A CEO’s Guide to Making a Food Delivery App: Challenges, Market Players, and More

As a business owner, you must test the water and verify market potential before entering it. So, if you are a bit confused about taking your food business online or launching an on-demand food delivery app, let’s first clear the air so that you can consume this guide with full interest and leverage this knowledge to the fullest.

According to statistics, in 2020, food delivery apps in the USA made $26.5 Billion in revenue. Compare this number with the $8.7 Billion which the industry generated five years ago and you will realize the market is not just growing but booming!

The market earnings have increased by 204% in the last five years, all thanks to the arrival of platform-to-consumer services. Food delivery apps like Postmates, DoorDash, Talabat, and many others are loved by users all around the globe. If we talk about their founders, investors, and other stakeholders, they are reaping immense benefits.

The reason behind this popularity? Convenience.

This is the only mantra to achieve success and earn billions as a tech entrepreneur. Provide your consumers with what they desire and enjoy the market share.

To help you do this seamlessly, we curated this guide for all the CEOs, budding entrepreneurs, and on-demand economy enthusiasts who want to make their mark in this flourishing market.

By the end of this guide, you will have a clear idea of how you need to get started in order to develop a profitable startup and grab maximum market share in the near future.

So, without further ado, let’s get started.

3 Challenges that You Need to Tackle Before Entering Food Delivery Market and their Solutions

Seeing the demand, a lot of entrepreneurs are striving to make a custom food delivery app to earn more money. But, although the industry holds incredible growth potential, a food delivery business will have its own challenges. Let’s have a look at them:

1. Logistics and Order Fulfillment

A food delivery business has many challenges to tackle. However, the most important one is organizing & managing logistics and order fulfillment processes. Some of these challenges are:

• Deciding whether to keep the delivery services restricted or cater to a wider geography
• Hiring the right number of resources and allocating the right number of vehicles
• Deciding the scope of getting a huge number of orders from some specific locations
• Prioritizing the food delivery requests and ensuring safe & on-time delivery

Solution:

To tackle all the problems efficiently, food delivery businesses must think of certain solutions that not only provide short-term results but are also effective in the long run. For example, it is crucial to invest in integrating features like order scheduler, geofencing, location tracker, or delivery route optimizer that helps you manage the orders automatically, saves time, and increases profitability.

Or, you can also choose to utilize other order fulfillment methods like BOPIS in case you own a physical store. Buy online and Pick up in-store (BOPIS) is an efficient way to complete orders and at the same time, it will save delivery chargers for your customers.

2. Setting the Right Pricing Model

The food delivery market is becoming highly competitive. Thus, it is difficult for businesses to predict the right price and delivery charges for food delivery.

The new startups offer services on low profit margins to attract consumers and beat players but then they also make less money than their counterparts. On top of it, the highly volatile food costs add complexity to the challenge.

Solution

The best way to tackle this challenge is through research. Invest in thoroughly analyzing the prices of competitors and set up a profitable pricing model. Your prices should match the prices of key competitors in the market while still being profitable for your business.

3. Acquiring and Retaining Customers

Along with the demand for food delivery, the competition in this industry is also rising and it is becoming difficult for players to attract consumers.

With so many options available, consumers are also looking for the top players who provide convenience at the best prices. An app that provides solid deals, rich customer experience, and good customer service gets more loyal consumers than others.

Solution

The best way to attract and retain users is by adding features like push notifications and referral programs for consumers. In addition, your application should have a seamless customer experience that lets users order food with just a few taps without investing a lot of time. Intuitive app features like gamification, parcel tracking, and loyalty programs can attract as well as retain users, which is one of the best ways to survive in the food delivery market.

5 Global Players in the Field of On-Demand Food Delivery and How They Work

To beat the cut-throating market competition, it is crucial to study how your competitors are working. So, let’s look at the biggest food delivery companies in the world and figure out what they are doing to outshine in the market.

1. GrubHub: The Best Food Delivery App in the USA

Grubhub is undoubtedly the most popular food delivery app in the USA with over 30 million active users. Presently, it operates in more than 4,000 cities across the globe and allows for deliveries as well as takeaways.

The app provides a seamless customer experience along with many outstanding features that make food ordering seamless for customers. It even permits customers to schedule an order in advance. Grubhub app is free to download on Android as well as on iOS devices.

Revenue Model: How Does the Grubhub App Make Money?

• It charges a commission on each order
• Let restaurants advertise on the platform
• Has monthly subscription plans that provide certain benefits to the customers.

If you are planning to launch an amazing food delivery app to stand out in the market and win hearts, check out these 10 Outstanding Food-Delivery App Features to get the job done easily.

2. Deliveroo: The Best Food Delivery App in the UK

Launched in 2013, Deliveroo is one of the most popular food delivery apps in the United Kingdom. In fact, it is said to be one of the most profitable and lucrative startups in the entire world. Presently, the app is operational in many other countries like France, Germany, Dubai, Spain, etc.

Across the UK, it has a partnership with more than 10,000 restaurants and is constantly working to increase this number for serving more businesses and consumers.

Revenue Model: How Does the Deliveroo App Make Money?

