How Food Delivery App Helps In Making Money?

By Ruchir C.

Today’s hectic lifestyle requires a partner to assist you with your business model achievements. Online food delivery businesses have kept audiences engaged throughout. Also, there has been seen a convenient rise in the revenue of online food delivery applications, especially during the COVID-19 pandemic. In this article, we will focus on the cost for building food delivery apps in 2022.

Food delivery is a courier service which provides services through stores, restaurants, or third-party applications. After the outbreak of the coronavirus pandemic, people prefer to execute orders via mobile apps, websites or telephones. With an increase in on-demand food delivery, start-ups are under incredible pressure to make revenue in this competitive marketplace. Online deliveries include cooked dishes as well groceries from the market.

When COVID-19 was at its height, delivery apps like DoorDash and UberEats exploded in the market with their popularity. The deliveries not only included cooked dishes but groceries from the supermarket as well. In addition, food delivery apps provided jobs and opportunities to those who lost their jobs during the pandemic outbreak. Students or food delivery drivers worked part-time to earn amidst the pandemic.

Business Model of Food Delivery Apps

The unprecedented growth in the food delivery industry has evolved and expanded its reach to a wider audience by following the latest trends in the marketplace. By strategizing the business model for your food delivery app development, you can analyze the market with a suitable audience. Moreover, by setting goals, you can select the business model accordingly.

Entrepreneurs need to stay well-informed with other food delivery apps to have a piece of exact knowledge about the market. This blog throws light on various business models so you can make the right decision in choosing one for your food delivery app.

  1. The Order Only Model

The model name suggests this model is referred to the online food delivery companies that feature several restaurants via a virtual platform. Furthermore, the company works as a mediator between restaurants and consumers. This model arranges drivers and consumer services to make the delivery process smoother. Companies like UberEats and DoorDash follow this model to deliver food.

However, this model was used by first-generation companies such as JustEat, Grubhub etc. They focused on aggregating independent restaurants in managing their fleet of couriers. In this model, the company connects to different eateries providing services to its consumers. Most importantly, this model focuses on minimum capital investment.

For Order Allocations:

It is easier for the customer to place an order from followed website or application, and they'll receive an email or a mobile notification. After confirming the order, a message will be sent to the consumers. But in some cases, the company prints orders through the kitchen POS system.

For Delivery:

The delivery boy will deliver the order to your doorstep. You can use the customer helpline number in case you face any issues.

Advantages of Order Only Food Delivery Model

In this business model, you don't face any issues regarding the food delivery process. You can also charge a commission fee whenever an order is placed.

Challenges of Order Only Model

At first, it might be not easy to connect with eateries, but you need to make a plan about what you need to offer them. Thereby, you need to give more attention to the marketing of your product through the online platform for successful outcomes. The outcome of this model depends on the services the restaurants provide to their customers.

Moreover, this model provides limited options to the customers because only those items are listed that the restaurant can prepare. However, the app owner won't be able to control the quality or packaging of the food. Therefore, customers are more likely to retain your services if they aren't satisfied with the quality of the food.

  1. Order with Delivery Business Model OR Delivery Service Aggregators 

This business model is similar to the model mentioned above, but it is based on the logistics of the app. In this business model, the app owner takes care of the whole process as the order is accepted and then delivered to the customers. Businesses highly recommend this model as there's no pressure on the restaurants to manage the fleet services. Besides, restaurants can gain a customer base through the app by providing better services.

Logistics such as food joints, restaurants and home delivery services are handled by order and delivery platforms.

For Order Allocations:

The restaurant will register your information via an online platform, and then you can place an order from them. The restaurants will receive your order through a website or mobile app service. Whether to pay online or via cash for the following order is your choice.

For Delivery:

The delivery person nearest the restaurant will receive the notification, and your order will be delivered to your doorstep. Also, the food delivery app features allow customers to add instructions for the followed order, such as to ring the bell.

Advantages of Order and Delivery Model

This business model relies on the user's experience with restaurants and delivery boys. You can also charge a delivery fee from the customers and the restaurants based on their location. For advantageous outcomes, you can provide your customers with instant and flexible delivery options for high ratings of your food delivery businesses.

Challenges of Order & Delivery Model

The food delivery logistics face the biggest challenge of delivering the order on time. Most customers are concerned about on-time delivery of their food because, for them, time is crucial, especially for those who order food at work. Therefore, you need to manage every resource of your business effectively.

Furthermore, it is essential to focus on the transport fleet while setting up your business with swift, prompt, and proper addresses of the customers. According to McKinsey's report, around 60% of customers prefer courier speed services. The longer delivery time may lead to an unsatisfied customer base degrading the profitability of your customer base. However, if the problem isn't solved in time, it may affect your business model's viewership. As well as, the restaurant, in association with your application, might also plunge.

