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online food delivery startups

Business Model of Online Food Delivery Startups

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A lot of startups have emerged in this technological era. Everything seems to be moving around the gravitational force that digital Marketing has created around itself. Commerce has seen fewer searches than e-Commerce and amalgamation of business and technology is showing wonders. Food business is no exception. Many online food delivery startups have come up in recent times among which some are doing well; some have made an exit while some are struggling for their existence.

So, whether such start-ups rise or fall depends upon their Business Plan. The more detailed and sorted out the business plan is the more chances for your company to recover from the tough times.

What are the reasons for food delivery startups to go online?

In fact, the reasons behind food delivery startups to go online are associated with the flaws of the traditional system models where food was delivered by the restaurants once it gets ready. Some of the issues were delayed delivery, high order limits, increased cost in terms of full-time delivery boys, training of delivery persons etc.

The high penetration of smartphone users and their high involvement in e-commerce transactions motivated enthusiasts. They came up with business ideas of On-Demand Food Delivery Solutions to handle the complete requirements of Food delivery logistics. This is done by bringing the restaurants and customers on a single platform. The benefits offered to both parties ensured the sustainability of this business model. It also grabbed the attention of investors and venture capitalists.

What are the important elements of a strong online food delivery business model?

(a) Key Partners

(b) Value Proposition

(c) Key Resources

(d) Key activities

(e) Customer Relationship

(f) Delivery Channel

(g) Customer Segments

(h) Cost Structure

(i) Revenue Streams

Each business model must include these elements to have a robust and clear idea of the feasibility and profitability of their business plan.

What are the business models used by online food delivery startups?

The Business Model Canvas for GrubHub has a value proposition for Customers, Restaurants, and Delivery persons. Customers can order meals online by browsing the menu of different restaurants. They can also track their orders and access 24*7 customer support service. The restaurants benefit as their customer base expands and they need to pay commission only for the orders received.

Lastly, the delivery persons earn a good amount of money with handsome tips too. The costs majorly incurred by GrubHub are on technology, salaries to permanent employees, and payments to delivery persons. On the other hand, the Revenue comes from commissions and advertising of restaurants.

Apart from commissions, other revenue streams for food delivery companies are the subscription plans. These companies charge subscription fees for a fixed period of time and encourage users to make frequent visits on their portals by giving them attractive offers and discounts in exchange. Some of the examples of such startups are Postmates, Sprig, Munchery.

In order to sustain the competition and get the required funding, one must have a viable business plan and a Unique Value Proposition (UVP) to offer to its partners. There is no shortage of opportunities as Food Delivery Application Development Services is in demand worldwide with more and more entrepreneurs venturing into this field offering choice, speed, convenience and lot of other stuffs for the food lovers.

Last modified: 29 Jun 2020