On-Demand Food Delivery Business Model

Paresh Sagar
blog updated dateUpdated Date: Apr 11, 2024

successful food delivery business model

We have an intriguing question to throw… have you ever wondered how much UberEATS, GrubHub, and Dominos earn? To know this, you will have to fall a lot deeper into the world of on-demand food delivery business models and understand their work. As of November 2021, DoorDash and UberEATS are the best online food delivery apps in the USA, with 57% and 24%, respectively.

Well firstly, these food delivery apps lure customers to order food from their favorite hotels by pop-up offers and push notifications.

Food, Clothes & Shelter – these are the three basic needs that drive humans to earn money. And people spend the most frequently on food.

With foodies all over the globe, how about planning to set up a food delivery business? Let’s check out which food delivery business model suits your business the best.

What are the Business Models of Online Food Ordering Apps?

With the ever-growing love for different cuisines among people, one of the safest business ideas is to launch an online food delivery app.

There are two models of on-demand food delivery market:

1. Platform-to-Consumer

2. Restaurant-to-Consumer

Both models have distinctive features. Keep reading further to check out the pros and cons of both food delivery app platforms.

1. Platform-To-Consumer Food Delivery Business Model

The P2C model provides on-demand food deliveries to customers from partner restaurants. The restaurants, cafeterias, and cloud kitchens are connected with these third-party delivery aggregators, and the users have to use their smartphones to place orders.

platform to consumer food delivery business model

We can create an UberEats Clone in 48 working hours. You can also develop something from scratch that is similar to Foodpanda, GrubHub, DoorDash, etc., contact us.

Pros of Platform-to-Consumer Model

  • More Orders – A restaurant has walk-ins and pre-booked tables. Additionally, restaurants can multiply their earnings by registering on the platform.
  • Least Overhead Expenses – The footfall in restaurants has an inverse relation with the number of orders on online food ordering apps. Restaurants need not hire large waiting staff and can focus on increasing the kitchen staff.
  • Customer’s Convenience – Today, the customers can order meals while watching El Clasico on the couch with a beer pint in their hands!

Cons of Platform-to-Consumer Food Delivery App business Model

  • High Promotion Costs on Online Food Delivery Apps – Being a cafe owner, you would like to list your app on every famous third-party platform to widen your customer base. But, each forum has its registration and maintenance charges which collectively can be a lot. Handling this burden is difficult. On the other hand, registering on only one third-party platform will cost you losing customers and lesser popularity.
  • Overcharge Commissions – These third-party platforms charge a large share of the total bill from the restaurants. For a newly established restaurant, it might be challenging to afford these high charges.
  • No Data Access – Being registered with the platform, restaurants don’t have access to the insights of customers liking, frequency of orders, etc. They have minimal information.
  • No Customization Online Food Delivery Apps – Every platform has its UI and UX setup. No restaurant can display itself in a way different than the rest. Every registered business has to adhere to the display guidelines of the platform only.

You may also like: Ubereats VS Doordash

2. Restaurant-to-Consumer Model Food Delivery Business Model

Many food joints have separate and individual applications, and this distinct identity distinguishes them from the other restaurants. The restaurants or food chains that don’t deliver in a particular location later partner up with food aggregators to reach out to audiences, not their geographic capacity.

restaurant to consumer food delivery business model

McDonald’s and Dominos are perfect examples as they have their app and partner up with other food delivery websites and applications.

The Restaurant-to-Consumer model comprises the restaurants to build their application as well as register on the third-party food aggregators.

Pros of Online Food Delivery Business Restaurant-to-Consumer Model

  • Customization – Restaurant owners can customize the appearance of their logo, app’s UI, menu card, prices of food items, etc. if they choose to launch an app based on the restaurant-to-consumer app model.
  • Enhanced Consumer Experience – A restaurant can manage and control the consumer experience by launching a full-fledged application. The private database of food ordering apps can enable you to record consumers’ unique preferences and customized orders. Furthermore, owners can also work on the negative feedback.
  • Speedy Delivery – Yes! The best advantage is that there is no third-party delivery boy. The extra time and tantrums of the delivery service are minimized here.
  • Automated Procedures – There is less need to spend spare time, money, energy, and employee resources for marketing. Owners can directly offer coupons and promotional offers on the app itself.
  • Skip Middlemen – Since there is direct contact between the restaurant and the consumer, the service charges of all middlemen can be escaped from.

Cons of Restaurant-to-Consumer Model

  • Intense Competition from Online Food Delivery Apps – While users can order food from different places and get it in the same order, there is not much variety in ordering the food from one site.
  • Hygiene & Sanitary Protocols – Owning a restaurant is challenging. What’s even more difficult is maintaining the restaurant hygiene license.

What to Choose? The Final Take on Online Food Delivery Business Model

With the COVID-19 pandemic and the estimated spread of the Omicron virus, staying indoors is the safest option. But, not being able to eat out is an injustice to foodies. So, the food market will only keep growing.

Do not dump your food delivery app business idea. Instead, discuss it with us, and our business analyst team will suggest a suitable model attain maximum profitability.

We suggest our clients to go for an intelligent food delivery business model, i.e., a robust hybrid model. We mean to say choose to create a presence on as many platforms as possible for the broadest audience scope. The business analyst team at aPurple can provide you with a FREE quote for your on-demand food delivery business.

food delivery business app idea

Frequently Asked Questions – Food Delivery Platform

Q1. What is a food aggregator app?

An app that acts as the middleman or the adjoining platform between the restaurants and consumers is a food aggregator app. It allows the users to search for various restaurants, meals, reviews, etc.

Q2. What is a food delivery aggregator?

After reaching a certain number of restaurant registrations, food delivery aggregators launch their platform to the public. Post launching, they provide their food delivery services to the customers from their desired restaurants. They earn revenue by charging a commission from the restaurants.

Q3. Is a food delivery business profitable?

Yes, the food delivery business is profitable. Such a business can earn a service fee from customers and commission from the restaurants, and it’s a two-way income.

Paresh Sagar
Author
Paresh Sagar, the innovative CEO of aPurple, is renowned for his passion for experimenting with new business models, technological aspects, and software solutions. His knowledge and insights are a must-read for entrepreneurs, tech experts, and avid readers alike, offering valuable perspectives on the ever-evolving landscape of business and technology. With a keen eye for innovation and a dedication to sharing his expertise on business digitalization, Paresh continues to inspire and inform professionals across the globe.

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