  1. Fully Integrated Business Model OR Full Stack Business Model

As per the name, in this model, a single service provider is responsible for the food chain as a whole. Thence, we can say that one party is responsible for preparing food and delivering it to the customer's doorstep. Therefore, this business model boosts sales of food delivery items by comforting customers at their homes.

Considerably, business entrepreneurs hire cloud kitchens to prepare meals. However, this business model doesn't provide for its customers. Instead, this business model only places an order and delivers items to the customers.

For Order Allocations:

In this type of business model, order allocation takes place in two ways, as mentioned below:

The first allocation involves admin, where the order is directly allocated to the nearest driver. On the other hand, the second allocation will go to the admin panel, and then it is the admin's responsibility to allocate it to the nearest driver.

For Delivery:

The drivers hired by the company deliver the food item. Consequently, per the requirements, the delivery may be scheduled, or the item is instantly delivered. Every driver is given a set of meals to be delivered to the customers.

Advantages of Fully Integrated Model

This model is advantageous for your business as there is no third-party involvement in the user's experience. If you opt for this business model, you'll operate your company by yourself. This business plan will enhance your meal delivery patterns with profitable revenue.

Challenges of Fully Integrated Model

Every business faces an operational cost, and startups cannot afford such an amount. Therefore, making several deliveries at once is important to enhance the user experience.

Monetization Techniques for Your Food Delivery Application

Food delivery application helps in marketing and selling food delivery items to customers. Customers can receive their orders at their doorstep without visiting the restaurant. According to a survey, the food industry is estimated to earn $200 billion by 2025. Monetization techniques help businesses to increase revenue by reaching a wider audience.

In this on-demand world, food delivery apps have an exceptionally established user experience. These mobile apps are accessible to everyone as they can install and immediately order required food items. Lastly, you need to deliver food to the registered address. But while planning a venture about delivery app development, here’s how you can monetize your Food Delivery Apps.

Delivery Fees

The food delivery apps can make revenue by charging a delivery fee like a shipment application. You can charge the fees according to the distance from where the food is ordered. Fix a rate for a meal ordered from different locations.

Peak Hour Extra Charges

Because your food delivery app services can earn revenue during the peak time of the day, i.e. lunch and dinner, certain items on the menu are limited to a particular period. So, the customers will have to pay an extra fee if they want to order food from these delivery places. UberEats is an example of this model.

Transaction Commission

Several delivery apps have earned a commission by selling food. For instance, the app will get a certain percentage of the amount earned on every order agreed by the app owner and the restaurant.

Advertising on the App

Additionally, restaurants can publicize their product by advertising mobile app services. When a restaurant is paid for advertising, it is displayed at the top for some time. As a result, you see the advertisements of these ads first. In addition, you can earn revenue from Google AdSense and UberEats.

Offline Advertisements

The food delivery company advertises through food packaging to gain customers’ attention. As far as advertising is concerned, Food Delivery Company can also send their posters and pamphlets for consequent engagement of the users.

Email Marketing Campaigns

The food delivery app will be able to gather all contacts from the user’s account. Furthermore, you can send email campaigns informing users about the latest offers, promotions, and more. These campaigns can yield sales of your food delivery app resulting in higher commission margins.

How Much Does it Cost to Develop a Food Delivery App?

Online services are common among customers in this competitive world, offering ease and convenience. But, after that, you need to manage the value of your on-demand app efficiently for its additional value amongst customers. Also, the consumers save their time from waiting in a long queue.

The cost range of the mobile app development is likely to depend upon the features designed in it for both the platforms – Android and iOS versions. Additionally, the development company also takes care of app testing and the app launch in the marketplace.

Therefore, depending on the features, the on-demand food delivery app development cost depends on the resources you require to transform your app. So, to develop an application like UberEats and GrubHub, the price would be around $30,000 to $40,000. But to develop a web app for restaurants, the price may range from $50,000 to $60,000.

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Today, we all have a hectic lifestyle, and we must add some revenue to our pockets by following a proper business model. The business models for developing food delivery apps have kept the audience engaged. Also, it has generously increased the revenue of mobile apps.

The on-demand business model provides a hassle-free experience to the customers by saving their time and effort. Amidst the pandemic, online food ordering kept the audience engaged, and this idea was appreciated by everyone globally. In addition, online food delivery industry builds revenue by collaborating with various restaurants.

Online food delivery services have succeeded greatly, as evidenced by leading companies like JustEat and UberEats. In addition, it has become easier to earn by advertising your product via the delivery app. As you can see, there are different ways to earn revenue through online food services. Customers nowadays like to order online rather than dining out and place order.

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