The on-demand food delivery services have highly revolutionized the traditional way of delivering food. People have started ordering food more than ever before in times of pandemic. Now the on-demand food delivery apps are gradually changing the traditional way of dining.
On-demand food delivery apps have gradually become popular among the millennials due to their speed and convenience. It allows them to get their favorite food without leaving the comfort of their home. This can be a win-win situation for both the restaurants and the aggregators as the restaurant owners do not need a vast infrastructure for their food delivery.
So, this is the best time for you to develop a profitable on-demand delivery solution for your business. For doing that, you can hire the best and dedicated developers or you can outsource it to a dedicated software engineering team. But before you start talking with a software development team, you need to have adequate knowledge of on-demand delivery platforms. In this blog, we will guide you on on-demand platform types with their pros and cons.
What are the main types of on-demand delivery platforms?
In the traditional method of food delivery, the customer calls the restaurant and waits to get food delivered on its doorsteps. Pizza deliveries are the most famous forms of food delivery. But today this scenario has changed. Now the customers don’t need to make phone calls to the restaurants, they can get food directly to their homes by placing orders using on-demand food delivery apps.
Nowadays, many local restaurants and food outlets have entered the food delivery markets by making robust food delivery apps. Uber Eats, Grubhub, Postmates, Deliveroo, etc. are some of the popular on-demand food delivery platforms. All these services allow the customer to book their favorite delicious food from their nearby restaurants within a few taps on their smartphones.
Here are the two main types of on-demand food delivery platform:
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1. Platform to consumer
As the name suggests, a platform to consumer delivery model is a business model where the customers can get their favorite food by making an order via their smartphones. Due to this, it is gaining popularity among the customers. As per Statista, user penetration is expected to reach 12.5% (approx.) by 2024. So, you can consider making an on-demand food delivery app for your business to grow your profits.
Here are some pros and cons of the platform to consumer delivery platform that can help you understand more deeply:
1. Increase in orders
With the inception of food delivery apps, more and more restaurants got recognized by the people. This has created a surge in their daily orders. Also, the restaurants can pay something extra to get premium benefits.
2. Minimal overhead costs
Also, the overhead costs for the restaurant owners have decreased with the usage of on-demand food delivery apps in their business. Now the restaurants do not need to hire a large staff as the customers are directly placing their orders.
Also, the restaurants do not need to maintain paper records for everything as the on-demand food delivery system has automated everything for them.
3. Convenient to customers
Platform to consumer delivery apps gave a great convenience to the users by letting them order their favorite food in just a few taps. Also, the users don’t need to go out of their houses or stand in lines to get their favorite food.
4. Effective order management
Order management has become more effective with the inception of an on-demand delivery app. Now there is no hassle of writing orders on the paper and tally them later on. You can easily keep track of orders electronically and you can also check them at any time.
1. High Commissions
The main disadvantage of the on-demand delivery food solution is that the solution providers charge a very high commission. As per Laist, Uber Eats charges a commission of 15% to 30% (approx.) as per the restaurant type. While Grubhub charges a commission of 25% (approx.) on every order.
2. Lack of user data
While using the on-demand food delivery apps, restaurants do not have an exact idea of their customer info. They don’t have enough information on who their customers are and what they like. Due to this, they are unable to catch up with important insights and market data.
3. Higher promotion costs
Getting listed on every food delivery platform is very expensive for restaurants. Also, they will miss the opportunity to reach a larger customer base as they are not available on every popular platform.
Famous food delivery companies such as Zomato and Swiggy charge a commission of 12 to 23 percent (approx.) to the restaurant owners. This can decrease the profit of the restaurant owners as it decreases a good amount of the restaurant’s profit.
2. Restaurant to consumer
Although you are directly delivering the food to the customers, you can try some discount and cashback offers to attract more customers. Let’s have a wide look at this model by discussing its pros and cons:
1. Increased customer base:
By providing a full-fledged food delivery service on their own, the restaurants can easily control the consumer experience. Also, the restaurants can ensure their customers with faster delivery of fresh food. This improved service can help you to increase your customer base.
2. Faster service
Restaurant to the delivery model can help the restaurant owners to increase the speed of their deliveries as they cook their food in-house.
The restaurant owners can ensure speedy delivery of fresh food as they are providing their services with the help of their in-house staff and drivers. Restaurants will take immense care of delivering food faster as they are directly taking care of it.
3. Process automation:
By deploying a robust on-demand food delivery software, the restaurants can automate their traditional way of dealings. Also, there are no issues maintaining paper records as everything is recorded digitally on the food delivery platform.
Another benefit of implementing on-demand delivery software into your food delivery business is that you do not need to hire additional staff for attending phone calls of the customers as they can place their orders directly with their smartphones.
Also, the restaurant can automate their marketing process by offering multiple promotional and special offers to their customers. It will help them to build a long-time relationship with their customers.
4. No middleman
In the platform to consumer delivery model, restaurants have to deal with a lot of middlemen. They need to pay a royalty to the delivery platform. Also, they have to pay for some payment service provider to get their payments.
In the restaurant to consumer model, restaurant processes can get faster as the restaurants are delivering food directly to the customer’s doorstep. So, there is no need for any middleman here. Thus, no issues of the high commission will arise here.
1. Higher waiting time
Sometimes, the customers have to wait longer in lines for their food due to full booking. So, the customers opt for going to another restaurant rather than waiting for so long. This could have an adverse impact on your revenues as it will let you miss out on your potential customers.
2. Competition from delivery apps
Nowadays, there is an on-demand delivery app available for everything, and the food delivery sector is not an exception. These apps give the convenience of booking food from their phones without leaving the comfort of their homes. So, the customers will not go to a restaurant because they are directly getting it on their doorsteps.
3. Hygiene issues
The issue of hygiene is also a major concern for restaurants. Nowadays, people have become more health-conscious compared to old times. So, they are expecting proper hygiene in their food deliveries.
Sometimes, restaurants are not following enough hygiene measures in their dealings. Their staff is also following the unhygienic methods. Compared to restaurants, on-demand delivery platforms maintain more hygiene. They ensure to have a proper hygienic packing of their food. Also, they instructed their drivers to make touchless deliveries to avoid human contact.
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With the speed at which on-demand food delivery services are growing, we can definitely say that this sector is going to flourish rapidly in the upcoming year. So, you need to prepare yourself to get the benefits of this emerging segment. For that, you need to build a robust on-demand delivery solution for your business.
Building a robust on-demand delivery platform can cost you a lot and also you need to spend numerous dedicated hours in making it. The best solution to get a software developer team on board to make your food delivery solution.
From the budget point of view, we can say that the cost to develop an on-demand delivery app ranges between $20,000 to $50,000. Also, many factors affect the app development cost such as the development company’s experience, location, app type, development time, etc.
Feel free to share your thoughts with us regarding on-demand food delivery. Thank you for reading this blog.
This article is written by Mushahid Khatri. Mushahid is a Chief Executive Officer of Yelowsoft which is one of the leading on-demand food delivery solutions. He believes in sharing his strong knowledge base with a leaned concentration on entrepreneurship and business.