Foodora Business Model – How it Works and Earns Money
Foodora Business Model – How it Works and Earns Money
Last Updated on May 17, 2022
When you come home from work, or from college, or anywhere else — how many times do you see people delivering food in your neighborhood?
You can’t really count, right?
We’re pretty sure this is a really common scenario for us to witness nowadays.
Well, those uniform-clad heroes are on a mission — the mission to make this world a better place spread happiness, and make you smile by delivering your favorite food items to you, anytime, anywhere, anyday.
By definition, food delivery services have completely transformed the way people order and consume food today. You see, it is because of these people — the long lines or waiting times are no longer an issue for food lovers.
It is because of these food delivery applications that everything is possible within minutes of ordering food online & your food gets delivered to you right at your doorstep. According to a report by businessofapps, the food delivery industry market share is expected to grow to $320 billion by 2029!
If you are a food delivery startup, catering service, one or a chain of restaurants, you should create a food delivery app or have your businesses listed under some aggregator — to take your business to the next level.
How can you get a food app developed without talking about Foodora, one of the most popular food delivery applications in Germany, Sweden, Norway & Finland?
What Is Foodora?
Foodora is Norway’s most successful and popular food delivery service and Ecommerce website, currently operating in Finland, Sweden, and Norway. Originally based in Berlin, Germany, Foodora is a third-generation digital company driving the transformation, ensuring that everything you order gets home in less than an hour.
Foodora was founded in Munich in February 2014 under the name Volo GmbH. The company moved to Berlin when Rocket Internet acquired the entire company in April 2015. And then later in June 2015, Foodora acquired catering services from Hurrier (Canada), Suppertime (Australia), and Heimschmecker (Austria) operating under the name Foodora.
Foodora has merged with Urban Taste, a leading-edge food delivery brand from Delivery Heroes, again under the name Foodora itself.
And then in 2018, the German distribution units, including Foodora Germany, were acquired by the Dutch company known as Takeaway. Delivery Hero, on the other hand, is also operating in other markets with a new name — Foodora. Since May 2020, Foodora has been fully functional in Germany, Sweden, Norway & Finland.
How Does Foodora Work?
Foodora truly revolutionized Germany’s food delivery industry by acting as an intermediary for the delivery of famous cuisines.
Since launching in 2014, they have expanded its geographic location to 50 cities in 10 countries — and for which they had to take a unique approach in order to outperform the existing competition in those countries. Therefore, their approach to marketing is somewhat candid — covering the city with print ads, loops, balloons, and even old-school graffiti.
The process starts when the customer logs into the app or website, chooses their favorite restaurant, chooses from a curated menu, and pays online to complete their order. The food ordering application has been expertly crafted with a responsive design full of colorful images of dishes and menu lists.
Then as soon as the customer completes the order, a notification is sent to the restaurant, and preparation of the dish begins. The restaurant also receives the estimated arrival time of the delivery agent to prepare the food for delivery.
Cooked meals are handed over to eco-friendly suppliers, such as bike-only delivery. Because the delivery area is small in most cases, the food reaches the customer in less than 30 minutes. And that is the reason why Gourmets choose Foodora — for an unforgettable one-click culinary tasting experience.
Food delivery mobile apps like Foodora provide full transparency and accountability in the supply chain to both users and restaurants. Users can track the estimated arrival time of their order after the delivery service picks it up from the kitchen.
The right combination of the three renditions: Users, Restaurants, and Organizations will generate more revenue and meet the needs of your users.
Business Model Used By Companies Like Foodora
The Order & Delivery Model
New and emerging restaurant marketplaces that have evolved over the past two years focus on steps 1 and 3 of the process. They bring orders to the eateries and manage the deliveries for them through their own delivery fleet such as Foodora, Deliveroo & Doordash
The order is placed in the interface of the app or website where the restaurant menu is showcased for the users.
Even though it happens occasionally, the restaurants raise the menu prices to pay a commission to the delivery company. Additionally, customers are charged a flat rate for each order they place. Once your order is placed, it will be sent to the courier company closest to the recipient.
- Delivery: When the delivery man is on duty, he logs into the delivery man’s phone app and tracks their location. After receiving the order, the courier decides whether the work can be done. Those who claim the job first will get it. And the job gets sent to more couriers if no one takes on the work.
- Limitations: These are software and logistics companies that have to perform a very high volume of operational tasks (courier hire and training, equipment maintenance, shift planning, etc.). As a result, these on-demand sites are not as easy to scale as pure software platforms.
To explore other food delivery business models check out our article Top Business Models For On-Demand Food Applications
How Companies Like Foodora Make Money
Commissions On Orders:
Food Delivery Marketplace App Platform Owners may charge a fixed fee as a fixed amount or percentage of all orders placed on the Platform. You can allocate or negotiate different commissions with other restaurants to provide the platform for free, but earn a profit from your food delivery service by taking a commission on each order to deduct the platform cost.
