A business functional unit operating in India has reached a revenue of 43.77 billion dollars in 2024. It is expected to grow at 15.98% annually. By 2029 it is projected to rise to 91.88 billion dollars. Wondering, Which business gives such huge returns??. Is it feasible?
The answer is a ‘Yes’. Indian people has contributed to the above earnings by using online food delivery applications. It makes us speechless, is it not? We people are standard contributors to the above achievement.
The top priority for any human to survive is food. Humans have a soulful and emotional bond with food. Every occasion is expressed with food language. Man has an ardent sense of flavors and colors. As humans evolved with Technology, so did his food preferences and means he found and used them. The food culture of every area began spreading across boundaries and zones using technology.
How food delivery applications make money: Key Revenue Model Explained
Food made available and people enjoying food is a business. With the food business growing everywhere, man blended food preferences with technology.
Food delivery applications came to life and started spreading its wings across cities and towns. A decade ago around 2014 food delivery applications stepped it’s First footsteps in India. The food delivery application started climbing rapidly with technology, in the fast-moving world. Let’s get into this deeply in the consecutive passages.
People and food
High-quality food has good flavors, texture, appearance, minimal processing, and nutrition. People always crave good food. People enjoy food to socialize with friends, learn about different cultures, celebrate, and self-care. Such high-quality food is not available anywhere at any time. The idea to stabilize the availability of food, for our needs and special occasions led to the development of online food delivery applications.
Food Linked by Technology
Every morning starts with a morning coffee for millions of people. The taste buds awake along with the eyes. Food is a high priority on a regular day. Every day three fully cooked meals with tea intervals and snack breaks make the day complete for an average human. People are ready to dedicate time leaving behind important tasks to satisfy their food preferences. Technology linked with food supplies can assure people that food is made available irrespective of location and time.
Online food delivery application evolution
E-commerce started its journey via online door delivery service. In this process, the products from the seller are delivered in the footsteps of the buyer using an online platform. This paved the idea behind online food delivery applications. The seller is an entrepreneur, a local restaurant, a cafe, or an independent chef. The buyers are food consumers. The connection link between them is the online food delivery application.
Way to do things
Ordering food online is a piece of cake for all people these days. Kids find it user-friendly to order food. The process of ordering food starts with the user installing the application on the mobile device. After going through the routine of the initial login the user can pick the preferences of food and service provider. Payment is solely based on the option chosen by the customer. Within a few minutes, the delivery reaches the user.
Food Ordering System – Types
•Restaurant Controlled
In this system, restaurants have their own website and applications. They manage their delivery services, which shows they handle multiple orders at the same time. The food order and delivery methods are similar to any online application.
• Independent website
The individual owns the website. They take and control orders directly from customers. Individuals can contact the supplier personally and place the order. Home-based entrepreneurs find this system profitable.
How does the online order system work??
The online system provides users with the flexibility to order food, beverages, and snacks from a website or application installed on their devices. There are two main components involved.
1. Customer Interface
The customer/user, downloads the application and logs in with their address or personal mobile number. After login, the user picks the place and food according to their choice. The user pays for food and gets a notification about the order placed. These are the activities involving the user.
2. Admin Interface
The term admin here refers to the food service providers. The restaurants and or any service provider must also log in and be authenticated to use the application. The system on the admin side picks the order received, intimates the food preparation in-charge unit, and gets work done. Payment details are processed and verified. The food prepared is handed to the delivery in charge. The delivery person tracks the address and assists the admin with on-time delivery.
Working approach
The overall working of the food delivery application is summed up to a few points below
1. Order food
The customer scrolls and selects restaurants of their choice, browse the menu, looks into offers, and selects the menu
2. Payment
The ordering process is completed only after the payment is completed. Customers can pay online using cards or cash on delivery.
3. Order Confirmation
The order is completed only if the request from the customer is accepted by the restaurant. The customer waits for the notification message.
4. Order Ready
When the food is prepared and handed to the delivery person, the customer is sent another notification message. The customers can track the food delivery status.
5. Delivery
In the final step, within a few minutes the yummy, hot, steaming food is delivered to the destination chosen when placing the order.
