Over the years, as the food delivery arena is expanding, so are the food delivery business models are changing and evolving. From the days of ordering food via call to simply tapping the screen for food delivery, we have come a long way.
With different business model canvas for food delivery service, you can choose the model that suits your business objectives and goals the best. In the past few years, food delivery app development has seen a surge in the market. People are coming up with different business models to make the most of their investments. As the modern consumer seldom cooks, it has become an everyday thing for them to order their food at home, be it pasta, pizza, or maybe vegan salads (after all, we have health-conscious folks around us, too, and food ordering businesses have given a thought to them as well *wink*wink*).
Being interested in the food delivery business, you need to pick the right food delivery app business model and let the development team do the rest of the work.
Massive Demand for Web-based and Mobile Food Delivery Service Business Model
With customers shifting demand from traditional phone-ordering food delivery systems to modern-day business models of food delivery, it certainly opens them to comprehensive options for food that too from many restaurants with just a few taps on their tablets or smartphones. We certainly can’t expect the food ordering system to be much simpler than this, can you?
- The prominence of restaurant and grocery delivery ventures like Munchery, Foodora, Deliveroo, Postmates, and others has already reached great heights in terms of valuations (for instance, in 2016: Postmates made $600 million, Foodora – $ 4 billion, Deliveroo – $1 billion, Munchery – $300 million.
- 59% of the millennials order home delivery or takeaway instead of dining in a restaurant.
- Around 87% of Americans believe third-party food delivery applications have made their lives easier.
- The delivery sales are expected to grow by 20% and reach an estimated value of $365 billion by 2030.
Based on the facts, around 39 US-based private food firms have $5 million or more in funding. New businesses are putting efforts into following various food delivery apps’ business models to deliver either cooked meals or some plan to deliver fresh ingredients for home cooking.
So, if you also have a blurred picture of your business plan, read further to get a clearer picture that helps you make an informed decision.
Most Popular Food Delivery Business Models for a Futuristic Business
Our food delivery app developers understand how important it is for a food delivery business to have a clear idea of the target audience and define their business model canvas for food delivery service considering the audience’s needs and business objectives.
So here in this article, we try to figure out the future scenario for this industry by comparing different types of food delivery business models that food delivery startups adopt. Let’s explore it all!
Aggregator Model: Order and Delivery (from various restaurants) Food Delivery Business Model
If you are looking forward to developing an app that lists all the restaurants in the city and lets users pick from their favorite places to eat, this is the model for you. Here you would develop a platform that allows restaurants to list themselves on your platform and users can order from it. You’d be the delivery partner for the orders placed via the app and help the restaurant owners reach a wider audience.
- Cut-throat competition creates a lot of challenges for new businesses to create their customer base. With so many big names in the industry, it would be difficult for a new business to grab eyeballs.
- The commission fee for most businesses is minimal. To make sure you can at least cover your operational cost you’d need to have a competitive commission. This could be a challenge in the long run.
- Users can explore a range of restaurants and cuisines under one roof.
- Customers can compare the prices and ratings of different restaurants and order from the one that fits them the best.
- The profit margin may drop because of the cut-throat competition among restaurants and the cost of delivery.
- The profit and business gains depend on the restaurants registered on the app.
- Sponsored Listing: You can let restaurants pay you to list them as one of the top food joints in the city. You can also let them pay you to promote their brand on your platform.
- Advertisement: Let the businesses that share a similar target audience or operate locally advertise their products and services on your platform at minimal charges.
- Commission Fees: You can charge a percentage of the total order value from the restaurants that get orders via the app.
Restaurant-to-Consumer Model: Order and Delivery (from the single chain) Business Model for Food Delivery
If you own a food chain or a single restaurant, then this is the right food delivery app business model for you. The food delivery app developers build an application specifically for your food chain or restaurant. You need to manage the orders, visibility, delivery fleet, etc. on your own. This is a great idea if you have built a brand name in the market and can get a loyal customer base.
- One of the biggest challenges when it comes to any delivery service provider is maintaining the delivery fleet and the logistics. Packing, managing the logistics, and taking care of other things along with serving in the restaurant would require additional resources.
- Food quality is your biggest concern. You have to ensure that the food you deliver and serve to customers is fresh, hygienic, and up to the mark. Packing the food the right way is another challenge.
