution in 6-8 weeks.