Why are online food applications popular?
Like a spider’s web, with built-in speed, the online food app is thriving across cities, towns, and even in remote areas. The logic behind its flourishment is interesting.
1.24 *7 service
In today’s work nature people work during the morning and at night, the food delivery app started to target customers and collaborated with restaurants and local food centers to take in orders at any time. People who juggle between work time and cooking time find the food app very helpful.
2. Time saving
People need not spend time grooming themselves to eat at fancy restaurants or travel long distances to visit places of their choice and wait for the weekend to taste their personal favorites. Foodies can enjoy food without worrying about time.
3. Discounts and offers
To capture the attention of people, every food unit provides exclusive discounts/offers daily on selective food items. Special days and festival seasons have more options provided. People avail these benefits with family and friends.
4. Accessibility
People can order food irrespective of the place they are in. If you’re stuck in traffic while returning home or have night shifts at work, you can fill your food platter with different food varieties from different food vendors at the same time which is not possible offline.
Benefits of online food delivery application to food provider units
The online food apps serve both parties involved in E-commerce. Listed below are some perks of food units.
1. Contactless delivery
Food aggregators and restaurants find the app to have a smooth relationship with customers. Their priority is on the food ordered and delivery not on the client management.
2. Low operation cost
Food units when operated online have low maintenance and operation costs. Service delay and customer handling ethics can be let loose. Food is ordered in a single click and delivered easily
3. Multiple Orders
People when go to a restaurant their main expectation is to sit in a comfy place and enjoy food slowly. They prefer to order step by step and taste food while chatting with family and friends. This takes more time for the provider to complete one single group of people. In online technique with the help of the application, multiple orders are accepted and processed at the same time.
4. Increased revenue
It is a fact that customers order more food items online than offline. The costs to focus on appearing to the customer are less and if the quality of food is maintained consistently food owners can make a hefty sum.
5. Customer retention
If restaurants offer good discounts and good food people cling to them. The customer can be sure about the taste and quality of food at familiar places and trust them. If service providers earn customers’ trust, customer retention can make them run their business smoothly.
6. Brand visibility
Food apps do not support only experienced concerns. Any new start-up can log in to the application with the required documentation, get themselves verified, and become authorized suppliers. Small cafes, snack shops, and dabbawalas can work hard and establish themselves through this platform.
How does online food ordering work?
In today’s world full of opportunities people are attracted to and tend to ways that serve them quickly with surprising benefits and a variety of options. The food app is a success among millions of people because they feel it is super easy to use. Irrespective of age category and language known every single person can adapt to use the application smoothly. All restaurants incorporate colors brightly and eye-catching food displays with prices listed and descriptions of food items. Some restaurants display the ingredients used to ensure consumer’s hygiene and food quality. The entire journey is quick like a wink with a few steps :
• The user can download the free application directly from the Play Store on the mobile.
• The application proceeds initially with the language preference of the customer.
• New users can directly access the home page, new users can log in with their social media accounts or personal mobile number.
• The user can access the home page, view top offers of the day, and the related details of restaurants and food options.
• The food is listed and the user can choose his likings from the menu and add it to the cart
• Users can order any number of items, and verify and confirm the order. Personal cooking requests can be made if needed.
• The next step is billing, the bill includes the price of the food ordered, tax, and delivery fee
• The app gets user’s personal details like address for delivery and proceeds to payment options.
• In a few minutes the wait is over and the user can feast with the food received.
Basic Elements of online food delivery application
The methods for food processing and delivery may vary from one food supplier to the other but the elements involved are the same. They are
•Notification messages
The main feature of any online application is the communication between the user and the supplier. They communicate and respond only through notifications. These notifications reach the customer directly and help them to keep track of the food ordered.
•Order management system
The system captures the order, tracks the order, and delivers the food. Its work starts when the customer places the order and iterates till the order is finally delivered.
•Review and Ratings
The feedback the user provides about the entire service operations is called review. Positive reviews can earn lots of customers. Before trying out any app, users now take a glance at the review. The performance of the restaurant based on each criteria rates on a scale between 1 to 5 by the customers. The rating star mirrors the authenticity of the food supplier.