- Abiding by the compliances and regulations of the industry is another challenge that restaurants may have to take care of. Some licenses and permits must be obtained for a trusted food delivery business model to run successfully.
- Dependency on Third-Party Platforms: Restaurants relying on third-party delivery platforms may face challenges related to dependence on these platforms for their revenue. Changes in platform policies, algorithms, or market dynamics can have a direct impact on a restaurant’s business.
- Single restaurant owners or chain of restaurant owners can reach a wider audience with the help of dedicated food delivery applications.
- A dedicated mobile application designed for your business can help you analyze user behavior and offer personalized recommendations to users.
- Managing the delivery fleet is an added responsibility and expense you may have to bear.
- Setting up your app and integrating all the functionalities may be a bit of a trouble. Training your staff to use the app is a time-consuming process too.
- Advertisements: Setting up ads for brands targeting similar user bases can help you earn great profits. You earn revenue as these brands gain visibility.
- Subscription Model: Let your users subscribe to the app for added discounts and rewards. This would help you increase footfall at your application.
- Freemium Model: Offer users a freemium model where they have to pay only for the exclusive app features they want to avail.
Order Only Models: Food Delivery Business Model
You can build a platform that lists all the restaurants for online delivery. In this business model for food delivery, the user can order and pay directly from the platform. It is just an online platform that lists the restaurants and their menus. In this model, you don’t have to worry about setting up the delivery management system. Simply partner with a delivery management service provider and they’ll take care of delivering your food to the customers.
- Order accuracy is one challenge that most businesses with order-only food delivery business models have to face. Since the order is placed through a different platform and the delivery is managed by a third party the chances of order inaccuracy rise.
- Marketing and customer execution are another challenge here. The customer places an order through one platform and the food delivery platform handles the rest of the process. Managing it as a single unit sometimes becomes a challenge.
- Reduced operational costs as half of the work is taken care of by the delivery management partner. The restaurants have to function as usual where they do not have to worry about other things.
- Order-only food business models promote a collaborative environment where they can offer space for more local restaurants to join in and expand the business.
- Depending on the third party for the delivery of the product can be risky as they would function according to the availability of their fleet. Sometimes, the chances are that an order may not be delivered on time.
- Since the delivery system would be commission-based, partnering with a third party for the delivery is a risky business.
- Sponsored Listing: The most common way in which the food delivery platform business model makes money is, sponsored listings. The restaurants pay sponsorship to these platforms to list them on the home page and increase their visibility.
- Advertisements: Another way to make money for these platforms is through advertisements. The brands that target similar audience bases connect with the customers by displaying their ads on food delivery platforms and pay these platforms if someone visits them using their platform.
Delivery Only Models: Delivery-based Business Model
This is a reliable business model for food delivery service providers. Here the company owns a fleet of delivery partners and connects with the restaurants to deliver food. It becomes easier for restaurants to deliver food to their customers’ doorsteps at a minimal charge without having to invest a lot in maintaining the delivery fleet. This is a great solution for restaurants who are simply making a presence in the market for now.
- One of the major challenges for the online food delivery business model is maintaining the logistics and the delivery process. They need to maintain a delivery fleet that is available around the restaurants with an order-only food delivery business model. Building a presence in the market is a big challenge.
- Maintaining delivery cost and time can be difficult in times when there is a surge in demand. The fleet has to manage timely delivery without extra costs to ensure the customers are satisfied and the partner restaurants incur no loss.
- It becomes easier for restaurants to make a strong presence in the market without having to invest a heavy amount in maintaining a delivery fleet.
- Restaurants would be paying only for the fleet they use and the extra expense of miscellaneous fees that come with having a dedicated delivery fleet is eliminated.
- The dependency on third parties for delivery can delay orders and bring a bad reputation to the restaurants.
- Market saturation is another point to consider. With rising numbers of restaurants, the market may run short of delivery persons.
- Delivery Fees: One way to earn money through this food delivery app business model is to charge a minimal delivery fee from the user and the restaurant.
- Subscription Plan: To make the income a little certain, you can offer restaurants subscription plans, and in case of higher demand you can charge a premium.
