Food Delivery App Business Model – The Ultimate Founders’ Guide

Nowadays, food delivery has become a global market worth more than $150 billion, having more than tripled since 2017. In the United States, the on-demand food delivery app market has increased more than twofold during the COVID-19 pandemic, continuing its steady growth trajectory of 8 per cent.

The debut of alluring, user-friendly apps and tech-enabled networks, amalgamated with evolving customer expectations, has unlocked ready-to-eat food delivery apps as a significant category.

Curious about building a food delivery app in under a minute? Check out our YouTube video for a quick, step-by-step guide!

If you are at square one wondering how to strategize the food delivery business model, here are recommendations to consider when picking the right business model:

• Analyze the market
• Define the target audience
• Outline business goals

Essential Insights: Crafting a Winning Food Delivery App for Today’s Market!

As an entrepreneur, it’s important to understand various online food delivery business models existing in the market to make a well-informed decision. Herein, we’ll talk about different business models for on-demand food delivery apps and guide you to pick the right one for your venture.

The Surprising Truth Behind Food Delivery Business Model – Stats You Can’t Ignore

If you are looking to step into this market anytime soon, it’s best to have a thorough grasp of its different business models and strategies before taking the baby steps.Let us check them out.

Different Types of On-Demand Food Delivery Business Models

As a food delivery startup, it’s a must to know each food delivery business model’s pros and cons before choosing what works best for you.

1. Order Only Model

For newbies, this is an amazing business plan to consider.

Herein, the food delivery app allows customers to connect with several restaurants and eateries. App owner provides a solution for eateries to list their food delivery services and easily connect with customers. In return, restaurant owners manage the delivery with their own fleet. All you have to take care of is on-demand food delivery app development ensuring seamless order management from customers to respective restaurants and eateries.

This is a company strategy that solely depends on orders. Remember, logistics are out of your hands as an app owner.

Indeed, your work consists of being an intermediary between the restaurant and costumes through your app. Consumers place an order with one of the registered restaurants, and the meal gets delivered by a rider employed by the restaurant or a third party.

Often, ~ 20% to 30% of the order value in addition to the shipping costs are incurred by the app owner.

Workflow:

• Customers use your app or website to place an order.
• Next, the order is shared with the nearest restaurant through an app notification.
• Once restaurants receive orders, it will confirm the same and customers get notified of their order acceptance.
• POS system integration enables restaurants to print order receipts to the respective order boxes.
• In-app payment integration ensures customers make secure payments for orders hassle-free.
• Lastly, the delivery person is assigned to the order pick up, ensuring timely delivery.

Monetization Options:

Employing a business model based on commission is a good go.

In this, you can define a price for restaurant owners and charge a commission on every order placed through your app. Next, you can opt for a feature-listing approach where restaurants pay a fee to have their businesses listed in the top feature list.

2. Order and Delivery Model

In this food delivery business model, the logistics are managed in the same way as discussed in the above model. Herein, the subtle difference is restaurants don’t have to worry about maintaining their own fleet of delivery vehicles. Indeed, the app already has a voluminous client base, it may offer the benefits of the customer base.

Moreover, you can add different delivery modes in your on-demand food delivery app development as a part of this process.

To be precise, it can be Point-to-Point or Milk Delivery:

A. Point-to-Point: The delivery partner picks up an order from one restaurant and brings it to the respective customer.

B. Milk Run: Several orders are collected from a single vendor or location and delivered to multiple customers by one rider in this model.

In this, you designate a delivery person for frequent deliveries, ensuring timely deliveries.

Workflow:

• Customers scroll through the menu and place their orders using the app.
• Customers are notified about their order status through text or email.
• Once the order is ready to dispatch, the restaurant sends a message to its messenger stakeholders, consisting of the rider, customer and your business admin.
• The delivery will be picked up by a nearby rider upon acceptance, sharing the delivery status with the user in real time.

💡Note : The customers are charged delivery costs depending on their location.

