We live in a fast-developing world. And it’s not a secret that modern technologies bring new habits into everyday life. One of these habits is food delivery via mobile applications like Uber Eats, Food Panda, Zomato, and others. With the mobile food delivery app, you’re not limited by the menu of a particular restaurant when ordering your breakfast, lunch, or dinner from any place to any location, and at a convenient time. Food delivery is not a new service. You might remember the orders via phone – by 2011 their number amounted to $11 billion in the US. It’s fair to say that food delivery services were pretty popular for the last 9-10 years. And then mobile phones and high-speed Internet connection made a revolution in the food delivery area – in 2015 the number of online orders became higher than via phone. Nowadays it’s a lucrative business.
Table of contents
Step 1: choose the business model
How do food delivery applications work and why do you need them?
Food delivery apps allow making orders from the mobile phone. You can order a few dishes from different restaurants with one click. You can make an order and go to the restaurants to pick it up or just wait for the courier. Such apps are a great opportunity for communication between clients and restaurants.
And it’s actually a very profitable business. Statista said in 2019 food delivery generated revenue worth $107.44 billion and will increase to $156.82 billion by 2023. The market volume of the customer delivery area was $53.8 billion in 2019 and will increase to $82.2 billion by 2023.
As you can see, food delivery is a popular sector that can never be out of trend. Current market opportunities allow entrepreneurs convenient immersion to food delivery via mobile applications. So, if you have an idea about the food delivery app and want to know how to realize it, keep reading.
Step 1: choose the business model
There are four common models. Let’s discuss each of them.
1. Order-only model
You might face this model in applications like Delivery Hero, JustEat or Grubhub. It means you provide only a software layer for the restaurants. Restaurants can use your app for attracting clients, clients can make orders and you provide all the software services but logistics, delivery and couriers are restaurants’ concerns. Your application makes communication between eateries and clients faster and easier. Usually, the order-only model provides commission 7-15% from restaurants to the application owner.
How does it work? The customer makes the order in application. The restaurant receives this order and notifies this. After the order is done, the restaurant provides the delivery through special service or in-house courier.
Advantages. This model doesn’t need additional preparations for order realization and is very scalable.
Limitations. In this model, you completely depend on the restaurant and can control the process of delivery.
2. Order and delivery model
As you might have guessed, this is an advanced version of the previous variant. It’s used by Uber Eats, DoorDash and Zomato. In this model, the service provides not only a mobile application but also logistics and couriers. The platform for making orders and delivery is very beneficial for the eateries because they can provide only dishes without additional worries about delivery, paying couriers and other services. In this model delivery providers can charge additional payments for delivery and increase the order price during peak hours.
How does it work? The restaurant uploads its menu in the application, the client can choose dishes, make an order and pay for it. When the restaurant sees the order, it can be confirmed or rejected. When the order is ready it’s given to the closest courier. The last step is delivery to the customer.
Advantages. The service provider can charge a bigger price because of delivery. Also, this way is more preferable for restaurants, so you can have a wider menu and as a result, a bigger audience.
Limitations. Unlike the first model, this variant needs more resources and investments. You’ll need to hire a bigger team that includes developers, drivers, customer support, etc. Also, you should spend time and resources on teaching drivers and making logistics.
3. Cloud restaurant model
Cloud restaurants mean that eatery doesn’t have a place for guests at all and works only for delivery. Customers can see the menu, make orders and receive them. But can’t go to this restaurant for dinner. Such eateries use in-house delivery service or outsource it to food delivery apps. For the restaurant, this is a good way to start a business with a minimum of investments. Food delivery applications often collaborate with cloud restaurants and help them to start.
How does it work? The process of work is the same as in previous variants. The difference is that client could not visit such a restaurant.
Advantages. As we said, for restaurants it’s an efficient way to start with minimum investments. As for the delivery app service, it’s a way to find a new restaurant with lower prices (because such eateries don’t need big real-estate areas and can save costs on rent) and attract new customers.
Limitations. Such restaurants depend on delivery providers and could be not well-known without a physical presence on the market.