Cloud Kitchen Model: Common Fast Food Delivery Business Model
The most chosen food delivery business model for businesses that want to start small and scale later. Virtual kitchen food delivery applications or cloud kitchens are food joints that run from a virtual location. Thus, they have only order and delivery models and no dine-in mode. This saves a lot of overheads and operational costs that any regular restaurant has to bear. Cloud kitchens are gaining popularity these days. They are quite common with fast food chains and homegrown kitchens. This food delivery business model is quite feasible and has a high chance of success.
- Establishing a brand and gaining visibility can be difficult without a physical storefront. Relying solely on online platforms can limit exposure.
- Setting up and maintaining multiple kitchens for different brands can involve significant upfront costs.
- This needs a very low investment and is easy to set up from home. This helps you build your presence in the market before you decide to set up your actual restaurant.
- You don’t need a big staff to operate in the kitchen. You can simply start from your home kitchen and scale up from there.
- Without a significant presence starting small would be a challenge. More than operational costs, you will have to focus on your marketing costs to build a brand identity.
- A cloud kitchen business model has a great dependence on the third-party platforms where they are listed.
- Commission Model: In the cloud kitchen delivery model one can earn a commission on every order.
- Franchise Model: Maintain the franchise of the food delivery business and earn a fixed amount to publicize the brand.
- Advertisement Model: Cloud Kitchen can earn great revenue by offering advertisements to different brands.
Also Read – Top Food Delivery App Development Agencies
Food Delivery Business Model Canvas
A food delivery business model canvas is a high-level visual representation of the business to help you understand the various driving forces behind the business and how they can be used and scaled for maximum profits. Here’s a business canvas of a food delivery business with all the key elements.
Define the key partners you want to consider for business model food delivery. This would help you in defining the different roles and responsibilities.
- Delivery Agents
To pick the right business model of food delivery for your idea, we first identify the target customers. We define who are we making this food delivery application for.
- End users who would order their food online.
- Restaurants that would serve the needs of these customers.
Further, the end-users can be segmented as:
- Professionals who want assistance in terms of meal delivery and not mere occasional food delivery
- Families that are looking for a change from their regular home-cooked food
- People who are looking for a quick meal or are too tired to cook
For restaurants, the options could be,
- Restaurants that are looking to scale their business
- Restaurants that may not have their delivery service but would still want to deliver their food to the customers
- Platforms that can offer delivery services to restaurants
Here we’ll talk about what we have to offer to our target audience.
- Order a meal at your convenience
- Browse from various eateries
- Track orders in real-time
- Constant customer support
- Expand customer base
- Connect with customers easily
- Scale up the business with a digital platform
For Delivery Personals
- Earn tips from customers
- Get paid by restaurants
You need to be specific about how you want your customers to interact with you. It could be via call, a website, an app, or a mix of any of these channels. The obvious choice here is
- Food Delivery App for Android
- Food Delivery App for iOS
Customer Relationship Management
There are various ways in which you can manage the communication between your platform and your customers. For any business, customer support is a major part of its success.
- Social Media
- Reviews and Ratings
- 24*7 Customer Support
- Generative AI Chat Support
Picking the right monetization model is an important step to take care of. We need to make sure that we are picking the right model that can cater to the needs of the target audience and also provide the best ROI.
- Commission on Food Orders
- Delivery Fees
- Sponsored Listing
We need to create a list of the resources that we need to build the application.
- Technology Platform
- Delivery Partners
The next is the action plan we need to abide by to execute the project. This would include
- Platform Development
- Delivery Fleet Management
- Marketing and Partnership Management
Your business model canvas food delivery will help you identify an estimated budget that you would need for the project.
- Technology Needs and Fulfilment
- Marketing and Advertising Costs
- Logistics and Delivery Costs
Promotion and Marketing Strategy
The next in line is the marketing and promotional strategy to grow your food delivery business.
- Loyalty Program
- Promotions and Discounts
**This is an example of a food delivery business model canvas**
If you connect with our food delivery app development company, we can create a custom business model canvas food delivery to help you better communicate your vision to our team and your investors.
The Final Words
These are some of the most prominent and strong online food ordering models dominating the food delivery business. If you are looking forward to a mobile app development company that is well-defined and helps your business objectives, then you are at the right place. We have been delivering solutions over the years and have ensured the solutions delivered to you earn you great profits.
So, just find out what you want, and we get you a better result on the screen.