Business Models of Different Food Delivery Services

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Meaning Of Food Delivery Apps Food delivery is a
home delivery service in which a store,
restaurant, or third-party app delivers food to
consumers, whenever they ask for it. These days,
the offers are generally placed through a mobile
app, website, or phone.  Delivery includes cooked
meals and groceries from supermarkets. Other ways
to deliver food include catering or
wholesale. Fun Fact did you know that the
first case of food delivery was recorded in Italy
in 1889. King Umberto and his wife Margherita
called Rafaele Esposito, the creator of the
Margherita Pizza, and requested that the pizza be
delivered to the palace in Naples.  The emergence
of modern food delivery systems was driven by
economic necessity. In the 1950s, middle-class
Americans sat at home and watched television all
day. This almost brought the US restaurant
industry to a standstill and eventually forced it
to adapt, giving rise to the modern delivery
service we all know.
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• Types Of Food Delivery Apps
• Primarily, there are 3 main types of on-demand
  food delivery applications or models which are
  super popular nowadays. They can be classified
  as
• The Platform To Consumer Apps (Order Only
  Business Model)
• This is a good business model, especially for
  novice players. At the same time, with this, the
  application owners can connect multiple
  restaurants and eateries to end-users. In other
  words, app owners are able to provide a platform
  for multiple restaurants to sign up and provide
  food delivery services to their customers. 

However, this is an order-only business
model Here, it is the responsibility of the
restaurants delivery service or a hired
third-party courier service provider to deliver
meals to customers. You as the Food Delivery App
owner are not responsible for logistics. 
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• The Delivery Service Aggregators Apps (Order With
  Delivery Business)
• This model is very much similar to the business
  model above, except that it is also responsible
  for logistics. Therefore, the owner of the
  application takes the order of the end-user and
  provides food delivery. 
• The best thing about this model is that it is a
  very feasible business model as the restaurant
  does not have to manage its own fleet. Moreover,
  it also allows you to leverage your applications
  existing customer base.
• And in this model, app owners typically work with
  several individual courier providers to deliver
  food to the customers doorstep. Most Famous food
  delivery apps like UberEats, Swiggy, Grubhub, and
  others have adopted this model.

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• The Full-Stack Food Delivery Apps
• As the name suggests, in this business model, one
  service provider serves the entire food chain.
  This means one party does everything from food
  preparation to delivery to the customers
  doorstep. 
• This business model is very different from the
  previous two and requires significant capital
  investment. Typically, this business model is
  chosen by popular restaurants that create
  takeaway and delivery apps to offer additional
  amenities to regular customers. This allows
  customers to order food from the comfort of their
  own homes, which further boosts sales. The most
  famous example would be Dominos Pizza.
• Then some entrepreneurs even hire ghosts or cloud
  kitchens to prepare food. Then you choose
  the cloud kitchen business model and deliver food
  to your customers under your own banner. However,
  in this case, the restaurant does not offer a
  meal opportunity. All you need to do is take the
  order on the platform and deliver the food to
  your customers.

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• Factors That Determine The Success Of Your
  Platform
• Food delivery is a multifaceted process involving
  multiple parties simultaneously. To measure the
  natural growth and success of your food delivery
  business, its important to pay attention to
  specific KPIs or key performance indicators.
• Lets take a look at the most popular application
  KPIs here. 
•  Number of food deliveries 
• One of the most important metrics in a food
  delivery business is the number of deliveries
  completed. Typically, a number is expressed as
  the sum of deliveries made during that month or
  quarter.
• Knowing how many orders you are taking is
  important to estimate the growth rate of your
  food delivery business. In the world of venture
  capital, stakeholders are looking for significant
  increases in the number of deliveries. Growing
  businesses are typically expected to double their
  monthly deliveries.

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•  Profit Per Shipment 
• The ultimate goal of any business is to make a
  profit. Therefore, it is very important to know
  how much profit you get from each shipment. This
  information will help you identify the most
  profitable restaurants and reroute delivery of
  inefficient restaurants. 
• This metric also takes into account costs such as
  salaries, advertising, and transaction costs. 
• Average Order Duration 
• The average order time is a measure of how
  quickly your company can fulfill customers
  orders. An order is flagged the moment a customer
  purchases food in the app and marked as completed
  when an order confirmation is sent.
• The Average Order Duration KPI is calculated as
  the sum of the time spent on all deliveries
  divided by the total number of orders completed.
  KPIs are important because they help get rid of
  slow-running restaurants and couriers and further
  improve application performance.

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• Distance Transition Time  
• This KPI measures the time it takes for a carrier
  to complete a shipment. This includes the time it
  takes for your order to be picked up and
  delivered to your doorstep.
• This metric measures the speed of the delivery
  agent and the effectiveness of the delivery
  route. Therefore, the information obtained can be
  used to shorten delivery times and increase
  customer satisfaction.
• Driver On Order/Idle
• This KPI measures the percentage of drivers in
  delivery or waiting for delivery at any given
  moment. This helps the application evaluate the
  effectiveness of the driver network. 
• This metric also makes it easy to determine the
  time to reach the maximum number of orders. This
  will help determine how many drivers should be
  active during each period of the day. 

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• Customer lifetime value 
• The Customer Lifetime Value (CLV) measures the
  average amount of revenue a user earns over the
  duration of their membership. The longer the
  client uses the application, the higher the CLV. 
• With all these metrics, you can easily track the
  performance and efficiency of your food delivery
  system and discover new ways to improve the user
  experience. 

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Wrapping Up  When you wish to launch your own
food delivery app, it is important to understand
all these business models and choose the one that
is most suitable for your plan. It is always
advisable to start by creating an MVP with basic
features that successfully depict the use of your
app and with time introduce new updates on the
basis of the feedback received from users.