•Rewards
To boost sales and increase revenue the food units focus on ways to seek customer’s attention. The reward offered must feel promising, useful, and profitable to users. If this trick works any restaurant with good quality food and work morals can catch up with customers and take a step ahead in business.
The success of the application
A food-based application’s success depends on some terms like
• Number of food delivery
• Profit per shipment
• Average Order duration
• Customer retention
• Delivery drivers busy
Cost to develop a food delivery system?
The complexity and size of the applications decide the amount to develop an app. If the application must have standard features it takes around $5000 to $2000. If the application is to be started from scratch it may range from $50000 to $150000. The amount encompasses the software used, complexity, features of the application, technology incorporated, manual cost from the initial planning phase till launch of the application.
Rise of online food delivery
A statistical figure shows that for every 10 lakh people in India, there are approximately 2000 restaurants. Nearly 64% of people like to order food online and dine at home. Online food usage has risen from 8% to 12% between 2019 to 2023. Each customer, on average, is ordering more than three cuisines from over six restaurants on an online platform in a year, as per a recent survey.
Key Revenue Model of Food Delivery Business
The main logical thought that roots and grows in a business is profit. How do food delivery apps earn money by just delivering food? Has this question crossed your mind? The following words give the answer
1. Delivery charges
People nowadays like to order food from home and enjoy personal time. The food is delivered to the customer by a delivery team. The delivery team works under the online application to deliver food by charging the customer as delivery charges. The delivery charges vary based on the destination of the client. The best part of this technique is that the application gets paid by the customer and restaurants for every delivery. The amount is automatically credited directly to the account of the online application. A minimum of 30-35 % of the food bill covers the delivery charges.
2. Commission
The important doubt that arises in the mind of every foodie when using the app is, how the bill is shared by the application and food unit. Every delivery proceeded through the application earns a certain commission to the application. Imagine the number of deliveries a day and the commission obtained.! Each order contributed up to 14% of commission charges.
3. Registration fee
To use the application the restaurant or any food unit must register and enroll with all personal documentation. The application updates all the details only if the concerned food provider is eligible and authentic.
4. Subscription
The contact period after registration arrives as a package. They can maintain the contract period on a monthly, quarterly, half-yearly, or annual basis. In the subscribed time period the food units can display their supplies using the apps.
5. SMS/ Email service
Promoting business is an important service offered by the food app to restaurants. The app sends e-mail and SMS to regular and registered users. The app charges restaurants for the above task.
6. Social Media Marketing
Some restaurants pay online food apps to promote their brand and to display content on social media platforms like Facebook, and Instagram.
7. Advertisement
For restaurants to showcase their Menu and food items on the application they must pay money to the application. The discounts, and offers are displayed as pop-ups or flashing Ads on the homepage of the application. When the customer scrolls the home page they get automatically attracted to offers. This increases revenue for both parties.
7. Peak hour charges
Every day lunch and dinner break have orders flowing in, this time is termed as peak hours in business. The food delivery apps increase the charges during peak hours. Long-distance deliveries are put on hold and then the delivery charges are increased. Customers definitely need to pay the charges. This happens daily and increases the income of food delivery apps.
Market size and value of food delivery apps
The food delivery apps are a great success in many countries. The market value is set to grow dramatically annually. The company gained huge profits. In 2022, the online food delivery market in India earned $44.8 billion, in 2023 it is $70 billion. It is estimated to increase up to $125 billion in 2029 !!!. The market is expected to grow with the increase in the number of smartphone users and people’s demand. Zomato and Swiggy are the best food delivery apps in our country. In 2023, Swiggy’s revenue in Indian rupees was about 86 billion and Zomato made up 71 billion.
Conclusion
There is no doubt that new business ideas always gain people’s support. If you are interested in trying out the food business and looking for a place to develop an app you can blindfold yourself and just contact SMARTHER, a food delivery app development company with many years of experience in developing mobile applications. They maintain a very good relationship with customers. The task given to them is completed perfectly. The company’s backbone is its talented, well-qualified programmers. Many leading food units are their happy customers. Collaborate with them and get your dreams accomplished.