Home / Blog / On-Demand Food Delivery Business Models 2021 : A Complete Guide For Entrepreneurs
On-Demand Food Delivery Business Models 2021 : A Complete Guide For Entrepreneurs
As years pass the on-demand food delivery industry is experiencing a tremendous scale-up evolving and expanding the market. This unexpected growth of this industry paved the way for entrepreneurs and enterprises to start an online food delivery business and make use of this wonderful opportunity.
According to a report by Uber, it is expected that the on-demand food delivery market is expected to grow by 10% per year which will be worth 25 billion dollars in Europe by 2023. The technological developments and advancements helped to adopt the on-demand food delivery services. Also, the enhancements gave rise to the entrepreneurs to succeed in the on-demand business market.
Before starting a business, one needs to completely research and know about the industry. Fixing a suitable business model is one of the major things to do in the initial stage of starting a new business. In an on-demand food delivery business, it is suggested to analyze the market, fix targeted audience, define business goals, etc.
One who wishes to enter the online food delivery business should know about all the business models existing in the market. Now let us know in detail about all the on-demand food delivery business models here.
Types Of On-Demand Food Delivery Business Models
In the online food delivery market, there are two major business models that command the on-demand food delivery and ordering industry. All the business giants in the food delivery industry operate in consonance with any one of the business models mentioned below.
Aggregator Model
i) Integrated Model
ii) Order & Delivery Model
2. Inventory Model
Aggregator Model
In a general sense, the aggregator means businesses gather information on specific goods and services from various competing sources in the market through their online platform. As the definition says this is the business model that allows multiple restaurants to register and operate under a single food delivery platform. The services offered by various restaurants are aggregated by this business model. Here the platform acts as a bridge between the restaurant owners and the customers.
UberEats, Just Eats are some of the big brands using this food delivery business model. They have adopted this aggregator food delivery business model and exponentially grown. One can choose this business model when they plan to launch an on-demand food delivery application like UberEats and Just Eats.
The aggregator food delivery model is classified into two other business models based on the delivery operations.|
i) Integrated Model
The integrated food delivery model is a more stretchable and commercial business model in the industry. Both the admin and restaurants can manage the delivery in this business model. Many restaurants in a city will have their own group of delivery agents and all they need is a digital platform to bring their business online. This integrated model helps such restaurants to bring their offerings online and functions digitally.
It is important to make sure that the food delivery solution that you choose should offer the restaurants the functionality of approval from admin to activate the delivery services to “SELF”. This will help the admin to see whether the delivery is handled by the restaurant or the admin himself in the dashboard itself. After receiving an order from a user, the admin checks the dashboard whether the restaurant has enabled the self-delivery option. If not the admin will manage the delivery service accordingly.
Advantages of Integrated Model
This helps the restaurant owners to run their food delivery business without their own pool of delivery agents and a platform. So with or without the delivery feet and digital platform on their own, the restaurants can function efficiently and make profits effectively.
This food delivery business model would help the platform owner to overcome the uncertainties of launching a new business. The integrated model allows restaurants with or without the delivery fleet to be on the food delivery marketplace and function effectively. This business model makes way for a wider range of food menus to be on the platform which in turn increases the number of choices for customers in terms of dishes and restaurants.
ii) The Order and Delivery Model
In this Business model, three entities get involved which are Admin or Owner of the platform, Business Person or restaurant owners, and service provider. Here, Third parties take care of the Delivery process. Generally, Courier or logistics company provides delivery service which collaborates with the owner of the platform to offer their service to the customer. The delivery charge is estimated by the service provider.
Advantages of Order & Delivery Model
This Service would be definitely beneficial for business people as they need not invest in the delivery fleet. The admin of the platform can assign all the functions related to food delivery to courier service. Thus, Third-parties are managing the order deliveries so the owner need not worry about delivery management. The admin can confirm the effective and on-time food delivery services
2. Inventory Business Model
This inventory business model is an in-house model, where every function is done by the food delivery company itself. Only one body is involved here. From launching a food delivery website or application, preparing orders to food deliveries to the customers, everything is done by the company. The complete supply chain is controlled by the platform owner.
This model does not allow multiple restaurants to offer their services on a single platform. The food is cooked in the kitchen owned by the business and delivered by its own fleet of delivery agents hired by the business. This helps the business owners to easily track the food quality.
This business model is adopted by big brands like Domino’s, Burger King, McDonald’s, etc. If you are a person who is already running a restaurant chain, you can bring your services online via websites and mobile applications by choosing this inventory model.
Advantages of Inventory Model
One need not rely on the third-party food delivery platform is one of the major advantages of choosing this business model. The business that is running a chain of restaurants in a city and having their own group of delivery agents and looking for an online food delivery business model can choose this inventory model. By this, the business owners can save the commission fees paid to the third-party platforms and also have master control over the customer experience.
