There might be some uncertainties in various on-demand industries regarding their performance in the upcoming decade. However, entrepreneurs have no ambiguity about on-demand food delivery industry. Owing to the challenging corporate and domestic routines, consumers are shifting toward on-demand food from traditional dine-in industry.
It is wise enough to learn about the behavior of food delivery market before crafting a business model. Exploring the market reveals the prospective business areas and shortcomings of existing service providers.
This article presents a brief insight into industry before sharing the essentials of food delivery business model. It also shares a few features of Deliv Agent delivery framework with a link to find detailed demo. Food delivery businesses can rebrand this UberEats-inspired framework for their delivery services.
Market Analysis for Food Delivery Industry
McKinsey & Company reveals in its study that on-demand food delivery market is expanding 300% faster than dine-in industry. Startups are inclined toward on-demand food delivery instead of maintaining restaurants and fast foods. Besides, this incredible percentage also reflects the transformation of traditional businesses into on-demand ones.
Constituents of Success
One irrefutable reason for success of food delivery on-demand is the growing interest of youth. The statistics from the US reveal that out of all the delivery orders in 2018, 77% were millennial. Moreover, the second highest proportion belongs to Generation X. In essence, the people born in late eighties, nineties and opening years of 21st century are more inclined to order online food. This upcoming generation is most likely to inherit this trend. Consequently, the times ahead will witness over 90% of people consuming on-demand food daily.
A notable example is that of Firehouse Sub. This restaurant founded in 1994 is earning remarkable profits since it partnered with on-demand delivery service providers. In five years between 2012 and 2016, the restaurant doubled its number of locations from 500 to 1000. A vast majority of food consumers tend to seek home delivery instead of a dine-in option. Thus, this case study indicates that the growth of businesses like Firehouse depends on delivery services in town.
The upsurge of food delivery business in Europe is as impressive as in the US. Research unveils that British consumers spend approximately $13 billion on online food orders. Asian markets with huge population density are also demonstrating significant interest. This is the primary reason for Foodpanda to operate in 10 Asian countries.
Food Delivery Opportunities
The studies find that on-demand food delivery services are inaccessible to 18% of US residents. Moreover, most of these groups of people are willing to spend more than other areas for food delivery. This makes sense for them too – considering extreme weather and challenging daily work routines. Thus, it would be unfair to call these opportunities as challenges. Startups can start earning big time right from the first day by covering these citizens.
On-demand food market value will hit $544 billion g mark by 2023 – almost twice more than current $290 billion. Besides, the number of orders will increase by 62.4% in five years. This forecast only considers the growth rate of the industry. However, the value may break more barriers if delivery businesses cover remotely located areas too. It is noteworthy that the profit margins remain almost same because consumers are ready to pay more in such areas.
The areas with unavailability of services are not the only centers for opportunities. The increasing demand is enabling more space for food delivery startups in urban areas. As an inference, on-demand food delivery is one industry which will continue to outnumber services against demand for ages.
Food Delivery Business Model
There are scores of case studies from around the world. Fresh entrepreneurs should consider the business models of Doordash, Foodpanda, Grubhub, and UberEats considering their success. The difference among their models is insignificant. However, earning approaches considerably vary.
UberEats earns 30% of the total worth of an order placed at restaurants. There are thousands of restaurants in partnership with UberEats. Moreover, each of these restaurants caters hundreds of orders daily on average. Thus, the percentage of profits multiplies with number of partnered food outlets and orders at each outlet.
Grubhub and UberEats also earn additional revenue by ranking collaborated restaurants. In essence, if a restaurant aims to rank higher in customers’ mobile app searches, it pays the delivery service provider for it. Charging the delivery fee is another common approach used by each of these four service providers.
One of the most crucial aspects of this business model is to acquire correct combination of technologies. On-demand food delivery app development must ensure that the smartphone app offers top features with highest efficiency. For instance, the app should enable customers to find nearby restaurants and complete menu list. Moreover, the developers should ensure that search results prioritize restaurants which pay for marketing.
While developing the delivery software system, Deliv Agent teams modeled top features of UberEats and Grubhub. Thus, our cloud-based system is capable of performing everything that UberEats app does. There are some optional features which enhance productivity. Deliv Agent demo enables you to assess our product.
Reaching and Modeling Customers
Digital and traditional marketing phase kicks off few weeks before launch so that the consumers remain curious. Once launched, the service should offer promotional discounts to attract customers. The food chains will start contacting you for collaboration once your service develops a customer-base.
Restaurants are willing to start partnership with new delivery service providers despite being partners of another service. This is because there is no monthly or weekly payment compulsion. They only pay when the service provider caters an order. Therefore, the two industries complement each other through collaboration.
Incorporating Business Intelligence (BI) services is advisable once the business reaches a hundred thousand customers mark. The BI allows service providers to find out the causes of customer attraction.
Deliv Agent framework powers a number of high performing delivery and logistics businesses around the world. Sign up today to evaluate the efficiency and features of our system.