• Charges a commission on every order
• Charges delivery fees from consumers
• Let restaurants advertise on the platform
• Deliveroo Plus: A subscription plan for customers that provides them with many benefits
• Deliveroo for businesses: It let businesses place group orders with their items
• It also has a signup fee for drivers/riders

3. Uber Eats: The Most Popular Food Delivery App in Australia

Launched as a ride-hailing app, Uber made its entry into the food industry of Australia in 2016. And since then, it has successfully won the hearts of many Australians. As per reports, it offers the largest food delivery services in the country in 2021, catering to the needs of over 12% of Aussies.

One of the reasons behind its immense popularity in Australia is its partnership with almost all restaurants. It lets customers order food from anywhere and get the food delivered to them in the shortest possible time. Uber Eats is known to provide job opportunities to more than 59K people in Australia alone.

Fun Fact: Aussies make around 7K food delivery orders in an hour. So, if you are planning to launch your food delivery app in the country, do it ASAP to earn billions.

UberEats Revenue Model: How Does the App Make Money?

• It charges a commission from restaurants on every order
• Let restaurants market/advertise on the platform
• Charges delivery fee from customers
• Surge charges: On rainy or busy days, it charges customers an extra amount.

4. Talabat: The Best Food Delivery App in the Middle East

At present, Talabat is the leader of the food delivery market in the Middle East. Earlier, the market in the MENA region was led by three giants – Zomato UAE, Uber Eats, and Talabat. However, a few years ago, Talabat acquired Zomato in the UAE and Uber Eats also closed its operations because of its inability to stay profitable out there.

So, presently, Talabat is the leader in the food delivery space in the MENA region and it provides customers with a seamless experience. Another reason behind its popularity in the UAE is its exclusivity. It provides additional benefits to restaurants that cancel their partnership with other apps. If you want to know more about how Talabat works, check out our comprehensive blog on Talabat Business Model.

Revenue Model: How Does the Talabat App Make Money?

• Like other apps, it charges a commission on orders
• It also charges a delivery fee to consumers
• Let restaurant partners advertise on the platform.

5. Zomato: The Best Food Delivery App in India

Launched in 2008, today Zomato is a sensation in the Indian Market. More than its services, the app is popular for its marketing gimmicks. Using red color, Zomato has created amazing brand awareness in many countries including India.

Initially, it was launched as a platform to provide customers information about nearby places to eat and add/check reviews online. However, later on, it started deliveries to customers’ doorsteps. As of now, it is operational in more than 24 countries and over 3,200 cities across the globe.

Business Model: How Does the Zomato App Make Money?

• The app charges commission from the restaurants on every order
• It also makes money via advertising
• Zomato Pro: It provides a subscription plan that helps users order food at discounts
• Zomato Kitchen: It provides an infrastructure to food businesses for operating cloud kitchen
• It charges a sign-up fee from delivery partners and a delivery fee from consumers

Check out Zomato Business Model here and find out how it works to stand out in the market.

What Will Be the Future of Food Delivery Apps in the World?

When entering a multi-billion dollar industry, you must keep many things in mind. Obviously, just like you, others will also put a lot of money and effort into their venture. So, it makes sense to see new innovations, trends, niche services, and emerging technologies coming into the market in order to meet the increasing demands of customers.

When it comes to food delivery businesses, here are some trends that the industry is likely to witness. You should keep an eye on it if you want to succeed as an entrepreneur.

1. Rise of the Subscription Model

Although the subscription model is very popular in all tech industries, it is new for the food delivery businesses. But, giants like Zomato and Deliveroo are already serving customers via subscriptions. It lets them predict revenue over time and also make more profits.

In addition, it gives investors a reason to trust the business because of the incoming positive cash flow regularly. This, in return, helps businesses dominate the market. Market leaders like Grubhub are using subscription models to provide discounts and earn customer loyalty to win the market.

2. Restaurant Owned Apps and Delivery Fleets

In the coming years, we are likely to see more food businesses developing their own apps and hiring delivery personnel to manage delivery efficiently. The benefit of this approach is that restaurant owners have complete control over the experience they provide to their customers. And they do not rely on any third party to help them with their business operations. The best examples of such apps are Domino’s and Starbucks.

3. BOPIS

BOPIS is a pandemic-born feature but its popularity is not going to fade anytime soon. It solves a number of pain points in the food delivery industry and businesses can capitalize on these features to increase their sales by up to 30%. The only condition is that you require a physical store or restaurant for leveraging this amazing technique called Buy Online Pick In-Store.

Customers who do not want to pay for delivery charges and also do not wish to spend a lot of time in-store while their order gets packed, can utilize this feature and save time and money. On the other hand, retailers would save on delivery costs while still getting orders.

Apptunix: Your One-Stop Solution for Your Online Food Business

During the pandemic, we got a lot of requests for food delivery solutions as foot traffic dwindled and businesses started selling online.

Thus, to meet the high demand, our food delivery app developers developed a next-gen on-demand food delivery solution that companies can use to take their business online in just 7-15 days. So, why reinvent the wheel when you can get everything you want while paying less?

Let your customers order food with just a single tap, browse menus, enjoy in-app messaging, while you increase your brand awareness with a solution customized as per your business needs. Restaurants are making billions with their food delivery apps and now it is your turn to automate your business.

At present, we are catering to 200+ food businesses with this amazing solution, consisting of:

• A feature-rich mobile app for customers and drivers
• An easy-to-use admin dashboard for management
• Beautiful UI/UX designs with your branding
• A white-label and fully customized solution
• Free demo and trial with the guidance of our experts.

So, if you are planning to make a mark in the industry and don’t want to wait for years to see your dream change into reality, Request a Quote right away!