4. Meal kit delivery model
This is not a classic food delivery. In this case, the client doesn’t receive the dish but have all the necessary ingredients for cooking a dish. Restaurants deliver the whole meal kit with the recipe. The customer shouldn’t buy products by himself or herself and think about proportions because all ingredients are delivered in the right amount. Customers can choose from a variety of dishes with professional recipes, receive the whole meal kit and cook at home.
How does it work? The client makes an order, the restaurant prepares all the ingredients and the recipe. Courier gets the order and delivers it to the client. Not the client can cook the dish at home.
Advantages. Usually, this model works with the subscription. Thus, the provider has a lot of regular customers and the revenue per user is quite big. For the restaurant, it’s the ability to provide additional service almost effortlessly and for the clients this is the ability to cook favorite dishes at home.
Limitations. If you provide only meal kits, you might lose a big audience of customers that want to order cooked dishes from the favorite restaurants.
Step 2: choose the revenue model
Below we’ll list the most popular revenue models.
- Delivery charges. In this case, food delivery services charge a price for delivery. The price can be fixed or can depend on the location and the distance. For example, Uber Eats has a fixed price and now they count the price depending on the distance.
- Revenue sharing. A big part of delivery services prefers to charge a commission from each order. The commission rate can be fixed or depend on the order. Usually, it’s from 15% to 40%.
- Advertisement and promotional services. Food delivery applications can also be an advertising platform for restaurants. You can charge payments for the advertisements, banners, or top of the search lists.
- Surge pricing. This is a scalable pricing model. You can set bigger prices during peak hours or holidays. This way is used by Uber Eats, Zomto, Grubhub, DoorDash and others.
- Daily deals. In this case, the food delivery service collaborates with restaurants and sets discounts on specific dishes. Thus, clients can buy something with a discount only in the application.
- White labeling. This way is a good decision for small and unknown restaurants. In this case, the food delivery app sells dishes from the restaurant as their offering.
Step 3: analyze trends
Food delivery services are quite popular, so there is a high level of competency. If you want to have success, you should understand the latest trends in this area. The last two trends are making orders on social media and chatbots. People have too many applications and notifications and they don’t want to install one more. If you can integrate food delivery in the app they already have, do it.
For example, Domino Pizza was the first food delivery provider that allowed clients to make orders via Twitter. Users should create an account on the Domino platform and connect their Twitter to the platform.
The next important trend is the chatbots. We use messengers every day, so it’s very convenient to order food via chatbots. This is a great way to collect orders and notify users about special offers, sales, etc. Also, companies use the virtual assistant Alexa. You can order food through Alexa in Grubhub, Just Eat and other delivery providers.
Step 4: function definition
There are a lot of functions can be included in your application. You should define the most important and focus on them. In general, app can include four panels: admin, user, restaurant and driver. The last one is not necessary if you won’t work with the delivery. Below we’ll describe any panel.
- Sing up and profile management. This is the first interaction between users and applications. You need to create a convenient step by step registration, also you can add the registering via social networks.
- Restaurant list. Logically, the food delivery application should contain the list of restaurants where users can make orders.
- Review and rating. Users can evaluate restaurants and leave feedback. This will help other users to choose the appropriate dish or eatery.
- Delivery address. This feature can determine the user’s location and save a few locations for the delivery.
- Geolocation and real-time tracking. This feature helps users to track their deliveries and see where the courier is now.
- Cart. It helps to see all the items that the user wants to order. It is a very convenient feature, especially when customers want to order items from different places.
- Payment variants. It will be a good decision to integrate a lot of safe and reliable payment methods like credit cards, eWallets, etc.
- Bonuses and promos. It helps to promote restaurants and propose users profitable offers.
- Scheduling order. This feature helps users to set the accurate time for delivery orders in advance and don’t wait.
- Order history. With this feature, users can see the history of their orders and repeat them if needed.
- Multiple filters. This feature helps to make convenient search and sorting out the dishes and restaurants. The more eateries you have in application, the more demanded this function will be.
- Push notifications. This function helps to notify users about order updating, seasonal discounts, best offers and other important things.
- Customer support. Users should have the ability to connect with the customer support team to solve their problems with an application and orders.
- Dashboard. This is the main panel where the administrator can control all the necessary functions of the application.