Showcasing Restaurants On Platforms:
The restaurant has spent a lot of advertising on the restaurant menu. Thus as a platform owner, you would charge them to prominently display restaurant listings to advertise their brands on web and smartphone platforms.
Some restaurant companies are reluctant to hire their own delivery staff.
They want to use the delivery staff of the aggregator like Foodora for delivery, and then they pay for the delivery. You can hire your own delivery and delivery staff and charge for delivery orders placed in the restaurant.
Convenience Fee may be charged not only to the restaurant business but also to users of the platform placing orders from online delivery marketplaces. Although this convenience fee is small per order. Users will be willing to pay for using the platform from the comfort of their home or office.
Payment Gateway Fee:
As an aggregator, these companies can negotiate with their payment gateway company about the fees they charge for online payments. So as you’ll be the owner of your platform, there would be many daily transactions, they will give you the best transaction fees and you can charge on it in your restaurant business.
Subscription Revenue Opportunities:
Owners of the OnDemand Food Delivery Marketplace solution will have two subscription-based revenue models. For your restaurant business, you can come up with a variety of plans to increase the number of food orders like placements, recommendation lists, individual branding assets such as mobile apps, social media marketing, and more, Discount plans, monthly subscription rewards points, and more. You can charge monthly, quarterly, semi-annual and annual rates.
Due to the significant impact on the platform’s traffic, the companies may charge additional advertising fees from the relevant businesses to place banners or advertisements on their web and app platforms.
Service-based pricing for restaurant businesses:
Each restaurant business has unique requirements for running a business. While some restaurant companies can process incoming orders from their web software, some prefer a separate mobile app for better order management.
Some want to print order receipts on a thermal printer, others can easily do it through an app. Some restaurant companies want their own standalone mobile apps for their customers. Thus, you may charge them differently for these various additional services.
Selling Equipment to the Restaurant Business:
To run a digital business, every restaurant owner needs some sort of ancillary equipment: an Android tablet to process orders, a thermal printer to print order receipts, a POS system, inventory management software, and a large display to command In the kitchen, etc.
You as an aggregator can propose various marketing campaign plans for the restaurant business. Due to the nature of the restaurant business, restaurant owners do not have enough time for social media marketing or email marketing. You can offer different plans for this and promote your business to attract more customers and orders.
A food delivery company can provide SMS marketing in local areas and advertise deals that would appeal to the local population. The food app can charge restaurants for SMS services.
Launch Your Food Delivery App in 2 weeks
Tips To Create An App Like Foodora
- Making Your Single Or Restaurant Chain Successful
If you own one or more restaurants and need to grow your business, you can’t get the food ordering app wrong. They help you build a strong presence in the market. How?
Well, the restaurant app promotes the restaurant because users of this app will be notified of new offers and discounts through notifications. This allows you to attract more customers.
According to experts, you can not only receive and deliver orders using the online food delivery app but also market your business. You need to collect information about your customers and thereby use the app to boost your growth.
If you run a chain restaurant, you can enable ordering food online by choosing from the app or website. You can also track customer feedback and work to improve the customer experience.
With all in mind, a meal ordering app like Postmates should help you build a better customer base and drive your business.
- Give Options
When creating a food delivery app, you need to make sure that your customers have different options for ordering food. Customers need to be able to choose from a variety of restaurants, kitchens, or price ranges.
With the mobile restaurant app, it doesn’t have to be just an on-demand food delivery app. Customers can easily receive orders. You can order online and receive your order when you are ready.
Other options are also very important, such as delivering food to the desired location or booking a table in the case of a restaurant. This gives the customer the freedom to choose. Customers will feel monopolistic and will prefer your app over others.
The Foodora app also has the option of receiving orders rather than just delivering them. This is one of the most important tips that you can get for your upcoming application.
- Include Unique, Handy Features
Most Uber for food delivery apps and top food delivery apps have specific basic features such as real-time order tracking, in-app chat, and payment gateway integration. It’s even more important that you need to create an app that won’t get lost in the crowd.
The best way to do this is to add unique features to your app that will make the app stand out. I have some ideas about this.
- Multilingual Settings: If you want to appeal to a wide audience, you can incorporate this feature into your food delivery application.
- Delivery Scheduling: You can use this feature if you need to schedule deliveries according to the customer’s desired time. This allows the restaurant to prepare meals in advance and save customers time. The Foodora app has this unique feature.
- Favorite Order: Many people have a weekly or monthly ritual to eat a particular item from a particular location. You can save this as your favorite order and specify the ability to deliver it to your location each time.
For a detailed guide covering all insights, check out our article about creating an app like Foodora.
We hope the tips in the article will help you answer some of your questions about developing apps for online food delivery. I also understand that this is not all. You may have more questions. App developers can answer these.
We are a leading India-based web and food delivery app development company known for its performance apps. We have experience in developing various categories of web, Android, and iPhone applications. We have also developed a variety of food and beverage solutions.