On-Demand Food Delivery Apps: Business Model & Feature Insights

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Until a few years ago, delivering food from restaurants to the homes of customers was considered to be an extension of water the business walls. However, today, it is looked at as one of the biggest chunks of contributors to the revenue of the restaurant.

In addition to the passing of powers from boomers to millennials and the increased demand for comfort and customer-centric businesses, the COVID-19 pandemic has also played a major role in giving the on-demand economy the trust it needed to become mainstream.

Considering the possibilities of profit, it has also attracted a lot of entrepreneurs to start their own on-demand business, especially in delivering restaurant food to homes. The on-demand food delivery app market has shown promising figures in extrapolation by reputed companies like Statista.

The promising statistics

The food delivery on demand industry is expected to generate a revenue of about $96 billion by 2024, and inch very close to the 1 billion customers mark by the same year. As expected, the biggest chunk of this revenue comes from the users aged between 25 and 34.

The Internet penetration, the increased usage of smartphones, and the ease of making the technology available are factors expected to contribute to this massive growth.

Needless to say, food delivery app businesses also present lucrative revenue opportunities. The financial success of businesses like UberEats, GrubHub, Zomato, Deliveroo, FoodPanda, and Swiggy are responding to testimonials to the fact stated above.

The different channels of revenue

Food delivery on-demand app business presents a wide array of diverse opportunities of profit.

  • The food delivery app can consider charging a flat delivery fee or a delivery fee contingent upon the distance, the order, and the ease of access for the delivery executive.
  • The food delivery app facilitates orders for the restaurant. In essence, they function like affiliates who give restaurants an additional earning opportunity. Therefore, they can charge a commission from the restaurant on all the orders brought to them through the food delivery app. The commission can be charged as a percentage of the order or as a flat fee per order.
  • Food delivery apps can be considered a converging point for food lovers. Therefore, they can charge an advertising fee from the restaurant, and this feature is especially useful for restaurants that have just made their entry in a particular area.
  • Some food delivery apps have carved a niche for their brand and sometimes, they are bigger than the restaurant itself! In such cases, the food delivery app can’t even charge a subscription fee from the restaurant for merely having the restaurant listed on the app irrespective of the restaurant getting orders.

The way it works

To understand the way a food delivery app works, we will need to look at the entities involved. There are three major entities involved in A food delivery app functioning properly. The restaurant that prepares the food, the user who orders the food, and the delivery executive who takes care to bring the food from the restaurant to the location of the user can be considered the three vertices of the triangle of food delivery. In between them, overseeing all these functions is the centroid of the triangle, the administrator.

The user downloads the app and the app gets access to the location of the user. The location access can be made available either by turning on the GPS or by manually entering the address. As soon as the app provides access to the location, all the restaurants that deliver to that particular location are listed on the app. The user can choose the food items that they want from us in the restaurant, add the food items to the cart, enter information regarding customization if available, and can check out by making a payment through digital payment instruments.

As soon as the order is placed, a notification is sent to the restaurant. The restaurant accepts the order and starts preparing the food. Parallel to this, the same notification regarding the food order is also sent to the delivery executives in the vicinity. One of the delivery executives accepts the request to deliver, and guided by the GPS, they start moving towards the Location of the restaurant.

The restaurant prepares the food and keeps it ready for the delivery executive to pick it up. Again, the GPS comes to the forefront in precisely guiding the delivery Executive to the location of the user. The user receives the food packet and based on the experience of delivery and the quality of food, they can treat the restaurant and the delivery experience.

The blueprint of technology

The entire process is made possible through three distinct applications, one for the user, one for the restaurant, and one for the delivery executive. The administrator is provided with a separate panel.

The administrator panel is accessible on a website or on a mobile app. The administrator panel shows all the vital bits of information including but not limited to the total revenue, the prevailing commission rates, delivery costs, and all the other financial elements of the app like to be out for the delivery executives and the fulfilment of payment for the restaurant.