Which Is The Profitable Food Delivery Business Model?
If an entrepreneur starts an online food delivery business, they may end up in trouble in development, revenue, and reach among people. It is hard to predict the number of restaurants that will join the marketplace while launching a brand new food delivery business. In such scenarios, it is not a good idea to invest in hiring a huge group of delivery agents. It is suggested to hire a few delivery agents in the initial stage. After all, in the integrated model, both the admin and the restaurants can manage the food delivery. So this is the most perfect food delivery business model for startups.
There are several food delivery masters in the market, who operate as the integrated food delivery model and experiencing exponential growth. One of such market giants is DoorDash! They introduced themselves as a leader in the US online food delivery industry by accounting for 45% of all the orders in the US in 2020.
For adding value to your platform, offer the best solutions to the core problems. This will make the restaurants join your platform. Due to the COVID19 outbreak and lockdowns all around the world, people reduced their visits to the restaurants and started going online and ordering food to their doorsteps. So the restaurants need to react to this change in an efficient way. To switch the business online though there are several difficulties faced by the restaurants. They are mentioned below.
Lack of resources to bring their outlets online.
Insufficiency of delivery service to offer food delivery to customers.
“Integrated Food Delivery Business Model"
- A Solution To The Inefficiencies of Food Delivery Startups
But the integrated food delivery business model provides solutions to both the above-mentioned issues faced by the restaurants. Restaurants with delivery fleets will also reach out to you to take their business online and reach for a wide range of customers. This model serves both purposes.
some more factors that make the integrated food delivery business model the most sought-after one.
Admin has control over the delivery services
Delivery fee is an additional revenue model
Admin can keep tracking the delivery time and quality of service offered.
Geo-Fencing
How Does The Integrated Food Delivery Business Model Works?
The delivery process is explained through the functions performed by the admin, merchant, delivery staff, and customers in the online food delivery system.
Admin
Admin opens an account for the delivery agents hired by himself.
Admin has the power to enable and disable the delivery service offered by the restaurants.
Admin sets the delivery fees for the deliveries done by himself.
The orders are published to the restaurants in the delivery range.
Admin can a lot any particular delivery agent for delivery food in case of the order not accepted by any other delivery agents.
Merchant
The merchant opened an account for the restaurant's delivery agents.
To manage the order deliveries, the merchant enables the "SELF-DELIVERY" option.
For the deliveries done by the merchant, the fees are fixed by the merchant himself.
All the restaurant owners set a delivery range for their orders.
The order status is changed to "ACCEPTED" when the restaurant accepts the order.
After preparing the order, the restaurant changes the status to "READY FOR PICK-UP".
The restaurant is responsible for assigning the delivery agent in case of no agents accepting the order from the broadcasting.
Delivery Agent
The Delivery agents get alerts via notifications regarding the incoming orders.
Once, The Deliveryman accepts the order, The status is automatically switched to "PREPARATION".
When the food is prepared, the desired delivery person gets a notification and picks up the order.
The Portal tracks the route of the delivery person when they are on the way to customers.
While in half of the distance, the system automatically changes the status to "YOUR ORDER IS ON THE WAY".
Once the delivery person delivers the order, he/she changes the status to "DELIVERED”.
Customers
Customers can track the order status which is regularly updated.
Live tracking can also be integrated into the platform which allows the customers to track their order easily.
Factors That Make ByDoo Eats The Best Fit To Start & Scale Your Food Delivery Business
Here are multiple factors that make ByDoo Eats the best fit to start a brand new on-demand food delivery business. Following are the most important ones.
Hasslefree delivery management
Real-time delivery tracking
Order status update through in-app notifications
Multi-payment gateways
Schedule orders
Categorized searching
Availability Toggle
Verified providers
Estimated bill
Impeccable Map for Route optimization
Bottom Line
The business model you choose will play a serious role in determining the success and growth of your business. Hence it is very important to choose the right food delivery business model for starting your business. As technologies rule the world, we suggest you choose a hi-tech food delivery solution like ByDoo Eats.
ByDoo Eats is a number one ready-made UberEats Clone App developed by startupmart in the market with phenomenal features and functionalities. If you are looking to start your on-demand food delivery business, check out the demo from Startupmart, a top-tier on demand app development company.
Muthu Priya is a enthusiastic Digital Marketing Executive who has strong background on-demand mobile app marketing, performance-driven habits and forward-thinking creativity to all programs she oversees. She writes about mobile app technologies, Startups, Industires. Stay in touch with the blog updates at Startupmart to know the trends of On-Demand Industry.
