How Online Food Delivery App like UberEats & Grubhub Make Money

By Ronak Patel   |   22 August, 2019
How Online Food Delivery App like UberEats & Grubhub Make Money

We all may look upto best food delivery apps as a way to get food delivered but, in real sense, they deliver us the convenience. When we say convenience, it means in the form of ease of choosing food, ease of making decisions, easy payment options, etc. to the users.

Starting a food delivery business in 2021 is not like having a piece of cake. You need to have a completely dependable team that is very much organized; you need to have a clear idea about the locality you are targeting to deliver food; what the customer trends are; where do they like to dine often, etc.

Only when you are clear about such things, you will be able to go ahead with your business plan.

Whatever be the business is in question, the first and the foremost question that comes to our mind is How do food delivery apps make money?. Things are not much different for online food delivery apps.

With more people love the convenience of getting food delivered at their doorstep, the demand for online food delivery app development has increased tremendously over the last few years. Again from the perspective of the restaurants, they can use such service to reach a larger audience while paying minimal charges for the delivery. This way, they are more than happy to be part of the arrangement. The business of online food delivery app is becoming popular due to the ease it offers when it comes to delivering food.

Why are food delivery apps a big success today?

When we talk about the restaurant business, it needs a lot of investment. Investments start right from getting the right space and kitchen equipment. To attract more people in, these places need to be well-planned and made beautiful, which again means spending more money. The operating expense of the place is high with staff management and raw material contracts and if these things are not utilized well, then it means the loss for the business.

For the restaurants, the only way to cope up with expenses is to increase the number of orders and food delivery apps can very well achieve this. When we talk about restaurants, it forms an unorganized section of the market.

Here you can find restaurant chains which are run by huge MNCs, and you will also find small ones which are local –reaching a limited number of customers within a locality. They offer food delivery service within a said distance from the restaurant through their local carriers.

With the introduction of food delivery service, such small restaurants have been able to cater to the needs of a larger number of customers who are situated at geographically away. They are able to sell their top line dishes easily all the while increasing the number of orders.

If we look at the findings of Zomato, you will see that in its report of March 2019, in the first quarter itself it made more than 30 million deliveries across 200 cities. Now, this is something that Zomato has achieved in a span of a few years.

Food Delivery App
 

Top Food Delivery app Monetization techniques for 2021

Delivery apps can make money through different ways, and the same has been explained below:

Delivery charges

It is possible for the app to charge for delivery fees in case the restaurant does not have a dedicated delivery team for the task. The delivery charge can be based on the distance or can be a percentage of the order amount. One of the food delivery apps which make money through this way is Deliveroo. One of the reports states that just by delivering food to the customers from their favorite restaurants, Deliveroo has made £129 million. For per order they charge £2.50 to the customers. This way throughout the day, they make a decent amount just by charging for the delivery service.

Commission percentage

The commission percentage is another form of monetizing the food delivery app. The food delivery apps can work with restaurants and come on terms regarding pre-defined commission rates for their orders. The commission rates can be fixed based on the size of the order. For example, the app like JustEats charges a commission on the transactions to the restaurants. Today the company is based in more than 15 countries and has a market capitalization of $3.5 billion. Deliveroo is another food delivering company which follows such an approach for mobile app monetization. The company has been able to make significant growth in its revenue through this method.

Advertising

Another way for food delivery app monetization is through advertising. At an additional cost, advertising can be offered to the restaurants on the app. When we talk about food delivery apps, the advertisement can happen in the form of top listing for the ones which paid more for a certain period of time.

Swiggy is one such app which offers such a mode of advertising on its app. When the restaurant pays for the advertising, it is shown on the top of the search result to the app users. This way users will see them first before other restaurants in the list. Again, food delivery app like UberEats charges an amount as a marketing fee to feature an app.

Data-driven strategies

You can always work on optimizing the way you generate revenue from the app by studying data-driven analytics. This data can be collected from the user behavior on the app, which includes the kind of restaurants they like visiting in your app and order from. This way, you can know which users are regular on your app and are spending in more time and money. This way, instead of putting more money and efforts on new user acquisition, you can spend your efforts to maintain the existing ones.

Daily deals

Food delivery apps have gone a step ahead and now they have made a tie-up with restaurants by offering deals on the dishes. Here the best dish of the restaurant is offered through food delivery apps at throw away prices. Such restaurants are showcased on the deal pages of the app. When the orders are received for such dishes, it gets passed on to the restaurants. The restaurants, on the other hand, make use of such deals to up sell-side dishes along with the discounted ones. This works as a beneficial deal for the restaurant owners as well as the customers. As the amount of the order increases, the commission for the food delivery apps increases too.

White Labelling – Swiggy & Ubereats Clone Scripts

Now, this is something that every one of us is not aware of. White labeling in food delivery business is the process where the food delivery apps sell the dishes of the restaurants as their own as a brand. One few names in the market is ubereats and Swiggy. Some restaurants which are completely depended on ubereats and Swiggy and are doing well are offered the option of ubereats clone . Here the dishes are sold out under the brand of ubereats and Swiggy and for customers, such restaurants do not exist. Through this method, Swiggy is making enough money while the restaurants get what they deserve without having to take up any hassle. This works well for the ones which are especially the home run.

Email marketing

When we are talking about monetization tips for your food delivery app, then this will be seen on the top of the list. Increased engagement with your app means more revenue for the app.
Mostly, people have a dedicated email address, and when you approach them with a quality email marketing campaign that includes new promotions, deals or offers, coupon codes for latest offers at some restaurants available for a limited amount of time, you can be sure that it will get noticed by the people. You can keep the people stay connected with the brand by sending in regular emails. This will increase the frequency of their purchases from you.

Peak hours

There is still some other way for food delivery apps to make money. With this method, the apps can levy a delivery surcharge on the orders during peak hours. Apps like UberEats follow such a technique and they increase rates during lunch and dinner. UberEats limits its menu and location during the peak hours and to make them available charges at an extra fee.

Constant user engagement through emails will ensure that the users are making use of your app again and are in touch with it regularly.

If you wish to increase the revenue of your food delivery app, then you should work towards knowing what your target audience likes and whatnot. Making necessary improvements in this area will definitely increase app ROI.

Mobile app development
Final thoughts

Based on the current scenario, developing online food delivery apps can be considered as one of the successful businesses in the market. It is one of the best ways to build a business and start making revenue out of it quickly. The popularity of such apps increased manifold over the years because of the convenience it brings in for the restaurants and customers.

For the restaurants, it helps them build their brand and easily connect with a larger audience with fewer efforts while for the customers, they can find a vivid number of restaurants and dishes available to be ordered and delivered at their doorstep. So, it is a win-win situation for both parties.

Ronak Patel

Ronak Patel is a CEO and Founder of Aglowid IT Solutions, an ever-emerging Top Web and Mobile Development company with a motto of turning clients into successful businesses. He believes that Client's success is company's success and so that he always makes sure that Aglowid helps their client's business to reach to its true potential with the help of his best team with the standard development process he set up for the company.

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