The administrator is also responsible for keeping up the sanity of the app by suspending or disabling users, restaurants, and delivery executives based on malicious behavior. They are also responsible for all the promotions and discounts that are made available through the app. If need be, they can delegate customer support to the team to which they can give suitable powers to access the history of orders.

The user app

  • The user should be able to easily download the app and sign up for the service. The registration should be made available through existing login credentials like Google and Facebook. The sign-up should immediately create a profile for them that records their usual delivery addresses, history of orders, and the default payment instruments.
  • The user should be able to access the menu with convenience. The menu should include a search option where users can search by the food item, the restaurant, or the cuisine. They should also be able to filter food items based on their choices of food and if possible, even their allergies. 
  • They should be provided with offers and discounts either based on the track record or even the absence of it. These offers and discounts play a vital role in returning the customer.
  • The users should be able to make a payment by using digital payment instruments for which the app should tie up with a versatile payment gateway. They should be able to make payments using credit cards, debit cards, Internet banking, and wallets.
  • The users should be able to provide their feedback using a review and rating system that makes the entire ecosystem democratic.

The restaurant app

  • The restaurant should also be able to easily register with the app. The registration process should include collecting bank account details at the physical location of the restaurant.
  • They should be able to easily add a digital copy of the menu. The restaurant should also be given the facility to upload photos of certain menu items that might have a distinct name.
  • The payment made to the app should be quickly processed to the bank account of the restaurant.
  • The restaurant should have a facility to close orders and limit taking of orders either by time or quantity.
  • The commission rates should be congenial for the restaurant to not consider the food delivery app platform as a burden.

The delivery executive app

The delivery executive is responsible for carrying the parcel of food from the restaurant to the home of the user.

  • They should be able to easily sign up for the services just like the user does but they should also have a few additional authentication processes involved to verify the identity of the delivery executive.
  • They should be able to specify the hours of Their availability. It is stupid remember that these delivery executives are not employees but gig workers who do not get a salary but only a commission on every delivery that they process. They should also have the flexibility to either accept or reject orders that they might get.
  • The earnings of the delivery executive should be quickly processed to their bank account. These delivery executives, In most cases, are college students or workers looking for an additional source of income.

The challenges

There is no question on the profitability of an on-demand food delivery app business. However, there are a few challenges associated with this business, Just like any other. 

The first and foremost challenge is in returning customers. It is to be remembered that customers who use a food delivery app or not customers of the app but rather for the restaurant. The app only functions as an enabler or a facilitator. Therefore, it is quite possible that if another app offers customers with a better price or better offering, they might migrate to the other app. You should keep your customers constantly engaged with offers and discounts, and also maintain a certain degree of exclusivity in your offering.

 

The exclusivity comes from being tied up with some of the most elite restaurants in your area. If you have The right to clean that only your food delivery app can deliver food from a particular restaurant preferred in an area, it’s quite likely that customers will stick to your app. Partnering with restaurants has become a challenge, especially with the onslaught of a lot of food delivery applications springing up all over.

Another major challenge that food delivery app businesses face is in choosing between a sniper and a shotgun. Considering the limited availability of logistics and the lavish availability of restaurants, it is important to plan the area in which you will operate. Some of the most successful on-demand food delivery app startups started by targeting a specific area and expanding to cover the whole country.

Conclusion

Although you might face challenges in terms of operations, technology will never be a challenge. The skeletal technology required for launching your own on demand food delivery app can be made available through white label clones of existing food delivery applications. These white label clones are extremely easy to customize and can be garnished with the features that fit your business requirements. In addition to being easily available, they are also free from bugs that might interfere with the basic functionality of your app.

All you need to do is get in touch with the company that specializes in the development and customization of white label clones of on demand food delivery apps. They will take care to understand the requirement, customize the app, and deliver it to you, so you can start delivering food and delight to your customers!