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What is a food delivery service and how does it work?

Clone Script & Apps
Nov 07, 2022 08:48 PM

What is a food delivery service and how does it work?

Food delivery has now become an integral part of the urban lifestyle. And that’s why delivery agents can be seen throughout the day riding their bikes, carrying the orders, sporting their company T-shirt and a hat. It is observed that one-third of Americans order food online at least twice a week.

Food delivery service is somewhat similar to courier service in which the ordered food is delivered from the restaurant to the customer either by the restaurant’s staff or by delivery agents of a food ordering company. This obviously depends on the medium through which a customer places their order. Orders can be placed over a call, mobile apps and through web-portals of a restaurant directly, or through restaurant aggregator apps. Often a flat delivery fee is charged to the customer and at times even that is waived off, depending on the order volume. Food delivery service might also include delivering groceries from the supermarket. Technological interventions have further made food delivery services prompt and quick, keeping customers happy and loyal.

Food delivery businesses follow several models, which vary from company to company. But the priority is to deliver freshly prepared food quickly and safely. Below are a few popular models of food delivery services currently in practice.

1. Platform to Customer Model

In this model, third-party apps create a list of available restaurants in close proximity to the customer’s location. Customers are free to order from these partner restaurants and get the food delivered either by the restaurant or a delivery agent of the platform. Apps such as DoorDash, UberEats, and Deliveroo are perfect examples that follow this delivery model. Generally, these platforms take a 20-30% cut from the order value on the top potential delivery cost that may arise. This mode of food delivery business accounts for almost half of the $122 billion that is generated in sales per year.

2. Aggregators

A delivery service aggregator acts as an intermediary between a customer and several local r estaurants. Additionally, they offer customer support on behalf of the restaurants in case there’s an issue with the delivery or the order. JustEat, Delivery Hero, and GrubHub are some of the existing players. These platforms charge a fixed fee on every successful transaction facilitated or even prompts for a monthly subscription.

3. Full-stack Model

In this scenario, the food delivery business does everything all by themselves. Right from developing the app to hiring delivery staff and cooking the food in-house, every operation is carried out in house. However, this model needs substantial investments to launch the platform. Once sufficient scale is achieved, full-stack food delivery platforms eventually earn more as they control the whole value chain. They can control the food quality as everything is cooked in-house.

4. Restaurant to Consumer Model

McDonalds, Burger King, and Dominos are some of the biggest examples of this business model. These companies offer food deliveries to their customers through their websites or app to certain specific regions. They utilize partners like DoorDash and Zomato to deliver food to regions where they don’t serve themselves.

Types of Food Delivery Services

With a surge in demand, food delivery services globally have now been under the spotlight. From winning customers to understanding them, a paradigm shift in the approach of food delivery services is also underway. Understanding those four distinct types of food delivery services hence is essential.

1. Restaurant Prepared Food Delivery

This is an on-demand delivery service that has disrupted the traditional market. Three basic components of a meal experience – ordering, cooking and delivering are managed. While few handle all three basic operations, most are into accepting orders, passing it on to partner restaurants and then delivering it to the customers. Companies like JustEat, GrubHub, FoodPanda have partnered with restaurants and then deliver the food to the customers. Whereas fast food chains like PizzaHut, Dominos or McDonalds do it all by themselves or even engage third-party apps to receive orders and get it delivered.

2. Meal Kits Delivery

Companies like Blue Apron and Freshly cater to this segment. Expected to reach USD 20 billion by 2027 as per Grand View Research, this is mainly chosen by busy and overworked families. Meal kit offerings have two options – heat and eat, cook and eat. Fresh, healthy, relatable meals resonate with customers who mostly face slot delivery issues.

3. Grocery Delivery

Grocery delivery saw a sudden spike during 2020 and will continue with its growth in the next couple of years. The business starts with either a web portal or app and delivers groceries to the customers from a warehouse or offline store where the items are stocked. At times, an online grocery marketplace is created by joining hands with few local grocery producers/retailers who would eventually use the platform to sell their products on the marketplace. Companies like Peapod and Instacart are mainly leading the segment.

4. Veggie Box Delivery

Vegetable box subscriptions are on the rise nowadays. These can range from Community-Shared Agriculture boxes (CSA boxes) to a corporate equivalent, which are branded boxes of vegetables and fruits. During 2020, over 500 British vegetable box providers, with waiting lists ranging from 160 to 6,700 customers, delivered 3.5 million boxes of fresh produce to homes, more than double their usual sales. Popular U.K. vegetable box suppliers, such as Farmdrop and Riverford, had to introduce online queues due to surging demands. The U.S. based Farmers Box and Misfits Market also registered large spikes in their sales of veg boxes during the pandemic outbreak.

Top 10 Food Delivery Software/Apps

Since 2020, there has been a surge in the online food delivery business worldwide. Here are the existing top players around the globe.

1. GrubHub, USA
2. Doordash, USA
3. UberEats, USA
4. Postmates, USA
5. Just Eat, Denmark
6. Deliveroo, UK
7. HungryHouse, UK
8. Foodpanda, Singapore
9. Zomato, India
10., China

To sum up, the potential of the food delivery industry is endless. With the right technology and customer-centric approach towards delivering food, restaurants and food delivery businesses can thrive even in today’s highly competitive market.

Before hiring mobile app developers for a food delivery app, it’s essential to identify your niche and target audience. There are two main types of food delivery businesses:

  • Restaurant-to-consumer (R2C) 
  • Food aggregators. 

Restaurant-to-consumer (R2C) businesses focus on delivering meals from restaurants to consumers. Food aggregators, on the other hand, partner with restaurants and deliver them with an online platform to reach more customers.

You only achieve your food delivery app goals if that is efficiently marketed to reach potential prospects. You might be looking for someone who loves fresh produce, or maybe a busy parent is more likely to download your application.

Knowing your prospects before hiring a mobile app development company ensures your application is relevant to your users. It also allows you to establish marketing goals and business models better later in the process. 

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