Monetization Options:

You can charge registration fees to customers who want to sign up for your app under this on-demand delivery model. And in return, you can offer them free delivery.

Secondly, you can charge customers for delivery costs, especially to the ones who are not premium users.

Lastly, you can consider implementing a subscription model in your food delivery business model. Herein, you provide clients with free delivery and exclusive discounts in exchange for a membership. You can also consider offering features like listing bargains as an incentive when it’s about restaurants.

3. Fully Integrated Model

As the name suggests, a fully integrated model performs everything on-site.

So, if you are considering this for your food venture, you’ll need to do more than create a food delivery app or hire a delivery partner. In this, you’ll have to manage cloud kitchens cooking the meals.

The core objective of these facilities is to get the meals ready and not facilitate dine-in. Also, it’s possible to develop meals at a bare minimum cost while just paying for the kitchen in the “cloud kitchen” concept.

Customers as well as business clients can adopt this platform. This model provides a higher degree of personalization as they can create metabolic meals, provide corporate meal programs and simultaneously deliver nutritious treats straight to workplaces.

Contrary to the other two business models, here the admin is the owner of the cloud restaurant or kitchen, employing everyone from cooks to delivery partners. This means a restaurant owner’s on-demand food delivery app development will envelop all the admin functions right in.

Workflow:

• Offer in-app food menus to customers to decide on their orders easily.
• After placing the order, a notification is sent to the cloud kitchen.
• Once the order is completed, the restaurant’s delivery person delivers the meal at the customer’s doorstep.

Monetization Options:

Considering your business strategy, you may choose your delivery pricing. After all, restaurant owners and your business will share the profit margin. Plus, this is something that you can plan to split into the desired ratio.

You can plan to integrate premium features like pre-scheduled delivery, diet personalization, etc to make your app more interesting to your customers.

Must-Read – How AI Boosted Food Delivery Revenues by 30% – Real Case Studies Inside!

4. Meal Kit Delivery Model

This food delivery business model is also termed the restaurant-to-consumer model. Indeed, this delivery model is profitable.

In the meal kit delivery model, the restaurants deliver premium quality ingredients to their customers. This on-demand food delivery app development approach allows customers to pick vegetarian or non-vegetarian meals at their convenience. Surprisingly, multiple restaurants or eateries can’t operate under this model.

Imagine, a food venture like you is planning to opt for the meal kit delivery model. In that case, you need to hire a team of chefs to create innovative recipes, a staff to distribute the meal kits and suppliers to provide quality ingredients.

Workflow:

• Customers choose meals from a weekly menu on the company’s website. They can also personalize their orders by choosing the number of meals and members.
• The meal kit company prepares the ingredients.
• Next, the delivery service delivers the meal kits to the customers.
• Customers use the ingredients and recipes to cook a meal at home.

Monetization Options:

The core monetization model of meal kit delivery services is a subscription-based system. In this, customers pay a recurring fee to receive regular deliveries of pre-portioned ingredients and recipes, charging for the convenience of pre-planned meals and time saved on doing grocery shopping.

Next, you can consider upselling add-ons like adding extra ingredients or snacks to their meal kits.

Not to forget, you can plan to collaborate with other food brands for cross-promotion or exclusive recipe development.

Finally, Want to Build Your Food Delivery Business Model?

Or want to capitalize on your on-demand food delivery app development – create a food delivery app. An app that meets the unmet needs of end users with an effortless navigation experience.

Unlocking the opportunities and tapping into the untapped revenue streams do need a sophisticated understanding of the powerful forces shaping its trajectory. Thus, picking the best on-demand food delivery app development partner marks a meaningful silver lining for many.

If you are still at square one to pick the right food delivery business model, speak to our experts at Apptunix.

We have a wide array of technology stacks coupled with an experienced team to get you started on the project. When you discuss your groundbreaking idea with us, our team ensures an NDA is in place to secure what’s yours.

Let’s connect to make something that inspires the next.