- Registration and profile management. The administrator should have access to the users’ (customers and restaurants) profiles and manage them.
- Customer management. The administrator can manage users’ accounts and sees the information about accounts (contacts, name, address, etc).
- Restaurant management. As with users, the administrator can manage restaurant profiles, add a new one, edit them and delete.
- Payment management. This feature helps administrators to manage payments and transactions in the application, including refunds.
- Order management. Administrators can track deliveries, monitor their status and make business decisions.
- Delivery management. This is an important feature if you provide delivery services. It helps administrators contact drivers and couriers.
- Element modifying. This feature helps to modify the whole process of food delivery including dashboard elements and app design.
- Feedback management.If your app has a feedback function, the admin should have the ability to manage reviews from the customers.
- Campaign and discount management. This feature helps to provide promotions, sales, bonuses and other marketing activities in the application.
- Notification management. Administrators can receive and send different notifications via the application.
- Reset passwords. If a user (customer or restaurant) forgot the password from the account, the administrator can reset it and give the new access data.
- Analytics and reports. Using real-time data, the administrator can make prognoses and important decisions for the business.
- Dashboard. This feature displays the number of orders, their statuses (new, delivered, completed, canceled) and actions with every order.
- Restaurant profile. Every eatery should have its own profile where they can edit information, add new dishes, food listings and prices.
- Order management. Restaurants should have the ability to receive, reject and complete offers in the application. Also, they need to have alerts and reports about every order in real-time.
- Payment management. The restaurant needs the ability to withdraw money through the application. Also, they should be able to edit, manage and track payments from customers.
- Brand management. If the restaurant has a few locations, each of them should have access to the application and order management.
- Special offers. This feature will help to manage users’ bonuses, special offers and discounts.
- Customer support. This function helps to manage customers’ and restaurants’ requests fast and efficiently.
- Registration. Before start working, the driver should be registered in the system. After registration and verification, they can receive and deliver orders.
- Orders and history. This feature helps to see new orders and the archive of old orders.
- Call or chat. This is a useful option for the customers that want to contact the courier in case of problems or adding details.
- Orders management and status updates. While the delivery courier should have an ability to approve or reject offers and also update the order status.
- Online support. This feature allows driver to contact the support service in case of some issues.
Step 5: choose a technological stack
When you have a common understanding of application type and features, you should choose tools and services for its realization. They will depend on the business model and chosen functions.
There are some of the tech stacks you can use:
- Payment methods: PayPal, Braintree, Square API, Stripe;
- User location: Google Maps, Google Places API, Core Location Framework’
- Finding direction: Google Maps, Routific, MapKit;
- Registrations: Facebook SDK, Gmail SDK, Auth0;
- Storages: Google Cloud Storage, AWS, Azure, Digital Ocean;
- Analytics: Google Analytics, FireBase
- Push notifications: Amazon SNS, Firebase Cloud Messaging, Urban Airship.
Bonus tip for newbies in the food delivery business
Nowadays the most popular approach is the order-only model. In this case, you can start pretty quickly because you need to create only a software layer without a delivery process. The next popular variant is the order and delivery model because it’s convenient for restaurants and very popular among them.
With order-only model you’ll have somewhere of 7-20% per order. In case of order and delivery, you can earn more because the commission will include the payment for the order and payment for the delivery.
How much does the food delivery app cost?
We’ve discussed all the necessary steps and features for a successful mobile delivery application. And the last but not least question is how you need to invest to start a food delivery business? The development price depends on many factors like the platform (Android, iOS, Windows Mobile), business model, number of features, integrations, etc. Even the location of development team matters.
The initial phase of making a roadmap and development plan usually takes near 50 hours. The UI/UX design takes the same time. The process of back-end building can take 60-70 hours, the development might take 120 hours and testing near 100 hours. As you can see, the total time is near 300-400 hours. But you need to understand that these are very rough calculations.
The payment per hour depends on the level of specialist and often a location. For example, US developers can charge $200-300, European – $100-200, Indian – $20-100. Thus, we can say, the median is $50-100, so the application will cost $15,000-30,000. The advanced application with wide functionality like Uber Eats can cost you NEAR $35,000.
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