2 Most Popular Food Delivery App Business Models & Their Benefits Explained
2 Most Popular Food Delivery App Business Models & Their Benefits Explained
Anurag Jain
Last Updated on July 20, 2022
On-demand food delivery startups have the same psychological value in the on-demand economy–all food delivery startups pledge to save people time and effort when it comes to ordering food and getting food. There are various food delivery app business models that can be followed and in this article, we will be talking about the two most prevailing food delivery app business models and their benefits.
After Uber, several food companies have entered the marketplace on demand, many of which are doing well in the food industry. They provide their customer base with the convenience they deserve. And, their research into convenience has found several ways for their clients to save time and effort. For this reason, the global food delivery market is booming. According to reports, the revenue generated by the global online food delivery market is expected to grow by $474.30 Billion by 2026.
Food startups have made the decision taking quick and easy. For starters, you can view ratings and reviews on Zomato, UberEats, and similar food delivery startups before ordering food from the restaurant.
In fact, they made the payment process quick and easy to pay too. For example, food delivery apps like Ubereats allow users to pay with cards or pay from wallets like Paytm or other digital wallets as well.
Food startups have also made re-buying easy in fact. For instance, after you order restaurant food, you can bookmark your favorite dishes/restaurants and save your address along with your payment details, etc. to make it easy to reorder within minutes.
In addition, the food industry’s on-demand economy has transformed many international markets through a full cycle strategy to three core components of the food ordering process. Order, Cook, and Deliver.
There are two successful business models based on these three elements that have proven to work for food delivery startups.
Top 2 Food Delivery App Business Models
1. The Order Only Model
The model is followed by many food delivery services such as Delivery Hero, JustEat, etc., and serves as pure tools for independent restaurant ordering. The key point of sale in this online food delivery business model is to attract new customers through both an integrated web and mobile channel.
The Food Ordering Process
The food ordering process works this way under this model:
- Customers put an order on the website/mobile app first.
- The restaurant will then collect your order via the app or dashboard.
- The restaurant will alert the order has been received via an email or an automated phone call.
Delivery Process
The delivery process has two different possible scenarios.
- By the delivery person who is employed by the restaurant.
- By the delivery person who is employed by the company.
Limitations
Start-ups with this model are limited in terms of price and cuisine in their service offering on request. They are primarily associated with consumers with relatively low-key delivery foods such as burgers, pizza, Chinese, etc. Food startups can’t control and/or optimize the quality and speed of food delivery services with this model.
Benefits Of This Model
Online Food delivery companies are not going to have to worry about cooking or shipping this model. Such start-ups tend to charge 10-15 percent for food delivery services. And, being a pure software company, they have great scale possibilities and remarkable growth.
2. The Order & Delivery Model
The new startups of food delivery apps like Deliveroo, Doordash, and Caviar focus on the first and third components – ordering and delivery.
What they do is, bring customer orders and requests to the stores, and handle the distribution by themselves. In distribution, they usually work with several individual courier service providers that are linked through an app like Uber for both receiving customer orders and exchanging delivery details with courier service providers.
The Food Ordering Process
The orders are submitted in the app or website, where all the menus are posted from different restaurants. When a restaurant receives an order from the food delivery app, then the restaurant notifies the delivery company of the time to collect the package and the address of the destination.
Sometimes they mark the price of the restaurant goods to help restaurants pay the commission fee for the delivery service. For each restaurant they place their order, customers are also charged a predefined flat fee.
Delivery Process
The courier in service is logged in to the mobile app that monitors their positions. Once an order has been sent, the courier determines whether or not they will take the job. If the first courier refuses the job, the job is then sent to other couriers. The first messenger to say the work will get the job.
Limitations
Food ordering companies with a second model are usually software as well as a logistics company that has significant work to do such as recruiting couriers, training them, servicing, shift preparation, etc.
Contrary to the pure-software business model, therefore, it becomes a bit difficult for a food company with this model to scale up.
Benefits Of This Model
The downside of pursuing this model is that restaurants will charge up to 25-30 percent higher commission on average. However, you can provide both a variety of prices however restaurant choices that the pure business model of food delivery apps can not. One of the best examples of this model is the Doordash business model.
The Entrepreneur may, however, have to struggle a little to contend against the automated courier and restaurant networks. Yet, after starting up again.
See our comprehensive guides on launching a food ordering startup:
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